HPE | Sustainability and Shareholder Value

Sustainability engagement helped HPE drive nearly $160 million of new revenue in 2017.
Jul 24, 2018 10:05 AM ET

HPE 2017 Living Progress Report

We have long known that our Living Progress plan is the right thing for a responsible company to do. But we now have increasing evidence that our sustainability credentials contribute to our business objectives and deliver value to our shareholders.

This trend is reflected in the burgeoning growth of the sustainability investment sector.

In the U.S., assets under professional management that apply sustainable investing criteria grew to $8.72 trillion in 2016, representing 22% of all invested assets—an increase of 33% from 2014. Investors are attracted by the potential of corporate  sustainability programs to reduce risks from social and environmental issues, and position companies to better anticipate and prepare for resource scarcities and regulatory uncertainty.

We are leveraging our sustainability credentials to benefit our business in the following areas:

Building customer relationships

Our customers consider our sustainability capabilities to be a strategic differentiator. Customer insights research has revealed that a compelling number of our largest customers are embedding sustainability into their own businesses—which demonstrates that sustainability is no longer confined to a small group of sustainability professionals, but is instead becoming relevant to a wide range of business functions. We believe the trend toward mainstreaming sustainability issues in large businesses will continue.

To partner more closely with customers on such initiatives, we developed a customer engagement practice within our sustainability organization, working with our sales teams to present sustainability advances in business terms. This collaboration has led to clearer metrics identifying the financial and functional benefits of our sustainability credentials to our customers, in three main categories :

  • Equipment efficiency — maximizing IT processing power and storage capabilities, minimizing cost, lessening the demand for resources
  • Energy efficiency — delivering an optimum level of power, storage, and connectivity in exchange for the lowest input of energy possible—spearheaded by our Design for the Environment program
  • Resource efficiency — engineering our products to work most efficiently within the data centers that will operate them, matching type and quantity of material to the needs of space, power, and cooling

We engage with both current and prospective customers about the business benefits of sustainability for their organizations. This dialogue is already making a significant contribution to sales, amounting to over $160 million in new revenue wins in 2017. A number of customers have confirmed that our sustainability credentials gave HPE a competitive advantage.

In 2017, our sustainability professionals engaged over 400 customers—representing more than $5.6 billion in annual revenue—to share our thought leadership and provide briefings on HPE’s IT efficiency and sustainability initiatives. We also partner with customers to pursue commercial sustainability opportunities.

Expanding our market

Working in partnership with our customers, we are identifying global social and environmental issues that translate into market opportunities. Together, we are solving some of the world’s toughest challenges and at the same time generating business growth. The opportunities are global, they are multi-sectoral, and they are driven by social, as well as environmental, challenges. Four such opportunities are:

  • Industrial intelligence. Fueled by intelligent edge computing, the Industrial Internet of Things (IIoT) is powering a new revolution in industry, with efficiency and environmental impact reset to new levels. The market opportunities extend across many industries and regions. Research firm IDC forecasts that worldwide spending on the Internet of Things (IoT) will grow to $1.4 trillion in 2021 from an expected $800 billion in 2017. The largest investments are being made in IIoT areas such as manufacturing, transportation, and utilities.
  • Accelerating healthcare. The global healthcare sector, accounting for over 10% of global GDP, offers numerous opportunities for enhanced efficiency. Advanced IT is providing savings for healthcare funders, accelerating research, and improving treatment for patients.
  • Precision agriculture. The global population is anticipated to top 9 billion people by 2050, and experts estimate that agricultural output must double to meet the impending demand. Advanced IT solutions are at the leading edge of the agricultural sector’s innovation toward higher food production from a finite land resource.
  • Smarter cities. Over half the world’s population already lives in urban areas, and the proportion is increasing. Our customers are leveraging the HPE Universal IoT Platform to exploit significant market opportunities for making cities more sustainable and resilient.

Attracting top talent

Our industry faces a talent shortage, particularly in technical roles. Prospective employees—especially millennials—look for values in an employer that align with their own. When recruiting new talent, we use our Living Progress plan to demonstrate to candidates that our values are deeply embedded and proactively implemented. A 2016 PricewaterhouseCoopers study found that millennials are five times more likely to stay with an employer when they feel a strong connection with their employer’s purpose.

Strengthening supply chain resilience

Maintaining operations and reputational resilience is critical to driving quality and reliability from our supply chain network. Operational resilience gives our business the flexibility to manage risks and adjust to disruptions. Reputational resilience maintains positive stakeholder perceptions and ensures that we are responsive if a disruption occurs.

Our Business Continuity Management program aims to enhance our resilience by mitigating risk across four interconnected areas:

  • Supply chain mapping — giving us clarity on revenue distribution across nodes to procure business interruption insurance
  • Risk profiling and analysis — providing visibility to our critical suppliers and creating a scorecard for selection
  • Business continuity planning — ensuring that we are prepared to respond quickly
  • Incident and crisis management — helping us understand the severity of a disruption and supporting recovery

We focus on high-risk areas that could have a significant impact on reputation, financial results, or operating profit. Our program includes business continuity testing to assess climate-related disaster scenarios. The program benefits our business by ensuring continuity of operations, minimizing negative impacts to revenue and reputation, maintaining customer satisfaction, and avoiding any default in legal, regulatory, or shareholder commitments.

Our Supply Chain Responsibility program is also key to monitoring social and environmental information on suppliers to ensure operational and reputational resilience. Our focus on labor practices and environmental standards addresses the significant risk concerns prevalent in the electronics industry supply chain.

Ensuring product license to operate

We market our products globally and task our corporate affairs and social and environmental responsibility teams with tracking and anticipating changes to regulations with a potential to affect our products. Our network of environmental product stewards works to ensure that we comply with new regulations across our markets, including China, the EU, and the U.S. Wherever we operate, we aim to meet or exceed legal requirements on materials of concern.

In addition, we register for eco-labels that support sales in major markets, including the U.S. Environmental Protection Agency’s Energy Star. We also produce industry-standard IT Eco Declarations for most new products.

Click here to see the full HPE 2017 Living Progress Report.