Product Stewardship

Trend: Companies that design products to minimize waste and environmental damage may have a competitive advantage, both in economics and visibility.

BusinessWeek magazine describes the movement to design complex products with the disposal in mind.

Source: HP Wants Your Old PCs Back

Proponents argue that a company's responsibility for what it sells should include collection and disassembly at the end of the product's life cycle. As a slogan, product stewardship has been around since the Earth Days of the 1970s, but it is now a serious force in the auto and electronics sectors of Japan and Europe. The movement is likely to broaden in the U.S. as well. Several states are strong-arming auto makers into using less toxic parts, persuading thermostat manufacturers to fund bounties for the return of old mercury-laden devices, and pushing pharmaceutical giants to redesign packaging to reduce waste and accept unused medications for disposal.

A few years ago, when environmentalists in Washington State began agitating to rid local dumps of toxic old computers and televisions, they found an unexpected ally: Hewlett-Packard Co. Teaming up with greens and retailers, HP took on IBM, Apple Computer, and several major TV manufacturers, which were resisting recycling programs because of the costs.

Aided by HP's energetic lobbying, the greens persuaded state lawmakers to adopt a landmark program that forces electronics companies to foot the bill for recycling their old equipment. "This bill puts our market-based economy to work for the environment," said Washington Governor Christine O. Gregoire as she signed the plan into law on Mar. 24.

The movement to recycle electronic refuse, or "e-waste," is spreading across the nation, and so is HP's clout. The company helped the greens win a big battle in Maine in 2004 when the state passed the nation's first e-waste "take-back" law. Washington followed suit. Now, Minnesota and New Jersey are preparing to act, and 19 other states are weighing legislation. Activists hope to banish high-tech junk from landfills and scrub the nation's air and water of lead, chromium, mercury, and other toxins prevalent in digital debris.

HP's efforts have made it the darling of environmentalists. They say take-back laws are more effective at getting digital junk recycled than point-of-sale fees, which tax consumer electronics products to fund state-run recycling programs. They're also pleased because effective programs in the U.S. reduce the likelihood that the products will be shipped to less developed countries and disassembled under unsafe conditions.

But HP's agenda isn't entirely altruistic. Take-back laws play to the company's strategic strengths. For decades the computer maker has invested in recycling infrastructure, a move that has lowered its production costs, given it a leg up in the secondary market for equipment, and allowed it to build a customer service out of "asset management," which includes protection of data that might remain on discarded gear.

In 2005, HP recycled more than 70,000 tons of product, the equivalent of about 10% of company sales and a 15% increase from the year before. And it collected more than 2.5 million units (in excess of 25,000 tons) of hardware to be refurbished for resale or donation.

No other electronics maker has a resale business on this scale. But the others may soon wish to emulate HP.

For television makers, on the other hand, take-back laws are terrifying. Following the lead of PC makers, they're pushing consumers to replace their bulky television sets with flat-screen models, many of them primed for high- definition viewing. As a result, in the next three years, Americans are expected to throw out more than 550 million analog TV sets and computer monitors that contain thousands of tons of lead. The last thing these companies want are coast-to-coast take-back laws.

More than a dozen consumer electronics companies, including Panasonic, Sony, and Philips, have formed a group called the Manufacturers Coalition for Responsible Recycling. Backed by IBM, Canon and Apple, they have dispatched lobbyists to statehouses across the nation, pushing bills that mirror California's somewhat weak recycling program. Instead of forcing manufacturers to take back waste, they would impose a levy of up to $10 on sales of products to help states cover recycling costs without burdening equipment makers.

Environmentalists' biggest disappointment has been Apple Computer Inc. The company's progressive image, loyal customers, and retail network make it a natural for a take-back program. Yet Apple has fought such programs, and it lags behind HP and Dell Inc. in voluntary recycling.