Hewlett Packard Enterprise (\u201cHPE\u201d) is an iconic global firm in the final innings of one of the largest transformations in American business history.\u00a0 The company separated from its sister printers & PCs business in November 2015 and subsequently divested $20B worth of software and BPO services assets in 2017, leaving a business that primarily sells IT hardware [1].\u00a0 This new business mix means the go-forward company is highly affected by energy prices, since its hardware products usually are operated in an \u201calways on\u201d mode for many years, making the \u201ctotal cost of ownership\u201d highly sensitive to electricity costs.\u00a0 Since coal generates roughly 40% of U.S. electricity, and is the U.S.’s top fossil-fuel source of greenhouse gases, electricity is central to the broader climate change debate [2].\u00a0 Therefore, though not traditionally thought of as a business with meaningful environmental considerations, climate change and the associated regulatory regimes that govern fossil fuel use (particularly coal) are increasingly critical topics for HPE.<\/p>\n
Management has realized that the best defense is offense in this arena.\u00a0 HPE is keenly focused on getting out ahead of climate change policy so it can avoid energy cost spikes caused by last-minute desperate regulatory measures (such as an emergency halt to coal-based electricity production) that could seriously impact both the cost structure and demand for HPE\u2019s products, and ensure a smooth transition to renewable electricity sources.\u00a0 The supply chain is at the center of this discussion since HPE\u2019s supply chain actually contributes more greenhouse gas emissions than the entirety of its operations.\u00a0 For this reason, HPE made \u201creducing global and community environmental impact\u201d one of the three key pillars for its Supply Chain Responsibility mission statement in 2015 [3].<\/p>\n
To take the lead on climate change prevention, HPE\u2019s management is taking a multi-pronged leadership approach to limit its supply chain emissions, lead the transition to renewable electricity generation sources, and catalyze action by others through adherence to global climate change mitigation regimes.\u00a0 In 2016, HPE set new aggressive emissions reduction goals by establishing a first of its kind supply-chain-specific greenhouse gas reduction goal of 15% by 2025 (compared to 2015 levels) via science-based emissions targets at each supplier [4].\u00a0 HPE is working with its suppliers to build tools for effectively reducing greenhouse gas emissions, and regularly evaluates those suppliers on progress toward emissions goals, with 90% of its suppliers currently having reduction goals in place [5].\u00a0 Additionally, the company set out a vision to source 50% of its own electricity consumption from renewable sources by 2025 as a way to signal its willingness to \u201cdo its part\u201d in the fight against climate change [6].\u00a0 In support of this goal, HPE has established 13 solar power sites globally as well as a 144M kWh wind energy facility, which helped the company generate 28% of its electricity from renewable or zero-carbon sources [7].\u00a0 Finally, HPE has publicly endorsed multiple large-scale climate change agreements including the international \u201cParis Climate Agreement\u201d as well as the \u201cBusiness Backs Low-Carbon USA pledge\u201d which pressure governments to gradually shift to a carbon-light economy [8].<\/p>\n
While HPE has set impressive goals for itself over the next decade, it has not yet adequately paired those ambitions with a shorter-term, actionable implementation roadmap.\u00a0 When any organization sets aggressive goals and doesn\u2019t provide clear tools on how<\/em> to achieve those goals, it can create mounting pressure to cut corners, so HPE needs to ensure it doesn\u2019t create a system that leads to suppliers, employees, and peers \u201cgaming\u201d the system.\u00a0 One recommendation that may help with this is setting interim annual targets to have stakeholders make gradual progress rather than being tempted to try to back-load changes.\u00a0 Similarly, given how large and decentralized HPE\u2019s supply chain is, HPE needs to play a stronger role in fostering supplier collaboration with one another via the creation of a supply chain council or strategic alliances amongst its suppliers.\u00a0 This sort of multi-party collaboration within the supply chain could unlock additional emission reduction potential via potential supplier co-location, sharing of shipment routes, or better communicate to reduce waste.\u00a0 Finally, HPE should develop and publish sets of \u201cbest practices\u201d to facilitate knowledge sharing across its supply chain so that environmentally-focused process improvements discovered in one part of the chain can ripple through the rest of the supplier base rapidly.<\/p>\n Going forward, there are two key open questions.\u00a0 First, how can the company address the climate implications of its products in the aftermarket (i.e., after it has sold the product and it is being used by a customer), given that the level of GHG emissions generated from the use of its products by customers dwarfs that of its supply chain [9]?\u00a0 Secondly, should it start to more directly engage with policymakers to guide the climate change mitigation efforts in a direction that is most productive?<\/p>\n (798 words)<\/p>\n [1] Hewlett Packard Enterprise, 2017 Securities Analyst Meeting (Palo Alto: Hewlett Packard Enterprise, 2017), p. 3, 5.<\/p>\n [2] Michael Grunwald, \u201cInside the war on coal:\u00a0 How Mike Bloomberg, red-state businesses, and a lot of midwestern lawyers are changing American energy faster than you think,\u201d Politico, May 26, 2015, https:\/\/www.politico.com\/agenda\/story\/2015\/05\/inside-war-on-coal-000002, accessed November 10, 2017.<\/p>\n [3] Hewlett Packard Enterprise, Supply chain responsibility: Our approach, p. 2, https:\/\/www.hpe.com\/h20195\/V2\/GetPDF.aspx\/c03742930.pdf, accessed November 2017.<\/p>\n [4] Hewlett Packard Enterprise, Living Progress Report: 2016 Positions, Policies, and Programs, p. 12, http:\/\/h20195.www2.hpe.com\/V2\/GetDocument.aspx?docname=a00015938ENW, accessed November 2017.<\/p>\n [5] Hewlett Packard Enterprise, Living Progress Report: 2016 Data Summary, http:\/\/h20195.www2.hpe.com\/V2\/GetPDF.aspx\/c05155022, p. 11, accessed November 2017.<\/p>\n [6] Hewlett Packard Enterprise, Living Progress Report: 2016 Positions, Policies, and Programs, p. 10.<\/p>\n [7] Hewlett Packard Enterprise, Living Progress Report: 2016 Positions, Policies, and Programs, p. 17.<\/p>\n [8] Hewlett Packard Enterprise, Living Progress Report: 2016 Positions, Policies, and Programs, p. 10.<\/p>\n [9] Hewlett Packard Enterprise, Living Progress Report: 2016 Positions, Policies, and Programs, p. 16.<\/p>\n","protected":false},"excerpt":{"rendered":" Hewlett Packard Enterprise has made reducing greenhouse gas emissions a top-3 element of the mission for its supply chain and established a first of its kind supply-chain specific emissions reduction target. This memo dives into why HPE is emerging as an improbable leader in the fight against climate change.<\/p>\n","protected":false},"author":10206,"featured_media":23481,"comment_status":"open","ping_status":"closed","template":"","categories":[26,1794,1218,3662],"class_list":["post-23480","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-clean-energy","category-climate-action-plan","category-climate-change","category-it-hardware","hck-taxonomy-organization-hewlett-packard-enterprise","hck-taxonomy-industry-information-technology","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\n