October 13, 2011, 4:42 PM — After years of failing to get Microsoft to adopt a formal environmental sustainability policy, shareholders seem to have won: Microsoft will now insist its hardware suppliers comply with the company's social responsibility requirements.
Hardware makers will be asked to go beyond good environmental behavior and adopt Microsoft's full code of conduct. These cover legal compliance, business ethics, labor and human rights standards, respect for intellectual property and environmental protection. Two years ago, Microsoft was booted off the Nasdaq Sustainability Index "due to inadequate disclosure of quantitative environmental metrics," according to Microsoft. For the past two shareholder meetings, activist investors have been trying to get Microsoft to take board-level action to improve its sustainability track record.
While Microsoft's new effort "is generally headed in the right direction," environmental activists question how much impact it will really have, says Casey Harrell, an environmental analyst at Greenpeace International.
Specifically, select hardware vendors in Microsoft's supply chain will be asked to file reports and submit to audits. The results will be published in Microsoft's annual Citizenship Report. Microsoft didn't name names but said this policy will affect a dozen of its key vendors and contract hardware manufacturers. Microsoft is also asking that suppliers publicize their own results.
Could Dell be one of those suppliers? One of the policies in Microsoft's code of conduct is: "If applicable, identify the chemicals or other materials being released that pose a threat to the environment and manage them appropriately to ensure their safe handling, movement, storage, use, recycling or reuse, and disposal."
Greenpeace has been after Dell for years to cut the dangerous chemicals out of its electronics manufacturing. It won a concession from Dell earlier this year, when the company agreed to use more environmentally friendly packaging, and has been working with Dell to eliminate toxic PVC plastic and brominated flame retardants (BFR) from its products. A report card on Dell's progress is due out later this year and Harrell says it now expects Dell to push out more PVC/BFR-reduced and PVC/BFR-free models.
In its press release, Microsoft credited the new policy to shareholder John C. Liu, the New York City Comptroller working on behalf of the New York City Pension Funds, with about $120 billion of assets under management.