Sustainability

We just got back from SRI in the Rockies where I had an opportunity to meet with several socially responsible investors and stakeholders. Dell was happy to be a sponsor and help celebrate SRI in the Rockies 20th anniversary. This is an important event that brings together a community of investors, stakeholders and academics all focused on creating a cleaner environment, more socially responsible business practices, and better working conditions for everyone.

I held a short group presentation to discuss engagement between our corporate responsibility and IR function and our stakeholders at large. Engagement with our stakeholders has always been an important part of raising our awareness at Dell. We began more than 12 years ago when I first received a call to fill out a SRI survey and we had no corporate responsibility team at the time. We went out to disparate groups throughout the organization to answer most of these questions.

Today things have changed significantly. We have a strong Corporate Responsibility team and through involvement of stakeholders like you, Dell took a leadership position in becoming the first company to offer a free consumer recycling program, the first to become operationally carbon neutral, and now we publish our list of Tier 1 suppliers. Every product we make is more energy efficient and has a bottom line effect for both our customers and Dell.

Our progess here has been more of a journey and you, the stakeholders and SRI community, have always been there steering and mentoring us as we go. During our discussion, one of our long time friends in this process has been Tim Smith from Walden Asset Management who has always counseled us on important issues. We appreciate this candid feedback. To Tim and others, we say that we appreciate your help, and look forward to your continued help and involvement.

Please take a look at our Corporate Responsibility report. We have made a lot of progress but there is always more to do. If you have feedback, please share it.

Thanks. And we look forward to next year's SRI in the Rockies conference in San Antonio.

Today Dell issued its FY09 Corporate Responsibility Report.  I sat down with Tod Arbogast, Director of Sustainability, to discuss a range of topics regarding the report including Dell's achievements in Corporate Responsibility, engagement with the SRI Community, and how this area will evolve over time.

Please don't hesitate to post your questions/comments directly on Dell Shares or call or email us directly if you have any questions regarding this post.

We will also attend SRI in the Rockies in October and hope to see you there.

 Best,

 Rob

If you can't see the video above, please click here.

Dell’s commitment to be the Greenest Technology Company on the Planet continues to make great progress.  This quarter, TBR announced that Dell topped its first-ever Corporate Sustainability Index Benchmark Report for 2009, which measures the environmental initiatives of 40 companies in the computer hardware, software, professional services and network and telecommunications sectors.  In addition, GreenFactor ranked Dell the #1 green technology brand where more than 3,500 enterprise IT decision makers were surveyed on their perception of 26 enterprise technology brands.  Both rankings provide some real world support for our efforts toward integrating environmental sustainability throughout our operations and products.

Beginning in July, we will also begin providing more transparency into Dell’s environmental metrics and for the first time will publish a list of our Tier One suppliers in this year’s Corporate Responsibility report.

Over the past year, we have participated in and held several stakeholder engagement meetings.  The first was the Electronics Goes Green Conference in Europe.  Next, there were a series of conference calls facilitated by CERES, which is a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges such as global climate change.  The calls were dedicated to specific topics around our environmental strategy, Enviro 2.0.  And lastly, a large group stakeholder meeting was held here in Round Rock where all previous attendees were invited onsite to present their views directly to Michael Dell.  From all of these meetings, we learned from our stakeholders that they wanted to have a broader and clearer understanding of our Enviro 2.0 strategy.  They also told us to strengthen our commitment by publishing environmental metrics and providing more information regarding our supply chain. 

In support of this feedback, we have since decided to publish the following metrics in the online version of our upcoming Corporate Responsibility report due out in July.  We are still in the process of deciding actual targets and will update this information online.

·        Resources:  Total Water, Total Paper, Percent FSC Paper

·        Recycle & Reuse:  Total Mfg Non-hazardous Waste, Percent Recycled and Percent Reused

·        Buildings:  LEED Score New Space

·        Future Consideration:  Hazardous Waste; Hazardous Waste Reduction; DELL Total Non-hazardous Waste, Percent Recycled and Percent Reused

The meetings we held with stakeholders at these events gave us an opportunity to really listen to what they needed to assess our commitment to the environment.   In some places we were in agreement, while in other areas we openly discussed the business challenges we face and sometimes agreed to disagree.  What was so inspiring was the fact that we all left the meetings with a better understanding of each other. 

We believe our decision to publish metrics that strengthen the five pillars of our Enviro 2.0 strategy makes sense to stakeholders, provides them with more confidence in our strategy, and increases their visibility to track our progress.

As always, we invite your feedback.

Tod Arbogast

Director, Dell Sustainable Business

Each quarter as earnings approaches, I get an opportunity to discuss our sustainability efforts at Dell.  This quarter, I'm excited about presenting our first ever Corporate Responsibility report - Listen - Commit - Deliver for fiscal year 2008.  Actually, we have had an Environmental Responsibility report since fiscal year 1998; in fiscal year 2004 we changed this report to a Sustainability report, and today we take it one evolution further as a Corporate Responsibility report. 

At Dell, our commitment to corporate responsibility is something we take seriously.  Our sustainability programs are not created in a vacuum.  Management regularly meets with investors to discuss issues Dell is working on and what new issues we should put on our agenda. As we celebrate our successes and strive to reach new goals, it is important that our stakeholder's validate that we are setting and reaching the right goals and objectives. 

With this year's report we are also pleased to announce Dell is a member of the following indexes:  Dow Jones Sustainability Indexes, FTSE4Good and several KLD Indexes, including the Domini 400 Social Index.  We believe inclusion in these indexes is evidence of external recognition of our commitment to listen and execute against objectives management has set for the company.

Michael's letter to stakeholders describes our strategic initiatives and priorities across the environment and supply chain and in corporate governance for fiscal year 2008. These include our commitments to:

• be the greenest technology company on the planet and the first computer company to achieve carbon-neutral operations by the end of 2008, which we accomplished ahead of schedule
• continue leadership with our climate strategy and global recycling programs
• partner with our customers in energy-efficiency and climate-protection initiatives
• broaden our Global Citizenship commitment
• recommit our efforts to improve sustainability governance

The following information highlights some of the commitments we have made after listening to internal and external perspectives and how we have progressed toward meeting those commitments. Not every goal can be achieved in one year. Therefore, we will continue to report some multiyear efforts going forward.

Becoming the Greenest Technology Company on the Planet

In 2007 we launched a long-term, global effort to partner with our customers to become the greenest technology company on Earth. Our Zero-Carbon Initiative maximizes the energy efficiency of our products and also includes the efforts of Dell operations, employees and suppliers. Our environmental commitment means we will also continue to take a precautionary approach to chemicals management and to reducing waste generated in our operations.

Global Citizenship Commitments

Our Global Citizenship program continues to evolve. In 2007, Dell drove more awareness about the Electronic Industry Citizenship Coalition (EICC) Code of Conduct (the Code) with our suppliers, holding two supplier education workshops. Our approach is not only to audit, but also to educate, share best practices and partner with Dell's supply base to implement the Code.

The Fight against HIV/AIDS

We joined the (PRODUCT)RED^TM campaign, an organization which raises funds to buy anti-retroviral drugs for HIV-positive individuals in Africa. This pandemic affects our customers, employees, suppliers and communities around the globe, and the increase in infection rates is of great concern.

Continued Philanthropic Commitment

Dell and the Dell Foundation contribute to our communities through grants, event sponsorships, in-kind donations and employee volunteerism. In 2007, close to 30,000 employees volunteered in their communities and participated in many Dell-sponsored events.  The financial impact of donations and in-kind work from Dell, the Dell Foundation and employee giving reached over $26 million dollars.

Building Customer Partnerships

We believe that it is critical for our customers to be engaged in reducing environmental impact from our products. By partnering with the ReGeneration, a group of people of all ages from around the globe who believe this as well, we are empowering millions of customers through conversations and communities. 

We launched ReGeneration.org, a meeting place to engage experts, advocates, visionaries, authors and customers in an effort to foster dialogue on the environment - dialogue that will lead to action and results.

The goals and achievements highlighted in this report would not be possible without the counsel and guidance of stakeholders like you. Let me conclude by thanking you for your support over the past year. 

I welcome your continued feedback on this report, and look forward to our continued partnership on this journey.

HBS Professor, Nitin Nohria once said "communication is the real work of leadership."  This has never been more true at Dell than right now.  We launched DellShares with a commitment to reach out to our institutional and retail investors to discuss items relevant to our strategy, our financial results, and progress on our initiatives.  An important part of this progress is communicating Dell's commitment to sustainability. 

As we write our 2008 annual sustainability report and reflect on our progress, we want to reach out to all stakeholders, and in particular socially responsible investors.  SRI funds now represent over 10% of the $25 trillion U.S. equity market, and this trend is only growing.  Through DellShares, we hope you will join us for a quarterly dialogue on Dell's progress on corporate governance, environment responsibility or community engagement - these are topics of interest to all of us.

Sustainability is a multi-year journey for us so it is difficult to capture everything we do in one report.  Many of our programs go back five years or more and are only now coming to fruition.  However, we believe communication is the key - through DellShares we'll address a different topic every quarter.  This quarter we'll focus on Dell's environmental responsibility efforts.

Dell started with a focus on the Environment.  In fact, our first "Sustainability Report" in 1998 was really an "Environment Report."  Because the environment is most closely tied to our core business, it is where we have made the most public commitments.  Michael pledged last year that we would be carbon neutral by the end of 2008 and that Dell would be the "Greenest Technology Company on the Planet." 

Those are big commitments, but they were not new.  We had been working towards those for years.  Our products met lead-free requirements ahead of legislation and we are currently working on removing remaining traces of non-regulated BFRs and PVCs.  We are a leader in global product recovery and recycling.  Our products deliver maximum performance per watt.  Our catalogs had over 50% post consumer recycled content and we reduced customer waste by redesigning our product packaging. 

We also publically report our Greenhouse Gas emissions, lead our industry in operational efficiency, are committed to carbon neutrality and have recently announced that our corporate offices in Round Rock, Texas will be supported by 100% renewable energy.  Dell also reports on our waste that is being recycled, reused and landfilled.  In fact, we currently recycle over 94% of our own waste from manufacturing with public a goal to avoid 99% by 2012. 

In fiscal 2008, we launched ReGeneration.org, a global community of people who are concerned about the environment.  This site provides a place to network and learn about ways to reduce your impact on the environment.  We invite you to join the ReGeneration!

The leadership for initiatives like these start from the top at Dell.  We have a Sustainability Council that includes Michael as well as representation from Finance, Legal, Procurement, Marketing, Sales, Investor Relations, HR, Engineering and other groups.  The Sustainability Councils reports progress and results to the Governance and Nominating Committee of the Board of Directors, who in turn, share their council.  This direct engagement enables progress across all areas of sustainable business practices. 

These are a small portion of achievements we have covered in our Sustainability report.  I encourage you to read our 2007 Sustainability report for more details and look for our 2008 Sustainability report coming in Q2.  We look forward to your comments, and we hope this becomes fruitful dialogue.