Hewlett Packard Environmental

Philanthropy MetricsPrepared for Deanna Ward

By Jason Kibbey and Pedro Vieira

Preparers biographies

Education•MBA student, (Haas School of Business, 2008), B.A./B.S. Environmental Economics and Policy and Religious Studies (UC Berkeley, 2001)Professional•Defense of Place (non-profit land conservation)•Union of Concerned Scientists (vehicle emissions standards and climate change). •Resource Renewal Institute (environmental planning in the US)•Bain & Company (turnaround and product strategies for technology companies)•Additional: started own IT consulting company; worked abroad for a Spanish technology firm, managed cooperative housing in Berkeley.

Education•Ph.D. student (UC Berkeley, 2007), M.S. Project Management (UC Berkeley), B.S. Environmental Engineering (TU Lisbon)Professional•UC Berkeley/Moore Foundation (Chinese construction industry)•Portuguese Ministry of the Environment (nationwide city green rehab project)•Technical University of Lisbon (lectured on Environmental Management Systems and Environmental Policy)•IST-Technical University of Lisbon (managed chancellor's advisory office)

Jason Kibbey

Pedro Vieira

Project Goals•Develop screening criteria for new investments•Setup an assessment framework

- consider business objectives- consider all 3 Philanthropy areas- corporate citizenship priorities- scalable

•Test new framework/metrics - signature projects already underway (Scholastic and

WWF)•Recommendations

- strategic - new investment areas

Operating assumptions

• Successful environmental philanthropy often has a direct environmental impact and an indirect human impact

• HP’s strengths are as a technology company, the environmental initiatives that it funds should lean towards technological solutions to environmental problems instead of traditional environmental areas such as conservation or wildlife protection

• Many people we spoke with at HP described a critical need for philanthropy to demonstrate value to the business units

• As Haas students with environmental backgrounds, we want to see meaningful environmental impact with a strong business case

Environmental responsibility mandatory for IT manufacturers but philanthropy can differentiate

Energy efficiency in operation

and facilities

Product lifecycle / take-back

Not applicable

Product energy

efficiencies

Environmental

Philanthropy

Aligned philanthropy’s “virtuous cycle”

Selecting projects with social and environmental

returns and business alignment

Projects demonstrate social, environmental, and business returns

Expanded giving for aligned

investments in next investment cycle

Increasing social, environmental and business returns

Adapted from The Competitive Advantage of Corporate PhilanthropyBy Michael Porter and Mark KramerHarvard Business Review December 2002

Aligning philanthropy and business interests can lead to greatest social and

environmental returns

Perfect alignment will likely only be reached through multiple investments

Partnerships

•Enhance or bring out the richness of existing partnerships?

•Create synergies with other HP units

•Replicate existing efforts?

Other philanthrop

y

•Are there synergies or overlap with:

•Education?

•Economic development?

•Is the narrative still compelling if there are overlaps?

External pressure

•Customers?

•Government?

•Community?

•Suppliers?

•Broader impact than just share price?

•Mission

•History

•Profitability

•Address the needs of the business units?

Businessgoals

Screening funnel

Address pending or future regulations?

Compelling narrative?

Enhance HP’s brand?

Showcase HP products and technology

Harmony with existing initiativesEnvironmental impact without controversy

Alignment

Resources, longevity,scalability

NoticeableMust Have

Should have

Nice to have

Metrics need to be internal and external

Company

•Alignment with business goals(revenues v. philanthropy invest.)

•Alignment with other philanthropy areas(common projects; matching funds)

•Impact on sales(Revenue, Profits)

•Suppliers(# involved; # products)

Employees

•Involvement (# employees volunteering)

•Satisfaction(productivity)

•Retention(churn, turnaround)

•New recruits(#; quality; diversity)

Community

•Scale of influence(community, country, world)

•Impact on Community(# grants; # of grantees; $ awards)

• NGOs(# involved; size; members)

Customers

•Customer base(# customers; # of new customers)

Shareholders

•Impact on brand(brand strength)

•Impact on stock (stock value)

•Impact on reputation(strength)

Environment

•Impact on environment (GHGs, energy, water, metals,…)

Metrics:

Employees•Involvement•Satisfaction•Retention•New recruits

Community•Scale of influence •Impact on Community•NGOs

Customers•Customer base

Shareholders•Impact on brand•Impact on stock •Impact on reputation

Environment•Impact on environment

Company•Alignment with business goals•Alignment with other philanthropy areas•Impact on sales•Suppliers

Low High Low High Scholastic WWF

Recommended area of investment: Data center efficiency

Problem: Data centers require massive amounts of electricity to power servers, storage, and cooling.

Solution: Technologies such as load shifting and more efficient servers can dramatically reduce electricity consumption.

HP Advantage: HP labs currently has technology to govern processing loads that can reduce electricity use by 50% or more. HP’s new servers offer significant efficiency improvements.

Environmental philanthropy response: Work with existing industry partners and groups such as the Green Grid to raise awareness about needs for data center efficiencies and demonstrate new technologies that create significant energy use reductions.

Recommended area of investment: Reducing standby power consumption

Problem: standby power is estimated to account for 3-10% of home and office electricity use and contributes to 1% of global CO2 emissions. Standby power could be regulated in the future.

Solution: Improved standby technology can dramatically reduce worldwide electricity usage.

HP Advantage: HP is currently working with NGO partners to address the problem through more efficient products and has publicly demonstrated it ability to reduce standby power in its own operations.

Environmental philanthropy response: Invest in public research to reduce standby power already underway at Lawrence Berkeley Laboratory in addition to investing in advocacy efforts to create consumer awareness.

Investments with certain advocacy organizations requires “donation governance”

Advocacy Industry partnershi

psAdvocacy focused NGOs will usually not accept funding directly from companies that might benefit from their work.

To prevent a potential conflict of interest, gifts will either need to:• Pass through an independent 501(C)3 foundationor• Fund initiatives with multiple parties where the NGO may be a project manager but not receive funding directly from the company

Strategic recommendations

•Broader company understanding environmental philanthropy as business opportunity and competitive advantage

•Demonstrating value of aligned investments in environmental philanthropy to business units

• HP must publicize its environmental philanthropy to stakeholders

•Alignment of business and philanthropy goals requires formal frameworks and open communication channels

With proper support, environmental philanthropy will contribute to bottom

line and distinguish HP’s environmental efforts from competition

Value of project to me and HPValue to HP (we hope!)

• Introducing the value of environmental investments that don’t fall within HP’s typical grantmaking focus on individual (personal) achievement

• Introducing environmental philanthropy to the possibility of funding advocacy work with little controversy risk

• Expanding the discussion on how environmental philanthropy can leverage and expand HP’s strengths and current initiatives to create meaningful environmental impact

Value to Pedro and Jason

• Deepened our understanding of the potential for aligned philanthropy without compromising integrity or social / environmental impact

• Made us appreciate that there are still significant barriers for aligned philanthropy to be executed smoothly in the environmental arena

• Helped us understand the importance of open communication across different areas of the company and how difficult it can be even when done properly

Additional Slides

Screening funnel: data centers and standby power

Address pending or future regulations? Low

Compelling narrative? Moderate

Enhance HP’s brand?Moderate

Showcase HP products and techHigh

Harmony with existing initiatives

LowEnvironmental impact without controversy

High

AlignmentHigh

Resources, longevity,ScalabilityModerateNoticeableModerate

Data CentersAddress pending or future regulations?

ModerateCompelling narrative?

High

Enhance HP’s brand?High

Showcase HP products and techHigh

Harmony with existing initiatives

HighEnvironmental impact without controversy

High

AlignmentHigh

Resources, longevity,Scalability

HighNoticeable

High

Standby Power

Good deeds don’t speak for themselves

With declining totals, investments must be visible and resonate with

stakeholders

• As HP Philanthropy no longer leads as a percentage of income, “the good deeds speak for themselves” mode of company founders creates significant perception risks

• Reduction in total giving can be mitigated with strategic investments that have significant social or environmental impact and are recognized by stakeholders

2004 Giving as a % of Operating Income

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Walt-Disney Microsoft Target Intel IBM HP

%