Environmental Stewardship - Dell Style

Dell (DELL), not known as a cleantech company, but long known for being a supply chain expert and direct marketing leader in PCs and electronic devices, is turning its attention to global warming - or at least working to provide consumers some greener product options and more consumer information.

Earlier this year, Dell announced its Plant a Tree For Me program (www.dell.com/plantatree):

LAS VEGAS, Jan. 9, 2007 — Michael Dell today announced a global carbon-neutral initiative that plants trees for customers to offset the carbon impact of electricity required to power their systems. The first of its kind program, announced at the Consumer Electronics Show here, underscores Dell’s commitment to continued broad environmental stewardship.

I had a chance to speak to one of their public relations specialists and get a little color.

The program is rolling out in stages (global roll-out is next). It launched in January to provide customers the option to buy offsets of kwh required to power computer systems. Dell is passing through all the payments a customer makes to its partners - Conservation Fund and CarbonFund.org. [Note: There are an increasing number of for profit and non profit entities like these two that will buy carbon offsets made in a variety of ways to sell to companies like Dell to "green up" products.] They are not yet attempting to calculate the emissions required to make a Dell product, just use.

I asked about assumptions in program. Basically they are offsetting three years of average power usage:

The donation amounts for ‘Plant a Tree for Me’ are based on expected average CO2 emissions from the production of electricity needed to power the systems over three years – for example, a notebook emits .42 tons and a desktop 1.26 tons. The cost of the carbon offset is $4.75 per ton. It costs approximately $6.31 per tree planted. On average a new tree will sequester 1.33 tons of CO2 over 70 years through the program.

The specific energy values are based on EPA estimates provided by the EPA and Lawrence Berkely Labs. Conversion of energy consumption values to CO2 equivalents is done per WRI/WBCSD standard protocol (world resources institute/world business council for sustainable development). The cost for the carbon offset is set by our partners at $4.75 per ton.

I asked, why sinks? Why not energy efficiency credits or some other way of reducing carbon? Planting trees to create a carbon sink sometimes gets dinged for not being "permanent" enough of a reduction, e.g. if the forest burns down, all that carbon goes straight back into the air. But they tend to be the cheapest credits available. They didn't have especially insightful answers, but low cost and ease of availability probably play into it.

The reason for doing this?

Apparently Dell feels its customers are interested in greener products. However, while Dell says it is "encouraged by the response," they would not quote me any numbers of the level of uptake achieved or the targets they were hoping for.

In another area of note, Dell is rolling out an Energy Smart Program through a wide range of product areas:

Dell made significant progress during 2006 against its goal to deliver customers the most energy-efficient products in the industry. Since announcing the strategy and customer energy resource calculators at www.dell.com/energy in September 2006, we have rolled Energy Smart settings across the latest models of our OptiPlexTM desktop line to enable up to 70 percent system power savings for the OptiPlex 7451. We also recently introduced two PowerEdge products with Energy Smart settings with energy savings of up to 25% accompanied by performance enhancements that afford up to 3X increase in performance per watt over previous generations.

The desktop figures are based on an average unit cost of energy of $0.10/KWh and assume an Annual Usage Profiles of 1 hour max performance, 7 hours office productivity, 1 hour idle and 15 hours sleep state for 264 days a year; 24 hours sleep state for 101 days. The server values assume a 24/7 duty cycle.

At the same time, Dell is making available on its website a series of online calculators for energy efficiency, along with making the "energy consumption spec" for a wide range of products.

While the devil is always in the details on the assumptions used, I find it refreshing that Dell is putting this level of effort into providing consumer information on the green and energy impacts of its products - kind of like a restaurant providing us information. I am also refreshed to see Dell say that they are passing all the cost through, and are not taking a margin. While I am very excited about the potential to profitably market carbon credits to consumers, Dell's move tells me they view greening their products as a requirement to be in the business and a benchmark for product quality that they intend to meet, not just an extra option to add more margin to existing products.

I will be even more intrigued if Dell starts to publish or commit to customer uptake numbers on its carbon credit roll-out (like it would if I were an analyst asking for targets and uptake on units sold of a new product line).

And I will be elated if Dell starts to use its strength in supply chain management to force the carbon credit suppliers into more transparency and standardization (a chronic problem in the market today).

DELL 1-yr chart