“Sustainability issues may not be at the center of most consumers’ buying decisions, but if you look at the trends it’s becoming more top-of-mind,” explained Gary Niekerk, Director of Corporate Responsibility at Intel Corporation.
We discussed the story behind Intel CEO Brian Krzanich’s recent announcement that Intel is manufacturing and shipping conflict-free microprocessors, how the company’s thinking around sustainability issues has evolved over the years, where consumers fit into this larger picture, and much more.
Niekerk has worked with of some of the world’s most recognizable technology brands, such as HP, Apple and Intel to make sure what they do to produce their products is as admirable as the products themselves. In pursuit of this goal, Gary works with external stakeholders and internal business partners to find solutions to sustainability, supply chain responsibility and human rights challenges.
Rahim Kanani: A few weeks ago, Intel CEO Brian Krzanich announced that the company would no longer be using conflict minerals from the Democratic Republic of Congo anymore in its products. How did this particular effort come about, and why now?
Gary Niekerk: It might sound cliché - but we did this because we believed it was the right thing to do. We received a letter a few years ago from a group of non-governmental organizations (NGOs) and socially responsible investors. The letter raised concerns that some of the minerals/metals used in the electronics industry (Tin, Tantalum, Tungsten and Gold) might be funding conflict and human rights atrocities in the DRC.
This set into motion an effort that had no precedent or obvious path forward. We met internally to discuss the situation. Our current CEO Brian Krzanich gave us clear direction to figure this situation out and fix it. I think to Brian the problem statement was pretty simple: “the situation in the Congo is terrible and I want Intel to be a part of the solution, not part of the problem.” There was never a discussion about impacts to materials costs or schedules, it was always just what can we do to fix it.
Unfortunately the “fix-it” part turned out to be a lot more challenging than we thought. There were no established mechanisms or systems in place to track minerals from the mine of origin throughout the supply chain. Electronics manufacturers didn’t know where their metals were coming from. We determined that the smelters processing the ore were a key choke point in the supply chain, so we set out to implement a smelter validation system with our industry partners to give us reasonable assurance that minerals processed in those smelters were not contributing to conflict in the Congo. This process took several years and is still ongoing. It required Intel staff to travel over 250,000 miles to visit more than 80 smelters in 21 countries. There is more work to be done, but our January announcement that Intel is manufacturing and shipping conflict-free microprocessors at the Consumer Electronics show was an important milestone for us and the electronic industry.
Bob Leet, Intel supplier code of conduct program manager, holds Tungsten ore chips from the Codemibu... [+]
Kanani: More broadly, how is Intel thinking about sourcing materials more sustainably, and how has that thinking evolved over the years?
Niekerk: When I started my career at HP and then Apple in late 1980’s, HP made their own screws and calculator keys and Apple manufactured Macintosh computers in the heart of Silicon Valley; those days are long gone as most electronics companies now outsource the vast majority of their manufacturing. Intel is one of the few companies in the electronics industry that continues to manufacture the majority of its own products—in its own factories.
As companies moved more of their production offshore, the expectations regarding labor, ethics and sustainability migrated to the supply chain. The challenge is in the regions where much of the manufacturing now takes place; suppliers don’t have the management systems and controls in place to adequately address labor, ethics and sustainability issues. Intel’s response to this was to set clear expectations for our suppliers around labor and environmental issues; hold them accountable; and help them build their own capabilities and skills to successfully manage the labor and environmental challenges in their business. We see this as part of a maturity curve – and it’s going to take some time for the supply chain to move from a reactive space of a “don’t get caught” mentality to one that understands the longer-term, value proposition of sustainability.
Kanani: Are consumers demanding more sustainable products, or has there been a shift in strategy at the leadership level? In other words, is this evolution consumer-driven or conscious-driven?
Niekerk: I think it’s a bit of both. If you are a customer driven company, you try not only to meet or exceed your customers’ expectations, but you try to anticipate their needs. I think sustainability fits somewhere in “anticipate our customer’s needs.” Sustainability issues may not be at the center of most consumers’ buying decisions, but if you look at the trends it’s becoming more top-of-mind. There is a reinforcing mechanism in play here: the more that companies do in sustainability, the more consumers become aware, which creates higher consumer expectations, which drives companies to do more. We experience this in real time as a business to business supplier. Our customers such as Apple, HP, Dell and many others, are asking us, as one of their suppliers, for detailed information regarding Intel’s performance related to environmental, labor and ethical practices.
Kanani: As more of these types of policies are implemented across the organization, what will the impact of these efforts be both economically and socially?
Niekerk: There is a risk component to all of this. Greater awareness and integration into the organization’s culture enables people to make more informed decisions regarding optimizing risks, and identifying potential new opportunities. I remember a situation where we wanted to drill a water-well at one of our sites outside the U.S. We had the legal right to do this and the return on investment (ROI) seemed pretty straight forward; that is until we started asking questions around the sustainability of the underling aquifer, the impact of the job losses resulting from the loss of our revenue to the local water municipality, the public’s concerns of private companies accessing ground water, and “what if” scenarios related to drops in water supply or water quality due to extended drought or climate change. The simple ROI became a lot more complicated. A more broad understanding of all of the implications of a decision will lead to better overall decision making. Our historic ROI decision models are not very adroit at identifying these more broad impacts to society.
Kanani: Finally, is doing good, good for business?
Niekerk: Treating your customers and employees with dignity and respect; understanding the long-term impacts of your actions on the environment; and seeking opportunities to align your skills, capabilities and resources to address social challenges – I believe is a great blueprint for a sustainable business.
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