Human Capital

  • Labor Practices
  • Employee Health & Safety
  • Employee Engagement, Diversity & Inclusion

Business Model & Innovation

General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Electrical & Electronic Equipment

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Energy Management

Energy Management

Electrical and electronic equipment companies may use significant amounts of energy. Purchased electricity represents the largest share of energy expenditures in the industry, followed by purchased fuels. The type of energy used, magnitude of consumption, and energy management strategies depends on the type of products manufactured. A company’s energy mix, including the use of electricity generated on-site, grid-sourced electricity, and the use of alternative energy, can play an important role in lowering the cost and increasing the reliability of energy supply, and ultimately affect the company’s cost structure and exposure to regulatory shifts.

Waste & Hazardous Materials Management

Hazardous Waste Management

Electrical and electronic equipment manufacturing may generate hazardous waste, including but not limited to heavy metals and wastewater treatment sludge. Companies face regulatory and operational challenges in managing waste, as some wastes are subject to regulations pertaining to their transport, treatment, storage, and disposal. Waste management strategies include reduced generation, effective treatment and disposal, and recycling and recovery, where possible. Such activities, while requiring initial investment or operating costs, can lower companies’ long-term cost structure and mitigate the risk of remediation liabilities or regulatory penalties.

Product Quality & Safety

Product Safety

The proper and safe functioning of electrical and electronic equipment is an important issue because of potential risks to customers, including electrical fires. In the event of a product safety incident, companies could be exposed to product liability claims, revenue loss due to damaged reputation, redesign costs, recalls, litigation, or fines. Proper safety procedures, tests, and protocols for products can help companies reduce the risk of such adverse impacts and strengthen a company’s brand.

Product Design & Lifecycle Management

Product Lifecycle Management

Electrical and electronic equipment companies face increasing challenges and opportunities associated with environmental and social externalities that stem from the use of their products. Regulations are incentivizing companies to reduce or eliminate the use of harmful chemicals in their products. To a lesser extent, regulations and customers are driving companies to lower the environmental footprint of their products in the use phase, primarily in terms of energy intensity. Electrical and electronic equipment companies that develop cost-effective products and solutions for energy efficiency can benefit from increased revenues and market share, stronger competitive positioning, and enhanced brand value. Similarly, products with reduced chemical safety concerns can provide opportunities for increased market share.

Materials Sourcing & Efficiency

Materials Sourcing

Electrical and electronic equipment companies are exposed to supply chain risks when critical materials are used in products. Companies in the industry manufacture products using critical materials with few or no available substitutes, many of which are sourced from deposits concentrated in only a few countries which are subject to geopolitical uncertainty. Companies in this industry also face competition due to increasing global demand for these materials from other sectors, which can result in price increases and supply risks. Companies that are able to limit the use of critical materials through use of alternatives, as well as secure their supply, can mitigate the potential for financial impacts stemming from supply disruptions and volatile input prices.

Business Ethics

Business Ethics

Electrical and electronic equipment manufacturers may be vulnerable to regulatory scrutiny of business ethics because of their operations in regions with weaker government enforcement of business ethics laws. Companies in this industry have been found in violation of corruption laws such as the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act, as well as anti-competitive behavior. Unethical practices may jeopardize future revenue growth due to reputational risks and can result in significant legal costs and a higher risk profile. As such, strong governance practices can mitigate the risk of violations of business ethics laws and resulting regulatory penalties or brand-value impacts.

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