Why are some issues greyed out? Environment
- GHG Emissions
- Air Quality
- Energy Management
- Water & Wastewater Management
- Waste & Hazardous Materials Management
- Ecological Impacts
Social Capital
- Human Rights & Community Relations
- Customer Privacy
- Data Security
The category addresses management of risks related to collection, retention, and use of sensitive, confidential, and/or proprietary customer or user data. It includes social issues that may arise from incidents such as data breaches in which personally identifiable information (PII) and other user or customer data may be exposed. It addresses a company’s strategy, policies, and practices related to IT infrastructure, staff training, record keeping, cooperation with law enforcement, and other mechanisms used to ensure security of customer or user data.
- Access & Affordability
- Product Quality & Safety
- Customer Welfare
- Selling Practices & Product Labeling
Human Capital
- Labor Practices
- Employee Health & Safety
- Employee Engagement, Diversity & Inclusion
The category addresses a company’s ability to ensure that its culture and hiring and promotion practices embrace the building of a diverse and inclusive workforce that reflects the makeup of local talent pools and its customer base. It addresses the issues of discriminatory practices on the bases of race, gender, ethnicity, religion, sexual orientation, and other factors.
Business Model & Innovation
- Product Design & Lifecycle Management
The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
- Business Model Resilience
- Supply Chain Management
The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labor practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
- Materials Sourcing & Efficiency
The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
(Industry agnostic)
Disclosure Topics (Industry specific) for:
Hardware
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Data Security
Product Security
The hardware products and related software offered by companies in the Hardware industry can have vulnerabilities that expose consumers to data security threats. Therefore, hardware manufacturers play an important role in ensuring security of user data. Such vulnerabilities may occur at any stage of a product lifecycle, including product design, the manufacturing supply chain, product distribution, and the product’s use-phase. Companies in the industry that are unable to establish a robust approach to identifying vulnerabilities may risk exposing consumer data to security threats and potentially eroding the trust of their customer base. The increasing prevalence of cybersecurity threats creates both risks and opportunities for the Hardware industry, as effective product security can be a source of competitive advantage, thus helping companies to increase their sales and expand market share. Additionally, concerns about data security and related government actions can also serve as revenue-generating opportunities for this industry through opportunities for federal contracts and the provision of security products.
Employee Engagement, Diversity & Inclusion
Employee Diversity & Inclusion
Despite efforts by the industry to improve workforce diversity and inclusion, hardware company workforces are characterized by relatively low representation from women and minority groups. Greater workforce diversity is important for innovation as it helps companies understand the needs of a diverse and global customer base, which results in the ability to design desirable products and communicate with customers effectively. Companies that are unable to attract and retain diverse talent may risk losing market share to competitors that successfully employ a staff capable of recognizing the needs of diverse populations and capturing demand from segments that have traditionally been overlooked. Furthermore, companies seen as being more representative of their diverse, global customer base are likely to see increased brand loyalty which can also be a source of competitive advantage. Companies that are successful in recruiting and retaining a diverse and inclusive workforce can also avoid high rates of turnover, resulting in cost savings.
Product Design & Lifecycle Management
Product Lifecycle Management
Companies in the Hardware industry face increasing challenges associated with environmental and social externalities attributed to product manufacturing, transport, use, and disposal. Rapid obsolescence of hardware products exacerbates the externalities. Companies are therefore designing more products with the entire lifecycle in mind. Specific considerations include energy efficiency of products, hazardous material inputs, and designing for and facilitating safe end-of-life disposal and recycling. Companies that prioritize designing and manufacturing products with improved environmental and social impacts can avoid costs associated with externalities, and are more likely to grow consumer demand and market share, while eliminating potentially harmful materials. Furthermore, companies that are able to minimize environmental and social externalities of products will be less exposed to increasing regulation and costs, such as those related to extended producer responsibility.
Supply Chain Management
Supply Chain Management
Companies in the Hardware industry commonly have relatively narrow profit margins and remain competitive by relying on complex, global supply chains, and outsourced production to electronics manufacturing services (EMS) companies. Because companies in the industry typically contract with suppliers in countries with the lowest direct costs, the industry’s products are often manufactured in countries that have limited regulations or enforcement protecting workers. Companies in the industry have limited direct control over social and environmental standards in production, making improving performance on the issue difficult to manage. This dynamic can heighten a company’s exposure to reputational risks and impacts on short- and long-term costs and sales. Such effects can arise from increasing regulation and its enforcement in response to high-profile safety or labor incidents, or through a shift in demand away from companies associated with such incidents. Companies that actively manage the impacts generated by the supply chain through the use of standards, monitoring, and engagement with suppliers may be better positioned to protect shareholder value over the long term.
Materials Sourcing & Efficiency
Materials Sourcing
Companies in the Hardware industry rely on numerous critical materials as key inputs for finished products. Many of these inputs have few or no available substitutes and are often sourced from deposits concentrated in only a few countries, many of which are subject to geopolitical uncertainty. Other sustainability impacts related to climate change, land use, resource scarcity, and conflict in regions where the industry’s supply chain operations are also increasingly shaping the industry’s ability to source materials. Additionally, increased competition for these materials due to growing global demand from other sectors can result in price increases and supply risks. The ability of companies to manage potential material shortages, supply disruptions, price volatility, and reputational risks is made more difficult by the fact that they commonly source materials from supply chains that often lack transparency. Failure to effectively manage this issue can lead to an inability to access necessary materials, reduced margins, constrained revenue growth, and/or higher costs or capital.
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