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  • GHG Emissions
  • Air Quality
  • Energy Management
  • Water & Wastewater Management
  • Waste & Hazardous Materials Management
  • Ecological Impacts

Business Model & Innovation

Leadership & Governance

  • Business Ethics
  • Competitive Behavior
  • Management of the Legal & Regulatory Environment
  • Critical Incident Risk Management
  • Systemic Risk Management
General Issue Category
(Industry agnostic)

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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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