Power of protest felt by Dell

dellshareholdersAustin American Statesman
Dan Zehr

It only took a few thousand letters and a set of prison uniforms.

When a small band of environmental groups first set its sights on Dell Inc. in May 2002, the world’s No. 1 producer of personal computers had little interest in expanding the recycling programs for the PCs it sold.

Customers didn’t care much about recycling, Chairman Michael Dell said that summer when protesters first showed up at the company’s annual shareholder meeting in Austin.

“At first they did ignore us,” said Eleanor Whitmore, who worked for the Texas Campaign for the Environment in Austin before moving to its Arlington office. “But if you’re a company, and you’re concerned about profit, and you have 6,000 letters coming in from customers and shareholders, it really starts to add up after a while.”

At the time, Dell said the letters hadn’t made it to his attention. That changed when the Texas Campaign began directing correspondence to Dell’s home address.

The letters and the growing number of environmental groups that started joining the nationwide Computer Takeback Campaign helped ratchet up pressure on the company. The small Texas Campaign — it has a staff of about 25 has about 8,000 members enrolled this year — stepped up and took the lead.

“They targeted Dell because they felt it would be the hardest, and it’s also the biggest,” said Julie Gorte, director of research at the Calvert Group Ltd., one of the country’s biggest socially responsible investment funds. “I do think that had an effect, but it wouldn’t have if there hadn’t been some willingness to negotiate, to talk about change, on other side.”

Dell officials soon met with the representatives of the Texas Campaign and the Silicon Valley Toxics Coalition. The company began looking for ways to promote recycling. It held a public forum on computer recycling at the University of Texas.

Dell eventually hired an executive to oversee its recycling program. It launched free recycling for customers who bought new PCs, including it as part of the online sales process and training sales people on recycling options.

“What they did was give us a bit of a wake-up call,” Dell spokesman Bryant Hilton said. “Environmental responsibility wasn’t new to us, but we probably hadn’t put enough thinking into our ‘product retirement’ strategy.”

Meanwhile, shareholders such as Calvert, which holds about 967,000 Dell shares among its 27 funds worth $9.7 billion, also quietly pushed Dell to change. Gorte, though, gives most of the credit to the environmental groups’ willingness to challenge Dell and Dell’s willingness to learn and respond.

Today, the company is singled out for praise, not scorn, by the once-critical environmental groups.

“Dell, especially, has responded since a couple years ago,” said Sheila Davis, director of the Clean Computer Campaign at the Silicon Valley Toxics Coalition, a nonprofit group in San Jose, Calif., that’s supported by several thousand dues-paying members. “When we started the campaign, they were laggards.”

Although environmentalists say there is still more progress to be made, Dell is no longer the environmental groups’ primary target.

Said Whitmore, of the Texas Campaign: “It was awesome to get to go to that (July 9 shareholders) meeting and say ‘good job at Dell’ rather than protesting.”

Dell wasn’t chosen so much for its record on recycling compared with other PC companies as its position as the world’s largest computer seller. That’s where grass-roots efforts find the most publicity and can have the most impact, said Alan Siegel, chief executive of the Siegel & Gale brand consultants in New York.

“Dell is a major factor in the industry and voice in the industry,” Siegel said. “You’d expect them to have a constructive stance on this, and, if they don’t, they’ll” draw a negative reaction.

And that’s what happened as the environmental groups “made it a point to show up at every public event to let people know,” Whitmore said.

The groups knew that Dell was sensitive to its public image. After all, Dell instantly dropped its popular television pitchman, actor Ben Curtis, who played Steven in the company’s widely recognized commercials, after he was arrested with a small amount of marijuana.

Two strategies did more to change Dell’s approach than the piles of letters and the slowly developing discussions.

dellcesThe first came at the huge January 2003 Consumer Electronics Show in Las Vegas. Activists there donned prison uniforms to protest the use of inmates by Dell’s recycling vendor, Federal Prison Industries Inc., better known as Unicor. The protest made news worldwide.

The Las Vegas protest “really threw it out there,” Whitmore said.

Six months later, Dell had dropped its contract with Unicor. But there were larger issues at play.

“It was an opportunity for us to make contact with the rest of the industry, to send the message that you could be next or this is what we’re working toward,” Whitmore said.

The environmental coalition followed by targeting one of Dell’s key consumer demographics: students. The groups, led by the Boston office of Clean Water Action, garnered support from student organizations at 150 colleges in all 50 U.S. states.

“That provided a great amount of momentum for the campaign,” said Toral Jha, program director at the GrassRoots Recycling Network in Madison, Wis.

It also got the strongest public reaction from Michael Dell.

“The issue of effectively disposing of electronic waste has Dell’s full attention, and we’re working to address this challenge and meet our responsibilities,” he said in an open letter to students.

Dell followed that letter with a teleconference during which he answered questions from students and environmental groups. It was during that call that he said the company’s customers want Dell to institute a recycling program, a complete change from his first exchange with the Texas Campaign.

Although the company didn’t like all the coalition’s methods, it now regularly meets with environmentalists to discuss environmental policies. And Dell provides updates on how its programs are developing.

“I was a little surprised by some of their tactics,” Michael Dell told the Austin American-Statesman earlier this year. “We make a whole lot more progress when we sit down and have a conversation instead of someone coming in with 10,000 letters and going away.”

But there’s no denying the impact.

“Their push got us moving in the right direction,” Dell spokesman Bryant said. “Then the natural Dell momentum took over.”

Dell, along with No. 2 Hewlett- Packard Co., scored higher than other computer manufacturers on the Computer Takeback Campaign’s recycling report card this year. Both companies announced voluntary recycling programs last month.

And a few days later, Texas Campaign Director Robin Schneider attended another Dell shareholder meeting. This time, she stood up to praise the company.

But the work won’t end there, environmental leaders said. They want legislators to pass laws that make computer makers responsible for recycling old PCs, and they want the companies to more aggressively promote current programs.

Otherwise, said Davis of the Clean Computer Campaign, “the problem is just sitting there in their closet, or it’s sitting on their desk, or it’s sitting in their garage.”