Dell Aims to Go Carbon Neutral

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But since Dell can't eliminate all its emissions through energy savings, efficiency, and renewable energy, the company plans to buy carbon offsets to achieve "neutrality." Carbon offsets—the practice of buying and selling rights to emit C02—constitute a market worth about $100 million in the U.S. But in some cases, the impact of offset purchases can be negligible (BusinessWeek, 3/26/07). "We're working with a team of environmental organizations as we shape this offset strategy to ensure that the offsets are permanent and meaningful," says Parker.

Notably, the initiative's cost has been small: So far, Dell has spent about $5 million, or less than one-tenth of 1%, of its fiscal year 2006 sales of $56 billion. Parker says the money spent so far will ultimately produce savings. "In some cases, the return on investment is a year and a half, and in some cases it's longer—like four to five years," he says.

Outsourcing Complicates The Picture

The details were also thin, however, as to how Dell plans to push the companies that actually manufacture its computers to meet the new goal. Dell says it will require major suppliers to report their emissions, but ultimately, the company has a lot more control over how much power it consumes in its own offices and facilities.

Like every company in the computer business, Dell outsources a lot of production to foreign manufacturers. Jeffery Wu, an industry analyst with iSuppli, estimates that more than half of all Dell notebook PCs are manufactured by Quanta Computer, while another third come from Compal Electronics. Dell's desktop PCs and servers are partially built in Asia, then shipped to Dell facilities in the U.S. and Ireland, where they're assembled, configured, and shipped to customers.

All that outsourcing makes for a vastly more complex picture of Dell's carbon impact, and all the more difficult to assess, Gillenwater says. "It's a matter of where you draw the boundaries. Everyone wants to say they're carbon neutral, but then there's the question of what that means. There's no clear definition. There's the problem with measuring the carbon footprint, and the wider out you draw the boundaries, the more complex the picture gets, and the less control a company like Dell has with the information it gets from its suppliers."

Goal: carbon neutral

Dell's logistics suppliers—mainly delivery companies—will be required to use biodiesel fuels on their vehicles. In particular, suppliers sending parts to Dell's campus in Penang, Malaysia, will have the emissions of their vehicles measured. Those that don’t meet Dell's demands, Parker said, will have 10 days to fix the vehicle or risk being banned from Dell’s campus.

In general, computers have a huge environmental impact (BusinessWeek, 9/10/07) from manufacturing, to the energy they consume while in use, to disposal, and recycling. Dell is one of many computer makers, including HP and Apple (AAPL), that have come under fire from activists and others who want the companies to lessen their overall impact on the environment. Lately, Dell has tried to portray itself as being greener than others in its industry, launching efforts like "Plant a Tree for Me," which encourages customers buying Dell products to offset their carbon impact by adding a few dollars to their purchase for charities that plant trees.

Dell is just the latest big name in the technology sector to brand itself with the "carbon neutral" billing. Google (GOOG) and Yahoo! (YHOO) have both promised to make their operations, which consist primarily of huge installations of power-hungry computer servers, carbon neutral by the end of 2007.

Hesseldahl is a reporter for BusinessWeek.com.