Brian K. Richter’s case study illustrates how firms can use lobbying strategies to complement socially responsible activities that are cost centers and turn them into a competitive advantage.

Twenty years ago, electronic waste became an environmental priority in the US for both local and federal governments.

In 1999, Americans discarded 4.3 million tons of consumer electronics and appliances. A small part of that waste was sent to developing countries like India and China to be recycled with very primitive techniques: breaking apart old machines to extract reusable metals and plastics. As the environment and health impacts of electronic waste became more and more evident, groups of American activists started pressuring politicians to regulate e-waste management and let the manufacturers pay for their polluting products.

In 2002, Silicon Valley Toxic Group Coalition (SVTC) was one of the most influential grassroots activist groups in California, which lobbied California legislators for stricter regulation of e-waste. Many of its members were employed by Hewlett-Packard, the PC and printers’ producer. Hewlett-Packard and its main competitor, Dell, were both extremely interested in the regulatory outcome, which would have largely affected their profits.

Hewlett Packard and e-Waste Regulation is a new Stigler Center case study by Brian K. Richter, Assistant Professor in the Business, Government, and Society Department at the University of Texas at Austin’s McCombs School. The case study explores “how firms can be effective in lobbying for progressive policy changes while benefiting their own bottom lines.”

In Part A of the case study, Richter presents the lobbying dilemma for Hewlett-Packard: During the 2003-2004 legislative sessions, the California State Senate discusses Bill SB20, a stringent e-waste regulation which would force electronics manufacturers to report how many units they sell every year and how many of those are recycled. The California Integrated Waste Management Board decides on challenging targets and has the power to impose fines on manufacturers if they fail to comply.

Renee St. Denis, director of the American Product Take-Back Program for Hewlett-Packard, and David Isaacs, director of Government and Public Policy at the firm, have to decide whether to support SB20 or to fight against it. Is HP’s best strategy to join forces with its competitors to smooth the regulation? Are severe requirements a cost to avoid, or do they give the firm a competitive advantage over less-environmentally sensitive competitors like Dell?

Part B of the case study is focused on Hewlett-Packard’s challenges after the SB20 debate and its new proactive approach to lobbying. The company’s attitude toward regulation evolved after the California experience: Hewlett-Packard stopped reacting to legislators’ proposals and tried to influence regulation from the beginning of the deliberative process, advancing a proposal of its own to reduce the uncertainty on future environmental costs. How should Denis and Isaacs approach local governments in Maine and Maryland to minimize the impact of e-waste requirements?

Professor Brian K Richter’s case illustrates how firms can use lobbying strategies to complement socially responsible activities that are cost centers and turn them into a competitive advantage.

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