HP Smelt It -- Time for the Tech Industry to Deal With It

Photographer: Tomohiro Ohsumi/Bloomberg

A worker checks a sheet of electrolytic copper in a tankhouse at the Onahama Smelting & Refining Co. plant in Iwaki City, Fukushima Prefecture, Japan. Close

A worker checks a sheet of electrolytic copper in a tankhouse at the Onahama Smelting &... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

A worker checks a sheet of electrolytic copper in a tankhouse at the Onahama Smelting & Refining Co. plant in Iwaki City, Fukushima Prefecture, Japan.

Hewlett-Packard peeled another layer off the supply-chain onion last week. Don't be surprised if its competitors are shedding a tear in private.

HP published a list of the 195 smelters that supply materials used in the production of its computers and other electronics, the first such disclosure in the 74-year-old company's history. HP said it's the only information-technology company to do so, a claim that analysts do not dispute.

The smelting stage is where some of the most abhorrent labor violations and corrupt business activity can take place. Specialty smelters take tin ore and other minerals, and use heat to extract the important metals used in electronic components. More visibility into and pressure on the smelters could promote them to favor conflict-free minerals, HP said.

A big reason that this type of information -- crucial to understanding the human suffering that results from the production of a smartphone or PC -- isn't more readily available is because it's expensive to gather, and few companies have the influence to hold their suppliers accountable. HP, the world's highest-volume PC maker, is one of the rare few.

Apple is another. It took the brunt of the public-relations hit after labor issues and corporate-campus suicides at Foxconn Technology Group, a top consumer-electronics assembler, brought the spotlight onto how gadgets are made. Apple eventually responded with external audits of its suppliers' facilities and by publishing some of the findings, along with a list of suppliers.

The Apple supplier reports set the bar, and others began following, said Anand Srinivasan, an analyst for Bloomberg Industries. HP's move -- met with little fanfare outside the decidedly unsexy ESG industry (environmental, social and corporate governance) -- could have a similar effect, he said.

"Some companies, particularly large companies with better ESG track records, are disclosing more information," Srinivasan said. "Everybody is comparing notes from an ESG perspective. So they're saying, 'HP did this, so I'm going to have to do this to match it.'"

Some smelters own mines, while others buy from outside ore miners that operate sometimes-dangerous facilities in African villages. HP's documentation doesn't go that far down the supply chain, but it's certainly a step forward. Now, it's time for the rest of the industry to start digging.

This story was first published in Bloomberg's Global Tech Today newsletter. To get an early jump on the top tech news from around the world, sign up for the free weekday report.

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