HP has a big sustainability hit with at least $3.5 billion in realized revenue: ‘This is only a small slice of what we know to be the case’

Customers, employees, and investors are increasingly showing preference for companies that reflect Environmental, Social, and Governance (ESG) standards. Financial technology firm Broadridge estimates that investment in ESG funds could grow to as much as $30 trillion by 2030, and the SEC is considering taking climate under its purview. 

Silicon Valley giant HP just revealed how much it’s adding to the bottom line, and it’s a lot. The IT company realized $3.5 billion of commercial sales in 2021 from sustainable impact efforts, it announced Thursday. 

To determine this figure, the company says, it tracked “new sales in which sustainability criteria were a known consideration and were supported actively by HP’s Sustainability and Compliance organization and Commercial organization.”

HP’s president of personal systems Alex Cho tells Fortune that this proves sustainability and impact do not need to be at odds with profit: “At the beginning, when we first started the sustainable impact investments, it definitely felt like an either-or … but now we have so much of our business where sustainability is the innovation that drives sales, that shows you demand.”

HP’s attribution is only for the commercial sector, so it does not include small business or consumer sales, chief impact officer Ellen Jackowski points out: “We’re working on adding systems, metrics, and processes to be able to have that broader calculation, so this is only a small slice of what we know to be the case.” On Tuesday, HP reported second-quarter revenue of $16.5 billion, after reporting net revenue of $17 billion for the previous quarter.

Jackowski said the company tracks revenue attribution for impact primarily through the language in requests for proposal from prospective customers, and other steps or signs during the sales process.

“If they include questions about sustainability and they want to know about our energy efficiency and our products … or any question that can be attributed either to the environmental or the social side, we track that as a [client] company that is making decisions based on this information … We also have a significant number of these companies that ask for briefings on sustainability.”

HP reports that revenue from the sustainable aspects of its products has tripled from nearly $1 billion a year ago.

“The opportunity to become far more focused on sustainability is expanding,” Cho says. “So it encourages us to continue to do all the heavy lifting on daily decisions and big strategic decisions to continue to shift in enabling our portfolio, our services, how we manage suppliers and partners, and the type of programs we run.”

In its annual sustainability impact report, HP touted progress on product and packaging circularity, forest conservation, and net-zero goals in addition to efforts around human rights and diversity. After it set a goal of becoming the “most sustainable and just” tech company, its products and packaging were 39% circular—meaning they come from recycled and renewable materials and reused products and parts—in 2021. It has pledged to reach 75% circularity by 2030. By comparison, competitor Apple reports that 12% of material used in its products is recyclable and that “nearly 20% of all material used in Apple products in 2021 was recycled.”

HP has been publishing this report for 21 years. Jackowski points to the company’s industry-leading ambition and progress against those goals.

“We were the first company to publish our comprehensive carbon footprints in the IT industry. We’re the first company to set carbon-reduction goals comprehensively across scopes one, two, and three of our footprint,” she says. “HP has the world’s most sustainable PC portfolio; the core piece of how we know that is the number of EPEAT Gold PCs we sell, and we have more than anyone else in the industry.” As of June 2021, HP had 209 EPEAT Gold and 166 Silver products across 21 countries.

HP leaders, including CEO Enrique Lores, see sustainability as a competitive advantage for their business. “Simply put, when we innovate with purpose, we create the conditions for both business and society to thrive,” Lores wrote in the report.

“We continue to get incredible requests from our customers that are at a much more detailed level than ever before,” Jackowski says. “When you look at the regulatory environment as well, and how that’s shifting particularly across Europe and in the U.S., that again only points to more value creation coming from companies that are investing in sustainability across the board. And we’re already realizing that today.”