As with the majority of the more than 50 industry sectors examined by Innovest, “sustainability leaders” in the computers and peripherals sector substantially out-performed their industry competitors over a three-year period. Companies with above-average Innovest Intangible Value
Assessment ratings, including the three leaders, HP, IBM and Dell, outperformed companies with below-average ratings as a group by approximately 19% at the end of three years from April 2000 to June 2003. Top-performing stocks also posted superior results in other business performance and market valuation ratios, including:

Operating Profit Margin, leaders outperformed laggards by 4.3% versus 1.5%

Return on Equity, 14.6% versus 3.6%

Return on Assets, 3.6% versus 1.6%

Total Return – 1 Year, 26.7%

Total Return – 2 Year, 35.6%
While most players in the tech sector continue to languish in a soft global economy, leading firms have begun to address a host of intangible issues that are expected to define the sector’s competitive landscape over the coming years. Chief among these issues are bridging the digital divide — by providing digital technologies to underserved populations — and a new global legislative trend to make producers financially responsible for the takeback and recycling of electronic products. Those firms who have received higher Innovest ratings are those best positioned to respond to these issues, with their investors poised to reap the benefits.

Driven by increasing global competition, leading companies are pursuing sustainability best practice in order to leverage new sources of value for stockholders. They are consciously developing innovative products that meet new regulatory and consumer demands, building valuable strategic partnerships with governments and global organizations, and increasing digital access in India, China, South America and other regions to foster future demand for digital technologies. The report identifies those companies that excel in several of these areas and are vigorously integrating these strategies into their business plans.

In total, 18 global competitors in the sector were analyzed. Companies from the U.S., Europe, and Japan were benchmarked based on their strategies to improve performance, reduce risk, and to develop new business opportunities. According to Devin Crago, the study’s primary author, leading computer and peripheral companies are coming to see performance on sustainability issues as fundamental factors in determining long-term competitiveness and profitability. “Strategic capability is critical,” said Crago. “With major issues on the horizon like European extended producer responsibility legislation, health and safety lawsuits and the digital divide it’s apparent that firms implementing proactive strategies today will be better positioned to outperform their competitors going forward.”