Building a Sustainable Brand: How Managing Excess Inventory Contributes to Your ESG Goals

About 90 percent of S&P500 companies have environmental, social, and governance (ESG) programs in place, publishing reports annually to shareholders and the general public. These reports outline the progress of their initiatives in these three areas.

What do electronic components companies report on the most as part of their ESG initiatives?

For the “S,” manufacturers generally examine and evaluate their supply lines. Are materials and parts being sourced in an ethical manner, from companies that share their values? This, in turn, encourages more suppliers to report their own ESG policies. There is a rising trend of adoption of comprehensive policies across the electronics industry.

Governance — the “G” — pertains to rules internal to the organization, ensuring diversity, fair treatment of employees, and safe working conditions.=

By far the most dominant concern in the electronics world is “E,” the environmental impact, because electronics include several toxic materials that prove difficult to dispose of. See our previous post for a discussion of the various hazards that components pose to local environments.

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What Is Excess Inventory?

Common ESG initiatives for electronics companies include programs to reduce this hazardous waste, as well minimize their carbon footprint, and promote a transition to a more circular economy.

One easily adoptable idea for ESG action achieves all of the above. Electronics companies can manage slow-moving and excess inventory through responsible re-distribution and re-marketing.

Waldom Electronics offers a program to ethically handle slow-moving and excess components — while at the same time recouping value for participants.

What constitutes excess inventory? It might be components that were purchased in bulk at one point for a past product but are no longer needed for new models. These items might be obsolete in the context of your manufacturing outlook, but they are not unusable for the industry at large.

Excess parts may also result from strategic purchasing when supply chains were volatile and remain in the warehouse as extra stock now that availability and prices have returned to normal.

In the past, electronics vendors looking to decrease warehouse management costs or reclaim storage space might simply throw out old, unneeded parts. Given the toxic pollutants that can leech out of landfills, simply discarding electronics is now viewed as an irresponsible policy.

Unloading Electronic Component Stockpiles

The Green Stock Program prevents useful components from going to waste. Waldom will act as a partner to find a sustainable channel for slow-moving and excess parts and employ its extensive global distribution network to put them back on the market.

The process for manufacturers to get started is easy. Once the part numbers have been identified, Waldom handles all logistics to take the materials off the company's hands and provides compensation for the stock returned to the supply stream.

Since launching its Green Stock Program in 2010, Waldom has responsibly repurposed over 5 billion components for leading IP&E manufacturers, while remaining true to its roots of selling exclusively to distributors, and never to OEMs. This figure is expected to double to 10 billion by 2028.

Evolving Trends in ESG

Why are electronic component manufacturers and distributors striving to cultivate an image of corporate responsibility? Consumer-facing companies want to partner with B2B brands that share their values and make ethical choices. Increasingly, electronics makers are being evaluated not just on their products and services, but on their ESG practices as well.

Consumer and regulatory forces are rapidly driving corporations toward more sustainable practices. The SEC's proposed climate disclosure rules and the FTC's "Green Guides" set new standards for ESG reporting and marketing claims. On the horizon, more legislation is likely as governments enact policies aligned with climate accords.

We could argue that the more companies voluntarily adopt responsible disposal practices the less legislatures feel the need to enact stringent formal regulations, which often burden electronics makers with red tape, extra costs, and compliance complexities.

Take the First Step with Waldom

While becoming a truly sustainable brand requires a multifaceted strategy, responsibly managing your distribution excess inventory through services like Waldom's Green Stock Program offers a tangible way to demonstrate ESG commitments.

For organizations wondering how to take the first step, reevaluating disposal practices for slow-moving and excess components can be considered low-hanging fruit for ESG implementation.

Additionally, the Green Stock Program is an ESG measure that also generates revenue. Your company could be sitting on millions tied up in excess inventory. On average, manufacturers and distributors recover a substantial fraction of the original costs for their slow-moving and excess parts — value that would otherwise be lost.

Reach out to Waldom today to turn liabilities into assets while elevating your organization's sustainability profile. A greener, more circular future awaits industry leaders who get ahead of evolving ESG expectations.