Global Sustainability Eastman Kodak Company 2008 Annual Report Table of Contents 2 A Letter from Management 3 Report Scope 4 Company Profile 8 Sustainability Framework 12 Performance Data 17 Governance 21 Compliance 22 Privacy 23 Environmental Responsibility 35 Safety and Health 37 Supplier Responsibility 39 Our Employees 42 Our Communities A Letter from Management A Letter from Management Kodak has transformed itself into a new digitally oriented company during the past few years, with some 70% (year-end 2008 percentage was 68%) of our revenues now derived from digital businesses. As we’ve said before, digital changes everything – including our approach to sustainability. For more than ten years, we have set aggressive, quantitative goals as a key measure of our progress. This year, we’ve published a new set of Sustainability Goals, expanding expectations for products, suppliers and employees as part of our digital transformation. Energy usage and greenhouse gas (GHG) emissions continue to be key focus areas. We far surpassed our goal to achieve 20% reductions in these areas (since 2002) by posting 41% declines. Thus, in our new Sustainability Goals, we have raised the target to 50% by 2012. As you can see, while digital changes many things, it does not change what matters most – our commitment to sustainability. That commitment is an unwavering constant in our strategy. We recognize our role in helping society prosper by driving business growth in a responsible manner that creates value for all stakeholders. Even as we’ve grown our digitally oriented products and services, we’ve kept our sustainability focus in our traditional imaging business, too. A key milestone was achieved with the recycling of 1.5 billion single use cameras over the two decades of this product’s life. This outstanding example of recycling and reuse serves as a beacon to our digital businesses. We are now looking at ways in which such a “cradle to cradle” approach to product stewardship can be achieved, with materials and components being reused in ways not envisioned in today’s world, in which e-waste is a major and growing challenge for all companies. We’re very pleased that our performance continues to be recognized by a number of leading worldwide organizations in the areas of ethics, corporate citizenship, diversity and environmental stewardship. We thank Kodak people worldwide for making this recognition possible through their sustained focus and accountability. All of us will continue working to ensure that we build on this record of progress. Antonio M. Perez Chairman and Chief Executive Officer David M. Kiser Vice President and Director Health, Safety, Environment and Sustainability 2 Report Scope Report Scope Kodak is pleased to present our third annual Global Sustainability Report as well as our 19th public report to include health, safety and environmental performance. The Global Reporting Initiative Sustainability Reporting Guidelines (G3) provided the framework for this report. The report content was selected and prioritized to communicate the approach, specific actions and progress towards implementing Kodak’s Corporate Responsibility Principles—its guide for strategic action on sustainability. Information in the report reflects the worldwide business activities of Kodak and its subsidiaries during the calendar year 2008. Every attempt has been made to report performance data on a worldwide basis. Where this is not possible, exceptions are noted. Greenhouse gas emission and energy data for the years up to and including 2007 have been verified by a third party auditor and certified by the California Climate Action Registry. The remaining governance, environmental, health, safety, diversity and philanthropy data are internally verified. Financial data is from the Eastman Kodak Company 2008 Annual Report on Form 10-K available at www.kodak.com/go/annual report. Since our last report was released in May 2008, we have continued to align our report more closely with the external standards of the Global Reporting Initiative. This 2008 Global Sustainability Report contains expanded standard disclosures and performance data. As constructed, it reflects the breadth of Kodak’s performance, its successes and its challenges in the framework of our overarching sustainability and business strategy. You are welcome to provide comments on our progress to kes@kodak.com. 3 Company Profile Company Profile As the world’s foremost imaging innovator, Kodak helps consumers, businesses, and creative professionals unleash the power of pictures and printing to enrich their lives. Kodak’s portfolio is broad, including image capture and output devices, consumables and systems, and solutions for consumer, business and commercial printing applications. Kodak was founded by George Eastman in 1880 and incorporated in 1901 in the State of New Jersey. Kodak’s common stock is traded on the New York Stock Exchange under the symbol “EK.” There were 55,759 shareholders of record of common stock as of January 31, 2009. Kodak is headquartered in Rochester, New York. We are a global company with worldwide sales and operations including manufacturing operations in Brazil, Bulgaria, Canada, China, Germany, India, Israel, Japan, Mexico, Russia, the United Kingdom and the United States. At the end of 2008, the Company employed the full time equivalent of approximately 24,400 people. The actual number of employees may be greater because some individuals work part time. Non-U.S. Employees 48% U.S. Employees 52% 4 Company Profile Company Operating Locations Norway Corporate Headquarters Rochester, NY Canada United States Bermuda Sweden Finland Denmark Netherlands Poland England Belgium Luxembourg Germany France Austria Switzerland Hungary Romania Portugal Italy Bulgaria Turkey Spain Greece Israel Russia Japan China Taiwan Hong Kong Thailand Phillipines Dubai India Mexico Barbados Venezuela Colombia Korea Malaysia Singapore Peru Brazil Chile Uruguay Argentina Australia New Zealand 5 Company Profile Kodak Products and Services 2008 Net Sales from Continuing Operations Significant Products Reportable Segment and/or Services Markets/Sectors Served Consumer Digital Imaging Digital cameras and accessories; Consumers; Retail photofinishers; (CDG) Snapshot printers and media; Consumer Mobile, automotive, industrial and inkjet printers and media; Digital picture professional imaging sectors (in billions) $3.1 frames; Retail printing kiosks and related media; On-line imaging services; CCD and CMOs sensors Traditional photographic products and Consumers; Professionals, Film, Photofinishing and services used to create motion pictures cinematographers and other Entertainment Group and for consumer, professional and entertainment imaging customers; (FPEG) industrial imaging applications; Single $3.0 use cameras Prepress equipment and consumables; Creative, in-plant, data center, Workflow software for commercial commercial printing, packaging, Graphic Communications printing; Electrophotographic newspaper and digital service Group (GCG) equipment and consumables; Inkjet bureau market sectors $3.3 printing systems; Document scanners; Micrographic peripherals and media; Maintenance and professional services for printing products Net Sales By Region, 2008 Canada and Latin America 10% Net Sales By Segment, 2008 United States 41% GCG = $3.3B Asia Pacific 16% Europe, Middle East and Africa 33% Other = $7M CDG = $3.1B FPEG = $3.0B Refer to Kodak’s 2008 Annual Report at www.kodak.com/go/annualreport for additional financial detail. 6 “Kodak has completed what is one of the most remarkable turnarounds in corporate history: transitioning primarily from a Company Profile film company to one positioned to compete in the digital world. Throughout this time one unwavering constant has been our commitment to operate as a responsible corporate citizen. Going forward we are poised to achieve sustainable, profitable growth while continuing to set and report on challenging goals for environmental and social stewardship.” —Antonio Perez 2008 Significant Changes As the Company entered the second half of 2008, the global recession broadened dramatically and began to negatively impact all of its businesses. As a result, the Company has decided to focus its investments on businesses at the core of its strategy, which are Consumer Inkjet, Commercial Inkjet and Enterprise workflow. The Company will make pragmatic decisions, rationalize its product portfolio, and focus its resources on those core opportunities. The Company will continue to build upon the stable, cash generating businesses and reposition other digital business including Kodak Gallery, OLED, Imaging Sensors and Electrophotographic Printing to generate maximum value. Refer to Kodak’s 2008 Annual Report and Notice of 2009 Annual Meeting and Proxy Statement at www.kodak.com/go/annualreport for additional detail including sectors served and types of customers/beneficiaries by reportable segment (pg. 5), risk factors (pg. 10), properties and countries with major operations (pg. 15), legal proceedings (pg. 15), subsidiaries (pg. 116) and beneficial ownership (27, Proxy Statement). 7 Sustainability Framework Sustainability Framework Kodak is committed to sustainability worldwide. We recognize that we have a role to play in helping society prosper by driving business growth in a responsible manner that creates value for all stakeholders. It’s the way George Eastman set up his fledgling company in the 1880’s, and it’s our legacy today. The results of such progressive thinking of the 1880’s is seen in our current sustainability framework, consisting of the Kodak Values, the Corporate Responsibility Principles and our public and voluntary goals. Carl W. Ackerman, a biographer, writing in 1932, said: “Mr. Eastman was a giant in his day. The social philosophy, which he practiced in building his company, was not only far in advance of the thinking during his lifetime, but it will be years before it is generally recognized and accepted.” At Kodak, we conduct ourselves according to six corporate values. These values define who we are, and how we act toward each other, our customers, our shareholders and all our publics. Beyond his inventive genius, Eastman blended human and democratic qualities, with remarkable foresight, into the building of his business. Among the many important philanthropic interests of Eastman were worker’s rights, institutes of higher learning, scientific research, dental technology, music appreciation, cinema, international business, African-American education, and women’s education and employment. • Uncompromising Integrity The Kodak Values • Respect for the Dignity of the Individual • Trust • Credibility • Continuous Improvement and Personal Renewal • Recognition and Celebration 8 Sustainability Framework Corporate Responsibility Principles We believe that doing well by shareholders also means doing right by customers, employees, neighbors, and suppliers. Our Corporate Responsibility Principles serve as our guide for strategic action on sustainability. Corporate Responsibility Principles 1. Kodak conducts its business activities to high ethical standards. 2. Kodak respects internationally accepted legal principles, and obeys the laws of countries in which it does business. 3. Kodak is committed to sound corporate governance. In this regard, the Company’s diverse, independent Board of Directors has adopted publicly available governance principles. 4. Kodak conducts its business activities in an environmentally responsible manner. 5. Kodak respects the privacy rights of its employees, customers, and suppliers. 6. Kodak promotes a work environment of equal opportunity for all employees and does not engage in unlawful discrimination. The Company’s terms of employment are voluntary and the Company prohibits the use of child or forced labor of any kind. 7. Kodak is committed to employing a diverse work force, and to building and maintaining an inclusive work environment. 8. Kodak maintains a safe and healthy work environment. 9. Kodak recognizes the right of our employees to join associations of their own choosing or to refrain from joining, and the right to collective bargaining unless otherwise prohibited by law. 10. Kodak expects that suppliers and distributors will comply with applicable laws and generally accepted standards relating to business ethics, labor and environmental protection. 11. Kodak respects the economic development priorities of the developing countries in which it does business. 12. Kodak maintains a philanthropic program that reflects its global corporate goals in community development, business opportunity and quality of life. 9 Sustainability Framework Public and Voluntary Goals Kodak has had targeted improvement programs in its manufacturing operations for many years. However, in 1998, we made a shift from simply reporting the end results of internal initiatives to committing publicly to a set of multi-year performance goals and sharing progress on an ongoing basis. The first set of public goals set an ambitious 5-year program to voluntarily reduce emissions, conserve natural resources and improve the system by which Kodak managed its environmental responsibilities. The next set of goals established improvement targets for many existing indicators and included new elements to address employee health and safety. Established in 2006, the third set of goals, the Responsible Growth Goals, reflected our changing business model and evolution to a digital imaging company. The Goals acknowledged a greater supplier role, encompassed an ever-broadening portfolio of products and integrated strategic social aspects. The end of 2008 marked the conclusion of the Responsible Growth Goals. Progress has been made in all areas, and full results are reported under Performance Data. These goals have now been superseded by the Sustainability Goals. The Sustainability Goals again broaden Kodak’s focus by boosting expectations for products, suppliers and employees. For example, new focus areas include an emphasis on enabling employees to integrate sustainability principles into their everyday work, a target for increasing the number of ENERGY STAR qualified products, and a renewed initiative to measure and further reduce Kodak’s water usage worldwide. In addition to the pursuit of the Sustainability Goals, worldwide manufacturing sites will continue to annually set additional local goals. We are proud that during our unprecedented transformation to a digital imaging company from 2002 through 2007, we remained committed to sustainability. However, in order to ensure focus on improvements during such difficult times, we made difficult choices when setting our goals. For example, we prioritized energy use and greenhouse gas emission reductions and discontinued other corporate-wide operational goals where significant improvement had already been achieved. To complement this approach, we empowered our manufacturing sites to set additional sustainability goals specific to their local priorities 10 Environmental Goals 1999-2003 Reduced manufacturing waste by 47 % Sustainability Framework Reduced water use by 36 % Reduced energy use by 19 % Reduced emissions of CO2 by 17 % (well over 20% based on 1990 levels) Reduced emissions of 30 priority chemicals by 44 % Reduced the use of heavy metals in products by 85 % Certified 29 major manufacturing sites to internationally-recognized ISO 14001 A History of Worldwide Progress Health, Safety and Environmental Goals 2004-2005 Reduced greenhouse gas emissions (primarily carbon dioxide) by 10 % Reduced emissions of 28 priority chemicals by 17 % Reduced emissions of methylene chloride by 52 % (more than 90% since 1987) Reduced the use of energy by 12 % Reduced the use of water by 33 % Reduced waste from manufacturing by 22 % Reduce the use of lead solder and chromium (VI) corrosion protection treatment in 95 % of new products; Improve End-of-Life capability of Kodak products Reduced “Employee Safety Incident Rate” by 67 % Responsible Growth Goals 2006-2008 Reduced greenhouse gas emissions by 41% since 2002 Reduced the use of energy by 41% since 2002 Reduced Occupational Injury Rate by 65% Sustainability Goals 2009-2012 Social Responsibility Employee Education Raise awareness of Kodak’s sustainability commitment and its expectations of employees Employee Safety Achieve a 70% reduction in Kodak’s Occupational Injury Rate by 2012* Product Responsibility Product Energy Efficiency Qualify all eligible newly commercialized Kodak products under ENERGY STAR guidelines Product Environmental Attributes Improve the environmental attributes of Kodak products throughout their life cycle Supply Chain Performance Identify high priority suppliers annually and assess them against the performance expectations of the Electronics Industry Citizenship Coalition Operational Responsibility Energy Conservation Reduce the energy usage at Kodak operations worldwide by 50% by 2012* Greenhouse Gas Emissions Reduce greenhouse gas emissions from Kodak operations worldwide by 50% by 2012* Water Efficiency Measure Kodak’s worldwide water footprint *Compared to 2002 baseline year 11 Performance Data Performance Data Financial Highlights Amounts in millions except earnings per share amount 2008 2007 $9,416 $10,301 R&D Expenses 501 549 SGA Expenses 1,583 1,778 140 543 Loss from Continuing Operations (727) (205) Net (Loss) Earnings per Share (1.57) 2.35 Total Assets 9179 13659 Long Term Debt 1,252 1,289 961 3,029 Net Sales Restructuring Costs, Rationalization and Other Shareholders Equity 12 Performance Data Responsible Growth Progress The following table summarizes progress towards achieving our Responsible Growth Goals since their introduction in 2006 through year end 2008. Focus Goal Results Social Responsibility Global Citizenship Improve access to Kodak • Expanded product offerings of kiosks and scanners to ensure products that provide direct accessibility to people with disabilities. benefits to societal needs • Kodak’s former Health Group (now Carestream Health, Inc.) supported the establishment and continuing operations of 40 mammography clinics across China. • Provided single-use cameras to The Nature Conservancy’s Photo Voice project in China for villagers in the Yunnan Province to record their lives, culture and the local environment. • Provided print-on-demand technology for the publication of One of Us, the Hurricane Katrina photo journal to aid relief efforts, and the Barack Obama Official Inaugural Book Project. • Partnered with Carestream Health, Inc. to provide health diagnostic services to Olympic athletes in Beijing and donated equipment to local healthcare organizations in China. Employee Health and Safety Achieve 50% reduction in Kodak’s Occupational Injury Rate by 2008* • Decreased the occupational injury rate by 65%, with significant improvements in the United States and Canada. Product Responsibility Product Stewardship Improve the environmental • Expanded the practice that all products are evaluated for HSE impacts to all newly acquired businesses. attributes of KODAK Products throughout their • Enhanced product standards to improve the beyond compliance life cycle environmental attributes of Kodak products. • Launched recycling of kiosk consumables, expected to save 2 million pounds of waste from landfills. • Recycled, reused or refurbished over 20 million pounds of waste in 2008 alone, through the Printer’s EnviroServices Program. • Collected 1.5 billion Single Use Cameras for remanufacture over the life of the program; current cameras utilize nearly 100% remanufactured parts. • Reduced EASYSHARE All-in-One ink cartridge packaging by 75% while utilizing recyclable paperboard. • Improved battery life, material usage and packaging of digital cameras. • Improved energy efficiency, and resource usage in retail printing with solutions like the APEX. • Introduced the innovative FLEXCEL NX System and THERMAL DIRECT Non Process Plates, reducing waste and resource usage for printers. Suppliers Partner with suppliers to meet Kodak’s environmental and social responsibility expectations • Delivered a Kodak Supplier Performance Standard to all high priority suppliers. • Participate in the Electronics Industry Citizenship Coalition, and its supply chain performance improvement activities and supplier assessments. Energy Usage Achieve 20% reduction in Kodak’s energy usage by 2008* • Achieved an estimated 40% reduction in total energy usage (both direct and indirect). Greenhouse Gas Emissions Achieve 20% reduction in • Achieved an estimated 40% net reduction in total GHG emissions (both Kodak’s greenhouse gas direct and indirect). emissions (GHG) by 2008* Operational Responsibility *Compared to 2002 baseline year 13 Performance Data Employee Safety In 2008, Kodak’s injury/illness rate improved by 18% over 2007 and 65% over the baseline year of 2002. Additionally, Kodak experienced a workplace fatality at its plate manufacturing facility in Windsor, Colorado. In response, safety experts completed targeted audits of all similar operations worldwide, and corrective actions have been implemented. Kodak Worldwide Occupational Injury /Illness Rate (OIR) (cases per 100 full time workers) 2.5 2.0 1.92 OIR GOAL 1.8 1.52 1.5 1.25 1.0 0.5 0 2007 2006 2008 Year Energy Use and Greenhouse Gas Emissions In 2008, Kodak used 23,600 terajoules of energy for manufacturing, a drop of 7% from 2007 and 41% from the 2002 baseline year. Manufacturing operations represent over 90% of the Kodak’s total energy usage. Kodak Worldwide Energy Usage Reduction Progress (tera joules) 40000 35000 GOAL 20% Reduction from 2002 30000 25000 20000 15000 10000 5000 0 2002 Baseline 2003 2004 2005 2006 2007 2008 Year Kodak Worldwide Global Greenhouse Gas Reduction Progress (millions metric tons) 3.00 2.50 GOAL 20% Reduction from 2002 2.00 1.50 1.00 0.50 0 2002 Baseline 2003 2004 2005 Year 2006 2007 2008 In 2008, Kodak emitted 1.8 million metric tons of carbon dioxide-equivalents from its operations around the world, largely from United States (U.S.) manufacturing operations. This is a reduction of 7% from 2007 and a reduction of 41% from the 2002 baseline year. About 99% of Kodak’s greenhouse gas emissions are the result of energy use. Kodak far exceeded both its energy and greenhouse gas reduction goals of 20% from 2002 to 2008. All of the 2002-2007 results and been verified by a third party and certified by the California Climate Action Registry. Results have also been reviewed and accepted by the U.S. EPA Climate Leaders program. In 2008, results are being reported to The Climate Registry. The Climate Registry is a multi-state registry, with protocols and third party verification that are similar to the California Climate Action Registry. As in past years, the 2008 emissions will be verified in the latter part of 2009 by a third party in accordance with The Climate Registry and then submitted for acceptance by the U.S. EPA Climate Leaders. 14 Performance Data Other Environmental Metrics Kodak used 31.7 billion liters of water in 2008 – an 11% reduction from 2007. Although there has not been a corporate target for water usage reduction between the years 2002 to 2008, the majority of manufacturing sites do set site-specific reduction targets. Waste generation values are from the Eastman Business Park, the Rochester Research Complex and the Colorado Site. These three sites represent an estimated 80% of Kodak’s total waste generation and realized a 28% reduction from the previous year. Waste from the Eastman Business Park and the Rochester Research Complex includes general refuse, wastewater discharge and those waste defined by the U.S. Resource Conservation and Recovery Act. Waste from the Colorado Site is similarly reported with the exception that it does not include wastewater but does include wastewater treatment plant sludge. The Volatile Organic Compounds (VOC) emissions are also from the three sites mentioned above and are estimated to represent 80% of Kodak’s total VOC emissions. Emissions at these sites were reduced by 9% over the previous year. Emissions reported are for U.S. Environmental Protection Agency’s defined VOCs, and, therefore, do not cover all organic compounds that may be emitted. 2007 Water Use (billions of liters) Waste Generation (metric tons) VOC Emissions (metric tons) 2008 % of Operations Reporting 35.6 31.7 100 48,689 35,041 80 353 321 80 15 Performance Data Additional Operational Data Each Kodak manufacturing site establishes annual objectives and reports quarterly progress. Depending on the site’s operations, size and current status, performance metrics in addition to corporate-wide goals may be defined for emission reductions to land, water and air, natural resource conservation and/or compliance assurance. Manufacturing Site Columbus, Georgia • 4.1% electricity use reduction • 30% water use reduction • 18% natural gas use reduction • 30% solid waste to landfill reduction Dayton, Ohio • 5.8% water use reduction (47% reduction since 2001) • 496 tons of waste recycled Guadalajara, Mexico • 10% electricity use reduction • 15.7% water use reduction • 13% non-hazardous waste reduction • Zero water discharge operations Harrow, United Kingdom • 90% of dry waste recycled Leeds, United Kingdom • 25% water use reduction • 83% of waste recycled Malanpur, India • 9% water use reduction • 1.5% energy use reduction Osterode, Germany • 3.2% electricity use reduction • 0.4% natural gas use reduction • 0.4% hydrochloric acid use reduction Peabody, Massachusetts • 3% energy use reduction • 7.8% chloride load reduction in waste water Pereslavl, Russia • 15% electricity use reduction • 18% water use reduction • 90% of cardboard and plastic wastes recycled Shanghai, China • 24.6% solid waste reduction Weatherford, Oklahoma • 4.08% electricity use reduction • 31% electricity consumption reduction normalized to production • 15% water use reduction • 8% energy use reduction • 42% hazardous waste cost reduction • 12.5% increased in recycled materials • 25% vehicle gasoline use reduction • No change in electricity usage and generation of hazardous waste Wuxi, China Xiamen, China 2008 Results and Reductions Over 2007 • 8% natural gas use reduction 16 Kodak conducts its business activities to high ethical standards. Kodak is committed to sound corporate governance. In this regard, Governance the Company’s diverse, independent Board of Directors has adopted publicly available governance principles. Governance Ethical business conduct and good corporate governance are not new at Kodak. The reputation of our Company and our brand has been built by more than a century of ethical business conduct. The Company and Board have long practiced good corporate governance and believe it to be a prerequisite to providing sustained, long-term value to our shareholders. We continually monitor developments in the area of corporate governance and lead in developing and implementing best practices. First adopted in July 2001, our Corporate Governance Guidelines reflect the principles by which the Company operates. They establish a common set of expectations to assist the Board and its committees in fulfilling their responsibilities. In 2004, our Board adopted a Directors’ Code of Conduct to guide the Directors in recognizing and addressing ethical issues and in ensuring that their activities are consistent with the Kodak Values. Additionally, the Board operates within the framework of Committee Charters, Independence Standards and Qualification Standards. Kodak maintains Director Independence Standards, pursuant to the New York State Exchange Listing Standards. At the end of 2008, 10 of the 11 Board members were independent directors. Kodak Chairman and CEO Antonio Perez is the single executive member. Shareholders and employees can contact the Board through Kodak Shareholder Services. Kodak also provides a process by which shareholders can bring forward shareholder proposals to be considered at the Company’s annual meeting of shareholders. Contact information for Shareholder Services and additional information on submitting shareholder proposals can be found at www.kodak.com/go/governance. At the 2008 annual meeting of shareholders, there was one shareholder proposal on majority voting requirements for director nominees that was defeated. All of our employees are required to comply with our long-standing code of conduct, the Business Conduct Guide. Available in 20 languages, the Guide requires our employees to maintain the highest ethical standards in the conduct of company business so that they and Kodak are always above reproach. Training on the Guide is delivered annually to all employees worldwide. Additional information on Kodak’s Board of Directors, Codes of Conduct, Corporate Governance Guidelines, and Board standards and processes can be found on our website at www.kodak.com/go/governance. Committee Structure The Corporate Responsibility and Governance Committee, a committee of the Board of Directors, oversees the governance structure by • identifying and recommending individuals to the Board for nomination as directors; • performing an annual review of the Board’s performance; and • overseeing the Company’s activities in the areas of environmental and social responsibility, charitable contributions, diversity and equal employment opportunity. 17 Governance Kodak utilizes a Corporate Management Committee structure to oversee its sustainability activities and ensure they are aligned with the Responsibility Principles. Each committee is lead by a company officer and comprised of senior leaders from across the company. Select committees include: • Contributions Policy Committee • Corporate Ethics & Compliance Committee • Health, Safety and Environment Management Council • Risk Management Council, and R • Senior Executive Diversity & Inclusion Council External Membership Kodak’s internal governance structure is complemented by its membership in strategic external associations • The United States Council of International Business (USCIB). USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation. • The Electronics Industry Citizenship Coalition (EICC). EICC outlines standards to ensure that working conditions among manufacturers in the electronics industry are safe, workers are treated with respect and dignity, and that manufacturing processes are environmentally responsible. • The Global Environmental Management Initiative GEMI (GEMI). GEMI strives to improve environmental performance, promote corporate citizenship and contribute to financial success and shareholder value. vi tal Manag men em ron e nt tiativ In i ® e • Business Roundtable. An association of chief executive officers of leading United States companies, the Roundtable task forces focuses on issues it believes will have an effect on the economic well-being of the nation. Kodak participates on Consumer Health and Retirement, and Sustainable Growth Initiatives. • Information Technology Industry Council (ITI). One of the trade groups with the longest service record to the technology industry, ITI consists of manufacturers and suppliers of computers, telecommunications, business equipment, software and IT services who have come together to promote the global competitiveness of its members. Kodak holds an executive committee membership on the ITI Board of Directors and a board position on its Environmental Leadership Council. Glob al En The Audit Committee, a committee of the Board of Directors, assists the company’s governance structure by overseeing: • the integrity of the Company’s financial reports; • the Company’s compliance with legal and regulatory requirements; • the Company’s systems of disclosure controls and procedures and internal control over financial reporting; and • the performance of the Company’s internal auditors. 18 Governance Stakeholder Engagement Eastman Business Park in Rochester, NY is our largest site. Spanning over 900 acres, there are approximately 13,000 households and 550 businesses considered site neighbors. To ensure we are supporting this community’s information needs and responding to concerns, Kodak has established a Neighborhood Information Center, an Environmental Concerns Line and a Community Advisory Council (CAC). CAC members representing local government, school districts, plant neighbors, special interest groups and Kodak meet monthly to exchange information. In addition, Kodak representatives meet monthly with members of specific neighborhoods adjacent to the site for in-depth discussions on environmental issues and other topics. During 2008, a minimal number of calls were received from site neighbors. Many of these calls were general questions, with the steam and electric generation operations at Eastman Business Park being the predominate area of focus. External Recognition We are proud to be externally recognized for the results that our focus on high ethical standards and sound corporate governance have achieved. Covalence Ethical Ranking In the 2008 Ethical Ranking published by Covalence, a Geneva-based company, Kodak ranked ninth among 32 multinational companies in the personal and household goods sector and 100th among 541 companies representing all sectors. Covalence’s ethical quotation system is a reputation index based on an analysis of business contribution to human development such as labor standards, waste management, product social utility and human rights policy. Dow Jones Sustainability Index Kodak was again named to the Dow Jones Sustainability Index (DJSI). Kodak was first named to the Index in 2001. The annual review of the DJSI is based on a thorough assessment of corporate economic, environmental and social performance. 9 FTSE4Good Index In every year since 2001, Kodak has been included in the FTSE4Good Index, a London-based system designed to give investors a global standard for comparing the environmental and social performance of companies that also meet financial criteria for being on the FTSE index. Global 100 For the fourth consecutive year, Kodak has been named to the list of “Global 100 Most Sustainable Corporations in the World.” A company that makes the Global 100 is part of a select group whose sustainability performance demonstrates a strategic ability to manage economic, social and environmental responsibility. Pacific Sustainability Index Kodak has received an A+ rating on the Pacific Sustainability Index (PSI) from Roberts Environmental Center at Claremont McKenna College. The PSI uses a questionnaire approach to analyze the quality of sustainability reporting and assign companies a letter grade. A+ indicates a company with a score in the highest 4%. 19 Governance A Closer Look at Kodak’s Health, Safety and Environment Management System Kodak’s commitment to Health, Safety and Environment (HSE) starts with the senior leaders of the corporation. The HSE Management Council, which is chaired by a Company Vice President, provides leadership, sets policy and reviews company HSE performance. The Management Council includes senior leaders from the company’s Worldwide Business Units, Legal, Communications & Public Affairs and HSE. The HSE Coordinating Committee, which is chaired by the Vice President and Director of HSE, develops and administers appropriate programs under the direction of the Management Council. The Coordinating Committee includes a number of subcommittees and key programs that focus on critical issues such as product design, supplier performance, compliance and management systems, and functions as a technical advisory panel to the Management Council. Kodak continues to maintain ISO 14001 certification of its Corporate HSE Management System and the majority of manufacturing sites, as well as meeting continuous improvement targets. The management system includes Corporate HSE Performance Standards for Employees, Facilities and Loss Prevention, Partnerships with Suppliers and Product Commercialization activities. Facilities worldwide, including subsidiaries, are routinely audited to verify compliance with Corporate HSE Performance Standards, policies, procedures, and the laws and regulations of applicable governing entities. Corporate HSE Management System HSE Management Council HSE Coordinating Committee HSECC Subcommittees 1. Product stewardship 2. employee and facility stewardship 3. HSE audit and controls 4. HSE communications and external relations 20 Kodak respects internationally accepted legal principles, and obeys the laws of countries in which it does business. Compliance Compliance Kodak periodically conducts enterprise level risk assessments. The process is administered by the Company’s Chief Compliance Officer and Internal Auditors and includes assessment of compliance with United Sates and international laws, such as labor and human rights laws. Currently, Kodak and its subsidiaries are involved in various legal proceedings which are being handled and defended in the ordinary course of business. Although Kodak does not expect that the outcome in any of these matters will have a material adverse effect on its financial condition or results of operations, litigation is inherently unpredictable. Significant Health, Safety and Environmental Compliance In 2008, Kodak paid a $5,000 fine for a U.S. OSHA citation for violations under the general duty clause at its facility in Windsor, Colorado and a $122,500 civil penalty to the New York State Department of Environmental Conservation (DEC) for violations that occurred between January 2004 and December 2007 at Eastman Business Park (formerly Kodak Park). The DEC settlement largely concerned self-reported violations of air permit record-keeping and monitoring deficiencies that did not result in releases to the environment, and a single allegation concerning objectionable material contained in debris at a demolition site. Regarding the Eastman Business Park site, Kodak is currently implementing a Corrective Action Program required by the Resource Conservation and Recovery Act (RCRA) and is currently in the process of completing, and in many cases has completed, required actions for areas at the site. The majority of future work relates to long-term operation, maintenance of remediation systems and monitoring costs. In addition to these activities and as a result of a 1994 Consent Decree, Kodak is subject to a Compliance Schedule, under which it has improved its waste characterization procedures, upgraded one of its incinerators, and upgraded its industrial sewer system at the Eastman Business Park facility. The Company has submitted the required certifications demonstrating that it has completed the requirements of the Consent Decree, and expects the Decree to be closed in late 2009. Additional information on environmental compliance activities at Eastman Business Park can be found in the 2008 Eastman Business Park Sustainability Report available at www.kodak.com/go/sustainability. Kodak is presently designated as a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (the Superfund Law), or under similar state laws, for environmental assessment and cleanup costs at eight Superfund sites; two of which are related to businesses sold in 1994. With respect to each of these sites, Kodak’s liability is minimal. 2008 2007 2006 $127,500 $0 $53,226 Pollution Prevention and Waste Treatment Expenditures (in millions) $40 $57 $68 Long-Term Environmental Liabilities (in millions) $115 $125 $154 Health, Safety or Environmental Fines and Penalties • Corrective Action Program (Rochester, NY) $63 $63 $65 • Various Other Operating Sites $12 $19 $16 • Former Operations and Plant Closures $21 $23 $32 • Retained Obligations from Businesses Sold in 1994 $19 $20 $21 — — $20 • Acquired Businesses 21 Kodak respects the privacy rights of its employees, Privacy customers, and suppliers. Privacy Kodak strongly believes in the fundamental right to individual privacy. To that end, we are committed to use personal data relating to our employees, customers and suppliers only for legitimate business purposes. Such information is collected, processed, stored and transferred among Kodak locations worldwide -- and between Kodak and third parties -- in a manner that is consistent with Kodak business practices and policies, and in compliance with all applicable laws. Particular attention is given to the administration of sensitive information. Oversight of this policy is the responsibility of the company’s Chief Security and Privacy Officer. Every Kodak organization must comply with this policy, and all employees worldwide who work with personal data are required to complete data privacy training every two years. Kodak is a member of the Direct Marketing Association (DMA). Kodak.com and the Kodak Gallery web site participate in the DMA Safe Harbor Seal Program, under which the DMA provides an independent third-party dispute resolution mechanism for privacy complaints. No customer complaint has ever been filed against Kodak under this program. The DMA also has developed educational materials for companies and consumers interested in finding out more about the Safe Harbor framework and the DMA Safe Harbor Program. In addition, all vendors who access personal data collected by the company are required by contract to handle data in a manner consistent with our policies. The firm commitment to safeguarding privacy extends to customers in the Kodak Gallery (operated by Kodak Imaging Network, Inc.) and sites maintained by the Gallery on behalf of third-party partners. Safe Harbor Program The United States (U.S.) and the European Union (EU) have negotiated a Safe Harbor Agreement that allows U.S. companies to import personal information from Europe. Essentially, the program is designed to assure that the transfer of personal data from the EU to the U.S. complies with core privacy principles. As part of its compliance with the Safe Harbor guidelines, Kodak completes a self-assessment each year and certifies compliance with the Safe Harbor Principles to the U.S. Department of Commerce (DOC). Kodak Gallery makes a separate certification of compliance to the DOC. 22 Kodak conducts its business activities in an environmentally responsible manner. Environmental Responsibility Product Stewardship Kodak established a product design strategy in 1991 to ensure that product life cycle considerations look beyond current regulatory compliance. The strategy integrates sources of potential future regulatory requirements, competitors’ actions and issues of public concern into measurable standards that must be met by all Kodak products. Comprehensive product assessments continue to be integral to the process. Product assessments review health, safety and environmental considerations of new product commercialization across the entire product life cycle. Kodak’s beyond compliance positions are codified in Kodak’s internal Product Standards. The Standards cover all life cycle stages and are part of Kodak’s ISO 14001-certified Corporate HSE Management System. In 2008, Kodak’s product stewardship programs resulted in numerous eco-efficiency gains. Photolab systems, OLED technology, digital cameras, single use cameras and commercial graphic products have made improvements in energy efficiency, material usage, recycling and design for remanufacturability. Product Stewardship initiatives also extend to our customers whether they are large graphic print shops, retail photofinishers or individual consumers. Kodak is dedicated to helping all customers cost-effectively address sustainability challenges. Kodak’s objective is to enhance our capability to develop product systems that enable environmentally sustainable growth. The environmental dimension of sustainable growth, often termed eco-efficiency, necessitates a product focus beyond current regulatory compliance. Life Cycle Assessment and other related tools are used to gauge and improve the eco-efficiency of product systems in order to provide more product or service value for less environmental impact. With the use of the tools, Kodak is able to establish metrics, set design targets, provide design guidance, and compare competing technologies based on associated environmental impacts. To help meet the challenge, Kodak has partnered with academic institutions, such as Rochester Institute of Technology’s Golisano Institute for Sustainability and Georgia Institute of Technology’s Environmentally Conscious Design and Manufacturing Program, to enhance its eco-efficiency tools, obtain a better understanding of the environmental profiles of various imaging systems and identify opportunities for improvement. 23 Environmental Responsibility Moving to Dry Technology APEX was built from the ground up with sustainability as a key goal. Marketers and engineers worked together over an 18-month period by starting with in-store visits, deciding what problems to solve. The development process also included in-store trials in several retailer locations across the globe, in order to confirm that the sustainability results were delivered. As compared with silver halide-based photolabs, APEX consumes 70% to 90% less energy and eliminates up to 90% of greenhouse gas emissions. Ergonomically designed for serviceability and ease of operator use, its scalable and modular features ensure maximum construction and packaging material efficiency. In recent years, KODAK Photo Retailing Technology has made great strides in capabilities, performance and flexibility while becoming more eco-efficient as the technology transitions to digital solutions. KODAK Thermal Papers and Media are leading the way by producing excellent color prints whether used with KODAK Picture Kiosks, or the behindthe-counter KODAK Photolab Systems. Thermal media enables a system that uses no water or photoprocessing chemicals and generates no regulated waste. In 2008, the environmental benefits of thermal media were expanded as Kodak and Wal-Mart launched a national program to recycle used thermal media materials from in-store picture kiosks. The program is underway at about 4,100 Wal-Mart stores and Sam’s Clubs in the United States (U.S.) and is expected to annually recycle two million pounds of thermal printer ribbon, spools and cartridges. In September 2008, Kodak showcased APEX during a tour for attendees of the International Conference on Sustainable Manufacturing hosted by the Rochester Institute of Technology, the OECD, and the U.S. Commerce Department. In January 2008, the Digital Imaging Marketing Association gave its Innovative Digital Product Award to the KODAK Adaptive Picture Exchange (APEX), a modular, behind-the-counter thermal photolab system that enables retailers to produce profitable, high-quality photo products while dramatically reducing their costs and environmental footprint. Environmental Progress – Kodak Photo Retailing Technology KPM 2000 Footprint Reduction Throughput Of Prints (4 x 6) 1 print per minute KPM II G3 G4 DPS900 APEX 2002 2004 2005 2006 2007 24”W X 37”D 17”W X 31”D 17’, 24”, and 36” W 26” up to X 65”H X 58”H 36” W Flexibility for 122”W Flexibility for 8 X 12 Printer Modular 8 X 10 Printer Configurations 2.2 prints per minute 5 prints per minute Up to 15 prints 15 prints per minute per minute Up to 38 prints per minute 24 Environmental Responsibility Award-Winning Digital Camera and Picture Frame Designs Today, some 30 years after Kodak’s first digital camera-enabling patent in 1978, Kodak continues to deliver digital cameras with the features and flexibilty that consumers value, in efficient designs that reduce potential impact on the environment. The KODAK EASYSHARE ZD710 camera’s energy-efficient design led to an Innovations 2008 Design and Engineering Award in the Eco-Design and Sustainable Technology category from the International Consumer Electronics Association. A new eco-design feature allowed the ZD710 to capture almost twice as many shots as the previous model, a substantial reduction in battery consumption. Whereas early 0.9 megapixel KODAK Digital Cameras required four AA alkaline batteries for about 50 pictures, the ZD710 model with 7.4 megapixels provides more than 800 pictures per one CR-V3 lithium battery. Kodak not only designs its cameras to be energy efficient and environmentally friendly, it also takes a responsible approach to their use and end-oflife stages. For example, Kodak participates in the Rechargeable Battery Recycling Corporation’s national Call2Recycle‘ program, which helps consumers recycle used portable rechargeable batteries, such as those found in digital cameras, as well as old cell phones. Kodak also offers a “trade-in and trade-up” program specifically for digital cameras. Partnering with DealTree, the program allows camera owners to trade in old digital cameras (regardless of brand) for a cash rebate. The initiative, which began in 2006, results in digital cameras being re-used rather than discarded. Not only do Kodak’s award-winning digital picture frames provide vivid and vibrant images, they offer environmental advantages, as well. First introduced in 2007, today’s KODAK EASYSHARE Digital Picture Frames allow consumers to play slideshows of their favorite digital pictures and videos set to music. Brilliant, high-resolution color images, displayed in crisp detail, have made the frames increasingly popular in today’s digitally savvy world. However, when the International Consumer Electronics Association selected the KODAK EASYSHARE M820 Digital Frame as a 2009 Innovations Design and Engineering Award honoree in the Eco-Design product category, it recognized the product’s environmental attributes as well as its high quality. The KODAK EASYSHARE M820 Digital Frame was commercialized using Kodak’s Design for Environment principles and reflects the Company’s policy for supply chain responsibility. Among its key features are the following: • LED backlighting that replaces mercury-containing bulbs. • Meets the world’s most restrictive concentration thresholds for mercury, lead, cadmium and other regulated materials. • Meets voluntary energy conservation guidelines for use, standby, and power-off modes. • Minimized packaging material that is marked for recycling in various worldwide collection programs. • An overall 10% reduction in use of materials. • Verified that supply partner conforms to the Electronics Industry Citizenship Coalition’s Code of Conduct. In late in 2008, Kodak introduced the world’s first Organic Light Emitting Diode (OLED) wireless picture frame, which requires no backlighting at all and incorporates the many other environmental advantages of OLED technology. 25 Environmental Responsibility Advances in OLED Technology Throughout the course of its 130-year history, Kodak innovation has delivered cutting-edge products of the day while continually promising even better things to come. So it is today with KODAK OLED Products, which combine unparalleled image quality with a wide array of environmental advantages. And, the company’s OLED Technology offers the clear promise of an even brighter – and greener – future. Kodak leads the way in the OLED industry in both flat-panel display and solid-state lighting applications, and virtually all companies with commercial products in these arenas rely on Kodak technology. No heavy metals are used in OLED devices, and they require fewer materials than other technologies. The USDOE also has awarded Kodak a two-year contract to develop key technologies and processes for OLED lighting panels. Kodak first will develop an OLED luminaire that meets ENERGY STAR color and efficacy specifications and will address key areas of manufacturing processes through Kodak’s Vapor Injection Source Technology (VIST). VIST allows manufacturers to significantly reduce unit-manufacturing costs, with high manufacturing throughput and material utilization that initially exceeds 50%, and could be greater than 75% in future manufacturing applications. KODAK OLED Technology clearly is following the company’s long tradition of “innovation today, more to come tomorrow.” KODAK OLED Display Screens are as thin as a credit card, yet they produce bright, crisp images easily seen from any angle. Because they need no backlighting, they use far less power than traditional LCD screens. And, future manufacturing methods combined with Kodak technologies will drive an additional waste reduction of 50% to 90%. The future for solid-state lighting is equally promising -- both economically and environmentally — as the company’s OLED technology leads the way to a cost-competitive, high-efficiency alternative to fluorescent or incandescent lighting. OLED panels provide a natural-looking light that renders realistic colors and also yields energy savings of as much as 50% or more over electrical filaments or gas. Frost & Sullivan, the global consulting and market research company, named Kodak recipient of its 2008 North American Technology Leadership Award in the field of OLED Display Technology. Also in 2008, Kodak received a United Sates Department of Energy (USDOE) “Illuminating Ideas” Award for “significant achievements in solid-state lighting research and development.” 26 With these increased recycling rates, it means that today most KODAK Single Use Cameras are produced from recycled camera bodies. 1.5 Billion Single-Use Cameras and Counting Kodak has achieved the milestone of recycling 1.5 billion single use cameras, including both KODAK Cameras and those from the Company’s competitors. How does it work? A photofinisher returns used single use cameras to a collection center. Kodak then pays a fee for returned single use cameras, including those from other manufacturers with whom Kodak has an exchange agreement. The cameras are collected after the film is processed and, in the U.S., sent to Rochester, New York to be sorted and routed. Through a mutual agreement, major competitors’ single use cameras are sent to their original manufacturers while KODAK Single Use Cameras are sent to a Kodak factory in Guadalajara, Mexico, to be recycled and reused. The body and internal parts in good condition are put into new single use cameras, while the rest of the camera, such as the plastic outer casing, is ground and recycled. Kodak’s Design for Environment philosophy has resulted in cameras that are easier to dismantle for reuse of compatible materials and components. Percentage of different products recycled in 2008 (U.S. Rates) Started in 1990, the KODAK Single Use Camera recycling program, works with photofinishing outlets to return used single use cameras to Kodak sorting centers, where they are then routed for recycling. Nearly every piece of the camera is either recycled or reused in the ongoing production of more single use cameras, bringing down costs for consumers and keeping huge amounts of waste out of landfills. Laid end-to-end, the 1.5 billion cameras would stretch 120,000 miles, which is enough to circle the earth five times or reach more than halfway to the moon. Of the 1.5 billion, nearly 1 billion were KODAK Single Use Cameras. In the United States (U.S.), the rate of recycling for KODAK Single Use Cameras is 84%. That is up from 75% just a few years ago and is the highest rate of recycling of any consumer product in the U.S., handily beating the national recycling rates for items such as aluminum cans (52%) and consumer electronics (less than 20%). Kodak has recy 84% 50% 55% 25% 18% 1% Cell Phones Computers/ TVs Plastic Beverage Containers Office Paper Major Appliances KODAK Single Use Cameras Laid end-to-end, the 27 Environmental Responsibility The Evolution of Printing Plates For well over two decades, Kodak has led the way in developing advancements in printing plate technology. Today, Kodak’s comprehensive line of digital plates allows printers to find the best product for their operation that will reduce waste generation and the use of chemistry and energy in the plate-making process. In addition, innovations in plate technology have improved operational efficiency, reduced overall costs and driven greater productivity for Kodak customers. Kodak NexPress Digital Color Presses While Kodak NexPress Digital Production Color Presses are known in the printing industry for their outstanding performance, they are also designed to lessen their environmental impact. Many recycled materials are used in manufacturing, and the mainframes, accessories and replacements parts are designed to be remanufactured or recycled. The presses run with virtually no emissions, do not use or generate any harmful compounds and require no hazardous waste removal. Since the mid-1990s, Kodak has developed four generations of thermal plate technology, with each step offering another option of sustainable plate solutions. Preheat/postbake plates like KODAK THERMAL GOLD Plates, introduced in 1995, offer high quality and utilize processors, chemistry and ovens. Two years later came KODAK ELECTRA EXCEL Thermal Plates, which remove the need for prebaking plates, thus reducing requirements for chemistry and energy. In 2002, the introduction of KODAK SWORD Thermal Plates eliminated the need for post-baking ovens entirely, yielding another significant reduction in energy, chemistry and waste. Today, non-process plates like KODAK THERMAL DIRECT Non Process Plates have removed the need for processors and chemistry all together, offering the most favorable environmental attributes of any plate solution available today – no additional energy, water, or chemistry, and no waste to handle. Regardless of the specific technology, all our digital plate solutions strive to reduce the impact of process variability while minimizing the effort required to maintain exceptional stability. Better stability with fewer plate remakes means greater sustainability, leading to less consumption of energy, chemistry, water, paper, ink and waste in both prepress and on press. 28 Environmental Responsibility Serving the Graphics Community Kodak provides a wide variety of products for the graphics community, each with sound environmental attributes. • Digital printing solutions engineered to maximize component recycling and reuse • Prepress solutions that reduce the consumption of energy, water and chemicals • Workflow solutions that automate or eliminate process steps and reduce energy and waste across the print production chain • Web-to-print workflows that greatly reduce the use of paper and ink • ENERGY STAR scanners that use 30% to 75% less energy than standard equipment However, as in many other businesses, print service providers in the graphics industry realize that more and more customers and potential customers prefer to work with companies that are environmentally responsible and committed to sustainability in addition to offering environmentally advantaged products. And Kodak’s graphic communications business is right in step with this trend. Through a program called Toward Greater Sustainability…Together, Kodak partners with printing industry associations and customers around the globe to develop and localize effective programs that support customers’ sustainability objectives. To help printers achieve environmental goals, Kodak continues to utilize and broaden the worldwide reach of its “Green Kit,” an easy-to-understand overview of sustainability and its importance to printers. The Green Kit includes the “Top Ten Strategies for Sustainability,” tips and suggestions for “going green,” insight on what customers think about the green movement, a glossary of terms, and links to nearly 30 different sources of information. In 2008, Kodak expanded its customer support through webinars with topics such as “How to complete a sustainability self-audit” and “Sustainability is the new green.” A highly successful Kodak initiative that helps printing industry customers manage their operations’ environmental footprint is best known as PEP – the Printer’s Environmental Program. This multi-faceted effort includes recycling and reuse programs for a variety of materials and provides additional support through a pollution prevention program, a waste disposal services program, and a customer sustainability website. In 2008, PEP customers saved over 20 million pounds of waste from the landfill through recycling, reuse or refurbishment. With its industry partners, Kodak is currently funding the following graphics industry projects that support outreach and research programs for sustainability: • Bundesverband Druck und Medien (Germany) • Verband Druck und Medien Österreich (Austria) • Verband der Schweizer Druckindustrie (Switzerland) • British Printing Industries Federation (U.K.) • British Association for Print & Communications (U.K.) • Envirowise (U.K.) • Verdigris (U.K.) • Sustainable Green Partnership (U.S.) • National Printing Equipment and Supplies (U.S.) • Printing Industries of America (U.S.) 29 Environmental Responsibility Making Energy Efficiency a Culture Energy efficiency and the reduction of greenhouse gas (GHG) emissions remain a key, corporate-wide focus at Kodak. For more than a decade, we have set stringent, multi-year voluntary goals in these areas and have publicly reported the results. Since 2002, Kodak has reduced energy use by 41% and GHG emissions by 41%. In 2009, we have raised the bar again, setting new and tougher Sustainability Goals that include an additional 10% reduction for energy use and GHG emissions. Two subcommittees of the Health, Safety and Environmental (HSE) Coordinating Committee are responsible for integrating energy efficiency expectations into facility operations, product design, supplier performance, and compliance and management systems. The Employee and Facility Stewardship subcommittee requires each site to carry an energy reduction goal that supports and aligns with the corporate-level goal. For most sites, performance against these goals is included as part of the performance expectations for senior site and business leaders. The Product Stewardship subcommittee uses a product design strategy to improve the energy efficiency of all Kodak equipment products and to identify future improvement opportunities. We are currently working to meet revised Health, Safety and Environment Product Standards for energy efficiency that will create an even stronger link with ENERGY STAR by requiring covered Kodak products to be ENERGY STAR qualified. Employee Leadership Our achievements in the past and our performance in the future are tied directly to the outstanding efforts of Kodak employees at the site level around the world. Armed with enabling strategies and tools, these dedicated Kodak men and women drive success. The Energy Team at the Eastman Business Park in Rochester, N.Y., for example, achieved the energy savings needed to transition the site to a single powerhouse. The team used visual scorecards for each of the site’s primary utility services to track the progress of each operational area. The scorecards are accessible to all site employees and are reviewed monthly with senior leaders. These visual controls have been key elements in helping to attain the ambitious energy reduction goals. The Rochester site also uses an extensive, web-based Energy Information System that displays real-time energy usage data. Energy management teams, and all employees, can follow the data trends to identify opportunities for savings in the areas of demand for energy and the generation of energy. These analyses have helped drive the site to reduce steam flows for de-aerators, minimize waste steam, and optimize plant loading. In Windsor, Colorado, the company’s secondlargest manufacturing site in the United States, a coordination team of HSE professionals meets weekly to address energy management and other HSE issues across the entire site and its multiple buildings. Status reports on the issues are reviewed monthly at site steering team meetings that involve business leaders. Early in 2008, the Windsor site held an energy event that identified a variety of areas for saving energy – and more than half a million dollars. By year-end, the energy-savings measures had realized more than $500,000 in savings. In 2008, the Dayton, Ohio site replaced existing lamp fixtures in their facility. Three hundred fluorescent fixtures rated at 142 watts were installed improving light output and reducing energy consumption by 60%. As a result of the new fixtures and the implementation of a zone lighting program, electrical consumption is expected to be reduced by more than 1 million kWh annually, an estimated 4% reduction for the facility. 30 Environmental Responsibility At the four facilities that comprise the Kodak Vancouver, Canada site, energy management is the focus of cross-organizational, employee-led Green Teams. Formed in 2008, the teams achieved $50,000 in savings from upgrading a compressor in one building, while a server virtualization program realized additional savings when 128 servers were replaced with three new, energy efficient units. Through a partnership with British Columbia (BC) Hydro, the Vancouver site will pursue an energy reduction plan and receive financial support from BC Hydro to fund a full time energy manger. Efficiency through Tri-Generation At Eastman Business Park in Rochester – formerly Kodak Park – Kodak relies on cutting-edge technology to drive economic and environmental results. Generating energy through tri-generation makes Eastman Business Park twice as efficient as a standard public utility. Tri-generation begins with coal, natural gas and oil used to heat water in huge boilers to produce steam. In step two, this high-pressure steam is used to drive turbines that generate electricity. In step three, some of the steam passing through the turbines is extracted and piped to different processes for heating and cooling throughout the site. In a typical public utility, about a third of the generated steam is turned into electricity, while the other two-thirds ends up as heat lost to the atmosphere. At Kodak, almost two-thirds of the steam is converted to either electricity or used for heating and cooling, while about one-third is released as heat. As the final energy is extracted, the steam condenses and the resulting liquid is pumped back to the power plants to start the cycle over again. And, this is no small operation. The huge boilers at the site can generate 1.5 million pounds of steam per hour and generate 130,000 kilowatts of electricity. Thanks to the power of tri-generation, Kodak is able to generate 100% of both its electrical requirements and its heating and cooling needs for the Eastman Business Park site, while operating at an extremely high level of efficiency. On average, however, the site generates 95% of its electricity and purchases 5%. 31 Environmental Responsibility Partnership Initiatives As the company drives toward global sustainability, we continue to collaborate with many stakeholders and to participate in a number of partnerships aimed at improving efficiency and reducing emissions. Since 2004, Kodak has been a member of the California Climate Action Registry, a non-profit organization recognized as a standard-setter for tracking and reporting GHG emissions. Three years ago, Kodak became the first Registry participant with international operations to have its global data certified. As of 2008, six years of Kodak data have been certified for all six GHGs identified by the Kyoto Protocol. Beginning in 2009, Kodak will transition its membership to The Climate Registry, a new multi-state registry as the California Climate Action Registry is sunset. The Climate Registry is a multi-state registry, with protocols and third party verification that are similar to the California Climate Action Registry. In 2008, Kodak continued its participation in the United States (U.S.) EPA Climate Leaders program, a partnership between government and industry that challenges companies to establish goals and measure GHG emission reductions. By voluntarily reporting their emission reductions to EPA, partners demonstrate that GHG emission reductions can be achieved in an economical way and serve as corporate environmental leaders. In December 2006, Kodak joined the Chicago Climate Exchange (CCX), a commodity market that sells certified greenhouse gas (GHG) emissions allowances within the U.S. To participate in this market, Kodak committed to voluntarily reduce its GHG emissions every year from 2003 to 2010. In May 2008, CCX completed an extensive audit and in-depth review of Kodak’s emission calculations and CCX has accepted Kodak’s U.S.-wide GHG emissions accounting. Kodak is a proud participant in the Business Roundtable’s Climate RESOLVE initiative. Roundtable CEOs believe that forward-looking companies working in partnership with government can find many practical opportunities to improve energy efficiency and reduce, avoid, offset or sequester GHG emissions without serious economic disruption. For several years, Kodak has been a part of the Carbon Disclosure Project, an independent, not-forprofit organization designed to create a lasting relationship between shareholders and corporations regarding the implications for shareholder value and commercial operations presented by climate change. For more than a decade, Kodak has partnered with the U.S. EPA as an Energy Star Partner to produce energy efficient products and operations. 32 Environmental Responsibility Optimizing Our Company Eco-Footprint Kodak IT Turning Greener While strong policies and programs have led to many successes in energy management and product development, opportunities exist in the rest of Kodak’s operations, as well. The goal is to achieve a future sustainability leadership position in part by leveraging past success in areas such as environmental management, real estate management, procurement, logistics, transportation, and office and facilities management. In 2008, this initiative drove successes in a number of areas. The world’s IT operations are estimated to use 3% of the world’s energy and generate as much carbon as all the world’s airlines, combined. With this in mind, Kodak has established a worldwide Green IT initiative designed to reduce cost and greenhouse gas emissions by reducing energy consumption. A sampling of current Kodak Green IT efforts includes: • Choosing energy efficient IT equipment Recognition for Manufacturing • Maximizing the use of telecom and server infrastructure Kodak’s commitment to sound health, safety and environmental management at its worldwide manufacturing sites continued to be recognized through many honors and awards in 2008. • Kodak’s Wuxi manufacturing plant in China received the Green Enterprise Award from the local environmental protection agency. Kodak has received this recognition every year it has been awarded since 2004. • Kodak’s facility in Guadalajara, Mexico was again awarded the prestigious Clean Industry certificate for safety and environmental excellence by the PROFEPA, Mexico’s federal environmental protection agency. Kodak was first certified under this program in 1997, and has maintained its excellent standing in every recertification process since. • Kodak’s facility in Leeds, England won a “Highly Commended Award” in the “Process Manufacturing” section of the U.K. Best Factory Awards. • Kodak’s Rochester, N.Y. facility received the Silver Compliance Award from the New York Water Environment Association. The Silver Compliance Award is given annually to industries with > 99% compliance with their discharge permits. • The Columbus, Georgia site was nominated for Outstanding Operation of a Waste Water Treatment System by the Georgia Water and Pollution Control agency. • Turning off lights in data centers when not occupied • Properly disposing of, or recycling, electronic waste • Consolidating applications onto fewer energy efficient server and storage devices. • Increased the temperature of server rooms Transportation Initiatives In 2008, Kodak joined the SmartWay Transport Partnership, a collaboration between the United States (U.S.) Environmental Protection Agency and the freight industry established to pursue efficiencies in carbon dioxide and nitrogen oxide emissions. As a new shipper-partner, Kodak has created a three-year action plan that sets aggressive targets for reducing emissions and saving energy costs. A key element in the plan is designing shipments to optimize capacity, and to increase the proportion of goods shipped with SmartWay Partner Carriers. Also in 2008, Kodak’s Europe and Middle East Region launched a multi-faceted program designed to encourage “clean” means of transport and to reduce air- and road-based transportation wherever possible. After analyzing transportation and logistics, and by carefully working in partnership with transportation carriers, the region realized significant reductions of carbon dioxide emissions in Europe. 33 Environmental Responsibility Waste from Eastman Gelatine Benefits Area Farmers In 2008, nearly 28,000 tons of bio-wastes from Eastman Gelatine Company, a wholly owned subsidiary of Kodak, were applied to farmlands and compost piles for the benefit of farming communities in Massachusetts. The gelatin manufacturing process at the Kodak plant in Peabody, Massachusetts, creates waste-streams of nutrient-rich, organic bio-solids and bio-slurries. Rather than dispose of this waste in landfills, Eastman Gelatine partners with Agresource, Inc., to reuse the material for the promotion of crop growth. Agresource evaluates the various bio-wastes then delivers the materials to the area farms that they have determined will best benefit from the application of the specific nutrient-rich material. The program is carefully regulated by the State of Massachusetts, and permits for each of the bio-wastes are issued every two years. A Leader in Motion Picture Film Recycling FPC, Inc., a Kodak Company - a wholly owned subsidiary of Kodak - continues to be a leader in providing to the motion picture industry a secure and environmentally-responsible method of recycling motion picture film that has reached the end of its useful life. In 2008, FPC recycled 4.5 million of pounds of motion picture film. For more information about FPC, go to www.kodak.com/go/fpc. an average similar facility. The facility has high-efficiency heating, ventilation and air conditioning (HVAC) systems that are optimized through computer controls. The lighting has been changed to highly efficient fluorescent systems. Time of day setbacks and shutdowns are used for the HVAC and lighting systems. Green Building in Israel Kodak’s manufacturing facility in Israel, is an example of a “green” building. Many of the walls are made of transparent glass to provide the greatest amount of natural light and thus a considerable savings in energy. Light fixtures in all the central areas are energy efficient—consuming 15% less energy than regular fixtures—and reflectors disperse the light in the atrium and the entrance hall, reducing the amount of energy required for illumination. A building management system provides complete control over all electromechanical systems for the greatest efficiency. For example, the air conditioning system automatically adjusts according to the outside and floor temperature as well as employees’ personal thermostat settings. Air conditioning condensate and rainwater are harvested and used to irrigate the lawns and gardens around the building. Kodak Headquarters Earns ENERGY STAR The U.S. Environmental Protection Agency (EPA) recently gave an ENERGY STAR designation to Kodak’s Rochester, N.Y. headquarters office complex. The ENERGY STAR designation for offices is used to recognize superior energy management practices. In its review, the EPA indicated that the Kodak office complex utilizes 33% less energy than 34 Kodak maintains a safe and healthy work environment Safety and Health Safety and Health Kodak has a long history of commitment to health and safety. George Eastman started the first Kodak Safety Committee in 1911 with the objective of preventing workplace injuries. In 1912, Kodak became a founder and charter member of the National Safety Council, an organization in which Kodak is still a member. George Eastman believed that workplace injuries and illnesses are preventable, and we hold that belief today. Employee Safety Kodak has exceeded its goal to reduce its occupational injury/illness rate (OIR) by 50% in five years. Compared with the baseline year of 2002, the OIR was reduced by 65%. In 2008, the OIR improved by 18% over 2007. Safety performance is most improved in the United States and Canada. Safety performance outside the United States and Canada continues to be excellent. Kodak embraces a zero-injury philosophy. In 2008, continuous improvement initiatives included the following special emphasis areas: property loss prevention, field service and critical safety. Property Loss Prevention Property loss prevention programs are designed to protect people, assets, and the uninterrupted flow of products and services from perils such as fires, explosions, and natural hazards. Training in the principles of property loss prevention was developed in conjunction with FM Global and deployed to sites in the United States, Canada and the United Kingdom in 2007. In 2008, training continued in the United Kingdom, China, Germany, Bulgaria, Russia and Japan. In addition, standard guidance was developed for common risk scenarios. Field Service A new driver safety training program was implemented in the United States and Canada in 2008 for an estimated 1600 drivers. Lockout/tagout training was also a focus with training and kits delivered to field engineers in the United States and Canada. Ten training programs are in place for field engineers on various work environment hazards, and there has been a sustained effort to document and implement the use of risk assessments to guide safe field service operations. 4.00 2002 Baseline 3.6 3.50 Critical Safety 3.00 Critical Safety is a new, multi-year initiative focused on improved control for those work activities which could result in a high severity injury, where the control is operator dependent. In 2008, a standard set of controls for the company was defined by a team of health and safety professionals representing Kodak’s worldwide operations, and a self-assessment tool was developed. In 2009, sites will complete the self-assessment, and define their corrective action plans and begin implementation. OIR 2.50 2.00 2008 Goal 1.8 1.50 1.00 0.50 0.00 1ST Q 2ND Q 3RD Q 4TH Q EAMER MFG 0.82 0.65 0.94 0.43 GAR 0.08 0.10 0.00 0.12 LAR 0.15 0.00 0.08 0.00 US&C 2.63 2.46 2.42 2.28 EK CO. 1.68 1.44 1.48 1.41 YE 2008 1.52 EAMER: European, African and Middle Eastern Region; GAR: Greater Asia Region; LAR: Latin American Region; US&C: United States and Canada Region *The primary safety performance metric for Kodak’s worldwide operations is the Occupational Injury/Illness Rate (OIR); a measure of the rate of occurrence of work related occupational injuries and/or illnesses that warrant medical treatment greater than first aid, or result in restricted and/or lost time. 35 Safety and Health Safety Recognition Employee Well-Being External recognition is an important indicator of the success of our zero-injury philosophy and safety progress. In 2008, Kodak received the following safety awards. • Fourteen Kodak company units received Safety Excellence Awards from the International Imaging Industry Association (I3A). To help employees balance their commitment to the business with their personal, family and community responsibilities, Kodak has created a comprehensive Work/Life Effectiveness Program. • Two Kodak Graphic Communications Group units – the Research and Development facility in Oakdale, Minnesota and the Distribution Center in Columbus, Georgia – received I3A Best in Class Awards. • Online access to a variety of work/life topics • Three company units in Xiamen, China received a Safe Enterprise Award from local safety administration In addition, the following are examples of how all Kodak operations and employees around the world work together to protect the health and safety of our employees. • In Columbus, Georgia, employees reduced their occupational injury rate by 62% from 2007 by taking actions such as reducing the time to complete safety-related work orders. • Employees in Pereslavl, Russia continued their run of no lost time incidents since January, 2003. • By embracing an attitude of “working and living in accordance with safety”, 70 warehouse and shipping employees in Osterode, Germany celebrated five years without a lost time incident. Work/Life Effectiveness Initiatives provide: • Personal telephone consultations • Emergency backup care for children and older relatives • Noontime seminars on managing stress, parenting, caring for older relatives and paying for college • Flexible work schedules that help employees balance business and personal needs • External referrals as needed The Employee Assistance Program provides guidance and direction to Kodak employees facing personal challenges. Confidential assessment, counseling and referral services are available 24 hours a day, 365 days a year. Consulting with regard to corporate policy and regulatory matters also is available. • Employees in Weatherford, Oklahoma, marked two million hours since the last lost time incident in 1998. • In Rochester, New York, leaders launched a campus-wide Call to Action to demonstrate their commitment to safety, and priority on safe operations and a safe workplace. 36 Kodak expects that suppliers and distributors will comply with applicable laws and generally accepted standards relating to Supplier Responsibility business ethics, labor and environmental protection. Supplier Responsibility It is the policy of Kodak to obtain the best value from its suppliers and to maintain the highest ethical standards in dealing with them. Additionally, Kodak is committed to providing products that are safe and that minimize environmental burdens through their product life-cycle. The HSE Performance Standard complements the Supplier Performance Expectation by explicitly establishing the expectations that suppliers will: We cannot meet this global performance expectation unless we engage our suppliers. Our interaction with suppliers, however, goes well beyond environmental considerations. We encourage and foster relationships with suppliers who exhibit strong ethics, fair labor practices, respect for diversity, and a good record in many other social aspects. • Maintain safe facilities and operations, and Our desire to work with suppliers who reflect Kodak’s own commitment to corporate responsibility is manifested in our Supplier Quality Process. Through this process, Kodak has established Supplier Performance Expectations that cover traditional performance issues of price, quality and service, as well as Health, Safety and Environment (HSE) Excellence, and Supplier Diversity. Our Supplier Performance Expectations can be found at www. kodak.com/go/purchasing. Health, Safety and Environment Excellence With respect to HSE Excellence, Kodak expects its suppliers to: • Meet and preferably surpass, all applicable regulatory requirements • Work with their own suppliers to ensure compliance throughout their supply chain • Minimize waste by recycling, recovery or reuse • Work constructively with Kodak to resolve mutual environmental concerns, and • Comply with Kodak’s HSE Performance Standard and HSE Product Specifications. • Operate in an environmentally and socially responsible manner, • Ensure responsible employment practices, • Provide goods that are safe and minimize environmental burdens throughout their life-cycle. Responsibility for monitoring and verifying that suppliers meet this Standard lies with Kodak’s Supplier Social and Environmental Responsibility (SER) Assessment Program. The Standard is communicated to suppliers through contracts, purchase orders and other types of agreements as well as through e-mails and training events. A supplier’s ability to meet our requests to provide us with environmentally responsible products and operate in an environmentally, ethically and socially responsible manner is used in purchasing decisions. In addition to the more general performance expectations, suppliers are required to meet HSE Product Specifications. These Specifications include lists of restricted materials and other HSE productrelated requirements for equipment, components, media, consumables, and packaging. Suppliers are required to provide declarations to verify conformance to these Specifications. To strengthen our supplier process and align with industry best practices, Kodak has joined the Electronics Industry Citizenship Coalition (EICC) and has committed to implementing the EICC Code of Conduct throughout the supply chain. EICC outlines standards to ensure that working conditions among manufacturers in the electronics industry are safe, workers are treated with respect and dignity, and that manufacturing processes 37 Supplier Responsibility are environmentally responsible. Expectations set in the EICC Code of Conduct are monitored and verified through an EICC sponsored supplier Self-Assessment and On-Site Assessment Process. The EICC Code of Conduct is available in English, Chinese, Japanese, and Spanish at http://www.eicc.info/. Supplier Diversity With respect to Supplier Diversity, Kodak expects its suppliers to: • Support Kodak’s supplier diversity initiatives when applicable, • Have an effective program for purchasing from diverse suppliers and increase the percentages of purchase with these diverse suppliers each year, and • Work collectively with Kodak’s Commodity Managers to identify and utilize diverse suppliers. Kodak is committed to being a leader in promoting supplier diversity, which provides us the means to engage the best, most agile and innovative companies. Our policy is to use diverse businesses in our supplier base in order to expand opportunities for all segments of society to experience economic progress and competitive advantage. Kodak’s focus on supplier diversity has earned recognition in Black Enterprise magazine, which included Kodak on its list of 15 Best in Supplier Diversity in 2008. This is the third consecutive year of recognition from Black Enterprise magazine. Additional Supplier Expectations The company’s other overarching policies, such as equal opportunity employment (EOE) and privacy, also apply to suppliers, vendors and contractors and hold them to the policy standard. The EOE policy addresses issues of discrimination and harassment, unprofessional behavior, retaliation, and the right to collective bargaining while the privacy policy addresses the handling of personal data. Supplier Management Process Kodak has in place three tools – a Supplier Sourcing Process, Quality Assessment, and Business/ Technical Reviews – that are used to manage the company’s key critical suppliers, which represent approximately 80% of total spend and 20% of the supplier base. In addition, the Supplier SER Assessment Program employs an iterative, risk-based prioritization to select suppliers for social and environmental responsibility self-assessments and on-site audits, as warranted. Where necessary, HSE components are built into the quality assessment process. In 2008, Kodak organized a Supplier Diversity Council to review opportunities to refocus spending with minority suppliers. While Kodak outperforms many peer technology companies in supplier diversity, the company launched a call-to-action that established progressive increases in supplier diversity performance for 2008 and 2009. Women and minority business owners are encouraged to contact Kodak through several channels, including the company’s web site devoted to developing these relationships www.kodak.com/ go/supplierdiversity. Kodak’s commodity managers rely on a database created from online registrations from the website. 38 Kodak promotes a work environment of equal opportunity for allemployees, and treats its employees in a non-discriminatory manner. Our Employees Kodak is committed to employing a diverse work force, and to building and maintaining an inclusive work environment. Our Employees Kodak is committed to providing a work environment that is free from discrimination and harassment in any form. Kodak’s policy is to comply with all applicable laws that provide equal opportunity in employment for all employees and to prohibit unlawful discrimination in employment. Kodak’s policy is not to discriminate by reason of race, color, religion, sex/gender, gender identity, sexual orientation, marital status, pregnancy, citizenship status, national origin, age, disability or veteran status. In addition, in each country in which it operates, Kodak will comply with all applicable laws prohibiting employment discrimination based on any other factor. Several foundational factors contribute to diversity and inclusion at Kodak, including: • The Global Diversity Office, an entity charged with developing and providing leadership to implement a global strategy. • Eight employee networks for women, people of color, the gay, lesbian, bisexual, transgender community, veterans, and people with disabilities. • Senior leadership’s engagement in diversity and inclusion, from the CEO to the company’s Executive Council, and accountability measures to ensure Kodak’s commitments to diversity and inclusion are met. As a global digital leader, our success relies upon not only an environment free of discrimination, but also an engaged, diverse work force focused on growing an organizationally inclusive environment. Kodak has focused on diversity and inclusion and has maintained representation of women and people of color as a percentage of its global workforce. Kodak’s diversity and inclusion philosophy includes: • A commitment to a diverse and organizationally inclusive environment; • A global employee population that reflects appropriate demographics and helps direct our efforts; and • Knowledge and skill development for global inclusion in order to execute specific diversity expectations. Across the globe, Kodak customers are more diverse and multicultural than ever. As we reach out to their cultures and communities, we need the creativity of diverse minds to fuel our digital innovations, as well as insights that tell us how our marketing messages will be received. The insights from our diverse employees help us tailor our products for different consumers. Organized for Effectiveness At Kodak, commitment to diversity and inclusion starts at the top. Currently, two women and four minorities serve on Kodak’s 11 member Board of Directors. In 2008, Chairman and CEO Antonio M. Perez led the Board to identify diversity and inclusion expectations as components of its performance metrics. Perez is also chair of the Senior Executive Diversity and Inclusion Council, which sets policy, gives direction, and monitors results. 39 Our Employees Kodak recognizes the right of our employees to join associations of their own choosing or to refrain from joining, and the right to collective bargaining unless otherwise prohibited by law. Under Perez’s leadership, diversity and inclusion is a business imperative and was a key element within the “grow people” strategic priority of the company’s 2008 business plan. Senior leaders are required to include diversity and inclusion goals within their units’ business plans. In addition, regular diversity and inclusion strategy integration reviews, which began in 2007 with the CEO’s direct reports, were extended in 2008 to the next level business leaders to ensure continuity and engagement in each business operation. To assist its businesses, Kodak has also established a Multicultural Marketing Council sponsored by the Chief Diversity Officer and the Chief Marketing Officer, and led by the Director of Multicultural Marketing. Those businesses with revenue targets for multicultural marketing are required to designate a champion. Diversity is also a main topic of executive learning events, including “Leaders Leading” sessions, which are designed to engage executives in diversity scenarios and education. Senior Leadership Commitment The key to this structure is commitment from senior managers. Eight Corporate Diversity and Inclusion Champions, appointed by the CEO, serve as advocates for key diversity constituencies. Each employee network also has a Management Sponsor, giving it access to leaders of the company. Kodak holds senior leaders accountable under three key diversity metrics and how they perform against these metrics affects their compensation. The metrics are: • Representation • Supplier diversity • Personal leadership of diversity and inclusion Personal leadership means: • Personal involvement in diversity recruitment, retention and development – including mentoring and sponsorship of diverse talent. • Actions taken to create a leadership team and an organization with an inclusive environment that stimulates new thinking, creativity and healthy debate. • Incorporation of multicultural marketing strategies in their business or marketing plans. • Support of employee networks, diversity councils and other initiatives. In addition, a CEO Diversity Award, introduced in 1998, is presented annually to an executive-level individual who role-models exemplary leadership and embraces a mindset and behaviors that prioritize diversity and inclusion at Kodak. Nominations for the award are submitted by Kodak employees. Kodak’s John Bryant, Director of Corporate Engineering and Vice President, Office of the Chief Technical Officer, was the most recent to earn this recognition. Focused Recruitment In 2008, Kodak has renewed its efforts to recruit and retain diverse talent. The Chief Diversity Officer was named the Corporate Champion for Talent Acquisition and will partner with a talent acquisition consultant with expertise in recruiting diverse talent. A newly established Diversity Recruitment Council will leverage hiring opportunities and company-wide initiatives. Diversity Best Practices CEO Initiative In November 2007, CEO Antonio Perez became chairman of the Diversity Best Practices CEO Leadership Initiative. Diversity Best Practices is an organization focused on sharing best practices with its member companies and helping them develop innovative solutions for culture change. Perez continued to serve as chairman of the CEO Leadership Initiative in 2008. 40 Our Employees The Diversity Best Practices CEO Leadership Initiative is a five-point plan driven by the chief executive officers of the member companies to support and advance diversity and inclusion. The initiative includes CEO speakers, roundtables and forums, the CEO Diversity Leadership Magazine, a system for stating, communicating and tracking diversity and inclusion goals, an annual leadership summit engaging top thought leaders and diversity practitioners, and a collection of CEO advice and counsel regarding diversity on a member website. Kodak Honored for Diversity Kodak’s commitment to diversity continued to be recognized through many honors and awards in 2008. A complete list can be found at www.kodak.com/go/diversity. • In 2008, Kodak was recognized by B’nai B’rith International for commitment to innovation, diversity and philanthropy with the organization’s Distinguished Achievement Award • Kodak was named to Black Enterprise magazine’s list of 40 Best Companies for Diversity. Kodak was also listed among the top 15 companies for both Corporate Board Diversity and Supplier Diversity. • Once again in 2008, Kodak was included on the list of “Best Places to Work for GLBT Equality.” Honorees were selected by the Human Rights Campaign Foundation (HRC), a civil rights organization working to achieve gay, lesbian, bisexual and transgender equality. Kodak has received a perfect score every year since the Equality Index began in 2002. “It is just a way of life for us, just like any other business topic like quality, pricing, product portfolios. Diversity is not different and no less important,” —Antonio Perez. and Information Technology. Readers of Diversity/ Careers gave 100 companies top rankings for their support of minorities and women, their attention to work/life balance, and their commitment to supplier diversity. • In Brazil, the journal Valor Económico named Kodak among the best companies in people management. Based on a survey conducted with Hewitt Consulting, Valor Económico recognized Kodak for “the condition of emotional and intellectual commitment that results in behavioral changes.” Employee Programs In addition to its diversity and inclusion initiatives, Kodak maintains programs for managing employee relations. Outplacement Services In the United States and many other countries around the world, when business conditions require significant downsizing of operations or plant closure, Kodak provides comprehensive Outplacement Services to affected employees at every level of the company. These services may include transition counseling, training and coaching on resume preparation and interviewing, job search tools and resources, and expanded networking opportunities. Resolution Support Services Because Kodak is committed to provide effective means for responding to employee concerns, the company has established a unit known as Resolution Support Services (RSS) within Global Diversity and Community Affairs. RSS supports employees in appealing management decisions in order to resolve workplace concerns, which diminishes the need for external sources of support and problem solving. The services offered by RSS have been selected from state-of-the-art elements of proven alternative dispute resolution strategies. • Also in 2008, Kodak was named to the “Readers’ Choice” list of Diversity/Careers in Engineering 41 Kodak respects the economic development priorities of the developing countries in which it does business. Our Communities Kodak maintains a philanthropic program that reflects its global corporate goals in community development, business opportunity and quality of life Our Communities True to the legacy of its founder, George Eastman, Kodak continues its commitment to the communities in which it operates. At the heart of this commitment is an active community relations and contributions program designed to support the achievement of company goals. As such, programs and initiatives are focused to instill employee pride, build public trust, foster education, respond to community needs and enhance company image. Kodak support takes many forms and is based on its corporate values: respect for the individual, uncompromising integrity, trust, credibility and continuous improvement, personal renewal, and recognition and celebration. In 2008, Kodak contributed approximately $3.23 million to organizations around the world. In addition, Kodak donated an array of products to schools and not-for profit organizations. Kodak Sponsors American Greenways Since 1992, the Kodak American Greenways program —a partnership with The Conservation Fund and the National Geographic Society—has awarded more than 650 seed grants across the United States, totaling roughly $800,000, to support the development of community-based, actionoriented greenways projects. The small grants, generally between $500 and $1000, are designed to stimulate the planning and design of greenways in communities throughout America. The program also honors groups and individuals whose ingenuity and creativity foster the creation of greenways. In 2008, 29 nonprofits and other organizations from Alaska to Vermont received grants to support local greenways, trail and open space projects. Kodak at the Olympics Kodak put its advanced digital imaging technologies to work in several ways at the Beijing 2008 Olympic Games, helping to support attendees’ security, photojournalists’ images, and athletes’ health. The company’s imaging technologies were used to create more than 1.2 million security badges and corresponding credentials, and Kodak supplied all necessary equipment, materials and technical support for this important task. The Kodak Image Center, a 22,000-square-foot facility in the main press center, served the needs of more than 1,500 professional photographers and news agencies with both traditional and digital photographic products and services. Through an agreement with Carestream Health, Inc., formerly Kodak’s Health Imaging Group, the company provided the Olympic Polyclinic with medical imaging and radiology capabilities. This enabled radiologists to capture digital x-ray images of injured athletes within a matter of seconds. When the Olympics ended, the equipment provided by Kodak and Carestream was donated to local healthcare organizations in Beijing. To ensure proper environmental management practices, Kodak assisted the organizing committee in establishing a battery recycling program and participated in the Olympics’ solid waste recycling programs for plastics, paper, wood and metal. Voluntarily, Kodak established a photoeffluent treatment system that combined treatment at an approved Beijing treatment facility and on-site wash water recycling to ensure zero photoeffluent to the sewer. 42 Our Communities Aluminum Plate Recycling Benefits RONALD MCDONALD HOUSE Charities In 2006, Kodak launched an aluminum plate recycling program for customers as part of its Printer’s EnviroServices Program. This innovative service allows customers to easily recycle aluminum plates while receiving maximum value and preserving the environment. As an added incentive, customers also receive a RONALD MCDONALD HOUSE Charities receptacle to collect aluminum cans at their facilities when they join the program. A portion of the proceeds from the aluminum plate recycling plus 100% of the aluminum can revenue is donated to charity. In 2008, 6.8 million pounds of aluminum were recycled and $18,700 was donated to the RONALD MCDONALD HOUSE. Kodak Supports Photovoices - Indonesia Kodak is proud to be able to continue its support of Photovoices International as it initiates its latest work in Indonesia as a National Geographic Magazine Project. An innovative conservation program that integrates photography, local people and traditional knowledge to help shape conservation decisions, Kodak has supported Photovoices from its early days in the Yunnan Province of China. Founded in 2000, Photovoices provided some 250 Chinese villagers with KODAK Cameras and film to document their rich environment, culture and ancestral protection of the land’s natural diversity. Monthly interviews with the photographers about the stories behind the pictures have produced valuable information that is helping shape effective conservation decisions. In 2008, Kodak donated digital cameras for the Photovoices International project at sites of biological and cultural significance in Indonesia. Single Use Camera Recycling Benefits UNICEF Managed by Entrepid Communications, Ltd on behalf of Kodak, a donation is made to UNICEF, the United Nations Children’s Fund, for every single use camera returned in Europe. The money is then used by UNICEF to provide doses of polio vaccine. In 2008, 410,000 cameras were collected, enabling 68,000 children to be immunized against polio. The Nature Conservancy In 2008, Kodak continued its long standing relationship and support of The Nature Conservancy and its advisory role on The Nature Conservancy’s International Leadership Council. Made up of corporate representatives from many industries, the Council explores solutions to conservation challenges through cooperative partnerships between the business community and The Nature Conservancy. World Resources Institute As a 2008 member of the World Resources Institute’s Corporate Consultative Group, Kodak has benefitted from the exchange of leading-edge thinking on shared challenges with World Resources Institute experts and other peer companies, as well as access to environmental intelligence valuable to the pursuit of our sustainability goals. Kodak Helps Publish Photo Book On Hurricane Katrina’s Continuing Impact Kodak has lent significant support to photojournalist Chris Usher and a book of his photos that highlights the past and present impact of Hurricane Katrina, which made landfall on the United States Gulf Coast in August, 2005. The photos and interviews in the book, accumulated over three years, illustrate the fear, fatigue, frustration – and ultimately, the resilient spirit – of those who survived the devastating hurricane. Through the support of Kodak, Usher is donating all of the profits from the book, entitled One of Us, to relief organizations providing post-Katrina aid and assistance. After providing film and processing for the book, Kodak enabled the digital, on-demand printing and online ordering of One of Us in partnership with ColorCentric, A KODAK NEXPRESS Digital Production Color Press customer. 43 Our Communities Kodak Launches President Obama Inaugural Photo Album Kodak has partnered with outstanding photojournalists and Epicenter Communications to create a print-on-demand Barack Obama Inaugural Album that documents the historical American moment of the Obama presidency. Kodak also has provided the Smithsonian National Museum of American History with large-scale photographic archival prints from the Inaugural Project that were featured in a Smithsonian exhibit. Using KODAK Print-On-Demand Technology, consumers can visit www.InauguralAlbum.com, upload their own inaugural photographs alongside professional images and immediately create their own version of the official album. The Power of Storytelling Since motion pictures began, Kodak has enjoyed a special relationship with the movie industry – and especially with filmmakers, the great storytellers of our times. The company has collected nine Oscars for technical achievements, has continued to provide innovative products to the industry, and annually hosts the Academy Awards at the Kodak Theater in Hollywood, California. It is Kodak’s support for the individual filmmaker, however, that perhaps has the greatest positive impact on the millions of people around the world who are entertained, educated and frequently enlightened by the works produced by these craftspeople. Kodak’s assistance is often provided for students or other rising, independent filmmakers – people with compelling stories to share, but without the financial means to complete their efforts. For more information on Kodak’s many initiatives to promote individual filmmakers and film schools, please visit www.kodak.com/go/education. EASTMAN Scholarships and KODAK Faculty Grant Awards Kodak supports both students and teachers in the film industry through the EASTMAN Scholarship and KODAK Faculty Grant programs. The awards are funded by an endowment established by Kodak and administered by the University Film and Video Foundation (UFVF), a non-profit organization whose mission is to advance the study, practice, and preservation of motion picture and video production. Student prizes include a tuition stipend and product grants. The faculty grant is awarded to a professor whose project demonstrates an ability to enhance skill development in film production for emerging talent and classroom education. The awards are made each year at the UFVA Conference, which has been sponsored by Kodak since 1946. 44 Our Communities KODAK Filmschool Competition Now in it’s ninth year, the KODAK Filmschool Competition is designed to recognize the creativity and skills exhibited by student cinematographers in the collaborative process of visual storytelling. In 2008, four students - one from each major region of the world – were named first-place winners. Winning films from the competition are shown at the annual Clermont-Ferrand Film Festival, the largest and best-attended short-film festival in the world. Kodak has sponsored the Festival for more than 20 years. Student Commercial Awards In addition to feature and short films, Kodak recognizes the talent in the field of advertising with its KODAK Student Commercial Awards. The competition is designed to recognize the creativity and skills exhibited by student cinematographers in the collaborative process of visual storytelling and is open to students and recent film school graduates from Asia Pacific, Latin America, United States & Canada, and the European region. Kodak Sponsors Camera d’Or and Cinefondation at Cannes ‘08 For the 21st consecutive year, Kodak was the official partner of the Cannes Film Festival and sponsor of the Camera d’Or prize – awarded to the year’s best feature-length film submitted by a first-time director. The 2008 winner was British director Steve McQueen for his film Hunger. Kodak also partners with the Cinéfondation, whose main objective is to gain recognition for young filmmakers worldwide by presenting their films at Cannes and to facilitate their professional training and placement within the industry. Cannes Lions Festival For the ninth consecutive year, Kodak sponsored the Young Director Award, an initiative of the Commercial Film Producers of Europe at the Cannes Lions International Advertising Festival. Student filmmakers are invited to make a 30-second commercial from one 400-foot roll of KODAK Film, using advertising briefs created by major agencies. Each commercial is then judged on cinematography, post-production, creativity and overall look. 45 Our Communities Kodak Supports its Hometown Kodak continues to support Rochester, New York, its headquarters since 1880, through community involvement that helps make Rochester a great place to live, to work, and to raise a family. Financial Support for Eastman Theatre In 2008, Kodak announced it would provide $10 million to the University of Rochester to support the renovation and expansion of Eastman Theatre, the 85-year-old Rochester landmark built by George Eastman as part of his vision to enhance the arts in the community. Kodak’s support was provided through the company’s Rochester Economic Development Fund, which was created in 2004 to invest in the local community. In recognition of the company’s support, the performance hall will be renamed “Kodak Hall at Eastman Theatre” when the renovations are completed. In acknowledging Kodak’s contributions, University of Rochester president Joel Seligman said the investment “will have far-reaching benefits for the Eastman School of Music, the Rochester Philharmonic Orchestra, and the people of Rochester.” Eastman Business Park Reflects Heritage, New Role In 1891, George Eastman purchased an apple orchard north of Rochester. He constructed four buildings there for the manufacture of film, and thus began Kodak Park, which would one day become the largest manufacturing site in the Northeastern United States. For decades and decades, the manufacture of film and the pursuit of research at Kodak Park were prime drivers in the Rochester economy. In line with the company’s transformation to a digitally oriented company, Kodak Park also has been transformed and renamed, emerging as Eastman Business Park – a diverse industrial facility that once again is helping to drive growth for Rochester’s economy. Eastman Business Park today remains Kodak’s largest worldwide industrial and research site. Yet, it also is home to 28 other companies, and Kodak is working diligently with local and state economic officials to attract additional tenants to the site. Eastman Business Park, which includes 900 acres and more than 100 buildings, often is referred to as “A City within a City,” because Eastman wanted a self-sufficient manufacturing facility with a highly efficient and highly reliable infrastructure. The park features a full range of services, including utilities, on-site railroad, facilities management, on-site security and access control, emergency medical services, and its own on-site fire department and first response units. This enables tenants to concentrate on their core businesses, knowing they are receiving the highest quality services at the lowest possible cost. Kodak employs more than 6,000 people at the site, the other businesses provide another 4,000 jobs in Rochester, and the influx of tenants continues at a steady pace. 46 Our Communities Renovations to the Kodak Tower Since 1912, the Kodak Tower has been a landmark on the Rochester skyline and a symbol of the close ties between the company and the community it calls home. Now, Kodak has embarked on a three-year project to repair and restore the exterior of the iconic, 19-story building, including the unique architectural features on the top three floors, the intricate terra cotta masonry, and the promenade roof. Because of the extensive nature of the repairs, Kodak worked with the New York State Department of Environmental Conservation to relocate a peregrine falcon nesting box in the rooftop cupola. Over the last ten years, a single peregrine falcon female, named Mariah, hatched 38 falcon chicks, to the delight of local observers and others around the world who watch the birds on a special web-cam. Kodak and the United Way Once again in 2008, Kodak was recognized as the largest contributor (employee and corporate combined) to the United Way of Greater Rochester. Kodak Rochester employees pledged $1.9 million, while Kodak’s corporate gift was $1 million. The combined $2.9 million helped United Way raise $32.5 million for the Rochester community. Technology’s new Native American Future Stewards Initiative. The students received information on Kodak’s internship programs, watched Kodak videos, and enjoyed hands-on experience with KODAK Products from printers to kiosks to cameras. The Native American Council at Kodak, a network of employees, organized the students’ day-long activities in an effort to build relationships with the Native American community and strengthen the company’s commitment to fostering diversity in potential future employees. Trailblazers of Science and Technology In 2008, Kodak sponsored and co-produced a Black History Month supplement for Rochester’s Democrat & Chronicle newspaper that focused on “Trailblazers of Science and Technology.” In addition to well-known African-Americans who have helped shape the world, such as aviation pioneer Bessie Coleman and astronaut Mae Jemison, the supplement highlighted five Kodak scientists whose innovations have helped Kodak become a digital imaging leader. The supplement was distributed to about 15,000 middle-school students throughout the five-county greater Rochester region. In addition to financial support, 1,500 Kodak employees volunteered at over 70 locations in United Way’s 2008 Day of Caring in Rochester. Their efforts had a direct, positive, and often visual impact on the community. Kodak Headquarters Hosts Students From Seneca Nation High school students from the Seneca Nation received an inside glimpse of Kodak in 2008 as part of a program hosted by Rochester Institute of 47 Our Communities Kodak Participates in Campaign To Promote Rochester Kodak, along with many of its other business neighbors, is participating in a community-wide campaign designed to build a stronger sense of pride in the company’s headquarters city of Rochester. The campaign, called WeROC, touts the many reasons Rochester is a great place to live and do business. EPA CARE Program The EPA’s Community Action for a Renewed Environment (CARE) grant program supports communities in creating and using collaborative partnerships to reduce exposure to toxic materials. Eastman Business Park in Rochester, NY is one of several local industries that have joined forces with representatives from county and state government and local colleges to support this effort. The Collaborative successfully completed projects in the areas of lead hazard reduction, small business air pollution prevention, neighborhood toxics education, diesel fuel exhaust reduction, and other mobile source air toxics reduction. Committing to go beyond the original EPA grant period, in 2008, CARE pursued vehicle idling reduction at local schools and the collection of old or expired pharmaceuticals. Kodak provides in-kind support to the program. 48 Our Communities Kodak in the United Kingdom Additional Support With a history that goes back to 1891 with the construction of its factory in Harrow, England, Kodak’s presence in the United Kingdom has become integral to the company and the community. In addition, Kodak has also provided donations and support to the following initiatives in 2008: • The Iain Rennie Hospice at Home charity, which provides specialist nursing care for patients with a terminal or life-threatening illness. Kodak and UNICEF Since 2000, Kodak in the United Kingdom has been supporting UNICEF, the United Nations Children’s Fund, through a wide range of activities such as co-branding of picture CD packing and processing envelopes, website links, the online Christmas card collaboration and photo magic card initiatives. • Comic Relief, a Great Britain-based charity whose vision is “a just world free from poverty.” • The Peterborough Youth Voice project which assists young people involved in an alternative arts and music projects working toward various national accreditations. UNICEF and Kodak worked closely together to make a difference in the lives of the many thousands of children who have been orphaned because of AIDS in Lesotho. Home gardening and cooking kits, purchased with funding support from Kodak, allow these children to cultivate their own vegetables and turn them into nutritious meals. UNICEF is there to ensure that they receive the training they need to make the most of their crops. Employees, Children Run To Benefit Asthma UK As its national charity, Kodak is supporting Asthma UK, the only United Kingdom. charity funding research to fight asthma. The money donated provided funding for the Asthma UK children’s 2K running event and the Kick-Asthma children’s website, which provides information for children with Asthma. 49 Photo Credits About the Photographs We are proud to enhance this year’s report with the photography of Kodak employees from the Health, Safety, Environment and Sustainability organization. Cover: Cheri Mallie, Rochester, N.Y., Girl with Wings Cover: Judith Van Norstrand, Rochester, N.Y., Scottish Band Cover and page 7: Sima Chervin, Rochester, N.Y., Girl with Pigeons Cover: John Heyer, Rochester, N.Y., Wedding Cover: David Kiser, Rochester, N.Y., Dog Cover: Ian Barford, Paris, France, Fish Snack Cover: Sue Marsjanik, Rochester, N.Y., Boat Cover and page 26: John Heyer, Rochester, N.Y., Dragonfly Cover and page 47: Jackie Schlosser, Rochester, N.Y., Montmartre Restaurant Cover and page 34: Nancy Laurie, Rochester, N.Y., Kayaks Cover: Nancy Laurie, Rochester, N.Y., Friends Table of Contents and page 46: Denise Zimmermann, Rochester, N.Y., Key West Table of Contents: Sima Chervin, Rochester, N.Y., Boats in Mexico Page 3: Sue Marsjanik, Rochester, N.Y., Dock Page 9: Stefan Schmid, Stuttgart, Germany, Mushroom Page 10: Lydia Li, Xiamen, China, Sewing Woman Page 12: Karen Messineo, Rochester, N.Y., Siblings Page 15: Thomas Smithgall, Rochester, N.Y., Dog on Raft Page 22: John Piampiano, Rochester, N.Y., Italian Facade Page 23 and back cover: David Kiser, Rochester, N.Y., Fog Page 31: Lydia Li, Xiamen, China, Fisherman Page 36: Cheri Maillie, Rochester, N.Y., Butterfly Page 38: Cheri Maillie, Rochester, N.Y., Girl with Peaches Page 44: Greg Batts, Harrow, U.K., Flag Page 45: David Rice, Rochester, N.Y., Swim Fins Page 49: Soma Chengalur, Rochester, N.Y., Crew Back Cover: Judith Van Norstrand, Rochester, N.Y., Hammock 50 © Eastman Kodak Company, 2009. 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