Welcome to the EBC/AIM Best Practices in Corporate Stewardship Walmart Presentation • We hope to make this presentation available shortly EBC/AIM Best Practices in Corporate Stewardship The Core Ideas of Corporate Stewardship Corporate stewardship: Effective use of resources Explicit consideration of the environmental impact of a company’s products, services, and activities Interest in stewardship is driven by: Environmental costs are a large and growing corporate expense Executives view environmental and social responsibility in a more strategic way Sustainable development is: In the interest of all constituents Necessary for both business and the environment to thrive Background The Evolution of Environmental Policy: A Distilled History Environmental Protection Era Environmental Stewardship Era 1963 – Clean Air Act 1987 – 1969 – National Environmental Policy Act Brundtland Report (UN) balance environmental protection with economic development 1970 – EPA formed 1989 – 1972 – Clean Water Act Valdez Principles (Now CERES) ten elements for environmentally friendly practices 1976 – Resource Conservation and Recovery Act (hazardous waste focus) 1990 – 1980 – Superfund Established (cleanup infrastructure and penalties for violations) GEMI founded (Global Environmental Management Initiative) – framework for environmental excellence 1992 – Rio de Janeiro Earth Summit – 100 nations pledge to implement sustainable development practices 1995 – ISO 14001 – standard for environmental management systems (EMS) Background Encouraging Views About Corporate Stewardship “There are a number of things every company can do at little or no cost to improve its environmental performance” – Frank Alix, CEO of Powerspan Corp. “By implementing an energy management program, reducing unnecessary uses and costs, and installing energy savings methods, a company can save 15 to 30 percent of energy costs.” – Quentin Kelly, CEO of World Water Corp. “Making the decision to be more environmentally friendly excites your employees and the people around you. It shows you are the kind of company that can think about things on a bigger scale.” – Darren Hammell, CEO of Princeton Power Systems “Because we are environmentally committed, people who have ideas come and seek us out.” – Steve Demos, President of WhiteWave Inc. [Source: Inside the Minds: The Green Company 2004] Background Best Practices in Corporate Stewardship The goals of this project are to: Develop a perspective on current best practices through the analysis of recent public reports from 25 leading companies in the Northeastern U.S. Benchmark activities and views of local companies through a survey of 71 Massachusetts-based companies Facilitate a discussion of opportunities and issues Background Best Practices from Leading Companies Consumer (7) Ben & Jerry’s Gillette Johnson & Johnson Kodak Pepsico Polaroid Unilever Financial (4) Chittenden Bank Citigroup State Street Corp. Wainwright Report Analysis Consumer 28% Financial 16% Industrial 28% Utilities/ Services 28% Industrial (7) BAE Systems GE Praxair Raytheon Textron United Technologies Xerox Utilities/Services (7) Consolidated Edison First Environment International Paper National Grid PPL Corp. UPS Verizon How Organizations View the Subject of Stewardship Industrial & Consumer Utilities/Natural Resources Services Financial Institutions 6 5 4 4 3 Report Titles Report Analysis EHS 3 Environmental Stewardship Sustainability Social Responsibility Corporate Citizenship Other How Companies Approach Reporting Reporting Frequency 4% Less Frequent Unspecified Annual Reporting Guidelines Followed 32% 64% 40% GRI 16% CERES 16% Other 28% Unspecified (of 25 reports analyzed) Report Analysis Subjects Typically Covered in Reports Executive Statement Vision/Strategy Policies Key Metrics Governance Management Systems External Audit Environmental Impact Social Impact Safety & Health Stakeholder Impact Economic Impact Ethics 0 Report Analysis 20 40 60 80 100 Examples of Report Contents UPS (used GRI guidelines) Raytheon (used various guidelines) Overview Sustainability statement Letter from the Chairman The UPS business model Company profile Financial information Governance Facts-at-a-glance Awards and recognition Economic impact Social impact Report Analysis Employment policies Health and safety Community investment Environmental impact Policies Emissions Energy Compliance Waste & recycling Conservation EMS Future goals Letter from the Chairman Overview/Vision Governance Ethics Policies and management systems People – EHS performance Environmental impact Sustainability programs Continuous improvement Metrics Product design Stakeholder assessment Waste Emissions Recycling Commuter impact Alternative fuels Energy Restoration Compliance Community Customer Suppliers Recognition Typical Goals Cited in Corporate Reports Most Frequently Mentioned (25-45%) 1. Emissions reductions 2. Health and safety 3. Waste reduction 4. Energy conservation 5. Regulatory compliance 6. Community outreach 7. Materials consumption Commonly Mentioned (15-25%) Reporting improvements Environmental impact assessments Product safety and sustainability Management systems Third party certification Others (under 15%) Natural resource consumption Recycling Management/Employee awareness Supplier awareness Economic/Financial sustainability Community quality of life Report Analysis Example of Goals Johnson & Johnson (partial list) All facilities ISO 14001 certified Review 100% of products, processes and packaging for environmental impact Zero non-compliance events/releases 100% implementation of site-specific conservation and outreach plans 100% implementation of energy best practices by site Conservation of materials/natural resources 10% cumulative avoidance of water use 5% cumulative avoidance of raw material use 10% cumulative avoidance of packaging use 10% cumulative avoidance of non-hazardous, non-product output 5% cumulative avoidance of hazardous non-product output 5% cumulative avoidance of toxic non-product output Products to be mercury-free by 2008 7% reduction in absolute CO2 emissions 1990-2010 Report Analysis Commonly Highlighted Areas Where Significant Gains Have Been Realized Most frequently mentioned 1. Energy consumption 2. Emissions reduction (CO2, greenhouse gas) 3. 4. 5. 6. Hazardous material consumption Recycling Green energy sources Natural resource consumption (especially water) Other notable gains Safety programs Product design EMS implementation Report Analysis Training programs Governance approaches Metrics Typically Used Most frequently identified (75-100%) Emissions (CO2, greenhouse gas, other) Energy consumption (electricity, fuel) Commonly identified (25-75%) Water usage Waste quantity (hazardous, nonhazardous) Spills, toxic releases Recycling quantity Injury/illness rates Raw material consumption Hazardous material consumption Sites audited/certified Report Analysis Others identified (under 25%) Green energy usage Effluent quantity Compliance violations Noise standard compliance Remediation actions Product certifications Office supply consumption Business travel miles Workforce diversity Volunteer hours Total spending Charitable contributions Public/customer surveys Example of Specific Metrics Tracked First Environment Inc. Electricity consumed (kwh) per location Natural gas (therms) consumed per location Greenhouse gas impact from energy consumed Greenhouse gas emissions CO2 emitted (MT) per employee Source of electricity-trends Business travel miles Office supplies consumed Report Analysis National Grid USA Environmental incidents ISO 14001 Certifications Electricity use Percentage of electricity from renewable sources Fuel use – land network Fuel use – fleet Water use Natural gas losses Electricity losses Solid waste Hazardous waste Recycled waste SF6 losses Cable oil losses Contaminated sites Remediated sites Remediation spending Vegetation management spending Generator emissions Coverage by Subject Area TOPIC None Minimal Moderate Extensive Products Processes Facilities / Green Buildings Transportation / Logistics Suppliers Customers Community Compliance Resource consumption Hazardous materials Waste / Recycling Emissions / Effluents Energy consumption Green energy Safety & Health Employee Development / Diversity Ethics 40% 36% 44% 64% 28% 40% 4% 24% 28% 28% 4% 4% 4% 40% 24% 32% 44% 40% 40% 28% 8% 20% 32% 8% 28% 32% 28% 20% 20% 20% 40% 4% 24% 24% 24% 48% 28% 36% 40% 32% 40% 56% 64% 60% 20% 52% 44% 32% 16% Report Analysis 8% 12% 4% 4% 52% 8% 8% 4% 20% 12% 16% 24% 16% 8% Examples of Best Management Practices Product – Polaroid’s sustainability training for product design teams and “Product Stewardship News Notes” for sharing best practices Facilities – Citigroup’s site-by-site environmental footprint database Suppliers – Unilever’s agriculture and fish sustainability programs Energy – Raytheon’s Enterprise Energy Team (2004 initiatives saved $1.3M annually) Waste – Xerox’s waste reduction and recycling programs Natural Resources – Wetlands and wildlife programs at National Grid, Gillette, and International Paper Community – Johnson&Johnson’s site-by-site community outreach programs Ethics – BAE’s ethics officers and ethics hotline Management – GE’s PowerSuite web-based tool for measurement, reporting, auditing, and best practices sharing Report Analysis EBC/AIM Corporate Environmental Stewardship Survey Analysis - 71 Survey Responses Survey Analysis How Many Companies Have Formal Environmental Policies? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Environmental Stewardship Sustainability Social Responsibility (based on 30 of 71 survey responses) Survey Analysis Do Many Companies Have Formal Environmental Management Programs? NO 31% Length of Time Program has Existed <2 Years 2-5 Years YES 69% 6-10 Years Over 10 Years Unknown 0% 5% 10% (based on 39 of 71 survey responses) Survey Analysis 15% 20% Do Companies Have Clearly Defined Environmental Goals? Most frequently cited goals: 1. Reduce waste generation/increase recycling 2. Improve energy efficiency NO 46% YES 54% 3. Meet regulations/achieve compliance certification 4. Follow internal EMS guidelines 5. Limit use and generation of toxics Survey Analysis Do Companies Use Specific Environmental Performance Measures ? Most frequently mentioned measures: NO 44% YES 56% Survey Analysis Third party audits EMS Reports Compliance verification Energy usage Emissions Waste generation, recycling rates Document procurement (e.g. to measure chemical use) Dollars invested in related capital improvements # new programs implemented and stewardship activities initiated How Rigorously is Performance Managed? Do many companies use a formal EMS (Environmental Management System)? No reply 31% NO 41% YES 24% How many companies undertake regular audits of their environmental performance and progress? No reply 47% NO 28% YES 38% (based on 39 of 71 survey responses) Survey Analysis YES 38% 25% internally 13% externally Do Companies Commit to Public Reporting About Environmental Programs, and How Often? Frequency of Public Reports YES 34% Annually Every 2-3 Years NO 66% No Specific Frequency 0% 20% (based on 38 of 71 survey responses) Survey Analysis 40% 60% 80% 100% What Types of Stakeholder Involvement Do Companies Practice? Employee Education Customer Involvement Employee Involvement Community Education Supplier Education Community Involvement Supplier Involvement Local Hiring Customer Education Survey Analysis Local Procurement Extensive Considerable Some Little or None How Effective are Companies in Achieving Their Objectives? No progress Reduced Use of Hazardous Materials Reduced Use of Scarce Resources Reduced Waste Increased Recycling of Waste Reduced Effluents and Emissions Improved Heat / Light / Noise Impact Increased Energy Efficiency Increased Transportation Efficiency Reduced Density / Congestion Impact Increased Employee / Public Safety Improved Regulatory Compliance Habitat Preservation/Restoration Local Hiring Local Procurement Survey Analysis Outstanding What Strategies Have Produced the Greatest Gains and How Are Strategies Changing for the Future? Greatest Gains in the PAST Greatest Potential for Gains in the FUTURE 1. Facility Improvements 1. Operating Practices 2. Measurement, Monitoring, Reporting 2. Education & Involvement 3. Production Processes 3. Production Processes 4. Leadership Focus 4. Facility Improvements 5. Education & Involvement 5. Leadership Focus 6. Operating Practices 6. Product Design 7. Goals & Incentives 7. Measurement, Monitoring, Reporting 8. Diversity In Employment 8. Goals & Incentives 9. Product Design 9. Community Outreach 10. Community Outreach 10. Diversity In Employment 11. Transportation Practices 11. Transportation Practices Survey Analysis What are the Biggest Environmental Concerns that Companies Have? 25% - Waste from their operations and/or use of their products, including OHM 24% - Air Quality affected by operations, including GHGs, VOCs, and sulfur 13% - Energy Sources and inefficiencies 9% - Water Treatment, effluent pollution, etc. 7% - Compliance with regulations and reducing liability 5% - Health & Safety Measures to reduce risks and protect employees 5% - Ecological Footprint Concerns about overall impact 5% - Other concerns, e.g. stakeholder influence, recognition for efforts Survey Analysis Summary Conclusions Trend toward “social responsibility” orientation Dominant focus = policy, governance, metrics & highlights Core subject areas generally well covered Emissions, hazardous materials, compliance, waste/recycling, community involvement, supplier involvement, safety & health Hot topics getting increasing attention Energy, ethics, resource consumption Future areas for greater development Stakeholder assessment, customer involvement, external audit Product, transportation, green buildings, green energy sources Natural resource conservation Report Analysis EBC/AIM Best Practices in Corporate Stewardship Best Practices: Energy and Climate Change Lisa Drake Natural Resources Manager Stonyfield Farm, Inc. April 20, 2006 Stonyfield Farm at a Glance • Founded in 1983 with 7 cows as an organic farming school • Now the #3 U.S. yogurt brand • $250 MM sales • 350 employees Stonyfield Farm Mission Best Practices to Address Climate Change • • • • • • Energy Efficiency Incorporating Renewable Energy Offsetting Emissions Evaluating our “carbon footprint” Looking at our supply chain Education and Advocacy Energy Efficiency By increasing efficiency over the past 10 years we’ve: – Achieved 33% reduction in energy use and CO2 emissions per lb. of product – Saved over $1.7 million dollars and 46 million kilowatt hours of energy – Efficiency gains have come from: • incorporating heat recovery Facility Energy Use Per Pound of Yogurt Produced • installing energy efficient equipment 400 300 200 01 00 02 CY 02 FY 03 FY 04 FY 05 FY FY FY 98 97 96 99 FY FY FY 95 100 0 FY • growth 600 500 FY • refrigeration system changes BTUs • green building practices 800 700 Incorporating Renewables • 50 kW solar array installed summer 2005 • Largest solar photovoltaic installation in New Hampshire and 5th largest in New England Offsetting Emissions • Investment in Carbon Offsets – – – – Wind Power Reforestation Energy Efficiency Methane Capture • Offset 100% of the CO2 emissions from our facility energy use since 1997 • Eliminated 40,000 metric tons of global warming gases – Equivalent to taking 7,300 cars off the road for a year • Wrote how-to guide for other businesses Evaluating our Carbon Footprint Business Travel (Air & Car) Employee Commuting Finished Product Transportation Raw Materials Transportation Electricity Employee Commuting 20,000,000 Finished Product Transportation 15,000,000 Raw Materials Transportation 10,000,000 Electricity 5,000,000 Propane Q4-00 Propane Q3-00 Q2-00 Q4-00 Q3-00 Q2-00 Q1-00 Q4-99 Q3-99 Q2-99 - 25,000,000 Q1-00 1,000,000 Business Travel Q4-99 2,000,000 30,000,000 Q3-99 3,000,000 Cow Methane in CO2 equiv. Q2-99 4,000,000 Polytainers Embodied Energy 35,000,000 Q1-99 5,000,000 Q1-99 CO2 equivalents (lbs) 6,000,000 CO2 equivalents (lbs) Facility Global Warming Potential Supply Chain Global Warming Potential Supply Chain: Packaging Foil lid replacement • • • • 16% less energy used 13% less water used 6% less solid waste created $1 MM saved annually Form, fill and seal • Reduced packaging by more than one third! • Efficiency and productivity gains • $1.8 MM saved annually Annual savings of 730 tons or 36 truckloads of materials Supply Chain: Organic • 40% of energy used on conventional farms goes into making chemical fertilizers and pesticides – Those chemicals not permitted in organic farming • Organic-rich soils trap carbon, keeping it out of atmosphere • Stonyfield Farm ingredient purchases support over 40,000 acres of organic farmland Education and Advocacy • Lids, Website, Advertising, PR • Environmental messages on over 150 million lids Challenges…. • Cows • Trucks/Distribution • Goal Setting: How do we account for growth? – Ultimately it’s absolute emissions that matter to the earth - not normalized per unit of output EBC/AIM Best Practices in Corporate Stewardship National Grid EBC/AIM Best Practices in Corporate Stewardship Managing Supplier Requirements John P. LeFebvre, P.E. Corp. Mgr. of Env. Affairs Polaroid Corporation April 20, 2006 OPERATIONS • CHEMICAL & POLYMER PLANTS • COATING OPERATIONS – NEGATIVE MANUFACTURING – POSITIVE SHEET – CONTRACT • BATTERY MANUFACTURING • FILM ASSEMBLY 50 RECENT EXCITEMENT 2001 - FILED CHAPTER 11 2002 - CHAPTER 11 EMERGENCE, PURCHASED BY BANK ONE 2005 - PURCHASED BY PETTERS GROUP WORLDWIDE NOW A PRIVATELY HELD COMPANY 51 ENDURING COMMITMENTS • PROTECT PEOPLE • PROTECT THE ENVIRONMENT • PROTECT OUR ASSETS 52 PROTECTING PEOPLE • OUR EMPLOYEES • OUR NEIGHBORS • OUR VENDOR'S EMPLOYEES • THE PUBLIC AT LARGE 53 PROTECTING THE ENVIRONMENT • TOXIC USE ELIMINATION • TOXIC USE REDUCTION • REDUCING EMISSIONS TO AIR, LAND, WATER • SOUND WASTE MANAGEMENT PRACTICES 54 PROTECTING ASSETS • MAINTAINING POLAROID'S REPUTATION • A SAFE AND HEALTHY WORK ENVIRONMENT – REDUCED INJURIES / WORKMAN'S COMPENSATION RATES • MAINTAIN PROPERTY VALUE • MINIMIZE BUSINESS INTERRUPTIONS 55 CONTRACTOR PRE-QUAL FORM 3. 4. # of Employees:_____________________________________________________ Identify the type(s) of work and potentially hazardous work related activities that you might perform at Polaroid (check all that apply /circle the primary one) a) Type of Work b) Involves these activities General Construction Use of Hazardous Chemicals Electrical Exposure to Electrical Energy Mechanical Welding/Torch Cutting HVAC Use of Ladders/Staging/Scaffolding Structural Use of Crane Asbestos Removal Confined Space Entry Roofing Line Opening Rigging Excavation/Trenching Painting Use of Powered Material Handling Equip. Insulation Hoisting Maintenance/Service Use of Radiation Emitting Devices Other (Specify) Other (Specify) 56 CONTRACTOR PRE-QUAL FORM 5. What has your safety performance been over the past three years with respect to: a) OSHA Recordables Rate: ___________Current Year ____________Last Year # OSHA Cases: _________Current Year ___________2 Yrs. Ago __________Last Year _________2 Yrs. Ago b) # of Fatalities (Attach explanations) ___________Current Year ____________Last Year ___________2 Yrs. Ago c) Workers’ Compensation Experience Modification Rate (EMR): ___________Current Year ____________Last Year d) Have you been inspected by OSHA in the last three years? If yes, have citations been issued? ___________2 Yrs. Ago _______Yes _______No __Yes (Attach copies) ___ No 57 CONTRACTOR PRE-QUAL FORM 6. Do you provide safety training and maintain training records for: Initially upon Assignment? Refresher a) Field Supervisors b) Employees c) New Hires d) Subcontractors 7. Does your program require that safety inspections be made during the performance of work? By whom? How Frequently? Are they Documented? Do you have written programs that document your policies and safety procedures applicable to the hazards that may be encountered during the performance of work at Polaroid? NOTE: Upon return of this form, please submit a copy of the Table of Contents “ONLY” of your Heath & Safety Manual and your policy that describes what you require of your subcontractors. 58 HIERARCHY OF WASTE OPTIONS • TOXIC USE AVOIDANCE • TOXIC USE REDUCTION • REUSE / RECYCLE (INTERNAL / EXTERNAL) • BENEFICIAL INCINERATION • DESTRUCTION INCINERATION • LANDFILL 59 DISPOSAL AUDIT PROTOCOL • REVIEW AUDIT PACKAGE • D&B CHECK • PUBLIC DOMAIN SEARCH • COMMUNITY SUPPORT / OPPOSITION • CONTACT REGULATORS • OSHA RATES • SAFETY PROGRAM 60 DISPOSAL SITE AUDIT • INTERVIEW MANAGEMENT • INTERVIEW WORKERS • REVIEW COMPLIANCE HISTORY • TOUR OPERATIONS • REVIEW SITING • REVISIT BIENNIALLY 61 THANK YOU EBC/AIM Best Practices in Corporate Stewardship Innovative Waste Reduction Making More with Less Waste EBC / AIM Best Practices in Corporate Stewardship April 20, 2006 Agenda • EHS metrics reporting – Enterprise-wide EHS performance goals and metrics – Metrics reported at business reviews and up to BOD • Central Chemical Management Program – Top tier third party supplier service – Chemicals, gases and hazardous waste Uniquely incentivized • Resource Management Program – Solid waste and recyclables management Page 65 Raytheon Company – Year end 2005 2004 2005 Goal 2005 Results 1,757 NA 2,085 585 / 0.80 761 / 0.93 176 / 0.26 142 / 0.18 172 / 0.21 83 80 80 Solid Waste (Tons / $Billion Revenue) 1,279 1,247 1,240 Recycling Rate (Solid & Hazardous) 52% 50% 53% 41 98 173 2,984 4,155 5,556 Injury-Free BMPs Implemented 356 585 824 Pollution Prevention Projects Completed NA 62 87 44,630 40,306 71,029 Business Goal Performance Metrics People Injured At Work (Including First Aid) Recordable Injuries / Rate Performance * 756 / 0.93 Lost Workday Injuries / Rate Hazardous Waste (Tons / $Billion Revenue) Employee Award / Recognition Programs Comments/Cost Savings Lost workday rate improved by 19% over 2004; worked 2.5 million more hours in 2005 Relationships Business Leadership EHS Walk-Abouts Solutions Safety Awareness Training Highlights/Key Plans Injury Rates ORIR LWIR Goal 2.0 1.5 • Completed 25 EHS audits – 15 ‘A’, 9 ‘B’, 1 ‘C’ • Conducted a comprehensive safety blitz to reduce injuries at 1.0 • 0.5 IIS R SL ID S M S SA S N C S R A C R TS C om C pa ny 0.0 *Note - Restated 2004 results - RAC bio-diesel fuel implementation & CFC Refrigerant Recycling RTSC Polar Services recordkeeping audit • Polar Services’ Antarctic locations Provided continuous on-site EHS support to RAC Wichita during peak 4th quarter Significantly surpassed goals in deployment of award programs, injury-free best practices, leadership walk-abouts, pollution prevention projects and safety training Value Stream Defects / Inefficiencies Energy Inefficiencies Spills & Air Releases Emissions INPUTS Raw Materials OUTPUTS Value Stream Product Energy Wastewater Material Scrap Injuries Solid & Hazardous Waste Catastrophic Events Fires Business Interruption Central Chemical Management Regional Hub Incoming Chemicals Delivery Waste Disposal facility A Milk Run Facility E HM Delivery & HW Pickup facility B Facility D Facility C Page 68 Central Chemical Management Program – 10+ years in Andover – Now an enterprise-wide program – Tucson, Dallas, El Segundo, New England, Wichita, Largo – Leveraged commodity buy provides price advantage – Just-in-time chemical delivery, and web-based chemical ordering catalog – Reduction of labpack chemicals due to shelf-life expiration Page 69 Uniquely Incentivized Agreements • Incentivized to minimize chemical use – Identify less hazardous chemical substitutes – Reduce chemical usage • Cost sharing agreement between Raytheon and central chemical management supplier – Process Efficiency Improvements - PEI Page 70 Advantages of Central Chemical Management • On-line MSDS’s - 24/7 • “Free” environmental report data – Algorithm built in to do calculations – EPA TRI, MA TURA (Form S) – Target chemical queries- lead, chromium, beryllium etc. • No need for incoming inspection of chemicals • Greatly reduced or eliminated on-site chemical storage Page 71 Resource Management Agreement • • • • • 10 New England sites New compactors with non-petroleum hydraulic fluid, tippers, containers Established contractor goals to reduce waste & cost - 5% annually Dedicated onsite resource manager - once per week Recognized by EPA/DEP WasteWise for innovative waste reduction Page 72 Thank You Page 73 EBC/AIM Best Practices in Corporate Stewardship Peter Kinder THANKS TO OUR SPONSORS