Williams-Sonoma Energy Management Liaison: Genevieve Dufau

1. Williams-Sonoma Energy ManagementLiaison: Genevieve Dufau Annabelle Louie Elizabeth Lombardi May 2007

2. Table of Contents • Williams-Sonoma Overview • Project Objective, Scope, & Evolution • Methodology • Key Findings • Energy Management Action Plan • Implementation Guide • Upgrade: Corporate Facilities & Retail Stores • Collaborate: Partnerships • Communicate: Education & Engagement • What We Learned

3. The Company • Williams-Sonoma Inc. includes a portfolio of retail concepts: • Williams-Sonoma operates 570 retail stores across 43 states, Washington D.C., and Canada • Retail business is coupled with direct-to-consumer strategies, encompassing catalogs and e-commerce which generate incremental revenue and brand awareness

4. Methodology $ 1 2 3 4 • Calculate financial impact: • Energy savings • ROI • Interview Williams-Sonoma • Energy Needs • Existing Programs • Analyze energy usage • 2 SF offices • 1 SF store • Collaborate with PG&E to identify: • Specific upgrades • Costs/rebates 5 Created implementation guide for roll-out to other facilities, stores, and employees

5. Key Findings • Williams-Sonoma has a solid foundation in energy management • Opportunity to formalize program, gain alignment from key stakeholders and engage employees and consumers • We identified several no-cost to low-cost opportunities that can enhance its energy management performance • i.e. ENERGY STAR programs and rebates • Responsible energy practices makes good business sense and is a competitive advantage for Williams-Sonoma. • Capitalize on both by leveraging an integrated business strategy (Upgrade, Communicate, Collaborate)

6. Energy Management Action PlanAn Integrated Business Strategy Our Energy Management Action Plan aims to: • Upgrade facilities and benchmark on best energy management practices • Collaborate with strategic partners to strengthen Williams-Sonoma’s CSR efforts with its business objectives • Communicate improvements internally and externally

7. Implementation Guide 2 If qualify, apply for green certification 6 • Application/ Verification Implement upgrades 1 3 4 5 8 Conduct PG&E audit Evaluate upgrade options Calculate costs and savings potential Analyze energy performance Track improvements 7 Communicate & engage employees • Portfolio Manager (manual) • or • Automated Benchmarking Service • Financial evaluation • ENERGY STAR v. conventional models • Rebates • Utility costs • Portfolio Manager or Automated Service monthly reports • Free service • Identify areas of improvement • Obtain list of vendors • RightLights • Cleaning • PG&E • Raise awareness • Improve workplace pride • Obtain buy-in for future green projects • ENERGY STAR

8. Upgrade Corporate Facilities

9. Williams-Sonoma Self-Assessment of Energy Management Little or no evidence Some elements/degree Fully implemented Framework: Energy Star Assessment by: Bill Perez, Director of Facilities

10. Ice House Van Ness Address: 151 Union Street San Francisco, CA 94109 Year Built: 1908 Gross Floor Area: 217,492 sq. ft. # of Occupants: 1,047 Primary Use: Office Address: 3250 Van Ness Avenue San Francisco, CA 94111 Year Built: 1940 Gross Floor Area: 170,068 sq. ft. # of Occupants: 522 Primary Use: Office

11. Facility Energy Performance • Quantitative Assessment • Collect energy usage data • on Ice House and Van Ness: • Space type • Gross floor area • Number of occupants • Number of PCs • Operating hours/week • Electricity & gas meters • Indoor & wastewater meters • Garage space

12. Van NessPerformance Summary

13. ENERGY STAR Rating Van Ness rating: 80 • Rate Energy Performance • Rate buildings using Energy • Star Rating System: • Based on a scale of 1-100 relative to similar buildings nationwide • Normalized to accounts for weather variations • Buildings that perform in the 75th percentile or above can earn the Energy Star label Ice House rating: 75

14. Tall windows bring in lots of natural light Skylights Lamps along skylight add little benefit Halogen ceiling floods CFL wall sconces Perimeter metal halides are inefficient and add mainly ambience CFL exit signs (LED is best) No occupancy sensors Example: Lighting at Van Ness What Works & What Can Be Improved

15. Summary of Upgrade Recommendations for Van Ness • Benefits • Immediate cost savings • Increased employee comfort and productivity • Successful implementation leads to other green projects Lighting • T12 T8 • Incandescent  CFL • CFL  LED • Occupancy sensors • Daylight harvesting HVAC • Cleaning • Variable frequency drive (VFD) • Temperature controls Office Equipment • Adopt ENERGY STAR procurement policy • Start with monitors Cost Annual Savings $ $29K $27K $ 140K $33K $ Varies 25-50% An annual energy cost savings of 18% can be achieved through these selected lighting, HVAC, and office equipment upgrades

16. Financial Impact of Van Ness Upgrades $ Costs, annual savings, and rebates provided by PG&E $60K savings = 18% reduction in annual energy bill These are conservative estimates that do not take into account co-benefits of upgrades The Bottom Line Investing $170K in the recommended lighting and HVAC upgrades will reduce annual operating expense by $60K, or an 18% energy cost savings The simple payback period is 2.3 years and the return on investment is 43%

17. Williams-Sonoma Retail Stores Average Size: 6,018 Sq. Ft. Total Operating Hours: 13 hours/day Annual Utility Cost: $14,872 - Lighting (31%): $4,610 - HVAC (55%): $8,180 - Other (14%): $2,082 Annual Utility Cost Per Sq. Ft.: $2.59 • Challenges: • Substantial energy consumption due to large size of stores, long run hours, and quantity of stores • Sales lights are important for product display, but incandescent ones are inefficient and increases HVAC load • Fluorescent lights have been installed (particularly for non-sales area), but cost-savings have not been tracked

18. Summary of Upgrade Recommendations for Retail Stores • Benefits • Immediate cost savings • Efficient lighting reduces HVAC load • Even a small energy reduction can be significant, given the large quantity of stores Lighting • Install newer generation of T8s • Experiment with new lighting technologies • Occupancy sensors HVAC • Install outside air economizer • Use Energy Usage Index to benchmark stores Cost Annual Savings $ $550 per store $460 per store $ $2,550 per store $238 per store An annual energy cost savings of 10% can be achieved through these selected lighting and HVAC upgrades

19. Financial Impact of Retail Store Upgrades $ What is the financial impact of achieving a 10% annual energy savings across half the fleet retail stores? The Bottom Line Investing $686K ($0.40 per sq. ft.) to reduce energy usage by 10% will result in an estimated $424K annual energy savings. The simple payback period is 2.5 years and the return on investment is 39%

20. Collaborate

21. Partnerships

22. SF Green Biz Expand Reach via Green Partnerships Rebates & Incentives Certification Renewable Energy Purchase Program Potential Partner Partner with and leverage the most recognized brands in energy efficiency Support a well integrated energy management program with green power Tap into PG&E’s cost-saving programs, rebates, and incentives Objective Green Home Green Power Utilize green power by purchasing RECs or carbon offsets for all or a portion of electricity use and carbon emissions. 360 Energy Efficiency Apply for ENERGY STAR building label and local certification Apply for Green Business Certification • Smart Energy • Take part in one or all of the various programs: • Demand Bidding • Critical Peak Pricing • ClimateSmart Program

23. Expand Reach via Corporate Partnerships In-Store Program On-line Program Potential Partner Raise awareness for Williams Sonoma’s climate change efforts. Align Williams Sonoma with innovative campaign and energy leader. Objective Right Lights. Gift with purchase: Receive a free GE compact fluorescent light bulb with purchase of $50 or more. Earth Day: Carbon-Free Shipping Quantify and purchase carbon offsets for GHG emissions from online and catalog shipments. Program

24. Communicate

25. Employee Survey at Williams-Sonoma shows that for 84% of employees it is important or very importantto“work for a company that has a commitment to sustainability and the environment” Importance to Job Satisfaction Opportunity to increase employees’ interest level by engaging employees and making it a part of their overall experience at Williams-Sonoma

26. Engage Employees Establish & Communicate Energy Goals Develop Cross- Functional Energy Team Engage Employees • Establish goals and key metrics • Gain alignment on goals from key stakeholders • Communicate corporate policy and annual goals • Engage interested employees across company to help advance energy goals • Idea generators, communicators, motivators. • Employee training and involvement. • Annual meetings, e-mails, intranet • Share key achievements and milestones • Provide opportunity for employee feedback and new ideas • Rewards and recognition

27. Employee Education Hone the Message Effectiveness Vehicles • New Employee • Handbooks • Newsletters • Break room Posters • Contests, Games • Manager meetings • Reiterate Goals • Educate • Influence behavior • Community Impact • Keep Simple • Straightforward • Frequency • Accessibility

28. The Stockroom Is A Great Place to Communicate Energy Goals & Performance Currently, there are no mentions of energy efficiency in stockroom notices or in Store Operations Manual Energy goals and performance should be communicated to employees and tied to daily goals Keep energy efficiency top of mind with monthly newsletters

29. Reiterate goals Influence behavior Educate Community Impact Source: Gap Inc.

30. Williams-Sonoma core consumers skew towards Light & True Greens Green Consumer Segments: % of US Population True Greens • Regularly buy green products • Older (45-54, often parents) • More Educated • Higher Household Income Light Greens • Sometimes buy green products • 35+ • Represents purchasing habits of general population (i.e. turning “green) Never Greens • Skews younger (>35 yrs old) • Often unaware of green products Source: Green Living Report. Mintel, Sept. 2006

31. Satisfy Demand for Greener Products Green Bamboo Sustainable Wood Organic Cotton Composting Energy Efficiency

32. What We Learned • Value to Williams-Sonoma • Immediate cost saving opportunities • Actionable implementation guide • Resources and tools for energy management • Value to Us • Learn about energy efficiency • Apply analytical, strategic, and creative thinking • Work with a really cool company!

33. Genevieve Dufau, Awesome Liaison, Marketing Planner, Pottery Barn • Bud Cope, Senior VP of Store Development • Oliver Clode, VP of Catalog, Marketing, & Finance • Bill Perez, Director of Facilities • Jon Ward, Director of Store Repairs & Maintenance • Dave Aylard, Director of Leasing • Jay Oshiro, Senior Analyst, Customer Insights & Market Research • Christina Nicholson, Manager, Marketing Services • Steve Stewart, Data Center Manager • Bernie Conlu, PC Procurement • Nina Godinez, Assistant SF Green Biz Thank You For The Invaluable Experience! Liz Mueller Lisa Shell Adam Selvin Dave Gunter Heba Petursson Diana Simmons Darren Karopczyc Nik Kaestner Adam Werbach Sushma Dhulipala Kellie, Colleen, & Our Class! Audrey Chang Cliff Chen