Critical Issues in Direct Marketing: What Direct Marketers Can’t Afford To Ignore About Improving Their Environmental I

1. Critical Issues in Direct Marketing:What Direct Marketers Can’t Afford To Ignore About Improving Their Environmental Impact Wednesday, March 21, 20071:00 p.m. – 2:30 p.m. EDT DMA Education Services

2. Webinar Panelists • Speakers • Meta Brophy, Director, Publishing Operations, Consumers Union • Oliver Clode, Vice President, Catalog Manufacturing & Marketing Finance, Williams-Sonoma, Inc. • Chet Dalzell, Director, Public Relations, Harte-Hanks, Inc. • Phil Riebel, Environmental Director - North America, UPM-Kymmene Inc. • Moderator • Patricia Kachura, Senior Vice President, Ethics & Consumer Affairs, DMA DMA Education Services

3. Webinar Outline • Instructions to Participants, Kristen Cunningham (DMA) • Introduction of Speakers, Patricia Kachura (DMA) • Overview of DMA Environmental Planning Tool, Chet Dalzell (Harte-Hanks) • A Walk-Through of the Planning Tool • Design, Production & Printing,Meta Brophy (Consumers Union) • Paper Procurement & Use – Suppliers’ Perspective, Phil Riebel (UPM) • Paper Procurement & Use – Buyers’ Perspective, Oliver Clode (Williams-Sonoma) • Recycling & Pollution Reduction, Phil Riebel (UPM) • List Hygiene & Data Management, Chet Dalzell (Harte-Hanks) • A Demo of the Planning Tool,Chet Dalzell (Harte-Hanks) • Question & Answer Session,Patricia Kachura (DMA) DMA Education Services

4. Overview of DMA Planning Tool & Optional Policy Generatorwww.the-dma.org/envgen/ Chet Dalzell Director, Public Relations Harte-Hanks, Inc. DMA Education Services

5. A Vision for Success "America's Most Admired Companies: What gives GE such a glow? Fresh ideas and being green distinguishes the winners in our 25th annual rankings. How to get a great reputation… These days 'green' means something more. The three Most Admired Companies this year – General Electric, Starbucks, and Toyota – are building their growth at least partly on strategies and products aimed at helping preserve the planet." -- Fortune (March 19, 2007, pp. 88, 90) DMA Education Services

6. Direct Marketers Take on Environmental Planning • DMA Board-Level Task Force on Environmental Issues, 1989 • DMA Environmental Resource for Direct Marketers(First, Second & Third Editions), 1990 – 2004 • DMA Robert Rodale Environmental Achievement Awards,Initiated 1991 • DMA Committee on the Environment and Social Responsibility, 2005 • DMA Environmental Planning Tool and Optional Policy or Vision Statement Generator, 2007 DMA Education Services

7. DMA Committee on the Environment & Social Responsibility • Established by Board in March 2005 • Identify challenges germane to direct marketers • Encourage members to make progress on these challenges over time • Manage environmental performance of our membership • Appoint members to facilitate these goals: subcommittee and working group • Environment Record • Designed and executed survey to benchmark DMA members’ business practices • Selected benchmark project to inform and improve environmental performance DMA Education Services

8. Purposes of the DMA Environmental Planning Tool • Educate and suggest practices to consider in five general areas related to the direct marketing process • -- Design & printing • -- Paper procurement & use • -- Packaging • -- Recycling & pollution reduction • -- List hygiene & data management • Enable benchmarking in three areas of focus • -- Improve list hygiene & targeting of print communications • -- Increase recovery and recycling of post-consumer material used in catalogs and direct mail • -- Support well-managed forests DMA Education Services

9. Why Does Environmental Performance Matter? • Recognize the formula: greater efficiency = less waste = less cost • Understand heightened global concerns about environmental protection and how they influence our business • Bolster and maintain consumer confidence and trust in our business, and the role environmental stewardship plays in this trust • RecognizeFortune 1000 leadership and corporate citizenship – these firms are setting business trends in "green" activities • Take responsibility for business matters that affect the planet – and find practical and innovative ways to manage these areas well DMA Education Services

10. What Environmental Planning is Not • A pursuit of environmentalism in our business without a recognition of where tradeoffs may exist • A blueprint for being "green" – with higher profits as a guarantee • The pursuit of an agenda set by a third-party organization which may or may not understand the direct marketing business • A requirement that direct marketing businesses publish their environmental policies and practices publicly DMA Education Services

11. Desired Outcomes in our Use of the Planner Make an understanding and consideration of environmentally helpful practices more easily accessible in their direct marketing operations Enable an internal assessment of present-day practices, one company at a time – currently 115 listed practices Enable a benchmark from which organizations can improve their environmental performance, with respect to direct marketing Deliver a Web interface that is easy to understand, easy to use, and easy to reuse over time ___________________ OPTIONAL: Provide a draft public policy or vision statement regarding the environment, for those organizations which choose to do so DMA Education Services

12. A Walk-Through of the Planning Tool DMA Education Services

13. Section: Design, Production & Printing(17 practices) Meta Brophy Director, Publishing Operations Consumers Union DMA Education Services

14. Environmental Responsibility in Production • Communicate with stakeholders — marketing and creative, the production team, outside vendors. • Everyone has a part to play — make assignments • Agree to what you are collectively trying to accomplish • Research, query, investigate options and shop • Don’t stop until you understand the options and can present them clearly to your colleagues. Are you at least as conversant in marketing as your marketing colleagues are about production? • File away ancillary information for the next project. Pass along information to others DMA Education Services

15. Identify the package contents Review and revise for the next time Get the specs and/or a comp Decide on labeling Cycle of Continuous Improvement Enlist vendor input Nail down the details Analyze the cost Present the options The Process DMA Education Services

16. Use the Planning Tool • Reduce Waste • Can you change the size? • Can you eliminate a component? • Can you reduce the weight? • Can you cut the quantity? • Can you route electronically? • Reduce Toxicity • Can you test out of the label? • Can you find another method of creating interest and/or involvement? • Recyled/Recylable/Reusable Materials • Paper, poly, corn? BREs in inventory? • Labels and adhesives? DMA Education Services

17. Suppliers • Once they are on board, they stay engaged • Vendors are a valuable source for new ideas • They can gather information and spread the word within the industry • They share in the accomplishment: We want our vendors to make good choices, too DMA Education Services

18. Recent Successes • Liftnotes on high-yield groundwood • Letters on high-yield groundwood • Postconsumer recycled content in self-mailers • Biodegradable poly • Die-cuts instead of labels • Texture instead of adhesive or ink • Geographic splits DMA Education Services

19. Key Challenges (Or Are They Opportunities?) • TIME • To research • For the learning curve • For comparative analysis • EXPENSE: Print, Paper, Postage, Fuel • Source reduction can mean cost saving • Is there an upcharge? • The future of flats DMA Education Services

20. What’s Coming Next? • Stora Enso and Neste Oil to join forces in biofuel development ”…developing technology for producing new-generation biofuels from wood residues to replace fossil fuels in transportation and thus cut greenhouse gases.” -- Stora Enso Press Release, March 16, 2007 • Management thinking — Starting to ‘get’ responsibility “...a significant number of businesses have got past the ‘why’ of ethics and corporate responsibility—a critical breakthrough—and are now trying to wrap their brains around the ‘how.”-- Ethical Corporation, March 11, 2007 • How Print Got Green “…printers are taking the business of being green very seriously, following many paths to get there.” -- Graphics Arts Monthly, March 2007 DMA Education Services

21. Design & Production In Summary • Look at every campaign anew • Make environmental impact part of the assessment along with cost, quality, and delivery • Do your research • Use the DMA Environment Tool and the Resource Handbook • Bring others to the table — internal and external colleagues • Make others aware of initiatives — communicate outside your department • Ask about what others are doing DMA Education Services

22. Suppliers’ Perspective Section: Paper Procurement & Use(45 practices) Phil Riebel Director, Environmental Affairs – North America UPM-Kymmene Inc. DMA Education Services

23. Suggestions for Purchasing Environmentally-Preferable PaperKey points based on environmental footprint of paper DMA Education Services

24. Global leader in printing papers, among five largest producers in the paper sector Listed on DJSI for the fifth year in a row 2005 & 2006 industry group leader Top score in sustainable fiber sourcing & advanced environmental performance Ranked No.1 for sustainability by Time Inc. Second largest user of recycled fiber in the printing paper industry UPM In Brief DMA Education Services

25. Forest Recovered paper Converted paper products Paper Chemical pulp Wood products Energy production Paper Product Life Cycle Wood raw material to the mills and energy wood to the power plants. Energy to the mills Chips and sawdust for energy production By-products for pulp and paper raw materials Paper for converting Pulp for paper manufacture Recovered paper DMA Education Services

26. "Environmental Footprint" View of Paper Production UPM View: Companies are responsible for the environmental impacts caused during the entire life cycle of their products from raw material and energy sourcing to production, distribution, recovery and disposal Papermaking – summary of activities and environmental impacts • Activities • Road construction / harvesting / transport to mill • Other raw material acquisition and transport (clay, pulp…) • Recovered paper collection / transportation / sorting • Roundwood / chip storage / processing (debarking chipping) • Pulping (Kraft, TMP, GWD, DIP) • Paper-making • Shipping • Printing (energy, ink, waste) • Distribution / Use and Disposal • Paper recycling • Impacts • Habitat • Fossil fuel use / greenhouse gas emissions • Water / energy use • Wastewater emissions • Noise, dust • Runoff, solid waste • Air Emissions • Solid waste to landfill DMA Education Services

27. Environmental Guidelines for Purchasers1. Using a life-cycle approach (footprint of papermaking) • Evaluate the environmental performance of suppliers over the key steps in the life cycle of paper - forest to final re-use • Commit to using a report card to evaluate annual environmental performance • Address the key steps of papermaking: -- Forest management -- Mill operations -- Purchased power -- Certifications -- Paper composition • Evaluate report cards currently in use: • Paper Profile • EPAT (Environmental Paper Assessment Tool) • EPDS (Environmental Profile Data Sheet) • Integrate into purchasing decision DMA Education Services

28. Environmental Guidelines for Purchasers2. Promote sustainable forest management • We will promote sustainable forest management by increasing the level of third-party certified fiber in our paper, using recognized credible forest certification schemes such as PEFC and FSC. Forest certification levels are to be supported by a verified chain-of-custody. • There are two international systems (PEFC & FSC) • PEFC includes/recognizes SFI & CSA • Based on several scientific / field assessments, all systems achieve sustainable forest management • Three-country study done by UPM / DNV / WWF • Only 7% of the world's forest are certified – focus on increasing this • 72% of the certified fiber is under PEFC • Verified chain of custody is important to show that the origin of wood is known and % is accurate DMA Education Services

29. FSC 27% PEFC 71% SFI SFI FSC CSA MTCC 2% CSA PEFC Other PEFC Other FFCS FFCS Situation in January 2006 Certified Forests Globally by Scheme National schemes: SFI: Sustainable Forest Initiative (NA) CSA: Canada's National Standard for Sustainable Forest Management FFCS: Finnish Forest Certification System MTCC: Malaysian Timber Certification Council FSC Sweden, FSC Maritime etc: (accepted by FSC) UKWAS: UK Woodland Assurance Standard (accepted by PEFC and FSC) DMA Education Services

30. Environmental Guidelines for Purchasers3. Sustainable use of recycled fiber and promote the recovery of paper • We will use recycled fiber in appropriate grades where its use is economically justified and brings environmental benefits • We will promote the recycling of our paper products • 45-50% of paper products in NA still end up in landfills: There is a global need to increase the recovery rates of paper so that the recovered fiber can be used to make other products DMA Education Services

31. We will make efforts and set targets to reduce paper consumption This can mean using less paper and raw materials, lighter-weight papers, lower brightness, etc…. Less environmental impacts and raw materials per page Can save mailing costs as well Example: ENVIRONMENTAL SAVINGS PER PAGE (OF CATALOG / MAGAZINE) 40 LB TO 28 LB BASIS WEIGHT PAPER 20% less water used 10% cleaner wastewater 15 to 25% lower air emissions (SO2, CO2…) 15% less solid waste to landfill 28% less purchased electricity Environmental Guidelines for Purchasers4. Reduce consumption DMA Education Services

32. Environmental Guidelines for Purchasers5. Energy and global warming. Carbon footprint. • Energy and climate change: We value suppliers who have switched to less greenhouse gas (GHG) intensive energy sources such as carbon-neutral biomass, and are committed to continual energy-efficiency improvements • We consider the impact of our paper on global warming • Supply chain carbon (CO2) footprint • Raw materials to mill • Manufacturing • Purchased power • Transportation to printer, distribution DMA Education Services

33. Environmental Guidelines for Purchasers6. Other items • Illegal logging • Biodiversity • Corporate social responsibility • Health and safety • Stakeholder engagement DMA Education Services

34. What is Environmentally-Preferable Paper? • Sustainable use of wood fiber and recycled fiber in appropriate grades/locations • Third-party certification of mills and forests • Steadily increasing share of certified fiber supported by a certified chain-of-custody • No illegal wood or wood from designated protected or conservation forest areas • Increasing energy efficiency and biofuel usage – lower carbon footprint • Meet best-available-technology levels for environmental indicators • Continuous improvement in minimizing loading per ton of paper: air, water, effluent, solid waste • Open, transparent and third-party verified sustainability / environmental reporting DMA Education Services

35. Buyers’ Perspective Section: Paper Procurement & Use(45 practices) Oliver Clode Vice President, Catalog Manufacturing & Marketing Finance Williams-Sonoma, Inc. DMA Education Services

36. Environmental Responsibility as a Paper Buyer • Environmental stewardship is not just a fad – it has become main-stream and is now a business reality • Everyone can make an impact, regardless of how much paper you buy • One size does NOT fit all – every organization’s circumstances and approach will be different • Educate yourself – understand the facts • Be proactive – strategic and proactive solutions are always far better than reactive solutions • Incorporate environmental thought leadership into your everyday language and practices DMA Education Services

37. Establish a Corporate Vision Regularly review and report on progress Address gaps; move towards compliance Secure stakeholder involvement Cycle of Continuous Improvement Develop a policy in line with Vision Develop action plan and set targets Determine current state/baseline Communicate policy to all stakeholders Steps All Paper Buyers Should Take DMA Education Services

38. How The Planning Tool Can Help • Strategic Road Map • Menu of specific principles and initiatives that all Direct Marketers can choose to adopt and implement • Checklist for developing a baseline assessment • Provides insights on key impact areas for continuous improvement • Educational Tool – to assist Direct Marketers in better understanding environmental issues and options • Policy Guide and Generator – easily helps establish a strong foundation right out of the gate • Ongoing Evaluation Tool – provides a benchmark against which to gauge your progress and with which you can reset your baseline DMA Education Services

39. Motivators for Williams-Sonoma, Inc. • Corporate Responsibility • It’s part of our culture • Cost Savings $$$ • Reducing waste and inefficiencies • Increasing efficiencies • Customer Awareness and Loyalty • Increasingly important to our customer base • Changing Values of the Workforce • Attract candidates • Retain employees • Risk Mitigation • Business interruptions from negative publicity/activist campaigns • Legal actions/forced regulation DMA Education Services

40. WSI’s Environmental Journey – 2003-2006 • Educated ourselves on the key issues and established a Vision • Audited catalog paper supply chain and set priorities/targets/goals • Developed a Responsible Catalog Paper Procurement Policy • Reached out and partnered with key external stakeholders • Paper suppliers –ForestEthics – Peer Companies • Printers –FSC – Other NGOs • Reduced waste/increased efficiencies – saved significant $$$ • Continued to streamline and improve our List Hygiene and Modeling techniques • Tested and rolled out lower basis weight paper in all catalogs • Re-evaluated and reduced trim-size on virtually all catalogs • Renegotiated and significantly reduced printers’ spoilage allowances • Expanded use of “versioning” • Increased the use of the internet as a customer contact vehicle and ordering channel • Tested and incorporated PCW recycled content into Flagship catalog • Shifted virtually all (95%+) catalog paper to FSC-certified paper DMA Education Services

41. Words of Wisdom • Don’t ignore environmental stewardship – take responsible purchasing seriously and be proactive about it • Educate yourself and your organization, and develop a point of view • Don’t be afraid to reach out to NGOs: Many are well-intentioned, have subject expertise and understand the need for finding market-based solutions • Establish a responsible purchasing policy and communicate it to your stakeholders – move towards compliance • Continually challenge yourself and your supply chain partners, and collaborate with them to find and develop new solutions, including addressing cost concerns – it doesn’t need to cost more • Regularly review your progress, report on it, and reset the bar DMA Education Services

42. Section: Recycling & Pollution Reduction(32 practices) Phil Riebel Director, Environmental Affairs – North America UPM-Kymmene Inc. DMA Education Services

43. Sustainable Use of Recycled Fiber DMA Education Services

44. 3280 Norske Skog UPM 2520 2015 Nippon Paper Group, Inc. 1880 Stora Enso 1655 Abitibi-Consolidated 1545 Georgia-Pacific 1430 SCA 1340 Oji 1195 Myllykoski Corporation 1120 Bowater 0 500 1.000 1.500 2.000 2.500 3.000 3.500 Top 10 Printing Paper Producers Using Recycled Paper Enough to fill the Empire State Building 6 times Source: Jaakko Pöyry 23.11.05 1000 tonnes DMA Education Services

45. Benefits of Wood and Recycled Fiber • Sustainable managed forests and recycled fiber complement each other as important raw materials for papermaking • Benefits of using wood: • Renewable natural resource • Recyclable and re-usable material • Climate protection (forests are a carbon sink) • Carbon-neutral fuel (biomass) • Benefits of using recovered paper: • Efficient use of raw material • Decrease landfill waste • Save energy • Creating responsibility and awareness for recycling DMA Education Services

46. Nordic countries + 0.1 + 0.5 Western Europe Eastern Europe + 0.7 Russia 0.0 North America + 0.1 - 0.5 Latin America - 0.0 Japan + 1.2 China - 0.6 Rest of Asia - 0.2 Oceania - 0.8 Africa Net Annual Change in Forest Area, 1990-2000 Deforestation continues in tropical/subtropical forests in Latin America, Africa and Southeast Asia Annual change, %/a Total average annual change - 9.4 million ha DMA Education Services

47. Key Factors for Sustainable Use of Recovered Paper • Economic and environmental benefits must be considered • Paper is a valuable resource and should not go to landfills • Key conditions: • Minimal transportation • Modern mills using B-A-T / reduced environmental load • De-inked sludge used for energy generation, or re-used • Paper mills integrated to DIP • Paper grades adapted to pulp quality • Lower end up to newsprint can be 100% RCF • Recycled paper needs to be affordable and available • Input of virgin fiber is essential to make the paper cycle work DMA Education Services

48. Fiber Resource & Demographics • Finland and NA : • low population density • large forest resource • large paper industry • Virgin fiber resource predominates net Virgin Fiber / Paper Exports • UK : • high population density • small forest resource • small paper industry • Recovered fiber resource predominates • Germany and France: • high population density • medium forest resource • medium paper industry • Both virgin and recovered fiber DMA Education Services

49. Source: RISI DMA Education Services

50. Consumption of Recovered Paper by Region World consumption of recycled paper is expected to grow from 153 million tons in 2000 to 243 million tons in 2015 (average growth 3.1% per year). In volume terms, the growth will be fastest in Asia. Rest of the World Forecast Latin America Rest of Asia China Japan Eastern Europe Western Europe North America DMA Education Services