Welcome to the EBC/AIM Best Practices in Corporate Stewardship

1. Welcome to the EBC/AIM Best Practices in Corporate Stewardship

2. Walmart Presentation • We hope to make this presentation available shortly

3. EBC/AIM Best Practices in Corporate Stewardship

5. 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

6. Environmental Protection Era 1963 – Clean Air Act 1969 – National Environmental Policy Act 1970 – EPA formed 1972 – Clean Water Act 1976 – Resource Conservation and Recovery Act (hazardous waste focus) 1980 – Superfund Established (cleanup infrastructure and penalties for violations) The Evolution of Environmental Policy: A Distilled History Environmental Stewardship Era 1987 – Brundtland Report (UN) balance environmental protection with economic development 1989 – Valdez Principles (Now CERES) ten elements for environmentally friendly practices 1990 – 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

7. 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

8. 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

9. Best Practices from Leading Companies Consumer (7) Ben & Jerry’s Gillette Johnson & Johnson Kodak Pepsico Polaroid Unilever Industrial (7) BAE Systems GE Praxair Raytheon Textron United Technologies Xerox Consumer 28% Industrial 28% Financial 16% Utilities/Services 28% Financial (4) Chittenden Bank Citigroup State Street Corp. Wainwright Utilities/Services (7) Consolidated Edison First Environment International Paper National Grid PPL Corp. UPS Verizon Report Analysis

10. How Organizations View the Subject of Stewardship Industrial & Consumer Utilities/Natural Resources Services Financial Institutions 6 5 4 4 3 3 Report Titles EHS Social Responsibility Corporate Citizenship Other Environmental Stewardship Sustainability Report Analysis

11. How Companies Approach Reporting Reporting Frequency Reporting Guidelines Followed 4% Less Frequent 40% GRI 32% Unspecified 16% CERES Other 16% 64% 28% Annual Unspecified (of 25 reports analyzed) Report Analysis

12. Subjects Typically Covered in Reports Report Analysis

13. Examples of Report Contents UPS (used GRI 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 • Employment policies • Health and safety • Community investment • Environmental impact • Policies • Emissions • Energy • Compliance • Waste & recycling • Conservation • EMS • Future goals Raytheon (used various guidelines) • Letter from the Chairman • Overview/Vision • Governance • Ethics • Policies and management systems • People – EHS performance • Environmental impact • Waste • Emissions • Recycling • Commuter impact • Alternative fuels • Energy • Restoration • Compliance • Sustainability programs • Continuous improvement • Metrics • Product design • Stakeholder assessment • Community • Customer • Suppliers • Recognition Report Analysis

14. 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

15. 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

16. Commonly Highlighted Areas Where Significant Gains Have Been Realized Most frequently mentioned 1. Energy consumption 2. Emissions reduction (CO2, greenhouse gas) 3. Hazardous material consumption 4. Recycling 5. Green energy sources 6. Natural resource consumption (especially water) Other notable gains • Safety programs • Product design • EMS implementation • Training programs • Governance approaches Report Analysis

17. Most frequently identified (75-100%) Emissions (CO2, greenhouse gas, other) Energy consumption (electricity, fuel) 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 Metrics Typically Used 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

18. 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 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 Example of Specific Metrics Tracked Report Analysis

19. Coverage by Subject Area Report Analysis

20. 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

21. EBC/AIM Corporate Environmental Stewardship SurveyAnalysis - 71 Survey Responses Survey Analysis

22. How Many Companies Have Formal Environmental Policies? (based on 30 of 71 survey responses) Survey Analysis

23. Do Many Companies Have Formal Environmental Management Programs? NO 31% Length of Time Program has Existed YES 69% (based on 39 of 71 survey responses) Survey Analysis

24. Do Companies Have Clearly Defined Environmental Goals? • Most frequently cited goals: • Reduce wastegeneration/increase recycling • Improve energy efficiency • Meet regulations/achieve compliance certification • Follow internal EMS guidelines • Limit use and generation of toxics NO 46% YES 54% Survey Analysis

25. Do Companies Use Specific Environmental Performance Measures ? • Most frequently mentioned measures: • 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 NO 44% YES 56% Survey Analysis

26. 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 28% No reply 47% • YES 38% • 25% internally • 13% externally YES 38% (based on 39 of 71 survey responses) Survey Analysis

27. Do Companies Commit to Public Reporting About Environmental Programs, and How Often? Frequency of Public Reports YES 34% NO 66% (based on 38 of 71 survey responses) Survey Analysis

28. What Types of Stakeholder Involvement Do Companies Practice? Extensive Considerable Some Little orNone Employee Education Customer Involvement Employee Involvement Community Education Supplier Education Community Involvement Supplier Involvement Local Hiring Local Procurement Customer Education Survey Analysis

29. How Effective are Companies in Achieving Their Objectives? No progress Outstanding 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

30. Greatest Gains in the PAST Facility Improvements Measurement, Monitoring, Reporting Production Processes Leadership Focus Education & Involvement Operating Practices Goals & Incentives Diversity In Employment Product Design Community Outreach Transportation Practices Operating Practices Education & Involvement Production Processes Facility Improvements Leadership Focus Product Design Measurement, Monitoring, Reporting Goals & Incentives Community Outreach Diversity In Employment Transportation Practices What Strategies Have Produced the Greatest Gains and How Are Strategies Changing for the Future? Greatest Potential for Gains in the FUTURE Survey Analysis

31. 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

32. 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

33. EBC/AIM Best Practices in Corporate Stewardship

34. Best Practices: Energy and Climate Change Lisa Drake Natural Resources Manager Stonyfield Farm, Inc. April 20, 2006

35. 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

36. Stonyfield Farm Mission

37. 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

38. 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 • installing energy efficient equipment • green building practices • refrigeration system changes • growth

39. Incorporating Renewables • 50 kW solar array installed summer 2005 • Largest solar photovoltaic installation in New Hampshire and 5th largest in New England

40. 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

41. Evaluating our Carbon Footprint

42. 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

43. 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

44. Education and Advocacy • Lids, Website, Advertising, PR • Environmental messages on over 150 million lids

45. 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

46. EBC/AIM Best Practices in Corporate Stewardship

47. National Grid

48. EBC/AIM Best Practices in Corporate Stewardship

49. Managing Supplier Requirements John P. LeFebvre, P.E. Corp. Mgr. of Env. Affairs Polaroid Corporation April 20, 2006

50. OPERATIONS • CHEMICAL & POLYMER PLANTS • COATING OPERATIONS • NEGATIVE MANUFACTURING • POSITIVE SHEET • CONTRACT • BATTERY MANUFACTURING • FILM ASSEMBLY