creating sustainability plan to maximize profits & create differentiation

©Copyright Kennedy and Coe, LLC 2014. All rights reserved. ©Copyright Kennedy and Coe, LLC 2014. All rights reserved.

Creating a Sustainability Plan to Maximize Profits and Create Differentiation

Emily Johannes, Kennedy and Coe Ryan Heuer, Novozymes

©Copyright Kennedy and Coe, LLC 2014. All rights reserved.

What we will talk about today…

• What is sustainability? • How can a sustainability plan maximize profits and

create differentiation in the marketplace?

• How can we get there?

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Is this sustainable?

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Or… is this sustainable?

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Crop yields and natural resource pressures

• More extreme temperatures

• Unusual events • Unpredictable

and more extreme precipitation

Source: EPA

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Water stress and ethanol production

• Water stress in the high plains region of the U.S.

• Over $1.6 million annual value of ethanol production is at risk.

Source: Ceres, June 2014

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Nitrogen pollution and ethanol production

• Sixty corn ethanol refineries with $8.8 billion in annual production capacity are within watersheds of “high” or above delivery of nitrogen pollution to local waterways.

Source: Ceres, June 2014

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Constraints and

Pressures Increasing Population

Extreme Weather Events

Expanded Buying Power and Shifting Consumer

Preferences Supply Chain Disruptions

High Volatility Higher Cost of Doing Business

Sustainability = Resilience

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Defining sustainability…

• Environmental performance, social contributions, economic health

• Business and industry

viability

• Competitive advantage

• Resilience and reliability

• Brand and industry integrity

BALANCE PEOPLE, PROFIT, PLANET

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The Enabling Factor: Big Data

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What is a sustainability plan?

• Comprehensive measurement and projection of product and non-product attributes.

• Powerful tool for proving your story.

• But it is not: – Advertising – Outside of or additional to

internal business planning

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Sustainability Plan = Political Insurance Policy

• Differentiation and value via sustainability plans can help demonstrate industry best practices and innovation.

• Proactive engagement on sustainability issues resonates with D.C.

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Sustainability Plan = Long-term Thinking

• The reality: the world, and in particular, the U.S. will need to feed 9 billion people in 2050.

• Through sustainability planning, ethanol can demonstrate the longevity of the industry in a way that is compatible with food production.

• Sustainability doesn’t mean choosing food or fuel, rather it assesses resource use for fuel, food, and fiber!

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How are sustainability plans created?

• Sustainability is a journey, not a destination.

• Analytical processes, such as ResourceMax™, are used to design, assess, and analyze company information for maximum value and sustainability reporting opportunities.

Discovery Assessment and Data Collection

Data Analysis and Benchmarking

Value Strategies and Reporting

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Outcomes of ResourceMax

• Aggregate, analyze and benchmark data

• Manage what you are measuring – materiality

• Ability to report metrics to customers and stakeholders as needed

• Enhance internal decision-making and business planning

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Integrating sustainability plans

• Board of Directors / Executive Management Level

• Annual and Strategic Planning

• Procurement requirements and supplier codes

• Budgeting

• Modeling and Projections

Source: MIT Sloan Management Review, 2013

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Sustainability profitability

Source: MIT Sloan Management Review, 2013

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Leveraging sustainability for brand and industry differentiation

Enhanced brand and

industry value and

reputation

Meet internal goals and external

expectations

Non-product and product sustainability

attributes

Collecting data and

information

VS

How to Get There Ryan Heuer - December 11, 2014 At Kennedy & Coe’s Ethanol Leaders’ Summit

1.Build business – place sustainability at the heart of your business strategy

2.Integrate, integrate, integrate – cross-functional, high-level and day-to-day oversight

3.Link goals to bonus schemes – integrate sustainability targets into bonus schemes

4.Don’t underestimate training – build sustainability competences across the organization

5.Make success measurable – measure progress through targets and indicators

How to Organize Sustainability In Business

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“We imagine a future where our biological solutions create the necessary balance between better business, cleaner environment, and better lives.”

MAKE IT CENTRAL MAKE IT YOUR VISION

NGOs Suppliers Community

How to Engage Stakeholders

Key Stakeholders: The Customer

+

SAME QUALITY – CO2 SAVINGS

Beer has traditionally been produced from malted barley With Ondea Pro, great beer can be produced from un-malted barley Avoiding malting reduces CO2 emissions and barley losses

Greenhouse gas emissions can be reduced with 8%* and 7% less land is required to produce a hectoliter of beer.

* 8% of beer production, primary packaging, and upstream processes, e.g. barley (distribution and retail not included)

ACROSS INDUSTRIES

Cereals: 110 kg CO2

per ton of bread

Detergent: 100 kg CO2

per ton of laundry

Animal feed: 80 kg CO2

per ton of feed

Textile: 1100 kg CO2 per ton of fabric

Agriculture: 15 kg CO2

per ton of corn

Beverage: 25 kg CO2

per 1000 litre of beer

Leather: 100 kg CO2 per ton of hide

Paper making: 150 kg CO2 per ton of pulp

Vegetable oil: 44 kg CO2 per ton of oil

Dairy: 230 kg CO2

per ton of mozzarella

Cosmetics: 190 kg CO2 per ton of fatty

acid ester

Margarine: 23 kg CO2 per ton of hardstock

What’s in it for the …

Ind

ust

ry

Wor

ld

Con

sum

ers

Other Stakeholders: Partners

With a unique blend of microorganisms farmers can improve the efficiency of chemical fertilizer, fight insects and disease, and deliver higher yields

Stable prices Reduced cost Higher yields Cleaner water environment More food pr. acre

More stable food prizes

How to Prepare for a Sustainable Strategy

Corporate Sustainability

28

Source: Unilever Sustainable Living Plan Progress Report 2014,Internal analysis

Help more than a billion people to improve their health and well-being

Halve the environmental footprint of its products across the value chain

Source 100% of its agricultural raw materials sustainably and enhance the livelihoods of people across its value chain

Unilever as a Model Example

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THANK YOU

Novozymes Contributors: Arlan Peters – Head of Sustainability Jesper Kloverpris – Manager, Sustainability Chris Bender – Head of Public Affairs & Communications