final summit de sustainability management presentation combined

Sustainability Management:Walking the Walk and Talking the Talk

November 10, 2009

Presented by Dix & Eaton and Summit Energy

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Agenda

Overview Walking the Walk Talking the Talk Sustainability Indexes and Ratings Q&A

Brainstorming

Overview

John Hoekstra, Summit Energy

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Summit Energy Overview

Manage $20 Billion energy spend; over 50 million mtons CO2-e

Founded 1991 10 Offices 350+ employees 25,000+ client sites

Independent & unbiased

Core business

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Corporate Sustainability

Triple Bottom Line

Sustainability: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

– “Triple bottom line”

– “3 P’s” of People, Planet, Profit

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Environmental Impact Areas

Operational

(gate to gate)

Product (cradle to cradle)

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Corporate Sustainability Pressures

Investor / ShareholderRegulatory

Customer / Competitive MarketSocietal / Citizenship

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Why Sustainability Matters

Business continuity and long term financial wealth affected by environmental risks and social positioning

– Multi-tier market drivers: operational, product, supply chain performance

– Examples: reliance on foreign oil, watershed availability for facility ops

Market-makers (GE, HP, Wal-Mart, 3M, Starbucks) are riding the wave and setting the tone for others

Global public awareness and commitment (MTV generation, Gen Z)

– Compliance is not nearly enough for them

Strategic, top-level attention

– Senior management positions

– Board committees

– Socially responsible investors

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The Green Consumer

Source: Grocery Manufacturers Association & Deloitte

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Green Shopper Demographics

Source: Grocery Manufacturers Association & Deloitte

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Walmart

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Source: Walmart

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Life Cycle Analysis – Scopes 1, 2 & 3

Business to business (B2B)

Business to consumer (B2C)

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Life Cycle Analysis

Supplier Performance Metrics and Targets

– Drive cost improvements in supply chain

– Determine regulatory and financial risk of carbon on vendor channels

“Green” brand messaging to customers and shareholders

– Environmental / carbon product labels on the rise

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U.S. Regulatory Programs

Renewable Energy Standards

Energy Efficiency Resource Standards

GHG Reporting

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Organizations are Changing

Procurement

Environmental,

Health & Safety

Operations

Sustainability

“Chief Sustainability Officer (CSO)”

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Strategic Sustainability Roadmap

Develop Sustainability Strategy

• Determine corporate profile• Set goals & objectives

• Develop management plans (CarbonMap™)• Establish measurement & reporting structure• Set baseline with third-party verification

Determine Baseline Inventories

Evaluate Footprint & Prioritize Actions

• Identify top emitters• Commit to targets• Create performance metrics (KPIs)

• Reduce (raw material, energy, water, waste)• Renew (renewable energy, recycle, treat & reuse)• Restore (offset impact, manage credits)

Implement Optimization Activities

Communicate Results & Performance

• Voluntary / mandatory reporting• Internal communications• External communications

Walking the Walk

John Hoekstra, Summit Energy

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Areas of Focus

Electricity, natural gas, alternate fuel consumption reduction

Water consumption and waste generation reporting

Carbon / greenhouse gas (GHG) emissions benchmarking

Employee conservation initiatives

Sustainable purchasing practices and policy initiatives (supply chain)

Energy efficiency – lighting, HVAC, demand optimization

Portfolio optimization – source reduction, recycling, renewables

Innovative approaches – green building, outreach programs

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#1 – Develop a Strategy

Gather Stakeholders Understand Issues at Hand Determine Current Programs Review Competitive Landscape Set GreenProfile Finalize Strategy / Roadmap

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#2 – Measure Baselines and Progress

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Cost of Carbon Abatement

Reduce/Restore

Renew/Restore

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#3 – Reduce Operational Waste Energy Efficiency

– Lighting– Compressed Air– Chiller Controls– Cooling Towers – Usage Correlation– Demand Management– Heating and Ventilation– Pumps and Fans

Waste Efficiency– Raw Material Optimization– Lightweighting, Recyclability– Management Processes

Every facility is unique one size fits one!

Water Efficiency

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#4 – Clean Alternatives

Ohio passed its “Alternative Energy Portfolio Standard” (AEPS) bill S.B. 221

Utilities must provide 25% from renewable sources by 2025

Provides “carve out” for solar in the RPS Solar solutions generate renewable energy

credits (RECs) that utilities must buy Amplifies incentives for projects:

– Trading range of $300 – 500 per MWh

– 30% capital grants available from Treasury

– Changes payback scenarios from over 10 years to 5 and under….

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#5 – Engage Your Arms & Legs

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Engage Your Arms & Legs

Walking the walk starts from the facility up

Get your employees involved

– Simple: Turn lights off

– Complex: Participate in “green” teams to drive community involvement projects

Keep internal communications consistent and honest to drive loyalty

Touch your executives to gain momentum and support – show results!

Talking the Talk

Gregg LaBar, Dix & Eaton

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About Dix & Eaton

Founded in 1952; Cleveland-based integrated communications firm Two-thirds of professionals over 10 years of experience Practice areas: Investor relations, media relations, customer

communications, crisis communications, employee engagement Relevant specialties

– Energy Practice – Sustainability Communications

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#1 – Start small and build

Target an audience (internal, customers) Take on an issue Figure out your story (and identify shortcomings) Find internal champions Use existing communications tools, where possible Under-promise and be satisfied with what you deliver – no reason

to stretch the facts Commitment to continuous improvement (market drivers help you

determine the pace)

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PolyOne Corporation

No Surprises PledgeSM builds customer loyalty Leads to: marketing opportunities, media coverage, sustainability

awards, Sustainability Chairman’s Council, Sustainability Promise, Sustainable Solutions bio-product family, etc.

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#2 – Dare to Be a Leader

Challenge to show leadership (bravery) without being risky Tackle a tough issue by taking the high road “Sleeping with the enemy”? Must believe in what you’re doing or it won’t last – have a business

case for leadership Based on the belief that there are more than two sides to every

story and all points of view have at least some credibility Accept that not everyone will agree with you, but the vast majority

will respect you Become part of the solution

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Limited Brands (Victoria’s Secret)

Partnering with critics to protect brand reputation

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Paper Companies

Believe in what you’re doing and don’t back down – be part of the solution for dealing with limited resources

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#3 – Manage Reputation and Perceptions

Reputation and perceptions matter and must be managed – they’re not just an outcome of good performance

Industry leadership depends on reputation and perceptions, not just performance

Most people will give you the benefit of the doubt, and the tough critics will focus their energies on others

Communication, especially internally and with supply chain, builds opportunities, enabling sustainability commitment to be a self-fulfilling prophecy

Use communication to help build the business case

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Newsweek’s ‘Greenest Big Companies’

Top 500 rankings Environmental Impact

+ Green Policies + Reputation= Green Score

Partnered with KLD, TruCost, CorporateRegister.com

http://greenrankings.newsweek.com/

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#4 – Greenwashing vs. Greenblushing

Greenwashing: Perception of consumers that they are being misled by a company regarding a company’s environmental practices or the environmental benefits of a product or service

– CorpWatch says “disinformation disseminated by an organization so as to present an environmentally responsible public image” 

“One step we’ve taken is to make some of our SunChips® snacks with the help of solar energy at one of our plants in California.”

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#4 – Greenwashing vs. Greenblushing

Seven sins of greenwashing– The hidden trade-off. Suggesting a product is “green” based on an

unreasonably narrow set of attributes without attention to other important issues. – No proof. Committed by an environmental claim that cannot be substantiated

by supporting information or reliable third-party certification. – Vagueness. Committed by every claim that is so poorly defined or broad that its

real meaning is likely to be misunderstood by the consumer. e.g. “all-natural.” – Irrelevance. Committed by making an environmental claim that may be truthful

but is unimportant or unhelpful, e.g. “CFC-free” because it is banned by law.– Lesser of two evils. Committed by claims that may be true within the product

category, but that risk distracting the consumer from the greater environmental impacts of the category as a whole, e.g. organic cigarettes.

– Fibbing. Making environmental claims that are simply false, e.g. lying about Energy Star certification

– False labels. Committed when either words or images give the impression of third-party endorsement where no such endorsement actually exists.

Source: TerraChoice and PRSA Professional Standards Advisory PS-12 (October 2009)

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#4 – Greenwashing vs. Greenblushing

Guidelines for environmental marketing claims– Substantiation– Specificity– Seals of approval must explain basis for award or rating– Specific claims easier to substantiate than general claims

Definitions for:– Biodegradable– Compostable– Recyclable = Please Recycle– Recycled content– Source reduction– Refillable– Ozone safe, ozone friendly and no CFCs

Source: Federal Trade Commission’s Environmental Marketing Guideshttp://www.ftc.gov/bcp/edu/pubs/business/energy/bus42.shtm

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#4 – Greenwashing vs. Greenblushing

Greenblushing: Limited or no information disseminated by an organization so as to understate or ignore its commitment to and actions on environmental responsibility. – Walking the walk but being too unsure and shy to talk the talk

Newsweek’s Top 100 companies with low reputation scores

Wells Fargo Northern Trust

Adv.Micro Devices Hospira

Staples eBay

McDonald’s Molson Coors

Estée Lauder Nalco

Baxter Tiffany

CB Richard Ellis

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#4 – Greenwashing vs. Greenblushing

Symptoms of greenblushing:– Believing you need “all the answers” before you can communicate

– Being reluctant to talk about your sustainability activities, even when asked to or recognized by outside parties

– Downplaying your achievements internally, which can be very de-motivating

– Afraid to bring it up with customers in case they’re ahead of you or not particularly interested

– Always assuming there’s more risk than reward in communicating

– Feeling that what you’re doing is “not that special,” when, in fact, others could learn a lot from your ideas

Guide to Sustainability Indexes and Ratings

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Dow Jones Sustainability Indexes

Companies are ranked within industry group and leaders are selected for inclusion in the indexes (world, regional, national and industry)– Company questionnaire

– Company documents

– Analyst follow-up

– External assurance report by Deloitte

– Ongoing report by DJSI

http://www.sustainability-index.com/

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Carbon Disclosure Project

Independent nonprofit organization requests climate change data on behalf of – Institutional investors (455 with $55 trillion in assets under

management)

– Purchasing organizations such as Walmart, PepsiCo

– Government bodies

More than 5,000 large companies worldwide have disclosed their GHG emissions through CDP

CDP creates Leadership Index (CDLI) based on data received

https://www.cdproject.net/en-US/Pages/HomePage.aspx

Number of responding companies

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KLD 400 (formerly Domini 400 Social Index)

Independent research and index service for institutional investors

Evaluates environmental, social and governance factors

Consists of 250 U.S.-based global companies, 100 additional large and mid-caps, and 50 smaller companies with ESG exemplary performance

Index maintained at 400 all the time; companies removed or added anytime (not just for performance)

http://www.kld.com/indexes/ds400index/index.html

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Calvert Social Index

Similar to KLD 400 but operated by investment management company

Consists of 663 large U.S. companies Long lists of corporate traits

they like – and don’t like – Labor law violations,

environmental violations, human rights concerns, animal testing, tobacco, weapons, alcohol, gambling

http://www.calvertgroup.com/sri-index.html

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Other Indexes and Ratings

Global 100 Most Sustainable Corporations in the World – Published annually by Innovest Strategic Value Advisors for World Economic Forum

– Started in 2005– http://www.global100.org/index.asp

Scryve– Focused on environment and community performance of 3,500 companies

– Ratings based on KLD, paid and volunteer researchers, and reader opinions

– Want you to make buying decisions based on ratings– http://www.scryve.com

Sustainable Business Achievement Ratings (S-BAR)– 25 companies involved in beta test to define a “sustainable business”

– Rate governance and management, workplace, community, marketplace, and environment

– Plan to track Policy, Practices, Performance, Progress– http://www.sustainabilityratings.com/

Global Initiative for Sustainability Ratings (Corporation 20/20)– Goal to create global sustainability ratings framework– http://www.corporation2020.org

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Other Indexes and Ratings

Walmart Sustainability Index– Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions – Material Efficiency: Reducing Waste and Enhancing Quality – Natural Resources: Producing High Quality, Responsibly Sourced Raw

Materials – People and Community: Ensuring Responsible and Ethical Production

http://walmartstores.com/Sustainability/9292.aspx

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Social Indexes Conclusion

Ideas for leveraging social indexes– Use for benchmarking and planning – even if you’re not a formal

participant

– Cross-functional – partnership among EHS, operations, investor relations, corporate communications, customer communications, etc. to determine the impact and relevance for the company – why it matters to the company and why it should be relevant to key stakeholders

– Post list of awards and links on environment/sustainability/CSR section of Web site and intranet

– Highlight in investor presentations and annual report

– Issue press release to announce listings

– Use indexes’ member logos

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Recommended Resources

Web sites/blogs– Environmental Leader– Green Biz– Corporate Responsibility Officer– Best Green Blogs– Sustainablog– CSRwire– Taiga Company– Treehugger.com– Green Wombat (Fortune.com)– GreenInc. (New York Times)– ThreePs (Dix & Eaton)– SummitEnergyGPS (Summit

Energy)

Organizations– GreenCityBlueLake Institute– Entrepreneurs 4 Sustainability– Corporate Sustainability Network– Sustainable Cleveland 2019– Global Reporting Initiative– Global Environmental

Management Initiative Books

– Green to GoldDaniel Esty and Andrew Winston

– Making Sustainability Work Marc J. Epstein

– The Triple Bottom Line Andrew W. Savitz

– No Impact ManColin Beavan

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Contact Information

Gregg LaBarSenior Vice President, Energy PracticeDix & EatonCleveland, Ohio(216) 241-4614glabar@dix-eaton.com

John HoekstraManager of SustainabilitySummit Energy Services, Inc.Louisville, Kentucky(502) 429-3800john.hoekstra@summitenergy.com