Ceres Roadmap For Sustainability

THE 21ST Advancing Sustainable Prosperity
CENTURY
CORPORATION:
THE CERES
ROADMAP FOR
SUSTAINABILITY
FEATURING 20 EXPECTATIONS FOR COMPANIES BY 2020

ACKNOWLEDGEMENTS
REPORT AUTHORS The opinions expressed in this report are those of Ceres and do
Andrea Moffat, Senior Director of the Ceres Corporate Program, not necessarily reflect the views of any of our donors or member
was the lead author of this report with support from other team organizations. Ceres does not endorse any of the organizations
members: Natasha Scotnicki, Rebecca Berwick, Kristen Lang, which are used as examples or referenced in the report and we do
Veena Ramani, Roseann Casey, Brooke Barton, Meg Crawford, not accept responsiblity for any inaccuracy or misinterpretation
and Brinda Sen. based on the information provided in the report.
Ceres commissioned Andrew Newton to write this report. DESIGN
ACKNOWLEDGEMENTS Addison
www.addison.com
The authors would like to thank members of the Ceres Board of
Directors for valuable insights and suggestions, as well as detailed PAPER
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Anne Stausboll, Ken Sylvester and Joe Uehlein. We also would The paper for this report was generously donated
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THE 21ST CENTURY CORPORATION:
THE CERES ROADMAP FOR SUSTAINABILITY
1
THE 21ST CENTURY CORPORATION: THE CERES ROADMAP FOR SUSTAINABILITY
contents
03 Foreword 44 PERFORMANCE
04 Letter from the President 46 P.1 Operations
05 Thought Leader Perspectives 47 P.1.1 Greenhouse Gas Emissions and Energy Efficiency
48 P.1.2 Facilities and Buildings
06 INTRODUCTION 50 P.1.3 Water Management
08 Key Drivers of Sustainability 51 P.1.4 Eliminate Waste
09 The Stakeholder Perspective 52 P.1.5 Human Rights
10 The Investor Perspective
53 P.2 Supply Chain
11 Getting Started with the Roadmap
54 P.2.1 Policies and Codes
12 Ceres 21st Century Corporation Vision: 20 Key Expectations
55 P.2.2 Align Sourcing Practices
14 GOVERNANCE FOR SUSTAINABILITY 56 P.2.3 Engaging Suppliers
17 G.1 Board Oversight 59 P.2.4 Measurement and Disclosure
18 G.2 Management Accountability 60 P.3 Transportation and Logistics
19 G.3 Executive Compensation 61 P.3.1 Transportation Management
21 G.4 Corporate Policies and Management Systems 62 P.3.2 Transportation Modes
23 G.5 Public Policy 63 P.3.3 Business Travel and Commuting
64 P.4 Products and Services
24 STAKEHOLDER ENGAGEMENT 65 P.4.1 Business Model Innovation
27 S.1 Focus Engagement Activity 66 P.4.2 Research & Development and Capital Investment
28 S.2 Substantive Stakeholder Dialogue 68 P.4.3 Design for Sustainability
30 S.3 Investor Engagement 70 P.4.4 Marketing Practices
31 S.4 C-Level Engagement 71 P.4.5 Strategic Collaboration
32 DISCLOSURE 72 P.5 Employees
35 D.1 Standards for Disclosure 73 P.5.1 Recruitment and Retention
36 D.2 Disclosure in Financial Filings 74 P.5.2 Training and Support
37 D.3 Scope and Content 75 P.5.3 Promoting Sustainable Lifestyles
40 D.4 Vehicles for Disclosure
41 D.5 Product Transparency
42 D.6 Verification and Assurance
2
foreword
THE GLOBAL CONTEXT FOR

BUSINESS IS CHANGING.
In the 21st Century Corporation Report Ceres reminds us, When considering sustainability, it is important to focus on the
“Enormous opportunities arise during transformative times.” We entire spectrum of interrelated factors. True sustainability
are truly in transformative times. The sustainability challenges means judging solutions on a life-cycle basis and considering
the planet faces are extraordinary and completely unprecedented. the complete set of inputs, costs and externalities. Sustainability
“License to operate” can no longer be taken for granted by business challenges are increasingly interconnected: the climate crisis
as challenges such as climate change, HIV/AIDS, water scarcity and poverty, pandemics and demographics, water scarcity and
and poverty have reached a point where society is demanding a migration/urbanization. Sustainability challenges can not be
response from business. Moreover, business and capital markets considered in isolation.
are best positioned to profitably address these issues. Our economic activity, at its essence, is based on the use of natural
The interests of shareholders, over time, will be best served by and human resources. Sustainability issues are therefore central
companies that maximize their financial performance by strategically to high quality business. And, there are clearly higher expectations
managing their economic, social, environmental and ethical for businesses and more serious consequences for running afoul
performance. Central to this thesis is the explicit recognition that of the boundaries of corporate responsibility. But most importantly,
sustainability factors directly affect long-term business profitability. in these transformative times there are enormous opportunities.
In fact, the financial crisis has reinforced our view that sustainable The Ceres Roadmap for Sustainability is extremely timely and will
solutions will be the primary driver of industrial and economic serve as a powerful foundation and tool for companies as they
development in the coming decades. reset their business strategies for the 21st Century.
We often hear the question “Shouldn’t CEOs and business leaders
be focused on growth, profitability, competitive position and
shareholder returns?” Of course and a focus on sustainability and
long-term value creation does just that. Sustainable business
strategies range from reputation management to cost control to David Blood, Senior Partner,
competitive positioning and revenue opportunities. The most Generation Investment Management
progressive and forward looking business leaders understand best
practice business strategy is about leveraging sustainability
challenges into increased revenues, profitability, and competitive
advantage. Sustainability is integrated into strategy. It is not a
separate discipline.
3
letter from the president
Mindy S. Lubber, President of Ceres
TODAY, CORPORATIONS FACE

NEW REALITIES, WITH NEW
RISKS AND OPPORTUNITIES.
In the 20 years since Ceres began, we have strongly held to The 21st Century Corporation: The Ceres Roadmap for Sustainability
the principle that addressing the world’s greatest environmental focuses on the second pillar – setting new standards and expectations
and social challenges is an imperative for the corporate and for business leadership. It is a guide to companies on their journey
financial communities and that failure to address these challenges to comprehensive sustainability – from the boardroom to the copy
jeopardizes our ability to create prosperity in the long-term. room – and throughout the supply chain.
Ceres has created key building blocks for weaving environmental The report has 20 key expectations related to governance,
and social challenges into core business practices to achieve stakeholder engagement, disclosure and performance. Within
sustainability. We began with the Ceres Principles, a 10-point code governance, we encourage board diversity and sustainability
of corporate environmental conduct drafted in response to the expertise, and executive compensation packages that align with
Exxon Valdez oil spill. We then launched the Global Reporting sustainability performance. In the disclosure section, we
Initiative, now the international standard for sustainability encourage reporting of “material” performance data and goals
reporting, used by over 1,100 companies worldwide. We also for key environmental and social challenges. Under stakeholder
introduced the concept of “climate risk” – now deeply integrated engagement, we encourage “opening the doors” to investors,
into the corporate and investor lexicon. non-governmental organizations (NGOs) and other groups focused
These actions have moved us forward, but more must be done to on a company’s sustainability strategies.
produce the results we need. Incremental progress in tackling But the roadmap’s biggest priority, by far, is performance. Companies
global climate change and other sustainability threats is not must produce tangible results that put us on a truly sustainable
enough. We need accelerated performance path. For climate change, that means a 50
improvements from companies that reflect percent improvement in energy efficiency and
the true scientific and economic impacts of a 25 percent lower carbon footprint by 2020.
unchecked carbon pollution, growing water The report has It means eliminating hazardous waste, having
scarcity and billions of people still working
and living in poverty.
20 KEY closed-loop systems in place, decreasing the
footprint of suppliers and increasing human
Business is astute at solving problems, and
EXPECTATIONS rights standards by 2020.
many of the biggest global challenges we related to governance, Performance will be the ultimate measure for
face are social and environmental. As a result, stakeholder engagement, evaluating a company’s progress towards
disclosure and performance.
it is business that must lead the way by achieving sustainability. The best performing
turning these challenges into opportunities. companies of the 21st century will be those
This means fully integrating sustainability that recognize this evolving new order, and
considerations into governance, performance, accountability, R&D invest and act now. These companies will be best positioned to
and overall business strategy. Tracking results, analyzing data and thrive in the coming low-carbon, resource-constrained global
implementing actions to increase efficiency and competitiveness economy of the 21st century.
are cornerstones for success. The bottom line: sustainability must The race for sustainability is on.
be the foundation of the 21st century corporation.
Last year, Ceres unveiled a bold vision, Ceres 20∙20 for achieving
a sustainable global economy by 2020. It reflects the somber
reality that our achievements to date are not enough – that companies
and investors must do significantly more to truly align their
business models and investment strategies with the bold solutions
needed to ensure a properous and sustainable future.
Ceres 20·20 lays out four key pillars to achieve global sustainability:
ensuring honest accounting to reflect pollution’s true costs; Mindy S. Lubber, President of Ceres
setting new standards and expectations for business leadership; March , 2010
accelerating green innovation; and changing the rules of the game
so sustainable businesses can compete on a level playing field.
4
thought leader perspectives
“Integrating sustainability is not just a

good opportunity for business. It
is essential for success in a world of
constrained resources. Right now
“We simply cannot afford to wait any every business has a choice to make.
longer. Our planet’s natural resources We choose to move fast, using
are depleting at unprecedented rates. sustainability as a force for innovation.
We are already seeing real leadership We choose to embrace transparency,
from some of the largest companies collaboration and advocacy as tools to
around the world. The time has come unlock opportunity and enable us to
for all in the business community to thrive in a clean and green economy.”
stand up, take meaningful action, and
become part of the solution.” Mark Parker, CEO and President,
Nike
Frances Beineke, President,
Natural Resources Defense Council
“Our economic future depends upon

establishing a low-carbon energy
system. We need to dramatically
“We expect our portfolio companies to increase our investments in energy
do what is necessary to position efficiency, renewable energy, smart
themselves for a sustainable economy. grid technologies, and other
Environmental, social and governance innovations. These investments will
issues are core to business performance. ensure that our future is not only
We are looking for companies that sustainable, but prosperous.”
are managing these risks, developing
business opportunities, and disclosing Peter Darbee, Chairman of the Board,
their results.” CEO and President, PG&E Corporation
Anne Stausboll, CEO,

California Public Employees’
Retirement System
5
introduction
NEW
IMPERATIVES
FOR
LEADERSHIP
THE RACE IS ON TO ESTABLISH A LOW-CARBON SUSTAINABLE
GLOBAL ECONOMY AND THE COMPETITION IS FIERCE.
TRILLIONS OF DOLLARS AND THE WELL-BEING OF BILLIONS
OF PEOPLE ARE AT STAKE, AS WELL AS THE HEALTH OF THE
PLANET THAT SUSTAINS US.
Companies and the capital markets are center Business innovation and the power of
stage, and success will depend on their ability capital markets are urgently needed to
to place the Earth and its people at the core address these challenges. Companies
$6 TRILLION
of corporate strategies. It is a pivotal moment on the leading edge are responding with
with enormous opportunity and challenge – a a new business paradigm that makes
moment that demands excellence in corporate sustainability a performance a linchpin
leadership, vision and innovation. ENERGY INDUSTRY for future growth. They recognize
Cutting-edge technologies and the information that “business as usual” is no longer
revolution have transformed the way we live, must be retooled to minimize energy acceptable and that ad hoc sustainability
use and to have a substantially lower initiatives are no longer sufficient.
accelerated the spread of information and
carbon footprint.
catalyzed economic growth. Open markets Success requires placing sustainability
have created vast business opportunities while at the epicenter of business models.
helping to lift living standards for many – but Environmental, social and governance
not all – across the globe. Never before have issues must be seamlessly integrated into strategic planning
we experienced such explosive change and unprecedented growth and investment decision-making. Company practices must
within the span of just one lifetime. reflect an understanding that they are dependent upon goods
But this growth has come at a cost. Our climate is warming due and services provided by nature, and that nature’s limits and
to human behavior. Short-term thinking has left us with a global finite resources must be fully valued and managed for long-
recession. Ever-increasing food and water shortages are undermining term growth and prosperity.
governments, stimulating conflict and exacerbating global Companies, in essence, must lead the drive to a sustainable
poverty. World population, already straining limited resources, global future and they need to start today, not tomorrow.
will top 9 billion in 2050. Delay is not an option.
6
introduction
Enormous opportunities arise during transformative times. The

$6 trillion energy industry – six times larger than the Internet #"World population, already straining
economy – must be retooled to minimize energy use and to achieve limited resources, will top
a substantially lower carbon footprint.1 Clean, energy-efficient
technologies will power economies for decades to come, and
businesses that put themselves out in front will benefit the most. 9 BILLION
IN 2050
Companies with products and services attuned to the new economy
will emerge as winners.
Meeting the needs of billions of people in emerging markets
represents a substantial responsibility and challenge for business.
Many of the world’s 4 billion poorest – are moving beyond
The first section outlines core governance building blocks –
subsistence to active participation in market economies, yet their
management structures, goal-setting and strategic decision-making
fundamental needs – for clean water, better nutrition, energy,
processes – that are needed to integrate sustainability. Companies
healthcare and mobility – are not being met. This gap presents
can use proactive stakeholder engagement, highlighted in the next
tremendous opportunities – estimated at $5 trillion a year– for
section, to assess the relative importance of specific goals and
companies that are positioned to innovate and deliver low-cost,
the effectiveness of strategies. Disclosing critical information to
sustainable technologies and services.2
stakeholders, according to the expectations set out in the
Investors are growing increasingly aware of the risks that climate third section, will help show that a company’s commitment to
change, water scarcity, workplace conditions and other sustainability is real and its performance credible.
environmental and social issues present to companies’ bottom
Lastly, the roadmap details key performance areas for measuring
lines. They are telling companies they invest in to respond
how companies are progressing on sustainability. It includes
with aggressive strategies that transform risk into opportunity.
demanding performance expectations in keeping with the scale
Already, many companies are rethinking their business models and urgency of the sustainability challenges before us.
to address these fast evolving risks and opportunities. More
Now, more than ever, companies must begin calibrating their
than half of global executives in a 2008 survey by the Economist
performance goals against national and international performance
Intelligence Unit considered corporate social responsibility
standards that are grounded in science. In the case of climate
(a synonym for sustainability) a high or very high priority – up
change, for example, companies must reduce their greenhouse
from 34.1% in 2005.3 A growing number of companies are
gas emissions by at least 25 percent below 2005 levels by
asserting leadership on sustainability performance to distinguish
2020 in order to meet reductions that leading scientists agree
themselves from their peers.
are necessary to prevent catastrophic warming.4
This paper outlines Ceres’ vision and expectations for corporate
Just as sound business decisions must be based on science it is
best practices in the coming years – practices that must come
also important for companies to respond to societal expectations.
to represent the norm, not the exception. The sustainability journey
It has become clear that it is not acceptable anywhere in the
has already begun for
world to produce goods in unsafe or exploitative conditions. These
many companies and
are real business risks for global companies.
for those who are just
starting out, we offer Meeting the needs of billions In the coming years, the strategies that companies pursue will
a realistic and clear in emerging markets presents determine not only their shareholder value, but also the future
roadmap to accelerate tremendous opportunities: of our species and our planet. It is at once a daunting challenge
their efforts. It is and a huge opportunity.
intended to challenge,
as well as inform
$5 TRILLION DEFINITION
A YEAR
!"
"
and assist, those who
aim to integrate Sustainability
sustainability into their
business. It explores a. Brundtland’s is the standard definition of sustainability:
the rationale and key “Sustainable development is development that meets the needs of
the present without compromising the ability of future generations
considerations involved in making the shift to sustainability, details
to meet their own needs. It contains within it two key concepts:
strategies and tools being used by some companies, and provides the concept of needs, in particular the essential needs of the
suggestions for the next generation of best practice. world’s poor, to which overriding priority should be given; and the
The paper lays out four broad areas of activity that companies idea of limitations imposed by the state of technology and
should focus on and achieve by 2020. Those areas include social organization on the environment’s ability to meet present
and future needs” (Our Common Future, Report of the World
governance, stakeholder engagement, disclosure and performance.
Commission on Environment and Development, 1987). When
While the attention given to each component depends upon Ceres talks about sustainability, we are referring to how
the particular business and industry, we believe this roadmap will environmental, social and economic considerations are integrated
prove invaluable to all companies. into corporate strategy and capital markets for the long term.
7
introduction
KEY DRIVERS OF SUSTAINABILITY

COMPETITION FOR RESOURCES
The world’s population is projected to increase to more than measured, the impact of depletion on ecosystems is
9 billion people by 2050. Rising living standards will result harder to gauge and often impossible to remedy.
in both expanded markets for goods and services and With resource depletion comes risk of conflict as people
unprecedented demands on the planet’s natural resources. struggle to meet their basic needs. Take water – population
Many of the resources once considered renewable – like growth, economic development and climate change are
forests and fresh water – have become finite when we consider straining access to fresh water globally. By 2025, two-thirds
that human demands are growing more quickly than of the world’s population will live in water-stressed
the ability of natural processes to replenish them. While countries, posing significant risks to the economic and
exhaustion of commodities can be monitored and social stability of entire regions and to the corporate
operations in those regions.5
CLIMATE CHANGE
Our current fossil-fuel based economy has led to a A large number of businesses and investors have come
growing concentration of greenhouse gases in the together to call on governments at the national and global
atmosphere that is driving more extreme weather events, level to implement comprehensive climate policy. These
more severe and frequent cycles of drought and flood, groups include Business for Innovative Climate and Energy
and rising sea levels. These phenomena are being Policy (BICEP), US CAP, The Prince of Wales Corporate
met with new policies and regulations including those Leaders Group on Climate Change, the Investor Network on
designed to limit and put a cost on carbon emissions. Climate Risk (INCR) and the Institutional Investors Group
Businesses need to plan for a policy environment on Climate Change (IIGCC), among others. These businesses
increasingly hostile toward carbon emissions and for the recognize the opportunity to profit from technologies that
costs of adaptation to climate change. reduce emissions and create solutions to global warming.
ECONOMIC GLOBALIZATION
The integration of national economies into the global in enforced environmental and social standards. Whatever
economy brings opportunities for business, but often with the local enforced standard, many stakeholder
significant risks. More and more companies operate in groups demand, at a minimum, that companies meet
or source from multiple countries with wide disparities international expectations.
CONNECTIVITY AND COMMUNICATIONS
Advances in digital communication over the last two year-to-year growth of over 1000%.6 Using these types
decades have reduced not only the time it takes to build of tools, it has never been easier for people to track
a reputation, but also the time it takes to destroy one. a company’s sustainability performance and to widely
Communication is increasingly disaggregated across disseminate their perspectives on it. We have entered
multiple social networks. Facebook has over 65 million an era of “radical transparency.” 7
users, and is growing by more than 200% per year.
Twitter, while having a “mere” 7 million users, has shown
b. “Human rights are rights inherent to all human beings, whatever our nationality, place of residence, sex, national or ethnic origin, colour,
religion, language, or any other status. We are all equally entitled to our human rights without discrimination. These rights are all interrelated,
interdependent and indivisible” (United Nations Human Rights, Office of the High Commissioner for Human Rights – What are Human Rights,
2010, Para. 1).
8
introduction
THE STAKEHOLDER PERSPECTIVE

GOVERNMENT
Governments in developing and developed countries are more effective oversight of and accountability for
implementing policies in response to key sustainability corporate activities that impact society and the
issues, including greenhouse gas emissions, toxic environment. In particular, the much-anticipated
chemicals, water use, labor, and human rights.b In the regulation of carbon emissions will provide a more
United States, there is renewed interest in developing level playing field for lower emitters.
INVESTORS
More investors are now asking companies to detail and about future growth potential. Long-term investors reward
quantify sustainability risks and opportunities in companies that integrate sustainability into strategic
their financial disclosures. As company owners, they look planning. Sustainability-based stock indices benchmark
to sustainability performance as an indicator of strong corporate performance against peer companies and place
management, strong governance and long-term thinking pressure on businesses to meet increasing expectations.
LABOR UNIONS
Unions expect companies to address issues that affect represent their members through formal negotiations,
employees, whether they be socioeconomic issues such engagement on public policy, and collaboration with other
as wages and healthcare, or environmental issues such organizations that support common positions.
as safety and climate change. They actively mobilize and
CIVIL SOCIETY
NGOs and community groups expect companies to groups pressure companies through legal action, public
address their environmental and social impacts. Giving campaigns and collaboration to address a full range of
voice to planetary concerns and future generations, as sustainability issues.
well as those impacted by corporate action today, these
BUSINESS PARTNERS AND SUPPLIERS
Companies expect that those they do business with will guidelines. As customers, companies are themselves
follow the same standards that they do for integrating pushing sustainability across sectors and the value chain.
sustainability into their business. Business-to-business Groups of companies in the automotive, apparel, electric
relationships therefore increasingly incorporate utility, electronics and pharmaceutical sectors are among
sustainability standards and criteria reflected through those collaborating to raise sustainability standards across
changes in Request for Proposals (RFP) and procurement their entire industry supply chains.
CONSUMERS
A growing segment of individual consumers are putting credible sustainability information accompanies this trend,
their money where their values are, demanding an including at the point of purchase. The economic crisis has
understanding of the sustainability impacts of the products not dulled consumer commitment to the environment, with
and services that they buy. Consumer concerns include the 78% of U.S. consumers in a 2009 Cone survey indicating
conditions under which products are made, the materials that they are as likely or more likely to buy environmentally
used and post-use recyclability. An increasing interest in responsible products as they were before the crisis.8
EMPLOYEES
One of the strongest forces demanding change comes from They seek out employers that have a clear vision for their
within. Current employees and talented job candidates contribution to a sustainable global economy, and
seek work that is meaningful and of demonstrable value once inside, look to influence the direction of corporate
to society, and they are prepared to receive a lower salary sustainability and drive improvements through their
in exchange for work at a socially responsible company.9 specific responsibilities.
9
introduction
THE INVESTOR PERSPECTIVE

As with the recent collapse of the financial markets –
stemming from a lack of regulations, failure of
accountability, and inadequate disclosure of risks that
investors were assuming – sustainability and climate
change also present far-reaching hidden risks to which
the financial industry needs to pay closer attention.
Increasingly, investors are recognizing and taking action
on governance issues, including environmental and
social issues that pose material business risks and that
have the potential to directly affect long-term financial
performance. Conversely, they see substantial benefits
to be gained by financing companies that are proactive
on these issues.
The Investor Network on Climate Risk (INCR) is focused
on the financial impacts of climate change. The group $"Investors are recognizing and taking action on
was established in 2003 with a membership of a dozen
investors representing $600 billion in collective assets, ENVIRONMENTAL, SOCIAL
and now includes over 80 investors with $8 trillion in AND GOVERNANCE ISSUES...
collective assets. INCR has been very active, calling for
strong national and international climate policies, asking
the U.S. Securities and Exchange Commission for
standardized disclosure of sustainability risks, directly Socially responsible investing has evolved from being
engaging companies, filing shareholder resolutions a “boutique” issue, to growing at a faster pace than
and making significant investments in clean technology. the universe of all investment assets under professional
management – growing 18% between 2005 and
We have seen an explosion of sustainability and specifically
200711 – while professionally managed assets grew less
climate focused research and investment products in the
than 3%. A report by Robeco Investment Management
past few years, much of it taking place in the midst of one
and Booz & Company expects responsible investing to
of our greatest economic slow-downs. We have also seen
grow to as much as 20% of total assets under
the number of financial indices that address sustainability
management by 2015.12
broaden and deepen. Many of these indices are being
managed by “mainstream” financial houses, including the The financial crisis has also resulted in an increased
S&P/IFCI Carbon Efficient Index, HSBC Climate Index, focus on the risk management processes at financial
Prudential Green Commodities Index, FTSE4Good, and institutions, with a push for greater transparency, holistic
NASDAQ’s Global Sustainability 50 Index. And investors risk identification and a longer-term focus. The 658
are seeing the results. For example, KLD Research and signatories to the Principles for Responsible Investment,
Analytics (now part of RiskMetrics) launched a Global which collectively represent over $18 trillion of assets,
Climate 100 Index and posted a 57 percent return believe it is in the long-term interest of their beneficiaries
(17 percent annualized) since its launch in 2006. 10 to factor sustainability into investment decision-making.
A 2009 Report by the Asset Management working group
In addition to stand-alone sustainability indices, financial
of the UNEP Financial Initiative asserts that investors
organizations are integrating sustainability into core
have a fiduciary responsibility to consider sustainability
decision-making. Numerous banks, including Citi, Morgan
components and those that do not may face very
Stanley, and Credit Suisse, have put in place a carbon
real risk by opening themselves up to legal liabilities.13
focused due diligence process for any future lending for
coal-fired power and other carbon intensive projects. The bottom line for business is this: investors are
Bank of America has also shown leadership by setting a rewarding companies that understand how sustainability
specific target to reduce the rate of greenhouse gas issues impact their business and that are implementing
emissions in its lending to the utility industry, and by strategies and actions that will enable them to thrive in
disclosing publicly that it is using a $20 to $40 per a sustainable global economy.
ton cost of carbon in evaluating loans.
10
introduction
GETTING STARTED
WITH THE ROADMAP
SUSTAINABLE
GLOBAL
ECONOMY
IN THIS ROADMAP, WE PRESENT AN INTEGRATED APPROACH

FOR EMBEDDING ENVIRONMENTAL AND SOCIAL CONCERNS
INTO THE CORPORATE DNA.
The Ceres Roadmap focuses on areas where Ceres sees enormous others. Companies that have successfully addressed particular
opportunities for impact; however, it does not cover every aspect challenges are highlighted in this report.
of sustainability. Each business has to create its own strategy for success,
It is designed to be of practical help to all, whether a business aims addressing both the risks and the opportunities of participating
to establish a leadership platform, to fill gaps in its existing in the sustainable economy. That said, all of the expectations
approach to sustainability or is still considering where to begin. presented in the Ceres roadmap need to be addressed if a
Ceres suggests that businesses start by: company is to achieve a comprehensive and coherent strategy.
Assessing
%"" the company’s baseline environmental and Each chapter in this report follows a similar structure: a
social performance statement of the overall vision for that section of the roadmap,
Analyzing
%"" corporate management and accountability followed by an outline of the business rationale and relevant
structures and systems supporting trends. The remainder of the chapter includes a set
of expectations with information on, “How to Get There.”
%"Conducting a materiality analysis of risks and opportunities
Case studies, examples and resources are provided throughout.
A company can then formulate its own route to sustainability based
In this report we provide over 200 company examples, covering
on the key directions laid out in the roadmap. The route a company
20 sectors, as well as an extensive summary of resources and
takes will vary according to sector and corporate culture. Some
tools to ensure there is clear illustration for how companies can
businesses are further along the path toward sustainability than
implement the roadmap and meet these expectations by 2020.
11
introduction
CERES’ 21ST CENTURY

CORPORATION VISION:
20 KEY EXPECTATIONS
GOVERNANCE FOR STAKEHOLDER DISCLOSURE
SUSTAINABILITY ENGAGEMENT
G1 BOARD OVERSIGHT
S1 FOCUS ENGAGEMENT
ACTIVITY D1 STANDARDS FOR
DISCLOSURE
The Board of Directors will provide oversight Companies will systematically identify a Companies will disclose all relevant
and accountability for corporate diverse group of stakeholders and regularly sustainability information using the Global
sustainability strategy and performance. A engage with them on sustainability risks and Reporting Initiative (GRI) Guidelines as
committee of the board will assume specific opportunities, including materiality analysis. well as additional sector-relevant indicators.
responsibility for sustainability oversight
S2 SUBSTANTIVE D2
within its charter. DISCLOSURE IN FINANCIAL
STAKEHOLDER DIALOGUE FILINGS
G2 MANAGEMENT
ACCOUNTABILITY Companies will engage stakeholders in a
manner that is ongoing, in-depth, timely,
Companies will disclose material
sustainability issues in financial filings.
The CEO and company management – from and involves all appropriate parts of
D3
C-Suite executives to business unit and the business. Companies will disclose how
functional heads – will be responsible for they are incorporating stakeholder input SCOPE AND CONTENT
achieving sustainability goals. into corporate strategy and business
decision-making. Companies will regularly disclose significant
performance data and targets relating to
G3 EXECUTIVE COMPENSATION
S3 INVESTOR ENGAGEMENT
their global direct operations, subsidiaries,
joint ventures, products and supply
Sustainability performance results are a core chain. Disclosure will be balanced, covering
component of compensation packages and Companies will address specific challenges as well as positive impacts.
incentive plans for all executives. sustainability risks and opportunities during
D4
annual meetings, analyst calls and other
VEHICLES FOR DISCLOSURE
G4 CORPORATE POLICIES AND investor communications.
MANAGEMENT SYSTEMS
Companies will release sustainability
Companies will embed sustainability
considerations into corporate policies and
S4 C-LEVEL ENGAGEMENT information through a range of disclosure
vehicles, including stand-alone reports,
risk management systems to guide day-to-day Senior executives will participate in annual reports, financial filings, websites
decision-making. stakeholder engagement processes to inform and social media.
strategy, risk management and enterprise-
G5 D5
wide decision-making.
PUBLIC POLICY PRODUCT TRANSPARENCY
Companies will clearly state their position on Companies will provide verified and
relevant sustainability public policy issues. standardized sustainability performance
Any lobbying will be done transparently and information about their products at
in a manner consistent with sustainability point of sale and through other publicly
commitments and strategies. available channels.
D6 VERIFICATION AND
ASSURANCE
Companies will verify key sustainability
performance data to ensure valid results and
will have their disclosures reviewed
by an independent, credible third party.
12
PERFORMANCE
P1 OPERATIONS facilitate disclosure of suppliers’

sustainability information.
1. Business Model Innovation:
Companies will innovate business
models to reduce material inputs
Companies will invest the necessary resources 1. Policies and Codes: Companies will
and prioritize a transition to sustainable
to achieve environmental neutrality and set supply chain policies and
products and services.
to demonstrate respect for human rights in codes aligned with overall social and
their operations. Companies will measure environmental standards. 2. R&D and Capital Investment:
and improve performance related to GHG Companies will use sustainability as a
2. Align Procurement Practices:
emissions, energy efficiency, facilities and primary filter through which all R&D and
Companies will address sustainability
buildings, water, waste, and human rights. capital investments are made. 50% of
performance in procurement criteria
the R&D investment will be focused on
1. Greenhouse Gas Emissions and Energy and contracting.
developing sustainability solutions.
Efficiency: Companies will reduce 3. Engaging Suppliers: Companies will
3. Design for Sustainability: Companies
greenhouse gas emissions by 25% from ensure that at least 75% of the company’s
will approach all product development
their 2005 baseline by 2020: Tier 1 and Tier 2 suppliers and 50%
and product management decisions
Improving energy efficiency of of Tier 3 suppliers meet the company’s
% with full consideration of the social and
operations by at least 50% standards for sustainability performance.
environmental impacts of the product
% Reducing electricity demand by at 4. Measurement and Disclosure: throughout its life cycle.
least 15% Companies will disclose a list of their Tier 1
4. Marketing Practices: Companies
% Obtaining at least 30% of energy from and 2 suppliers and measure and disclose
will align their marketing practices
renewable sources suppliers’ sustainability performance.
and product revenue targets with their
2. Facilities and Buildings: Companies sustainability goals, and will market
will ensure that at least 50% of
their owned or leased facilities, and P3 TRANSPORTATION AND
LOGISTICS
their designed-for-sustainability products
and services with at least the same
all new construction, will meet rigorous Companies will systematically minimize effort as their marketing of other products.
green buildings standards. When siting their sustainability impact by enhancing 5. Strategic Collaborations:
facilities, companies will follow best the resiliency of their logistics. Companies Companies will collaborate within and
practices that incorporate sustainable will prioritize low impact transportation across sectors to innovate and scale
land-use and smart growth considerations. systems and modes, and address business sustainable products and services, and
3. Water Management: Companies will travel and commuting. contribute to the development of open
assess water-related impacts and source solutions.
1. Transportation Management:
risks and will set targets to improve water
Companies will develop transportation
P5
use and wastewater discharge, with
criteria that incorporate distance EMPLOYEES
priority given to operations in water-
requirements from site to market and
stressed regions.
establish decentralized and localized Companies will make sustainability
4. Eliminate Waste: Companies will distribution networks. considerations a core part of recruitment,
design (or redesign, as appropriate) compensation and training, and will
2. Transportation Modes: Companies will
manufacturing and business processes encourage sustainable lifestyle choices.
review logistics to prioritize low-impact
as closed-loop systems, reducing toxic
transportation modes.
air emissions and hazardous and non- 1. Recruitment and Retention:
hazardous waste to zero. 3. Business Travel and Commuting: Companies will incorporate sustainability
Companies will decrease greenhouse criteria into recruitment protocols,
5. Human Rights: Companies will
gas emissions from business travel employee performance processes,
regularly assess key risks related to
and employee commuting by 50% from compensation and incentives.
human rights throughout their entire
a baseline of 2005.
operations, and will employ management 2. Training and Support: Companies will
systems that are aligned with internal develop and implement formal training on
policies and support the implementation
of universal standards. P4 PRODUCTS AND SERVICES key sustainability issues for all executives
and employees, and facilitate coaching,
Companies will design and deliver products mentoring and networks for sustainability
P2 SUPPLY CHAIN and services that are aligned with knowledge sharing.
sustainability goals by innovating business 3. Promoting Sustainable Lifestyles:
models, allocating R&D spend, designing Companies will promote sustainable
Companies will require their suppliers to
for sustainability, communicating the lifestyle choices across their community
meet the same environmental and social
impacts of products and services, reviewing of employees through education and
standards as the company has established
marketing practices and advancing innovative employee benefit options.
for itself. Companies will establish
strategic collaborations.
sustainable procurement criteria, catalyze
improved supplier performance, and
13
GOVERNANCE
FOR
SUSTAINABILITY
14
“ As fiduciaries, it is incumbent that directors act in a
way that considers the full spectrum of risks facing
companies, including climate change, water scarcity
and human rights.”
Adele Simmons, Board of Directors
Marsh & McLennan Companies
Companies will embed sustainability from the boardroom to the copy room
VISION
and will manage their entire value chain from a sustainability perspective.
Sustainability begins with board oversight and commitment and “ Sustainability is increasingly being seen as an essential element
follows through into management systems and processes that of operational efficiency and risk management by boards of
integrate sustainability into day-to-day decision-making. It is directors, and that means access to critical business information
this chain of accountability stretching from the boardroom about environmental and social risks will be essential for long-
to the factory floor or farm, that drives home the importance of term strategy.”
achieving truly sustainable business performance.
Nell Minow, Editor and Co-Founder,
As fiduciaries, corporate board members are obliged to assess
Corporate Library
risk. The financial impact of climate regulation, the scarcity
of water and other resources, and litigation over poor labor The governance expectations that are outlined in this section
practices – all represent examples of risks to businesses. are complementary to practices traditionally defined as “good
Corporate scandals and the current economic crisis have heightened corporate governance,” such as executive compensation aligned
demands for new approaches to governance, particularly in relation with long-term value creation, director independence, and
to executive compensation and risk management. As sustainability appropriately defining the roles and responsibilities of core
has risen up the corporate, investor and public policy agendas, it board committees. The focus in “Governance for Sustainability”
has become more fully integrated into these governance expectations. is more about establishing and overseeing stronger corporate
Shareholders, consumers, employees, civil society leaders alignment with the market and society’s expectations, creating
and policymakers are all demanding greater accountability and business value in the process. Companies that follow this path
transparency, as well as stronger alignment of corporate actions and embrace strong governance will be better positioned to
with public policies. foresee and adapt to changing economic, social, environmental,
and political conditions. The mandate for strategic, long-term
Corporate governance has always been a way to bring new thinking
governance must flow from the very top of the organization. There
into decision-making at the top of the company. In sustainability
is a growing expectation that boards of directors as fiduciaries
terms, a fresh perspective can help identify ways to marry the
should be informed leaders on sustainability issues that materially
firm’s core competencies with the world’s sustainability challenges.
impact corporate performance and plans.
Companies that embrace strong governance are better positioned
to foresee and adapt to changing economic, social, environmental
and political conditions in order to maximize value for both the
company and society.
15
governance for sustainability
Trends
Board Engagement Executive Accountability
% A 2008 survey of 1,040 directors of U.S. companies found that % There has been small but accelerating recognition of the need for
39% of respondents expected that the board would be spending a senior executive focal point to drive the sustainability agenda.
more time on sustainability issues during the current year than in More and more companies are establishing C-level positions –
the past.14 including stand-alone Chief Sustainability Officer (CSO) positions –
% 83% of the 636 companies in the Calvert Social Index with direct responsibility for sustainability issues.16 Between 2006
“understand the importance of board diversity” and have at and 2009, the number of CSOs in the Russell 3000 companies
least one woman and/or a member of a minority on their board. increased from 6 to 204.17
Nevertheless, 62% of these companies had no women or Institutional Investor Interest
minorities in the directorship pipeline – the top five highest paid % A 2009 report by Eurosif on investment consultants and
positions in the company.15 responsible investment found that 89% of investment consultants
anticipate an increase of pension fund interest in environmental,
social and governance (ESG) issues.18
16
G1: BOARD OVERSIGHT
EXPECTATION The Board of Directors will provide oversight and accountability

for corporate sustainability strategy and performance.
A committee of the board will assume specific responsibility for
sustainability oversight within its charter.
How to get there
RECRUIT DIRECTORS WITH DIVERSE BACKGROUNDS MAKE A BOARD COMMITTEE RESPONSIBLE

Nominating committees should seek directors* with expertise In order to ensure that sustainability issues are overseen in
in sustainability issues that are relevant to the company. sufficient depth, they must become the focus of a specific board
Recruitment and boardroom succession policies should also aim committee. Companies should establish a dedicated sustainability
to achieve diversity. Building a diverse board not only enables the committee or expand the role of an existing committee to include
corporate leadership to embody the values it champions, but to sustainability. A survey by Deloitte found that in many cases
draw upon the different perspectives that diversity of gender, race, directors favor placing responsibility for sustainability into the
and geographic region – to name but a few criteria – can provide. governance and nominating committee.19
In addition to diversity criteria it is important for companies to Board committee charters should spell out specific sustainability-
ensure sustainability considerations are part of the succession related responsibilities and accountability structures, including
planning process. the responsibility to oversee the content and effectiveness of
INFORM DIRECTORS policies, to review the company’s sustainability targets, strategy
and performance, and to review the adequacy of the company’s
To enable informed oversight and long-term planning, corporate
transparency on that performance. The board sustainability
boards should receive regular training and education on
committee should have the express ability to communicate regularly
key sustainability issues. It is anticipated that such training will
and directly with the senior-most executive responsible for driving
become a part of accredited director training programs offered
the company’s sustainability agenda, and to request reports from
by organizations such as the National Association of Corporate
that individual on relevant matters.
Directors, the International Corporate Governance Network and
the Millstein Center for Corporate Governance. The Corporate Sustainability Committee of the HSBC board is
responsible for advising the HSBC board, committees of the
Board and executive management on corporate sustainability
policies, including environmental, social and ethical issues.
The committee’s charter obliges it to oversee the effectiveness
of HSBC’s targets, strategy, policies and performance on a range
of sustainability issues as well as the company’s transparency
on those issues. The charter refers to international codes and
principles, thus reinforcing the legitimacy of the company’s
sustainability priorities.
Nike’s Corporate Responsibility Committee reviews significant
policies and activities and makes recommendations to the
board of directors regarding a broad range of operational and
philanthropic sustainability practices and initiatives. The
committee includes non-executive directors and its meetings are
attended by Nike’s Executive Team. The committee’s charter
gives it the power to review and make recommendations regarding
some of the key “hot button” issues that the company faces,
including human rights and environment issues.
* Throughout this section we refer to corporate boards but Ceres appreciates
that executive oversight will not always be undertaken by a board of directors.
This section should be taken to refer to whatever body carries out oversight
in the enterprise.
17
G2: MANAGEMENT ACCOUNTABILITY
EXPECTATION The CEO and company management – from C-Suite executives

to business unit and functional heads – will be responsible for
achieving sustainability goals.
How to get there
ENGAGE THE C-SUITE

When the size of the company warrants it, the CEO should appoint
a publicly identifiable C-level executive to act as a focal point
for efforts driving the sustainability agenda. This executive should
report directly to the CEO and the board.
A management committee chaired by the CEO or Chief Sustainability
Officer (CSO) and comprised of senior level managers from
across the enterprise can provide a strong mechanism for leading
and coordinating the integration of sustainability into strategy,
planning and operations. The committee should envision the
company’s approach to the most critical sustainability issues
over a 25-year view, translate that vision into specific, clearly
articulated goals and strategies, ensure adequate resources
are allocated, and review and update the vision at least annually.
SAP has created a Chief Sustainability Officer role to drive and
coordinate all aspects of its sustainability efforts, from
sustainability product innovation to the company’s own operations.
This position reports to an executive board member. The CSO
coordinates sustainability roles and responsibilities across
business lines, in part by means of a senior level sustainability
committee comprising executives from each business line.
The committee reports to the CEO and a committee of the board.
EMBED MANAGEMENT ACCOUNTABILITY
Management retains responsibility for achieving sustainability
targets and programs through day-to-day operations and decision-
making. Specific senior individuals responsible for sustainability-
related outcomes could be identified in corporate communications
in order to underscore that personal accountability.
Arizona-based electric power company APS/Pinnacle West likewise
has a formal sustainability governance structure focused around
an executive level Sustainability Policy Committee, chaired by the
CSO. This committee sets strategy and provides oversight. It is
complemented by a sustainability working group that includes
managers from business units and drives internal coordination,
as well as tracks risks, opportunities and performance. The
working group sets up teams to manage particular initiatives.
Vancity, Canada’s largest credit union, publicly identifies the titles
and names of the executives responsible for achieving the various
sustainability goals outlined in its Accountability Report.
18
G3: EXECUTIVE COMPENSATION
EXPECTATION Sustainability performance results are a core component of

compensation packages and incentive plans for all executives.
How to get there
ALIGN EXECUTIVE INCENTIVES The CEO and four executive directors of National Grid in charge
Sustainability performance results must be a core component of the of the company’s electric utility, gas distribution and shared
evaluation of senior executive performance and compensation services business have performance targets tied to the company’s
packages. The weighting given to sustainability performance should aggressive carbon reduction goals.
be disclosed in annual reports so that it is clear to shareholders “ Sustainability is part of our everyday discussions at National
and other stakeholders how executives are being rewarded. Grid. Linking executive pay and climate change deliverables has
Xcel Energy, in its 2009 Proxy statement, clearly lays out how increased accountability and positively impacted our culture.
certain sustainability metrics fit into annual incentive objectives Employees across the company are increasingly incentivized to
for all executive officers. The filing sets out the weight assigned put sustainability at the heart of the way we do business.”
to GHG emission reductions and safety performance, alongside
the weighting given to earnings per share. Tom King, President
National Grid U.S.
CASE STUDY
!"
BUILDING SUSTAINABILITY INTO THE BOARD

COMMITTEE CHARTERS
A board committee should have clear accountability for sustainability The charter should clearly make the linkage between sustainability
strategy and performance, whether by a standalone committee and business priorities. Ford’s sustainability committee charter
or by expanding the responsibilities of an existing committee. The clearly states that the “principal functions” of the committee include
committee charter should explicitly identify the committee’s assisting management in the formulation and implementation of
oversight duties. Below are some guidelines and good practice policies, principles and practices to foster the sustainable growth
examples that companies may consider: of the company on a worldwide basis and to respond to evolving
1. Purpose public sentiment and government regulation concerning vehicle
emissions. The committee must also aid management in setting
The charter should clearly specify the scope of the committee’s
strategy, establishing goals and integrating sustainability into daily
oversight of sustainability issues. Royal Dutch Shell’s Corporate and
business activities across the company, and keep under review
Social Responsibility Committee is responsible for “reviewing the
new and innovative technologies that could help the company foster
policies and conduct of the Shell Group of Companies with respect
sustainable growth.
to the Shell General Business Principles (including Sustainable
Development and the Health, Safety and Environment (“HSE”) Policy), The charter should include performance protocol, sustainability
the Shell Code of Conduct and to major issues of public concern.” reporting and goal setting. HSBC’s Corporate Sustainability Committee
is tasked with the responsibility of reviewing and advising the Board
2. Composition
on the Group’s sustainability reporting and sustainability targets. The
The committee’s composition should include at least two non- Committee also has an examination and approval function relating
executive directors. Ideally, these members should be chosen based to the Group’s environmental performance and impacts.
on considerations that include expertise on sustainability issues of
The charter should provide a framework for the integration of
particular relevance to the business.
sustainability and risk management. Sysco Corporation’s
3. Duties and Responsibilities Sustainability Committee is explicitly charged with reviewing
The charter should specifically reference the company’s priority management’s risk assessment and risk management
sustainability issues. Nike’s Corporate Responsibility Committee charter policies and procedures with respect to sustainability impacts
specifically mentions environmental and labor auditing and compliance. and considerations.
19
CASE STUDY
!"
CERES AND GOVERNANCE FOR SUSTAINABILITY

Ceres recognizes and consistently stresses the need for systemic Employee Retirement System (CalPERS) and the California State
change in the business sector. In order to see real and lasting impact, Teachers Retirement System (CalSTRS) – two of the largest
sustainability must become embedded in the DNA of companies. public pension funds in the United States together managing over
As one of the primary sustainability issues, climate change poses $360 billion of assets– officially integrated the 14-point framework
significant risk to companies and should be factored into governance. into corporate governance guidelines for their investment portfolios.
Therefore, Ceres and RiskMetrics developed a 14-point framework and “Corporate governance is about aligning companies and investors
methodology for evaluating how companies are addressing climate risk. to generate sustained, long-term share value,” said Rob Feckner,
Since 2003, Ceres has issued regular reports that score and benchmark CalPERS Board President. “Achieving sustained performance
the integration of climate risk and corporate governance by companies must include company actions to respond to environmental risks.”20
from a broad range of sectors, including consumer products, banking,
and heavy emitting industries. These reports have drawn the attention
of the investment community and in 2008 the California Public
BOARD OVERSIGHT WEIGHT
1 Board has explicit oversight responsibility for environmental affairs/climate change.

12%
2 Board conducts periodic review of climate change and monitors progress in implementing strategies.
MANAGEMENT EXECUTION
3 Chairman/CEO clearly articulates company’s views on climate change and GHG control measures.
4 Executive officers are in key positions to monitor climate change and manage response strategies. 20%
5 Executive officers’ compensation is linked to attainment of environmental goals and GHG targets.
PUBLIC DISCLOSURE
6 Securities filings and/or MD&A identify material risks, opportunities posed by climate change.
14%
7 Public communications offer comprehensive, transparent presentation of response measures.
EMISSIONS ACCOUNTING
8 Company conducts annual inventory of direct and indirect GHG emissions and publicly reports results.
9 Company has set an emissions baseline by which to gauge future GHG emissions trends. 16%
10 Company has third party verification process for GHG emissions data.
STRATEGIC PLANNING AND PERFORMANCE*
11 Company sets aggressive absolute GHG emission reduction targets for facilities, energy use, business
travel, and other operations, and achieves these targets on schedule.
12 Company has implemented company-wide programs to improve the energy efficiency of its operations.
13 Company currently purchases renewable energy for a significant portion of its energy use and has set
targets to increase future renewable energy purchases. 38%
14 Company pursues strategies to maximize opportunities from product and service offerings related to
climate change.
15 Company has assessed supply chain GHG emissions, engaged with suppliers on controlling emissions,
addressed climate impacts of materials/packaging and improved logistics to reduce emissions.
* Indicators adjusted from Climate Change Governance Framework to reflect focus on energy efficiency, renewable energy, products and services, and supply chain management.
Source: Table from Corporate Governance and Climate Risk: Consumer and Technology Companies, Ceres and Risk Metrics 2008
20
G4: CORPORATE POLICIES AND MANAGEMENT SYSTEMS
EXPECTATION Companies will embed sustainability considerations into

corporate policies and risk management systems to guide
day-to-day decision-making.
How to get there
The governance structures referred to in previous sections set the relevant ILO conventions, and other frameworks, including
accountabilities, goals and strategies for achieving sustainability. voluntary codes like the Principles on Security and Human Rights.
Embedding these within a complete Sustainability Management Pharmaceutical company Novo Nordisk has a human rights
System, as opposed to a solely environmental management system, policy that references the UDHR, provides the company’s view of
will ensure those strategies are implemented. its sphere of influence, and includes among other details Novo
CRAFT KEY POLICIES ON MATERIAL ISSUES Nordisk’s position on the right to health – the right most pertinent
to its mission.
Companies should develop policies covering all sustainability issues
that materially (see p. 27 for more on materiality) impact the Biodiversity is another example of an issue that is material to
company’s performance and plans, and outline the company’s vision many companies and on which a corporate policy should therefore
and strategy for implementing these policies. As part of this be developed. Global mining company, Rio Tinto, developed its
process, companies will need to engage with stakeholders to obtain biodiversity policy and strategy in conjunction with an external
feedback on the relevance of existing and proposed policies advisory panel that included key conservation organizations such
and to identify gaps. These policies should guide the company’s as Earthwatch Institute and Conservation International.
activities across its operations, the supply chain, logistics, the In 2008, recognizing investor, environmental and community
design and delivery of products and the management of its employees. concerns relating to the use of mountaintop removal (MTR) coal,
Specifically, companies should have a policy on human rights that Bank of America developed a coal policy, which aims, in part,
is publicly available. The policy should cover issues including to limit the financing of companies whose predominant method
the labor rights of employees, contract workers and supply chain of extracting coal is through MTR.
workers, diversity and discrimination, and the respect of host
communities. The policy should reference recognized frameworks,
such as the Universal Declaration of Human Rights (UDHR),
! IN FOCUS
Focus on Human Rights
Company commitments to respect human and labor rights should be And reference other core ILO Conventions dealing with:
demonstrated and communicated through policies, and implemented " – Minimum age
through codes of conduct and management systems and rigorous " – Equal remuneration
ongoing monitoring and evaluation. " – Occupational health and safety
Policies should respect the four Fundamental Principles of the ILO " – Freedom of movement
Declaration on Fundamental Principles and Rights at Work: Management systems should establish and integrate guidelines, codes
%" Freedom
" of association and the effective recognition of the and practices across the whole company. These systems should
right to collective bargaining include leadership development and employee training in order to build
%" Elimination of all forms of forced or compulsory labor the company’s overall capacity to identify and respond to human
rights issues and should also include provisions to protect whistleblowers.
%" Effective abolition of child labor
Systems should ensure regular monitoring, performance assessments
%" Elimination
" of discrimination in respect of employment and audits, employ legitimate verification processes, and include effective,
and occupation independent grievance mechanisms.
21

G4. CORPORATE POLICIES AND MANAGEMENT SYSTEMS continued
#"
ENLIST RISK MANAGEMENT SYSTEMS
Companies should incorporate consideration of environmental
and social risks and opportunities into their business processes
so that sustainability is factored into all decisions. This includes
identifying environmental and social events or circumstances
relevant to their business objectives, assessing them in terms
of their likelihood and the potential magnitude of their impact,
determining a response strategy, and monitoring progress. When
a company considers an investment opportunity that has an
impact on GHG emissions or water use, part of the sustainability
risk associated with the decision can be addressed by using
a shadow price for carbon or water, respectively. More generally,
investment decisions should use discount rates that favor long-
term planning or natural resource conservation.
PepsiCo’s Environmental Management System identifies
environmental risks and ensures compliance with regulations and
company standards by applying formal governance and auditing
processes to environmental programs and systems. The company Many banks including Citi and Barclays have formal processes in
also incorporates sustainability criteria into a Capital Expenditure place that assess the environmental and social risks – including
Filter that assesses all capital expenditure requests over human rights – in their finance, lending and investment portfolios.
$5 million. PepsiCo requires that all requests be accompanied In relation to project finance, for example, these and other
by a review of related sustainability risks and opportunities banks have signed onto the Equator Principles, which provide a
to track the sustainability payback on capital spend and thus framework for the integration of sustainability risk assessment
improving investment decisions over time. and management into project finance. Several banks and other
organizations are working on strengthening the Equator Principles,
Companies should use ongoing stakeholder feedback to identify
and some banks are applying the principles to a much wider
and prioritize sustainability risks, including emerging and
range of investment practices.
long-term risks. The risk identification and management process
should be based on the precautionary principle. As part of this
process, companies need to identify and prioritize human rights !IN FOCUS
risks and impacts. This analysis should consider the company’s
sector, local or national context, demographics and geographic
Insurance Industry and Climate Risk
vulnerabilities. Social and environmental impact assessment
ought to be an ongoing process to ensure that the company can Insurance companies are particularly exposed to environmental and
adjust to changing circumstances. social risks through the practices of their clients. Insurers’ exposure
to sustainability-related liability was starkly illustrated through
the wave of asbestos litigation starting in the 1980s, which nearly
! DEFINITION toppled London insurance company, Lloyd’s and which, according
The Precautionary Principle to one estimate, amounted to as much as $54 billion in insured
claims.22 As society struggles with the physical effects of climate
change and resource scarcity, insurers can be expected to see a
“ When an activity raises threats of harm to human health or the rising tide of liability claims stemming from extreme events, human
environment, precautionary measures should be taken even displacement, infrastructure failure, pollution of scarce water
if some cause and effect relationships are not fully established supplies, and other damages attributed to the action or inaction of
scientifically. In this context the proponent of an activity, corporate clients.
rather than the public, should bear the burden of proof. The Some leading insurers, including Swiss Re, Allianz and Zurich,
process of applying the precautionary principle must be have already taken steps to identify high-risk practices across key
open, informed and democratic and must include potentially industries, to advise clients to change risky practices or even in
affected parties. It must also involve an examination of the some instances to exclude certain coverage for industries where
full range of alternatives, including no action.” the risk cannot be priced accurately. Insurers are also optimizing
Wingspread Statement on the Precautionary Principle, Jan. 1998 21 their risk models to better incorporate changing hazards associated
with climate change and to test adaptation strategies in light of
intensifying hazards. Most insurers, however, still have a great deal
of work to do to develop public policies or frameworks for gauging
sustainability risks.
22
G5: PUBLIC POLICY
EXPECTATION Companies will clearly state their position on relevant FPO

sustainability public policy issues. Any lobbying will be done
transparently and in a manner consistent with sustainability
commitments and strategies.
How to get there
ADVANCE POLICY POSITIONS RESPONSIBLY “ Leadership from the business community is essential to our
Boards and executive team members should be involved in the success in protecting human health and the environment.
development of the company’s public policy positions, and BICEP is pioneering change, and proving every day that the
companies should disclose their positions, as well as their environmentally sound thing to do is also the economically
membership in and contributions to trade associations. sound thing to do.” 23
When appropriate, companies should play an active role in
developing trade association positions that encourage Lisa Jackson, Administrator
best practice sustainability performance consistent with their U.S. Environmental Protection Agency
own environmental and social performance goals.
In 2009, Apple Inc., Exelon Corp., PG&E Corp., the Public Service
Company of New Mexico, and Mohawk Fine Paper each announced
that they were leaving the U.S. Chamber of Commerce because the
Chamber’s position opposing meaningful climate change
legislation did not reflect their environmental policy positions.
! CASE STUDY
BUSINESS FOR INNOVATIVE CLIMATE AND

ENERGY POLICY (BICEP)
In 2008 Ceres, together with five founding companies – %" Limit
" construction of new coal plants to those that capture and
Levi Strauss & Co., Nike, Starbucks, Sun Microsystems (now part store CO2
of Oracle Corporation), and Timberland – launched Business for %" Assist
" developing countries in adapting to climate change and
Innovative Climate and Energy Policy (BICEP) to bring large consumer reducing carbon emissions
company voices to the climate and energy policy debate
BICEP members believe that climate change will impact all sectors
in Washington DC. The BICEP member companies, now numbering
of the economy and that varied business perspectives are needed in
17, support nine principles:
developing U.S. and international climate policies. In 2009, BICEP
%" Set short- and long-term greenhouse gas reduction targets companies met with 50 House and 40 Senate members, senior White
%" Stimulate green job growth House and agency officials, and attended the international climate
%" Adopt national renewable energy standard negotiations in Copenhagen. BICEP companies also joined with other
leading U.S. companies to call on President Obama to secure a robust
%" Capture vast energy efficiency opportunities
international agreement – one that establishes significant emission
%" Boost
" investment in renewable energy, energy efficiency and reduction targets and secures substantial U.S. financing. These
carbon capture and storage technologies businesses and others continue to push for strong international and
%" Establish
" cap-and-trade system with 100% auction of carbon U.S. domestic policies providing emissions reductions and market
allowances certainty necessary to unleash much-needed investments to develop
innovative solutions for climate change.
%" Encourage transportation for clean energy economy
23
STAKEHOLDER
ENGAGEMENT
24
“ To operate successfully in a complex global business
environment, forward-looking companies need to
open their doors to diverse stakeholders and incorporate
these perspectives into strategic decisions and
sustainable development initiatives.”
Ray Offenheiser, President
Oxfam America
Companies will regularly engage in robust dialogue with stakeholders across

VISION the whole value chain, and will integrate stakeholder feedback into strategic
planning and operational decision-making.
Stakeholder engagement is a critical process that helps companies the connection between engagement, disclosure and corporate
understand their key environmental and social impacts, identify performance. By focusing on those issues that are most important
risks and develop innovative solutions to sustainability challenges. to stakeholders, materiality analysis better equips a company with
Stakeholders include people or groups within or outside the company the insights that can foster innovation, including the development
who are affected by the company’s activities (See Figure S1). of new business practices, products and services. Investors,
Employees are a key internal driver of sustainability performance. for their part, are beginning to recognize that companies that
They have long been advocates for their own labor rights. More routinely engage stakeholders on sustainability issues are also
recently, their interest and commitment has been directed towards typically leaders in risk management and innovation.
the pursuit of innovations in sustainability. Efforts to engage
“ Constructive, ongoing engagement between companies and
internal stakeholders have evolved beyond the appointment of
investors on sustainability issues is a critical tool for driving
dedicated green teams and internal CSR departments. Now
engagements are more strategic, focused on core business issues the integration of sustainability factors in business strategies.
and involving senior executives from different business lines, This will bolster investor understanding of how companies
geographic regions, and areas of expertise. are addressing related risks, and capitalizing on opportunities
External stakeholders are also getting more attention. Engaging with and potential competitive advantages over the long-term.”
and responding to external stakeholders helps companies establish Kenneth B. Sylvester, Assistant Comptroller for Pension Policy
credibility and support for their license to operate. It is especially New York City Comptroller’s Office
critical for multi-national companies to capture the input
of stakeholders in specific markets to understand local impacts. This has encouraged companies to adopt a more expansive approach
to identifying and communicating with stakeholders, including
The role and process of stakeholder engagement has evolved over engagement on a broader range of topics. There is now greater
the past few decades. Historically, companies engaged local disclosure of the scope, process, and results of stakeholder
community members and other organizations to meet regulatory dialogues. Companies are also using new methods to reach different
requirements and secure permits for specific locations. As stakeholder groups. Emerging communication vehicles provide
companies began to realize the benefits of regular dialogue with both risks and opportunities. In particular, the rapid growth in
key constituency groups, engagement transitioned from a process social media has not only created new forums for dialogue, but
largely focused on compliance conditions to one that was about has begun to blur the lines between engagement and disclosure.
identifying and managing a wider range of risks. Such stakeholder
engagement proved invaluable as a way of working through Examples of successful stakeholder engagement identified in
issues in the wake of incidents or conflicts. Focus groups, one- this section represent a distillation of Ceres’ extensive experience
off meetings, and ongoing engagements also help companies to in this area.
understand reputational risks.
Now companies are engaging stakeholders to get out ahead in
addressing emerging issues. Companies are increasingly seeing
25
stakeholder engagement
Trends
% According to a 2008 survey by KPMG:24
– 62% of the 250 largest global corporations in the Fortune 500
(Global 250) engaged in formal stakeholder engagement –
nearly double the number in 2005. However, only 32% of
companies that engaged in formal dialogue publicly responded
to the feedback they received.
– 65% of Global 250 companies disclosed who their stakeholders
are and how they are engaged
Stakeholder Demand for Disclosure
% 75% of respondents to a 2008 IBM survey of 250 business
leaders worldwide reported that the number of advocacy groups
collecting information about their business had increased over
the past three years. 63% of respondents felt they had access
to sufficient information about the sourcing and content of
their products to satisfy customer information needs, yet three
quarters of respondents admitted to not knowing their customers’
sustainability concerns well.25 $ North American Shareholder Resolutions on Climate Change (1999– 2009)
Rising Investor Engagement

% Investors have been filing an increasing number of shareholder
resolutions on sustainability issues, including climate and
disclosure over the past 10 years, with 68 submitted in 2009
alone. There have also been a record number of resolutions
withdrawn due to positive company commitments.26
26
S1: FOCUS ENGAGEMENT ACTIVITY
EXPECTATION Companies will systematically identify a diverse group of

stakeholders and regularly engage with them on sustainability
risks and opportunities, including materiality analysis.
How to get there
IDENTIFY STAKEHOLDERS IDENTIFY WHAT MATTERS

Companies should systematically engage a diverse array of Companies should identify key issues of concern to the company
stakeholders from various key constituencies, both internal and through an internal materiality analysis and should then share this
external. Stakeholder mapping is the process whereby companies analysis with external stakeholders. Stakeholder dialogue can be
identify stakeholders and understand, track and assess how used to identify additional issues, prioritize efforts, and recognize
each group is being engaged on key sustainability issues by various emerging risks that could become increasingly important to the
business lines, across geographies and the entire value chain. business over the long term. The company should then explore the
The diagram below offers a classic high-level representation of links between identified material issues and the leadership team’s
the range of a company’s stakeholders. The mapping exercise vision and strategy.
should take this to the next level of detail, identifying specific The company’s view of materiality should take into account what
stakeholders or stakeholder groups. stakeholders consider to be significant and provide an explicit
response to that feedback. Ford’s 2008/09 Sustainability Report
includes an interactive materiality matrix that categorizes issues
based on two dimensions: the degree of stakeholder concern and
the extent of the current or potential impact on the company.
Vodafone, too, uses a materiality matrix to identify the issues of
greatest importance to the company and to stakeholders. It then
uses the matrix again to prioritize sub-issues.
! FIGURE S1-2
$ FIGURE S1 Identifying Stakeholders 27
Vodafone Material Issues 28
Mapping helps ensure that the company is engaging a broad range

of stakeholders, while identifying overlaps that can be eliminated
to improve efficiency of engagement activities. Large companies
could employ a multi-national stakeholder advisory team to
help address globally relevant sustainability challenges. Companies
that have significant local impacts will need to prioritize
community engagement.
Mapping also helps determine the appropriate depth of engagement
to be maintained with particular constituencies. It is an opportunity
to assess which stakeholders are best positioned to provide the
company with expert feedback on the company’s key sustainability
performance indicators.
Healthcare company Baxter discloses a detailed list of stakeholders
on its website, describing them and the channels by which
engagement takes place. Weyerhaeuser, similarly, lays out clearly
a list of its recognized stakeholder groups and how it engages
with each.
27
S2: SUBSTANTIVE STAKEHOLDER DIALOGUE
EXPECTATION Companies will engage stakeholders in a manner that is ongoing,

in-depth, timely and involves all appropriate parts of the business.
Companies will disclose how they are incorporating stakeholder
input into corporate strategy and business decision-making.
How to get there
REACH OUT REGULARLY Regardless of the relative formality or informality of the

Companies should engage with stakeholders regularly and engagement channel, companies should commit to ensure that
proactively in step with the business planning cycle, as well as they provide credible information that is supported by
in response to unexpected events. Specific engagement agendas performance data. While online forums can complement existing
may be timed to accompany key geographic or cultural events, stakeholder processes and engage a much broader set of
initiatives, or emerging trends. stakeholders, online engagement should not replace traditional
engagement or disclosure that the company has in place.
For multinational companies, engagement with stakeholders
Companies should also be aware that online engagement is only
at the global corporate level should occur at least once a year,
effective for those stakeholders with access to technology.
whereas engagements at country or community level should
occur more frequently. “ Through our external stakeholder engagement process, we
USE APPROPRIATE CHANNELS have listened to the need to speak openly and candidly about
the challenges and dilemmas in our business. This type of
Different constituencies should be engaged through channels
appropriate to each group. Community Action Panels might be the frank assessment is an important part of how we’re going to
best way to engage with community groups near company facilities; make progress and improve as a company.”
employees can be engaged through the company intranet or Bob Langert, VP Corporate Social Responsibility
employee surveys; government can be engaged through regulatory
McDonald’s Corporation
discussion forums. Every avenue of communication offers an
opportunity to interact with one or more stakeholder groups on DEMONSTRATE ACCOUNTABILITY
sustainability issues.
Companies should disclose the feedback provided by key
An example of using direct community engagement that was stakeholder groups and explain how this has influenced their
successful for Shell, was its efforts to obtain support for one of its business strategy. This disclosure reinforces the two-way
projects in the Philippines. A study by the World Resources nature of engagement and completes the accountability feedback
Institute found that Shell’s engagement helped them avoid project loop. When companies are unable to address all stakeholder
delays, which resulted in $50 – $70 million in savings and a return concerns, they should be explicit about the rationale for not doing
on investment of 1,200% on its community consent efforts.29 so. This transparency will build the trust and credibility necessary
Many companies, for example, are turning to online communication for ongoing long-term engagement.
tools such as blogs and social media platforms, including In 2006 – 07, Ceres engaged with the New York Organic Fertilizer
Facebook, Twitter, and Justmeans, to engage their connected Company (NYOFCo) as a part of our Facility Reporting Project.
stakeholders. Conversations about companies are now taking NYOFCo, a facility based in the South Bronx, is in the business of
place online all the time whether initiated by those companies treating waste from the city of New York and converting it into
or not. Companies should identify, evaluate, or create fertilizer. Ceres organized a series of five community meetings
opportunities that allow for active, transparent, and quality between the facility and its neighboring community, addressing
online engagement with stakeholders. a number of contentious issues including odor, public health
To engage consumers on the company’s sustainability strategy and safety. Through this focused engagement, NYOFCo committed
and performance Seventh Generation uses a broad social media to a series of performance and communications commitments t
strategy that includes the Chairman’s blog, employee blogs, hat were then disclosed in their facility report.
Facebook, LinkedIn, a YouTube channel, Twitter, and Justmeans.
The company’s sustainability report website engages users
by offering the opportunity to “crowd-source” a book of best
practices in corporate sustainability.
28
! CASE STUDY
THE CERES STAKEHOLDER ENGAGEMENT MODEL
For more than 20 years Ceres has been bringing the investor, business identification of emerging issues, enabling companies to take a
and NGO communities together in constructive dialogue to advance proactive approach to sustainability.
improved corporate sustainability performance. Drawing primarily upon Ceres stakeholder engagements are confidential, collaborative and
the depth and expertise of the Ceres coalition, the Ceres stakeholder solutions oriented. Ceres is an active participant in these dialogues,
engagement model features diverse teams of credible, external and along with other stakeholders, offers honest and constructive
stakeholders that provide ongoing input to a company on policy, strategy, feedback. A key part of the Ceres model is creating an accountability
performance and disclosure. In 1995, Ceres brought companies loop where companies not only receive feedback from stakeholders,
together with stakeholders in 20 unique dialogues. In 2009, we but also respond on how they will act on the feedback received. The
convened over 115 engagements. long-term nature of the Ceres dialogues also helps stakeholders
We believe it is critical for companies to be at the table with and companies to develop the mutual trust necessary to work together
stakeholders who will challenge them with differing opinions and to identify smart business solutions for sustainability challenges.
insights. A diversity of expertise and perspectives results in the
29
S3: INVESTOR ENGAGEMENT
EXPECTATION Companies will address specific sustainability risks and

opportunities during annual meetings, analyst calls and other
investor communications.
How to get there
SPEAK TO THE STREET

Investors represent a key group of stakeholders that companies ! CASE STUDY
should engage in a proactive and regular manner. Companies
should report on and discuss specific sustainability risks and
opportunities in investor communications and engagements,
INTEGRATING
including annual meetings and quarterly earnings calls. STAKEHOLDERS INTO
These engagements should provide investors with a deeper
understanding of sustainability risks and opportunities. STRATEGY DEVELOPMENT
Clear, concise sustainability information allows investors to
evaluate performance, so that they may reward companies In 2008 Dell, Inc. began the process of developing a
whose activities address social and environmental challenges. comprehensive environmental strategy, called Enviro 2.0, to
At General Electric’s annual shareholder meetings, CEO Jeffrey help the company move towards Michael Dell’s goal of becoming
the greenest technology company on the planet. Based on
Immelt often explains the business opportunities presented
past experience working with stakeholders, Dell recognized the
by sustainability challenges and highlights the company’s
value in bringing together external experts with the key senior
efforts to develop solutions to address them. In 2008,
executives from each of its business lines to provide input
Immelt highlighted the company’s commitment to growing its
during the early development of the strategy. Ceres worked with
ecomagination initiative and in 2009 – a year almost entirely Dell to identify and match key stakeholders with each of Enviro
focused on the company’s plans for weathering the economic 2.0’s six pillars: Climate Leadership, Sustainable Operations,
crisis – Immelt addressed GE’s efforts to develop clean energy Product and Packaging Stewardship, Global Recycling,
technologies and solutions as a prime business opportunity.30 Services and Solutions, and Engagement and Empowerment.
In addition to the updates provided at the annual shareholder The team included experts in climate and energy, life cycle
meetings, ecomagination and healthymagination are featured assessment, e-waste, materials, packaging, communications,
every month in GE’s investor update on business highlights. and employee engagement, as well as investors and government
representatives.
“ The opportunity to directly engage with stakeholder experts
Through a series of dialogues between stakeholders and Dell’s
from NGOs, policy and industry is valuable for our business. This
business line leaders, the company established goals, targets,
engagement resulted in a deeper understanding of how and metrics that would be used for measuring success for each
the impacts of Dell’s supply chain could be further integrated of the six pillars. The culmination of these dialogues was an in-
into our sustainability strategy.” person meeting bringing together all 30 stakeholders, more than
two-dozen Dell employees, as well as Michael Dell, to finalize
Gil Casellas, VP, Corporate Responsibility Enviro 2.0. Ceres and the stakeholder team will continue to
Dell, Inc. engage with Dell to ensure that the strategy is implemented by
the business lines and that stakeholder feedback is addressed.
30
S4: C-LEVEL ENGAGEMENT
EXPECTATION Senior executives will participate in stakeholder engagement

processes to inform strategy, risk management and enterprise-
wide decision-making.
How to get there
INVOLVE EXECUTIVES
To demonstrate the company’s commitment to sustainability,
senior executives – including members of the C-suite – should
participate in stakeholder engagement. This is an important
opportunity for corporate leaders to hear directly from external
stakeholders, including NGOs, investors, customers, suppliers,
and members of the community. This process provides executives
with a first-hand understanding of stakeholder concerns and
how they align with the company’s business and sustainability
priorities. Board members will also gain value by participating
in these discussions.
Since 2007, Ceres has worked with electric utility American
Electric Power (AEP) to organize multi-stakeholder engagements
that include more than 40 representatives from the company’s
senior management team, including the CEO, CFO, COO
and presidents of AEP’s various operating companies. These
individuals are brought together with a multi-stakeholder group
of investors, environmental NGOs, academia, and labor group
representatives to discuss the company’s sustainability policy,
strategy and disclosure. AEP’s board of directors is kept informed
about the engagement process and the results from this dialogue.
“ Transparency and accountability along with a close working

relationship with our stakeholders will grow our business and
serve our shareholders’ interests.” 31
Mike Morris, Chairman, President, and CEO

American Electric Power
In addition to Timberland’s regular ongoing engagement with a
dedicated stakeholder team, CEO Jeff Swartz engages with
stakeholders in quarterly conference calls focused on a particular
sustainability issue of concern to the company. The open question
and answer format of these sessions allows stakeholders easy
and direct access to the chief executive and lends itself to
generating maximum candor and transparency. These calls are
archived and publicly available on the Timberland website.
31
DISCLOSURE
32
“ Corporate transparency, accountability and an honest
assessment of social and environmental risks are
essential elements of fully understanding risk in the
twenty-first century and enhancing shareholder value.”
Denise Nappier
Connecticut State Treasurer
Companies will report regularly on their sustainability strategy and

performance. Disclosure will include credible, standardized, independently
VISION
verified metrics encompassing all material stakeholder concerns, and
detail goals and plans for future action.
Comprehensive disclosure of sustainability performance and Market information providers, including Bloomberg, are taking
impacts is a key part of a company’s sustainability journey. What advantage of this rising interest in corporate sustainability
gets measured gets managed, and what gets disclosed gets done. disclosure. In August 2009, Bloomberg launched a new product
Disclosure is not just a way for companies to tell their story. It that allows clients to search, display and store sustainability
is also a way to build relationships with key groups and a critical information of over 3,000 publicly traded companies on
part of the process for determining their impacts and identifying their terminals.
new business opportunities.
“ Bloomberg is committed to sustainability, not only as a matter
The growing call for mandatory environmental and social disclosure of principle, but as good business too. Operating sustainably
is pushing reporting to the mainstream. A number of countries
can enhance business efficiency. And our product teams are
worldwide already require some form of corporate sustainability
developing new tools for the financial community to manage
disclosure, and there is growing support for similar requirements in
the United States. risk and leverage opportunities around this issue.” 32
Since 2002, when 60 organizations formed the Corporate Sunshine Peter Grauer, Chairman
Working Group, there has been ongoing investor engagement Bloomberg, L.P.
with the U.S. Securities and Exchange Commission (SEC) over The growth in social media has also begun to blur the line
its rules, guidance and enforcement activity relating to corporate between disclosure and engagement, creating new opportunities
disclosure of environmental impacts. In June 2009, investors for dialogue but also new pressure for transparency. As social
representing $1.4 trillion in assets called on the SEC to issue media enables internet users to share news and make their
interpretive guidance to get companies to disclose climate opinions about corporate sustainability issues known in real time,
and other material sustainability risks in their financial filings. companies have to be prepared for open and honest discussion
The SEC released guidance on climate risk disclosure in of sustainability performance issues as they arise.
January 2010.
This section identifies the characteristics of an approach to
In September 2009, the U.S. Environmental Protection Agency disclosure that meets these new and emerging challenges.
issued a rule that requires the disclosure of greenhouse gas
emissions by large sources and suppliers in the United States.
U.S. insurance regulators – through the National Association
of Insurance Commissioners (NAIC) – also require that insurance
companies disclose climate risks and opportunities annually to
their customers and investors.
33
disclosure
Trends
More Companies Are Reporting
% The 2008 KPMG Survey of Sustainability Reporting among the
world’s 250 largest companies found:34
– 79% are now issuing stand-alone sustainability reports and
a further 4% are integrating sustainability data into their annual
financial reports
– 77% claim to use the Global Reporting Initiative Guidelines in
their reporting.
– 73% of the largest U.S. companies by revenue issue
sustainability reports, compared to only 32% in 2005
% The GRI Guidelines are now the gold standard:
64% of companies listed on Germany’s DAX 30, 48% of those
listed on France’s CAC 40, and 22% of the UK’s FTSE 100
report using the GRI guidelines.35
Disclosure Expands Along the Value Chain
% The boundaries of corporate disclosure are beginning to expand. $ Global Report Output per year (1998 – 2008) 33
In 2008, 34 companies participated in the Carbon Disclosure
Project’s Supply Chain Survey. These companies encouraged a
total of 2,318 suppliers to disclose aspects of their climate
related plans and impacts.36
Human Rights Disclosure
% A 2006 survey of Fortune 500 companies on their approach to
human rights found that:37
– 93% reported having human rights principles or practices
– 75% claimed to be reporting externally on human rights issues
% However, a 2009 study found that while some companies are
increasingly disclosing information on human rights, the quality of
the reporting is relatively weak, typically providing only isolated
and anecdotal examples.38
34
disclosure
D1: STANDARDS FOR DISCLOSURE
EXPECTATION Companies will disclose all relevant sustainability information

using the Global Reporting Initiative (GRI) Guidelines as well as
additional sector-relevant indicators.
How to get there
APPLY THE LEADING REPORTING STANDARD

The GRI Guidelines have become the de facto standard for
sustainability reporting. In 2009, over 1,100 reports officially
registered their sustainability reports with the GRI. Using
these guidelines enables consistent, comparable disclosure on
sustainability performance, risks and opportunities.
Companies should use the GRI framework’s principles and
indicators to disclose their performance. The GRI has 15 sector
supplements including oil and gas, financial services, and public
agencies, as well as specific issue guides on areas such as human
rights. These additional guidance documents are designed to
help organizations navigate more deeply into sustainability reporting.
Companies find additional sector-relevant disclosure guidance
developed by regulatory agencies, and other national bodies in the
countries where they operate.
! CASE STUDY
CERES AND DISCLOSURE

From the creation of the Ceres Principles at our inception in 1989, % In partnership with INCR and other organizations Ceres
Ceres has worked to create tools and standards that companies created the Global Framework for Climate Risk Disclosure,
can use to meet mounting expectations for improved disclosure. which encourages standardized disclosure to make it easy for
Disclosure is at the core of Ceres’ history and we strongly believe that companies to provide information and for investors to analyze
what gets measured gets managed and what gets disclosed gets done. and compare companies.
% In 2002 Ceres launched the Global Reporting Initiative (GRI) – % Ceres has engaged the U.S. Securities and Exchange
currently the de facto standard for sustainability reporting with Commission (SEC) on the issue of climate disclosure since
approximately 1,100 companies registered as users worldwide. 2004. A key priority is encouraging the SEC to develop
% Ceres’ 80-plus network companies all commit to regular interpretive guidance on environmental, social and governance
sustainability reporting and ongoing engagement with the Ceres disclosure, particularly in regard to climate change risks
stakeholder teams in developing those reports. that companies should be providing. The SEC issued clarifying
guidance on corporate climate disclosure in January 2010 that
% Ceres regularly publishes sector and issue-focused reports that
is reflective of Ceres input. This represents a critical step forward
evaluate corporate sustainability disclosure and provide guidance
in creating a level playing field for all companies and improved
for companies looking to improve. These Ceres reports have
information for investors.
focused on climate and water risk disclosure, as well as specific
sectors such as the utility and auto industries. There has been a tremendous evolution and uptake in sustainability
disclosure over the past 10 – 15 years and Ceres believes that
we have reached a tipping point. Rigorous reporting of material
sustainability information is an expectation of all large companies
and by 2020 will be required as a standard practice by all sizes
of companies.
35
disclosure
D2: DISCLOSURE IN FINANCIAL FILINGS
EXPECTATION Companies will disclose material sustainability issues

in financial filings.
How to get there
MAKE FINANCIAL DISCLOSURES COMPLETE

A company’s financial filings should include discussion of
material environmental and social risks, including strategy,
performance data and forward looking information as appropriate.
Companies should disclose sustainability-related liabilities and
costs in financial statements even where contingent or difficult
to quantify. A number of groups, including the International
Federation of Accountants and the Canadian Institute of Chartered
Accountants, are already developing standards to address
particular disclosure challenges, such as climate change.
Much of the pressure to improve corporate disclosure of sustainability
risks in financial filings is coming from the investor community.
Since 2004, a broad coalition of investors and NGOs, including
the Ceres-led Investor Network on Climate Risk (INCR) has
been engaging with the U.S. SEC on financial disclosures. This
resulted in the SEC’s issuance of interpretive guidance on
climate risk disclosure in 2010. The guidance outlines climate-
related “material risks,” which companies should be disclosing As this trend develops, more companies are considering how to
to investors, including: physical and regulatory impacts, as incorporate other sustainability risks into their 10-Ks. The
well as new economic and business opportunities. These groups Coca-Cola Company, Intel and APS/Pinnacle West (an Arizona-
continue to push the SEC to require publicly traded companies based electric power company) all made disclosures in their
to assess and fully disclose, not only their financial risks from 2008 10-K forms regarding the potential business risks posed
climate change, but also other material environmental, social and by water scarcity.
governance (ESG) risks.
“ In order for our economy to advance in a responsible,
Investor pressure on the SEC in the U.S. mirrors an international
sustainable way, environmental, social and governance should
trend towards mandating corporate disclosure of sustainability
issues. A number of governments, including the U.K., France, be integrated into investment decision making – it is our
Germany and Malaysia, now require assessments of ESG risks fiduciary duty. To accurately assess a company’s sustainability
in their annual reports.39 performance, investors need comprehensive and transparent
corporate sustainability disclosure.”
In the U.S., material sustainability risks that companies are
starting to include in 10-Ks and other financial disclosures Dr. Julie Gorte, Senior VP Sustainable Investing
include climate change, water availability, and human rights. Pax World Investments
A 2009 report by Ceres and the Environmental Defense Fund
analyzed climate risk disclosure in the financial filings of
companies in a number of “high risk” sectors, including oil
and gas, insurance, coal, transportation and electric utility.
The report concluded that while an increasing number of
companies are disclosing climate risks, the overall quality
of disclosure was still inadequate. Companies that are providing
more complete disclosure include PG&E and Shell.
36
disclosure
D3: SCOPE AND CONTENT
EXPECTATION Companies will regularly disclose significant performance data

and targets relating to their global direct operations, subsidiaries,
joint ventures, products and supply chain. Disclosure will be
balanced,covering challenges as well as positive impacts.
How to get there
The increasing breadth and depth of disclosure means that In 2008, National Grid set a long-term target to reduce its Scope
companies will need to extend the boundaries of their reporting 1 and Scope 2 GHG emissions by 80% by 2050. The company
in terms of geography, longer timeframes, and specific facilities also discloses a shorter-term reduction target of 45% by 2020.
and joint ventures. This requires companies to adjust and develop The timeframes and magnitude of these goals resonate well with
management and data collection systems. current climate science.
LOOK BACKWARDS AND FORWARDS Covering the breadth of key sustainability issues is part of
comprehensive disclosure. Alcoa has set itself specific sustainability
Companies should capture both past sustainability performance
goals in 15 distinct areas, including GHG emission reduction,
and their plans for the future. Past performance data should
health and safety, and the use of volatile organic compounds.
extend back at least three years and ideally five years. Looking
forward, companies should disclose emerging issues, using data In addition to disclosing greenhouse gas performance data for
projections on key environmental issues, such as GHG emissions, recent years as well as the current year, Suncor provides a
and on human rights and community impact trends. They should projection of emissions going forward (see figure D3). This
include short-term goals and, for key issues, long-term goals over provides important information for stakeholders and investors
a timeframe appropriate to the issue’s pace of development. to understand the future risks the company faces.
Personal care products firm Burt’s Bees discloses what it calls its On key issues, companies should disclose performance data on
Big, Hairy, Audacious Goals – stretch goals that the company aims both an absolute and a normalized basis in order to demonstrate
to achieve by 2020. These include making all product packaging robust data management systems. Where appropriate, data
either post-consumer recycled or biodegradable, and being carbon should be made available at shorter intervals – bi-annually,
free and 100% powered by renewable energy. quarterly or monthly – rather than just annually.
FIGURE D3
!"
Suncor Greenhouse Gas Performance Data and Projections 40
1. Estimates are based on current production forecasts and methodologies. The tables contain forward-looking estimates and users of this Definitions
information are cautioned that the actual GHG emissions and emission intensity may vary from the estimates contained in the table. Direct GHG emissions: Emissions from sources that are owned or controlled by the reporting company.
2. Data from 1990 to 2000 does not include Suncor’s U.S. operations. Indirect GHG emissions: Emissions that are a consequence of the operations of the reporting company, but occur at sources owned or controlled
3. Data includes direct and indirect CO2e emissions. by another company (e.g. purchased electricity).
4. Data and estimates for 2006 onward include the St Clair Ethanol Plant. Absolute (total) emissions: The total GHG emissions (direct and indirect emissions) of a facility or reporting company.
5. Data and estimates have changed from last year’s report due to Oil Sands methodology changes that reflect the inclusion of biomass, a Emission intensity: Ratios that express GHG impact per unit of physical activity or unit of economic value (e.g. tonnes of CO2e emissions per unit
methodology change in the calculation of fugitive emissions using LDAR data, and revisions to emission factors based upon AENV’s request. of gross production).
These changes are also consistent with the methodology used for SGER Bill 3 reporting.
37
disclosure
D3. SCOPE AND CONTENT continued
GO BEYOND DIRECT OPERATIONS
IN FOCUS
!"
"
Just as sustainability management has expanded to include
responsibility for supply chain issues and Extended Producer Greenhouse Gas Disclosure:
Responsibility, companies should broaden their reporting scope Scope 1, 2, and 3
to include not just the impacts of their direct operations around
the globe, but also their material impacts backwards and forwards
along the value chain. For example, companies should disclose Companies are increasingly expected to measure and disclose
their Scope 3 GHG emissions, including emissions attributable to emissions throughout the entire value chain. A comprehensive
the company’s supply chain and to the use of their products. approach to greenhouse gas (GHG) emissions measurement and
management encompasses Scope 1, 2 and 3 emissions:
In 2007, PepsiCo’s Walkers Crisps became the first product to
bear the Carbon Trust’s Carbon Reduction Label on each pack. %" Scope 1: All direct GHG emissions
The label details the product’s carbon footprint, 70% of which %" "cope 2: Indirect GHG emissions from consumption of
S
in the case of this snack food originates beyond the company’s purchased electricity, heat or steam
direct operations, further up the supply chain. %" "cope 3: Other indirect emissions, such as the extraction and
S
Fortum, the Finnish energy company, discloses its Scope 1, 2 production of purchased materials and fuels, transport-
and 3 emissions. Within the company’s Scope 3 figures, the related activities in vehicles not owned or controlled by the
company includes “indirect emissions from the production and reporting entity, electricity-related activities (e.g. transmission
and distribution losses) not covered in Scope 2, outsourced
transportation of the fuels we use at our power plants, from the
activities, waste disposal, etc.
air travel by our personnel and from the use of our products.” 41
For many companies, a significant portion of their GHG emissions
Broader reporting boundaries extend to key social issues, too.
are in their supply chain or from the use of their products and
Companies should report on issues related to workers,
services. The World Resources Institute (WRI)/World Business
communities and product safety wherever the company directly, Council for Sustainable Development (WBCSD) Greenhouse Gas
or through its partners, undertakes production or marketing around “Product and Supply Chain” Protocol Initiative is developing a
the globe (see page 59 for more on supply chain disclosure). standardized method to inventory Scope 3 emissions. This inventory
In its 2008 – 09 Social Responsibility Report, Gap provides three- will include emissions associated with the product life cycle and
year trend data on the performance of factories in its supply corporate value chains, accounting for both upstream and downstream
chain. The company presents this data by region and by country, impacts. The multi-stakeholder initiative is addressing such challenges
offering detailed regional data of the violations of its Code of as mapping the value chain and setting boundaries, prioritizing
Vendor Conduct. relevant emissions, allocation methods, and data collection. Increased
knowledge and understanding of these impacts will support more
“ As the world’s largest IT company, HP has the one of the most sustainable decisions about sourcing and product development.
complex and truly global supply chains. We realize that a large
part of our footprint lies in our supply chain and believe that
disclosure and supplier engagement on sustainability are key DRILL DOWN
for demonstrating leadership and raising standards across the Companies should disclose corporate level data and facility-level
entire industry.” data as appropriate, and should publicly disclose the names,
Engelina Jaspers, VP of Environmental Sustainability locations and aggregate performance-related information for all
Hewlett-Packard such facilities, including contract facilities.
Facility-level information is important to community stakeholders,
especially on issues such as water, pollution, emissions and labor
issues. Facility-level data is the backbone of supply chain disclosure.
A major challenge for companies is addressing the sustainability
impacts of their commodity purchases. The Better Cotton
Initiative (BCI) was created to address this issue in relation to
cotton production. This initiative engages a range of stakeholders
around the task of improving the sustainability of this commodity
market. BCI’s aim is to have wide-ranging industry impact, and to
instigate long-term benefits for farmers and others dependent on
cotton for their livelihood. The stakeholder partner group currently
includes NGOs, producers, brands, retailers and suppliers,
and has been supported by government funding. Through this
collaboration, in the future companies should be able to disclose
details of the impacts of their apparel products down to the level
of individual farms.
38
disclosure
ADDRESS DILEMMAS AND CHALLENGES

Companies should disclose their performance in a way that is ! CASE STUDY
balanced, adequately addressing dilemmas as well as successes.
Picking issues that are a particular challenge for the company CERES AND THE FACILITY
REPORTING PROJECT
and providing the rationale for the direction that the company has
chosen to pursue is critical for balanced reporting.
Patagonia’s Footprint Chronicles allow the consumer to track
specific products online from design through delivery. The easy- In 2003, Ceres and the Tellus Institute launched the Facility
to-read analysis lays out the positive environmental and social Reporting Project (FRP), a multi-stakeholder effort to create
attributes of specific products and the challenges that still remain guidance on developing consistent, comparable, and credible
sustainability reports for individual facilities based on the
within the product’s life cycle. The website offers photos and
GRI Guidelines.
video interviews of suppliers discussing their own challenges and
thoughts for the future. The guidance defines indicators (or metrics) for reporting
sustainability performance and provides recommendations on
Ford’s 2008 – 09 Sustainability Report came directly on the heels
the reporting process and stakeholder engagement. Companies,
of one of the hardest years in the company’s century-long history. including Ford, Timberland, La-Z-Boy, Rockwell Collins, and
Ford’s Sustainability Report directly addresses the challenges Smithfield Foods have used the FRP Curriculum and Training
the company faced – and continues to face – as a result of the process to disclose facility-level impacts in stand-alone reports.
recent economic downturn, including restructuring, layoffs, and
factory closings. The report provides detailed disclosure of the
company’s financial recovery plan and where it sees opportunities
for sustainable business practice now and in the future. CAPTURE THE BUSINESS CASE
To demonstrate the importance of environmental-related
IN FOCUS
!" investments, companies should include a cost-benefit summary
for key environmental expenditures.
Diversity Disclosure In its 2007 Corporate Responsibility Report, ST Microelectronics
details the costs of its environmental improvements to
installations, and specific benefits derived from savings in energy,
water and chemical use.
Since 1994, healthcare company Baxter International has included
an Environmental Financial Statement in sustainability reports
that track the business impacts of the company’s environmental
programs, including income, savings and cost avoidance.
BENCHMARK AGAINST PEERS
Companies should benchmark their performance against the
performance of their sector (where possible against peer company
data) and publish the results in their report. Bristol-Myers
Squibb benchmarks and discloses its performance on a range
of environmental indicators against anonymous data for its
pharmaceutical company peers. Issues covered include energy
For a number of years, socially responsible investors have been
use, CO2 emissions, water use and waste generation.
pushing companies to disclose comprehensive workforce diversity data
by making public their mandated disclosure to the Equal Employment
Opportunities Commission (EEOC). Groups like Sustainable
Investment Research Analyst Network (SIRAN) believe that making
this information public is a key tool to foster progress on hiring,
promoting and retaining minority and female employees. A growing
number of U.S. companies, including Sunoco, Intel and IBM, are
now reporting full EEO-1 data, which provides a detailed breakdown
of employee diversity by job category.
39
disclosure
D4: VEHICLES FOR DISCLOSURE
EXPECTATION Companies will release sustainability information through a

range of disclosure vehicles, including stand-alone reports,
annual reports, financial filings, websites and social media.
How to get there
REPORT REGULARLY
Companies should report comprehensively at a minimum on a
biennial and, ideally, annual basis, normally at the same time as
release of financial reports for the same period. Companies should
release data updates annually and more often where appropriate.
TARGET YOUR REPORTING
Companies should increasingly customize their disclosure based
on concerns and communication preferences of audiences involved.
Companies can use tools such as dedicated websites, social
media, and consumer labeling to engage with target constituency
groups. Regardless of the engagement channel, disclosure
standards should be rigorous and credible.
CASE STUDY
!"
REACHING DIFFERENT AUDIENCES

Companies are starting to use a wide array of techniques to share and resource consumption of the product. Timberland is actively
and discuss aspects of their sustainability plans and performance engaging its industry peers to create a standardized label that will
with different groups of stakeholders. Recent consumer concerns offer comparability for the consumer.
about contaminated food have led many producers to look at ways Companies are also using social media to reach consumers and
of improving their ability to trace products back to their source and employees. Business for Innovative Climate & Energy Policy (BICEP)
provide consumers with a new level of transparency. For example, companies, including eBay, Starbucks, and Symantec, are using
Dole created a website for their organic program where customers Twitter and Facebook to educate consumers and build public
can type in the 3-digit code found on a sticker on their fruit and get support for comprehensive climate legislation. Companies like AEP,
information about the farm where the fruit came from, including McDonald's, and Sun Microsystems are using podcasts and blogs to
location, size, relevant certifications, and even photos of the farmers communicate internal and external perspectives on their sustainability
themselves. This deeper look into the value chain also provides programs to employees.
companies the opportunity to communicate any challenges or
The creation and uptake of new and different social media vehicles
problems that have arisen in a product’s life cycle.
will allow companies to customize messaging to a wide array
Timberland communicates directly with consumers through its “Green of stakeholders; yet as these options grow it will be critical for
Index” labels featured on the company’s shoeboxes. The labels companies to ensure that all communications are based on strong
highlight the name and location of the factory where products are results and data to ensure credibility.
made. The labels also describe the climate impact, chemicals used,
40
disclosure
D5: PRODUCT TRANSPARENCY
EXPECTATION Companies will provide verified and standardized sustainability

performance information about their products at point of sale
and through other publicly available channels.
How to get there
USE STANDARDIZED DISCLOSURE

Companies should support efforts to standardize labeling within
and across sectors to enable credible, understandable information
sharing between companies and consumers.
Walmart’s Sustainability Index initiative represents a step in this
direction. The company has sent its more than 100,000 suppliers
a brief survey containing 15 questions designed to help evaluate
a supplier’s level of leadership on a range of sustainability criteria.
As the initiative evolves, Walmart intends to reduce this
information to a simple product label to inform consumer choice.
Although the questionnaire provides company-level information,
the long-term goal is to extend analysis to the product level.
Walmart is working to keep other retailers and stakeholders informed
as it develops the program. It is now encouraging them to join a
BEHIND THE LABEL consortium to develop the Sustainability Index as a transparency
tool for the retail sector.
Using the data and analysis discussed above, companies can
foster sustainable consumer behavior by disclosing key social and The de facto standard for product-level environmental
environmental indicators for their products. Boosting such transparency is the Environmental Product Declaration (EPD).
awareness can help create a competitive advantage as consumers The EPD, as it is known, meets the International Standards
start to look for this type of information when purchasing products. Organization’s 14025 standard and communicates aspects
of a product’s environmental performance such as raw material
Growing consumer concerns about chemicals used in home
acquisition, energy use and efficiency, the use of hazardous
products has led some companies to adopt leadership positions.
substances, recycled content use and emissions.
SC Johnson is now disclosing all the ingredients in its air care
and home cleaning products, including details of fragrances, dyes While product labeling in the U.S. is still voluntary, Japan and
and preservatives. Ingredients are available through three several countries in Europe are considering requiring such
communications channels: a website, a dedicated toll-free number, disclosure by law. The Japanese Ministry of Economy, Trading and
and product labels. Industry has been developing guidelines for disclosing the carbon
footprint of products since 2008.42 The French government has
In 2008 Seventh Generation introduced a three-part label on its
already taken steps: many goods in France will be required by law
products that discloses a full ingredient list, complete with an
to have EPDs by the end of 2010.43
explanation of each ingredient. The company supplements this
information with online material safety data sheets that provide A critical issue for product labeling – as with corporate
additional product health and safety information. In addition, the sustainability claims and disclosure more generally – is credibility.
company has an application that can be downloaded to a cell There is a considerable “trust gap” between green claims and
phone so that customers can research the nature of ingredients consumers’ expressed ability to assess them. Standardization
listed on any household product while standing in means the information in an EPD can be more readily certified
the shopping aisle. to a public standard and verified by a credible third party.
InterfaceFLOR, for example, enhances the credibility of its
product disclosures by providing a third party verified EPD – the
first carpet manufacturer to do so.
41
disclosure
D6: VERIFICATION AND ASSURANCE
EXPECTATION Companies will verify key sustainability performance data to

ensure valid results and will have their disclosures reviewed
by an independent, credible third party.
How to get there
SHARE STAKEHOLDER PERSPECTIVES

To help demonstrate that engagement processes are substantive,
credible and transparent, companies should include unedited
stakeholder perspectives in their disclosures.
These statements can be in the form of quotations from external
parties, or more substantive letters or statements that critique the
company’s performance and plans and make recommendations for
the future.
The sustainability reports for Gap and General Electric are good
examples of how a company might include a variety of feedback from
external stakeholders in their reporting of engagement activities.
American Electric Power worked with Ceres and a panel of
stakeholders, including investors, NGOs, academia and religious
groups, to obtain feedback on their strategy, performance and
disclosure. The stakeholders contributed to a joint statement that
was published, unedited, in the company’s 2009 sustainability
report. The statement called for, among other steps, bold
action on climate change, support for climate policies and a
OBTAIN EXTERNAL VERIFICATION commitment to address the use of coal in the supply chain.
At a minimum, companies should have an independent and
credible third party verify key sustainability systems, information
and data. Companies adopting a leadership position on disclosure
should verify all of their sustainability disclosures.
The company should clearly state the name of the group that has
provided the assurance, as well as the methodology and the scope
of the process involved. Inclusion of a verification statement by
the third party describing the scope and design of the assessment
will add to the credibility of the disclosures.
42
! CASE STUDY
CORPORATE REPORTING ON WATER RISK
Pressures related to water availability are growing globally, making Based on this assessment, the report lays out a set of best practices and
numerous industries vulnerable to water disruption throughout their recommendations for companies to improve water reporting, such as:
operations and supply chains. These pressures can directly threaten % Including material risk factors and performance data in
a company’s production levels, profit margins, and even “license to financial filings;
operate” in water-stressed areas. In light of these impacts, investors
% Providing water performance data broken down to the facility
are increasingly seeking information from companies on how they
level for operations in water-stressed regions;
are addressing and managing material water risks and opportunities.
% Outlining actions and policies for assessing and managing water
A 2010 Ceres report, Murky Waters: Corporate Reporting on Water
risks, including quantified targets for reducing wastewater and
Risk evaluates and ranks the water disclosure practices – in both
water use;
voluntary reporting and mandatory financial filings – of 100 publicly
traded companies in eight key sectors exposed to water-related % Disclosing how they are collaborating with stakeholders and
risks. The report assesses companies based on five categories of suppliers on water risks, including setting performance goals for
disclosure: water accounting, risk assessment, direct operations, key supply chains;
supply chain, and stakeholder engagement. % Describing specific strategies for developing water-related products
with strong market potential in a water-constrained world.
For more information, reference the Water Management section
on page 50.
43
PERFORMANCE
44
“ GE has never forgotten the importance of R&D. Each
year, we put six percent of our industrial revenue
back into technology – so much that more than half of
the products we sell today didn’t even exist a decade
ago. We’ve made a business decision to focus all the
innovative powers of GE on solving the problems of
energy use and environmental stewardship.” 44
Jeffrey Immelt, CEO and Chairman,

General Electric
Companies will routinely and systematically improve sustainability

VISION performance across their entire operations, extending from the initiation,
design and delivery of products and services to the management of
employees and the supply chain.
Governance, stakeholder engagement and disclosure are essential % Transportations and Logistics Companies will systematically
building blocks for embedding sustainability within the corporate minimize the sustainability impacts of the transportation
DNA. The ultimate measure of a company, however, is how that used for inbound and outbound logistics, business travel
company performs on the environmental and social issues linked and commuting.
to its business. % Products and Services Companies will design and
Sustainability is important for society and the planet, but it also deliver products and services that contribute to a more
presents companies with substantial opportunities to support sustainable economy.
business growth. Tackling sustainability helps companies reduce % Employees Companies will make sustainability considerations
costs in a carbon-constrained world, to turn waste into assets, a core part of recruitment, compensation and training of
to eliminate costly inefficiencies, and to avoid conflicts in employees and contractors.
operations and supply chains. And yet something bigger is afoot:
sustainability is providing the spark to innovation. New business
models are being forged and companies are funneling their Due to the depth of information found in the Performance
talents into the creation of new products and services to solve chapter, we have included specific trends within each particular
complex sustainability challenges. Engagement with employees section to provide additional context. In setting expectations
on environmental and social issues is opening the tap on a vast for the road toward 2020, we again recognize that companies
pool of latent intellectual capital. will need to establish performance goals that reflect their own
business models and corporate culture, as well as their unique
In this section, we identify and set out 20 sub-expectations for
risks and opportunities. The targets and goals are guidelines;
performance in five key operational areas of almost universal relevance:
some companies will be able to surpass them and others may
% Operations Companies will seek environmental neutrality and find them unachievable, but they are meant as mileposts to
demonstrate respect for human rights in their operations, raise the bar on sustainability performance.
and will invest in human and capital resources necessary to
support these goals.
% Supply Chain Companies will ensure that suppliers meet the
same environmental and social standards – including
disclosure of goals and performance metrics – as the company
has set for its internal operations.
45
performance – operations
P1: OPERATIONS
EXPECTATION Companies will invest the necessary resources to achieve

environmental neutrality and to demonstrate respect for human
rights in their operations. Companies will measure and
improve performance related to GHG emissions, energy efficiency,
facilities and buildings, water, waste, and human rights.
The activities over which a company exercises control or influence –
its direct operations – offer the most immediate opportunities for
improving corporate sustainability performance. While the range
Trends
of operational activities differs depending on the nature of the
company’s business or sector, it generally includes not just the
company’s traditional core operations but also value chain
partners such as joint ventures and franchises.
The business case for action on the environmental impacts of
direct operations is straightforward. Energy efficiency, for
example, is the prime way to reduce energy use and greenhouse
gas emissions in operations. Implementing energy efficiency
measures offers a clear return on investment both for businesses
and homes. A McKinsey study found that the United States could
save $1.2 trillion through 2020, and reduce energy consumption
$ Global Trends in Sustainable Energy Investment ($ Billions)
by 23% by investing $530 billion in energy efficiency measures.
Nearly two-thirds of these savings would be attributable to % New investment in renewable energy worldwide was
businesses alone.45 $155 billion in 2008.46
It is important to pay attention to the social impacts of operations % During 2008, U.S. installed wind capacity grew by 50% 47 and
if overall sustainability commitments are to be achieved, and installed solar capacity grew by 16%.48
doing so can result in concrete bottom line results. Companies that Green Buildings
establish strong social policies, commit to fair and safe working % Buildings today represent 40% of the world’s total energy
conditions and invest in employee training and development tend demand, and this demand is expected to increase by 45%
to see measurable improvements in worker safety, satisfaction between 2002 and 2025.49
and productivity. A demonstrated commitment to human rights, % The green building market has grown from just 2% ($10 billion)
diversity and equality in the workplace also enhances recruitment of overall construction in 2005, to 15 – 20% of new
and retention, and lays the groundwork for the achievement of construction in 2008 ($36 – 49bn) and is expected to grow to
broader sustainability and performance goals. For example, as a between $96 and $140 billion by 2013.50
media and entertainment company, Time Warner’s cultivation Water Risk
of the diversity of its people, content and products, is a business
% By 2030, according to a 2009 McKinsey study, we will require
imperative. It is achieved by auditing the breadth and diversity
40% more water than is currently available by accessible and
of their content, analyzing the appeal of content to new and
reliable supply. Agriculture is the largest water user accounting
emerging audiences, and developing diverse talent. These efforts
for 71% of global withdrawals.51 This world-scale water scarcity
are designed to foster market leadership and grow their overall
risk provided the impetus for the creation of the CEO Water
media business and multicultural audience appeal. Mandate, an initiative with 58 company signatories as of
This section considers these and other opportunities for companies November 2009.52
to enhance sustainability across the operation, including building Chemical Use
and facilities management, water management, the elimination
% Many countries have been, or are currently, revising and
of waste and respect for human rights. For each topic there are
signing agreements to monitor and control chemicals for safe
expectations, suggestions on how to take action and practical
use. In Europe, the Registration, Evaluation, Authorisation and
examples of how other companies have tackled these challenges. Restriction of Chemicals (REACH) Directive entered into force
in 2007; the U.S., Canada and Mexico agreed to review use
of certain chemicals and to share information in 2007; and in
2009, the U.S. administration announced principles to guide
the drafting of tighter laws to govern how the Environmental
Protection Agency (EPA) controls toxic chemicals.53
Human Rights
% In 2008, over 260 global companies reaffirmed their recognition
of the Universal Declaration of Human Rights and committed to
improve disclosure regarding human rights issues related to their
46 business operations.54
P1.1: GREENHOUSE GAS EMISSIONS AND ENERGY EFFICIENCY

Companies will reduce GHG emissions by 25% from their 2005
baseline* by 2020, by:55
% Improving energy efficiency of operations by at least 50%
% Reducing electricity demand by at least 15%
% Obtaining at least 30% of energy from renewable sources
56
* Ceres’ position is aligned with scientific targets that call for the U.S. to achieve GHG emission reductions of 80% below 1990 baseline levels by 2050 and at
least 25% reduction below 1990 by 2020. This expectation uses 2005 as the baseline, as this is consistent with pending U.S. climate policy legislation.
How to get there
ASSESS ENERGY USE AND SET GOALS on its rooftops, and has more under construction. Staples expects
Companies should develop comprehensive strategies for tackling these solar systems to generate enough electricity annually to
their contribution to climate change. A key first step in lowering power 400 homes.60
a company’s carbon-footprint is lowering energy use. Companies When Dell’s 2008 commitment to power its headquarters with
can begin this process with a systematic inventory of energy use green energy ran into the reality of supply constraints, the
in operations, after which the company can set absolute reduction company collaborated with Texas policymakers and the utility
targets and phased interim goals.57 This will position companies TXU Energy to increase the supply of renewable wind energy.
to develop and prioritize energy reduction strategies and allocate
sufficient capital and human resources to support long-term
investment in energy efficient technologies and processes. ! CASE STUDY
In partnership with the U.S. Department of Energy, aluminum
producer Alcoa’s Energy Efficiency Network – a team of Alcoa 21ST CENTURY UTILITY
experts and consultants – conducts energy efficiency surveys at
operating locations and identifies areas for improvement. To The electric power sector is responsible for one-third of global
date, this program has found more than $60 million in potential GHG emissions. Reducing the sector’s emissions is essential
savings opportunities. The company’s strategic environmental for limiting negative climate impacts and jump-starting a low-
plan includes a target for savings of $100 million per year through carbon sustainable economy. The scale and magnitude of the
energy efficiency and environmental management.58 necessary changes requires a fundamental rethinking of how
we produce, distribute, and use energy. To enable this shift,
Since 2001, chip maker Intel has turned an investment of the power sector will need to:
$23 million in energy efficiency and conservation projects
%" Aggressively manage and reduce carbon emissions across
into savings of more than $50 million and reduced emissions.
the enterprise
Projects have included the installation of more efficient
lighting and “smart” system controls; boiler and chilled water %" Pursue all cost effective energy efficiency
system improvements; and cleanroom heating, ventilation, air- %" Dramatically scale up renewable and distributed energy
conditioning, and heat recovery improvements. In 2009, Intel %" Realize smart grid carbon and consumer benefits
will invest over $5 million on more than 30 projects in an effort
%" Conduct robust and transparent resource planning
to save at least 30 million kWh of electricity and 750 therms
of fossil fuel each year in operations.59 Collectively we will need to overcome regulatory and market
barriers to a sustainable 21st century power sector, including
GENERATE OR PROCURE RENEWABLE ENERGY establishing regulatory policies that reward utilities for energy
To reach the greenhouse gas reduction goal above, all companies efficiency performance and developing system planning and
will need to set specific targets for the procurement of solar, financial analytic tools to better recognize the economic and
environmental benefits of non-traditional clean energy resources.
wind and other renewable forms of energy generation that have
little or no carbon footprint. Energy companies should set targets In 2009 Ceres launched its 21st Century Utility Initiative –
for renewable energy production and allocate sufficient levels of bringing together power companies, investors, NGOs, regulators,
capital to boost renewable generation over time. The economics experts and consumers – to address these challenges and help
of different renewable energy sources are changing rapidly but as accelerate the transition to a low-carbon economy. Ceres will
we move towards a global price on carbon the business case for continue to engage these key constituencies – encouraging
regulators to establish effective policies, educating investors to
investment in renewable energy sources will solidify. To overcome
assess and reward best practices in the sector, and working
market capacity constraints, companies may find it increasingly
with the utilities directly to implement changes.
advantageous to invest in projects on-site or to promote local
investment in cost-effective generation capacity.
The office supply store chain Staples forged an innovative
Resources: Climate Leaders, Natural Resources
partnership with SunEdison to help the retailer meet its renewable
Defense Council, National Wildlife Federation
energy goals without the capital expense of installing solar
equipment. The company hosts 25 active rooftop solar systems
47
P1.2: FACILITIES AND BUILDINGS

Companies will ensure that at least 50% of their owned or leased facilities,
and all new construction, will meet rigorous green buildings standards.
When siting facilities, companies will follow best practices that incorporate
sustainable land-use and smart growth considerations.
How to get there
ASSESS, ANALYZE, SET GOALS

Companies should begin by conducting comprehensive audits ! CASE STUDY
to ascertain a baseline measurement of current resource use,
efficiency, waste and employee health and safety considerations
in buildings and facilities. Several guidelines exist to support
NET ZERO EMISSION
this assessment, such as BREEAM and LEED, the rating systems
developed respectively by the research agency BRE in the UK
FACILITIES
and by the U.S. Green Building Council.
There is a demonstrable overlap between aspects of green building
and the creation of healthy workplaces. Sickness and healthcare
costs can be reduced by implementing green building measures
to reduce indoor air pollutants in company facilities. Improved
ventilation and better use of daylight correlate with higher productivity
and lower absenteeism.61
When Genzyme, the biotechnology company, moved its headquarters
into a new LEED-certified building, sick time fell by 5% and
58% of employees said they were more productive in the new
environment than in the previous headquarters.62
The baseline facility audits should produce a complete picture of
key opportunities for reducing energy, water and waste, as well
as promoting safe, healthy work environments. This analysis will
Many companies are realizing financial and environmental
inform and help prioritize strategic planning and capital allocation
benefits from adopting new practices and technologies that
decisions regarding building retrofit projects, investing in new
seek to achieve a “net zero” impact on the environment.
technologies, and siting and construction of new facilities.
Companies are taking their facilities off electrical, water and
Property manager Jones Lang LaSalle (JLL) enrolled 100% of natural gas grids and sustaining their operations almost
the buildings in its multi-tenant property portfolio in the U.S. entirely on renewable sources and recycled inputs.
Environmental Protection Agency’s ENERGY STAR program. At its Casa Grande plant in Arizona, Frito-Lay turns corn
This helped the company to set performance goals, create and and potatoes into bags of chips using large amounts of energy
implement action plans, and assess performance and progress. and also creating vast amounts of wastewater, starch and
JLL properties’ average ENERGY STAR score of 67 is 17 points potato peelings. The company is pursuing an aggressive strategy
better than the average building score of 50, equating to to make this a zero emissions facility. It is building acres of
$50,000 in energy cost savings annually per building.64 solar arrays and biomass generators, and installing high-tech
McDonald’s is integrating electrical control systems across its filters that will recycle most of the water used for rinsing and
restaurants worldwide – both owned and franchised – as part washing potatoes. The leftover sludge will be burned to create
of a strategy that McDonald’s expects will cut its annual energy methane gas to run the plant’s boiler. The retrofit, scheduled
costs of $1.5 billion by 14%. 65 Such integrated systems for completion in 2010, will reduce electricity and water
control lights, heating and air conditioning. They also monitor consumption by 90%, natural gas use by 80% and greenhouse
gas emissions by 50 to 75%.63
temperatures, allowing the company to optimize equipment use,
make maintenance more efficient, and ensure employee safety.
48
! CASE STUDY
SMART GROWTH IS SMART BUSINESS

building programs and investing in renewable energy generation. In
2009 Denver was recognized for its FasTracks initiative, which will
include the creation of 119 miles of light and commuter rail lines,
31 park-n-rides, 57 transit stations, expanded bus service, and the
redevelopment of a downtown multi-modal center.67 Chicago is also
active in smart growth initiatives and has set up a Green Buildings
Permit program, which provides developers and owners with an
incentive to build green by streamlining the permit process timeline
for projects. Projects accepted into this program can receive permits
within fifteen to thirty days, while the standard permitting process
takes up to 90 days.68
Sprawling development patterns and poorly managed growth increase Companies are starting to use smart growth approaches when they
traffic congestion, impact air and water quality, and put stress on expand or consolidate their operations. This might include giving
infrastructure and utilities. Such trends threaten the fiscal health of preference to reinvesting in established communities and existing
congested regions, create burdens for employees and ultimately, buildings, investing in infill development, revitalizing brownfield sites,
undercut business profitability. A Brookings Institute study found that and developing near public transit. Atlanta-based telecommunications
the carbon footprint of American metropolitan area residents is, on company BellSouth, for example, recently consolidated 10,500
average, 8.21 tons – 14% less than those living outside cities. This is employees scattered in 25 suburban offices into three urban centers.69
mostly due to high density development patterns and rail transit.66 The buildings were sited adjacent to major transit routes and the
Cities have been leading efforts to encourage and incentivize “Smart company improved parking availability at four end-of-line metro transit
Growth” principles, by taking actions including developing more stations to minimize employee travel times and, ultimately, to attract,
light rail options, regenerating downtown areas, establishing green retain and enhance the quality of life of its employees.
GREEN YOUR LEASE

When entering into leases, companies and lessors can establish
“green leasing” arrangements that enable them to capture
accurate data on energy use, water use, materials and waste.
Companies and property managers can then work together to
address these issues in line with their overall sustainability goals.
There are a number of organizations and companies that have
drafted detailed leasing processes that include all the components
for a green lease (see the sidebar).
SUPPORT PUBLIC POLICY
Companies should support local, state and regional policy efforts
to strengthen building codes and standards that promote
healthy work environments, more sustainable construction and
facility management practices, as well as the siting of buildings
to support smart growth initiatives (e.g. brownfield development,
access to public transportation).
“ Energy efficiency is core to business sustainability – Resources: BOMA’s Guide to Writing a Commercial
implementing retrofits saves building owners millions of Real Estate Lease, Including Green Lease Language,
dollars and enhances asset values while significantly Rocky Mountain Institute – Built Environment
reducing greenhouse gas emissions. That’s a win-win for
owners, tenants and the global environment.”
Lauralee Martin, CFO
Jones Lang LaSalle
49
P1.3: WATER MANAGEMENT

Companies will assess water-related impacts and risks and will set
targets to improve water use and wastewater discharge, with priority
given to operations in water-stressed regions.
How to get there
The nature and extent of corporate impacts on and risks relating CONSIDER THE ENERGY-WATER NEXUS
to fresh water scarcity will differ by geographic region and type When developing water management plans, companies should be
of business. Even so, in an environment where increasing numbers mindful of the potential impacts of climate change on water
of people suffer from limited water availability, companies will supplies and water quality, and assess the energy implications of
face growing pressure to manage those impacts. water-related technologies and investments. Integrated approaches
ASSESS, ANALYZE, SET GOALS to improve water and energy management will yield reduced water
use, as well as reduced energy costs associated with heating or
As with energy efficiency, a comprehensive water audit will help
pumping that water.
companies identify “low hanging fruit” opportunities to
reduce water withdrawals, consumption and discharges across For example, water movement and treatment in the U.S. consumes
their operations. some 100 million MW hours of electricity per year – this is
approximately 3 – 4% of all electricity generated nationwide. Of this,
Analysis of specific risks from local-level hydrological, social,
some 95% is used for pumping,71 and the balance is used for
economic and political factors, combined with local water
water treatment. In some regions of the country, like California,
footprint data, should be used to set absolute reduction targets
energy needs are much higher. Due to the impact of that
in water use and discharge.
state’s climate and geography, some 19% of its electricity is used
Companies should prioritize efforts to reduce operational water to move or treat water.72
impacts in water-stressed regions. To comprehensively assess
At a single plant, an integrated approach to water and energy use
and manage the risks associated with water scarcity, Diageo, the
saved IBM $3 million while increasing output by 33%. This
global alcoholic beverage company, identified 11 of its 52
included a 27% reduction in water purchases, almost $1 million
manufacturing plants to be in water-stressed areas. The company
in water treatment savings, and $1.5 million in energy savings,
set a target to half non-ingredient water use at these plants as
without incurring any capital costs.73
well as to improve water efficiency at all non-stressed sites by
30% by 2015. FACTOR IN WATER WHEN SITING
“ The days of undervaluing water are gone. The 21st century Companies should consider water availability – including the risk
will be one of strategic corporate water management, radical of contaminating water sources – when siting new facilities and
operations. Such consideration should include engaging with local
efficiency, and pricing that reflects water’s value as a human
stakeholders to better understand, anticipate and collectively
right, an ecological necessity, and a business input with real
manage shared water resources.
economic worth.”
The Coca-Cola Company considers water resources when planning
Dr. Peter Gleick, President and Co-founder new manufacturing sites, deciding on plant closings, making
Pacific Institute acquisitions or expanding production at existing plants. The
company has required all plants to undertake by 2013 a
REUSE AND RECYCLE comprehensive plant evaluation contained in the company’s
To improve efficiencies and decrease stress on freshwater sources, Standard for Source Water Protection. It covers source mapping,
companies should find innovative ways to recycle or to reuse source vulnerability assessments, and the development and
water across their operations. implementation of source water protection plans.
Unilever’s business in India, a country with major water availability
Resources: Pacific Institute, Water Footprint
challenges, is using numerous strategies to reduce its impact Network, WBCSD’s Global Water Tool
on water supplies and mitigate associated risks. Technological
innovations have reduced the company’s groundwater
consumption by 50%; rainwater is harvested at a quarter of
its factories for non-manufacturing processes and to replenish
groundwater systems; and processing water is recycled at
two-thirds of sites.70
50
P1.4: ELIMINATE WASTE

Companies will design (or redesign, as appropriate) manufacturing and
business processes as closed-loop systems, reducing toxic air emissions
and hazardous and non-hazardous waste to zero.
How to get there
TURN WASTE INTO WEALTH

Businesses should identify new ways to use what has traditionally
been considered waste as an input into new products. Where
there are opportunities to match wastes and inputs between
companies and sectors, companies should look at ways to
coordinate manufacturing processes to derive cost savings and
greater operational efficiencies. Think in terms of industrial
ecology – the outputs of one industry are the inputs of another,
thus reducing use of raw materials and pollution, as well as
saving on waste treatment.
Since 1961, industries around the town of Kalundborg in Denmark
have evolved to make use of one another’s process waste. A
Statoil refinery gets 15% of its steam from the surplus produced
by an Asnæs electricity plant; the refinery has a process for
eliminating sulfur dioxide from flue gas that then supplies
100,000 tons of the gypsum by-product to a wallboard producer;
CLOSE THE LOOP trout and turbot are grown using the surplus heat from a Novo
New manufacturing techniques can enable companies to adopt Nordisk facility. Through 1993, Kalundborg’s $60 million
zero-waste, closed-loop manufacturing processes. By doing investment in infrastructure to transport energy and materials
so, companies can dramatically reduce inputs and costs for the has produced $120 million in revenues and cost savings. 75
production of good and services. Another example of a city that has taken a networked approach
Undertaking life-cycle assessments (“LCAs”) can help companies to maximize by-product synergy and material reuse opportunities
move to less impact and zero waste products and manufacturing is Chicago’s Waste to Profit Network. This network of over 200
processes. LCA is a process for evaluating current or new materials, Chicago area companies, institutions, and government
inputs and processes to continuously improve the efficiency of departments has: diverted 165,000 tons of waste from area landfills,
resource use. Whenever LCAs show that key resources are at risk, reduced 102,000 tons of carbon dioxide, and created
or are particularly scarce or harmful to the environment or $15.6 million in cost savings and additional revenue for participants.
76
human health, a company can work to find suitable substitutes. Other industrial ecology initiatives are being pursued in North
Companies usually start this process with one facility or one America and elsewhere. Overall, this remains a largely untapped
product and then build from this learning to apply these concepts opportunity for meeting environmental and economic needs.
to the full business.
International paper merchant PaperlinX has developed a paper
recycling service called yoyo™. The company removes a
customer’s waste paper using its own delivery vans at the same
time it delivers new stock, thus lowering transportation costs
and saving carbon emissions. The paper collected is recycled into
yoyo™ brand 100% recycled paper.
Carpet manufacturer InterfaceFLOR has developed a closed loop
process called ReEntry® 2.0. Carpet fiber is cleanly separated
from its backing so that the maximum possible amount of
post-consumer material can be recycled into new products with
minimal contamination. These product changes and design
innovations have helped the company reduce its environmental
footprint by over 45%, and the company believes it can achieve
a zero footprint by 2020.74
51
P1.5: HUMAN RIGHTS

Companies will regularly assess key risks related to human rights
throughout their entire operations, and will employ management systems
that are aligned with internal policies and support the implementation of
universal standards.
How to get there
INTEGRATE INTO THE SUSTAINABILITY

MANAGEMENT SYSTEM
Companies will most effectively protect their own interests, as well
as the interests of their employees, contract laborers and host
communities, by integrating a strong, clear human rights policy
systematically across the organization.
ADDRESS INDIRECT IMPACTS
While there are limits to a company’s direct impact and control
of its entire supply chain, corporate policies and practices
should recognize the rights of supply chain workers, including
contract workers, as well as those directly employed by
the company. Human rights typically extend to a broad range of
socio-economic impacts that a company has in host communities.
Society increasingly expects a company’s obligation to respect
human rights to extend beyond direct operations and throughout
the complete value chain.
COMMUNICATE RIGHTS AND ADDRESS GRIEVANCES
The protection of human rights requires first that those impacted
know what their rights are. Companies should ensure that policies
and processes are clearly explained and understood by employees,
host communities, and other relevant stakeholders. Policies should
be readily available in various formats, languages, and locations,
and should be written in a way that is understandable and
meaningful to those to whom they apply. Those covered by the
human rights policy should also have clear, well-publicized
channels for raising or seeking a remedy in relation to human rights
issues. Grievance mechanisms should incorporate an objective,
third party communication channel to allow open and transparent
communication, and to avoid intimidation or fear of reprisal.
Resources: Business and Human Rights Resource

Centre, United Nations Human Rights – Human
Rights Translated: A Business Reference Guide
52
performance – supply chain
P2: SUPPLY CHAIN
EXPECTATION Companies will require their suppliers to meet the same environmental
and social standards as the company has established for itself.
Companies will establish sustainable procurement criteria, catalyze
improved supplier performance, and facilitate disclosure of
suppliers’ sustainability information.
For many companies, the largest opportunity for improving The potential benefits of improved supply chain performance are
sustainability performance is in its supply chain. On average, every bit as compelling as those achieved through direct action
40% to 60% of a manufacturing company’s carbon footprint is on the company’s own operations.
from its supply chain. For retailers, the figure is closer to 80%, The U.S. Environmental Protection Agency, through its Green
with an equally high supply chain exposure to human rights Suppliers Network program works with manufacturer supply
and social issues.77 By managing supplier engagement in a way chains to improve processes and minimize waste generation.
that achieves the highest social and environmental standards, a In the course of 26 technical reviews at participating supplier
company can achieve performance goals while creating a ripple companies, Green Suppliers Network identified potential
effect that raises standards deep within the supply chain. savings worth $9 million annually, including $4 million in reduced
Sustainable supply chain performance begins with establishing environmental impacts. The potential savings related to
supplier policies and endorsing industry codes or practices energy conservation, water use, and reductions in solid waste,
containing explicit references to social and environmental standards. hazardous waste, and toxic chemical use.79
These policies, codes and standards can only be realized when
they are integrated into the RFP processes, vendor selection
criteria, procurement practices, and ongoing supplier engagement.
Through these processes, companies and suppliers define and Trends
commit to mutual performance goals.
% A 2008 survey of 2,000 global executives by McKinsey found
Bringing sustainability improvements to life across the supply chain that nearly half of respondents viewed climate change as a
requires a commitment to long-term supplier relationships somewhat or very important issue to consider in purchasing
accompanied by appropriate levels of engagement and training. and supply chain management. Despite this, fewer than 25%
Many opportunities for lasting performance improvement can indicated that their companies always or frequently take
be supported through collaborative initiatives that identify root climate change into consideration in these areas.80
causes, reinforce best practices, and build capacity. It is rare % A 2009 survey of major European companies by Ecovadis found
that social and environmental issues exist in isolation. There is that 75% of firms surveyed were incorporating sustainability
typically an interconnection between environmental issues, concerns into their procurement bidding process, and some
social inequalities, working conditions, human rights and safety. 90% of procurement directors see sustainable procurement
A collaborative approach is necessary to effectively address – and as “critical” or “important.” 81
to distribute the associated cost of – these systemic challenges. % According to a 2008 RiskMetrics survey, only 20% of publicly
traded global companies have a supplier code of conduct, yet
“ It is often overlooked that suppliers are also companies, subject a review of data over three years showed a year-to-year increase
to the same responsibility to respect human rights as any other of 30% – 50%. 82
business. The challenge for buyers is to ensure they are not % Investors filed shareholder resolutions on International Labor
complicit in violations by their suppliers… A growing number Organization (ILO) Standards and Vendor Standards with
of global buyers are finding it necessary to engage in human 9 U.S. companies in 2009. The resolutions were triggered
rights capacity-building with suppliers in order to sustain the by investor concerns about safe and equitable factory
relationship.” 78 conditions and the widespread use of child labor in hazardous
conditions on farms. The resolutions asked the companies to
John Ruggie, Professor adopt, monitor, and report on compliance with ILO standards
Harvard Kennedy School throughout their supply chains. 83
UN Secretary General’s Special Representative for % Over the last 12 years, labor rights standards setter Social
Business and Human Rights Accountability International has provided social auditing
skills training to over 10,000 workers and managers from
32 countries around the world. 84
Resources: Verite and CREA – Standards for the
Knowledge and Skills of Social Auditors, SA 8000
53
P2.1: POLICIES AND CODES

Companies will set supply chain policies and codes aligned with overall
social and environmental standards.
How to get there
CRAFT A SUPPLY CHAIN POLICY

To diffuse high sustainability standards throughout its supply
chain a company first has to formulate and publish them.
Procurement policies should align with overall corporate
environmental and social policies and standards, and should
address priority issues relevant to the industry, supplier base,
geographic areas of operation, and stakeholder concerns.
These policies should be operationalized through a supplier
code of conduct, which mirrors the standards applied to the
company’s direct operations.
Companies that already have supplier codes include Apple,
Cisco and HP. The key to having a strong code is to ensure that
it addresses all of the components mentioned above, and that
they are implemented through the application of global sourcing
and operating guidelines. The code should also be integrated
into the terms of engagement with every supplier. The value and
application of these guidelines is enhanced by the clear
definition of terms, alignment with industry best practices, and
reference to key international frameworks such as ILO Conventions.
Recognizing the need to integrate lessons learned over time, policies
and codes should be regularly reviewed and revised. They should
also be harmonized with prevailing best practices and industry
and commit to these higher standards, and advocate with suppliers,
standards, and reflect stakeholder concerns.
industry peers, government and other stakeholders to raise locally
COMMUNICATE STANDARDS CLEARLY AND APPROPRIATELY enforced standards.
As noted in the discussion of human rights in the context of direct In 2006 McDonald’s was criticized in a Greenpeace report for using
operations, companies have the obligation to ensure that social Brazilian soya, the production of which was destroying the
and environmental standards are clearly explained and understood Amazonian rainforest.85 McDonald’s responded by reaching out to
by workers and contractors. This practice should extend throughout partners and advisors to help develop an industry-wide response,
the supply chain. Standards and codes should be readily available which included a moratorium on buying soya from deforested areas
and should be communicated in a way that is understandable and of the Amazon pending development of a monitoring mechanism
meaningful to workers at all levels. to halt agriculture-related deforestation. The Brazilian Association
of Vegetable Oil Industries, which includes companies such
LEVERAGE COMMITMENT AND POSITIVE INFLUENCE as Cargill, ADM and Bunge, provided support and cooperation to
In the context of a global supply chain there can be a misalignment this effort.
between a company’s standards and the level and enforcement
of local standards. While companies must uphold local labor and
environmental regulations, legal compliance is not enough. The
opportunities offered by supply chain globalization are
accompanied by expectations that the highest – not the lowest –
standard should apply. When a company’s standards are higher
than local legal standards, the company should publicly recognize
54
P2.2: ALIGN SOURCING PRACTICES

Companies will address sustainability performance in procurement
criteria and contracting.
How to get there
INCENTIVES AND REWARDS

In addition to rewarding suppliers for innovation, quality and
speed of delivery, a company can commit to longer-term contracts
with those suppliers that are operating to fair labor standards
and meeting environmental performance targets. It can provide
incentives to encourage workers across the supply chain to
identify the best sustainability practices that can be replicated
in other factories. And it can reward suppliers who demonstrate
a clear commitment to continuous improvement in systems
and performance.
RFP PROCESS
Best practices in procurement can be implemented through a
company’s “request for proposals” (RFP) process. Procurement
decisions are based on the achievement of specified criteria,
including the ability of a supplier to deliver on product quality
and quantity requirements. The RFP processes should be
enhanced to include supplier self-assessments, and the criteria
should be expanded to cover the supplier’s ability to deliver
on social and environmental performance requirements. These
criteria should be met before the company applies cost and
quality considerations to the final sourcing decision.
Procurement is a critical tool for driving change. Purchasing SUPPLIER DIVERSITY
managers need to systematically integrate sustainability
considerations into day-to-day procurement and contracting In addition to social and environmental performance standards,
practices alongside quality and cost concerns. In every purchasing many companies find that they can enhance supply chain
decision, companies need to meet baseline environmental and performance through supplier diversity – purchasing from women
human rights standards before factoring in cost and quality concerns. and minority-owned businesses. A survey by the Hackett Group
To do this, procurement staff need adequate and ongoing training in 2006 found that in leading companies, supplier diversity drives
to understand and evaluate social and environmental criteria. new sources of revenue. Leading procurement organizations that
Furthermore, the procurement process must facilitate “focus heavily on supplier diversity” achieve 133% greater return
and incentivize the award of contracts in accordance with on the cost of procurement operations than average performers.
sustainability standards. Every $1 million in procurement operations costs translates into
an additional $3.6 million to the company’s bottom line.86
55
P2.3: ENGAGING SUPPLIERS

Companies will ensure that at least 75% of the company’s Tier 1 and Tier
2 suppliers and 50% of Tier 3 suppliers meet the company’s standards for
sustainability performance.
How to get there
COMMUNICATION IS KEY “ In today’s challenging global economic environment, it is

This is not simply a question of which suppliers a company chooses imperative for companies to consider the impact of their own
to deal with, but also how they deal with them. To achieve improved decision-making on working conditions in their supply chains.”87
performance, companies cannot simply enforce standards, but
must commit to communication, training and capacity development. Lakshmi Bhatia, Director of Global Partnerships
Suppliers in turn, must also commit to achieve the standards, to Gap, Inc.
continual improvement, and to dissemination of these standards
throughout their own supply chain. IDENTIFY CAUSAL RELATIONSHIPS
A key first priority is providing training for supplier management Competitive pressures pose a constant threat to sustainable supply
teams and their employees on the company’s sustainability chain management. A last minute request to a supplier
policies and practices. may prompt the supplier to use more energy intensive modes
of manufacturing or transportation. Contracts that force
In 2003, HP published a Social and Environmental Responsibility small, expedited deliveries or that require significant changes
Supplier Code of Conduct – the first electronics company to do so. in the product may place unhealthy overtime demands on
In an effort to introduce the code, facilitate feedback, and labor, as well as escalate energy use.
increase compliance, the company developed capacity-building
programs and invested in monitoring by local expert auditing Companies may make some progress addressing the symptoms
teams. By late 2006 the company had introduced the code to of sustainable performance problems, but to achieve real
more than 500 of its suppliers – over 90% of its core supplier progress they must recognize and devise a strategic response
base. As a result of these investments in training and capacity to root causes. When competitive pressures are the basis of
development, most suppliers completed self-assessments specific supply chain sustainability issues, root cause analysis
adequately and committed to extend the training and standards can help identify systemic exposure to, or the exacerbation of,
to their own suppliers. environmental and social risks.
The monitoring and verification of compliance with supply chain When confronted with suppliers whose wages are below certain
sustainability standards remains a crucial strand of the national minimum wage reference points, the Fair Labor Association
communication loop, and of particular importance in countries requires the factory to undertake a root cause analysis to understand
where enforcement of environmental and human rights standards why the gap exists. This helps identify remedial steps to bridge the
is weak. Companies should ensure their suppliers have gap, such as increasing productivity or quality. Individual companies
established effective mechanisms for capturing worker feedback, such as Nike and HP, use root cause analysis to uncover and
that their suppliers’ employees have access to independent, examine the sustainability-productivity link.
fair and confidential grievance mechanisms for raising human rights In 2004, Gap partnered with the Ethical Trading Initiative and
and environmental concerns, and that there is protection for Women Working Worldwide (WWW) in order to research how
whistleblowers. Providing ongoing practical support to suppliers purchasing decisions impacted the working conditions of garment
on standards implementation through the appointment of on-site workers in a factory thousands of miles away. As a result, Gap
staff can be critical both to the audit and the process of building is developing training to improve production planning internally
trust. The company learns about the constraints the supplier is under, and at factories, and to improve its management of time-stressed
and the supplier learns why sustainability issues are of such production orders.
concern to the company.
56
! CASE STUDY
SUPPLY CHAIN COLLABORATIVE INITIATIVES

Many multi-stakeholder initiatives have emerged in recent years to The EICC is committed to establishing common assessment tools,
address industry and cross-industry challenges. The progress improved approaches to auditing, capacity building and training for
achieved through these efforts stems from the willingness of diverse suppliers and auditors. It has also developed a common reporting
actors – typically government, nonprofit organizations, labor groups, framework. Working groups are focused on particular issues, such as
workers, academics, and business representatives – to devise collective the extractive working group which is primarily concerned with the
strategies to remedy and mitigate social and environmental concerns. metals supply chain. Recognizing that this material crosses industry
The Forest Stewardship Council (FSC) is a multi-stakeholder initiative lines, this working group has expanded its multi-stakeholder effort to
that brought together loggers, foresters, environmentalists, and include other sectors, such as automotive companies.
sociologists to develop the FSC sustainable forestry standards and The Extractive Industries Transparency Initiative (EITI) was
certification systems. FSC standards integrate consideration established to set a global standard for transparency in oil, gas and
of economics and biodiversity, as well as the social impacts on mining. This coalition includes governments, companies, civil
communities and workers’ rights. The FSC standards are now society groups, investors and international organizations at both the
applied in over 82 countries worldwide and about 5% of the world’s membership and board level. Over 40 of the world’s largest oil,
productive forests are FSC certified. FSC has a chain of custody gas and mining companies support and actively participate in the
certification in place for a wide range of paper and forest products EITI process through their local operating companies in
and over 15,000 companies are certified along the forest product participating countries, through international-level commitments,
supply chain. and through industry associations.
The Electronics Industry Citizenship Coalition (EICC) was formed These and other multi-stakeholder initiatives not only address
to develop an industry code of conduct, setting standards for protracted, large scale problems, but also focus on “positive
social and environmental performance in the electronic industry’s obligations” of business, government and society, often finding
global supply chain. Business for Social Responsibility serves as opportunities to address complex challenges in ways that create
secretariat for this coalition, which now includes over 40 members business value.
worldwide representing various tiers of the electronic supply chain.
ADDRESS PRIORITY ISSUES MAKE MONITORING MEANINGFUL

Strategies and implementation plans should be weighted according While supply chain audits are necessary, they can be insufficient,
to the issues posing the greatest challenges across the and if done poorly, can divert attention away from timely, practical
supply chain, recognizing regional vulnerabilities, the scarcity of solutions. Some suppliers can receive as many as several hundred
resources, and other prioritized constraints. Energy efficiency audits a year – mostly of a tick-box nature – from a combination of
and conservation might be the guiding concern of one operation; customer companies.
in another operation the challenge may be identifying and In order to be productive, the monitoring and auditing process
mitigating supply chain risks to social stability, such as water must be based on open dialogue, honest analysis, a mutual
scarcity. Supply chain planning and procurement processes should commitment to continuous improvement, and incentives for
also take into consideration how to maximize local economic performance. Suppliers should be made aware not only of
development opportunities, and mitigate known social and standards and the consequences of non-compliance, but of the
environmental risks. potential for capacity development through collaboration with
General Mills’ Green Giant division works with growers to reduce buyers and industry groups, and the potential benefit to their
water consumption and minimize use of agrochemicals for key own bottom line that may result from performance improvement.
crops. One such success was a 50% drop in water use for broccoli Monitoring programs rely on effective mechanisms for capturing
farmers, by General Mills helping to convert their operations worker feedback, and must ensure that employees have access
from furrow to drip irrigation. This resulted in reductions in water to independent, fair and confidential channels for raising human
use by nearly 1.2 billion gallons a year. Green Giant has also set rights and environmental issues. Labor unions and workers
a goal to reduce insecticide application on sweet corn by 30% groups are a vital part of this process, and can be a critical partner
over three years and to reduce herbicide application on sweet corn in assessing performance, identifying inefficiencies and
by 5% over five years.88 achieving results.
57

P2.3 ENGAGING SUPPLIERS continued
COMMIT TO REMEDIATION BEFORE TERMINATION INCREASE EFFICIENCY THROUGH COLLABORATION

In instances of non-compliance, companies should engage in Collaboration between companies and other partners – within and
strategic and genuine remediation efforts with the supplier across sectors – can make supply chain monitoring more effective
before terminating the relationship. The goal is to improve practices and efficient, saving on time, staff, and resources. Best practices
across and within industries, not simply to pick winners. When and monitoring resources can be shared for common purposes,
poor performing suppliers are dropped, the workers may pay the decreasing costs and the time burden for both companies
consequences, or else a buyer with lower standards may step in. and suppliers, and increasing transparency about process and
Good faith remediation efforts – collaborative efforts with concrete results. Collaboration also holds out the prospect of addressing
goals and targets – should be pursued as the first response to specific challenges rooted in competitive dynamics. Worker
poor performance. groups, unions, NGOs, government offices and local community
In 2008, Levi Strauss & Co. engaged in a project with a supplier representatives may all be valuable partners in these collaborative
factory in Vietnam and a local NGO in an effort to address poor efforts. When communities adjacent to supplier facilities are
performance and compliance issues. This collaborative effort not yet sufficiently organized to collaborate, companies should
involved a range of internal stakeholders, investment in training consider supporting the development of civil society organizations
for management and workers, and the creation of a “Workers in these communities. These organizations can play an important
Initiative Program” to incentivize participation. The project role as watchdogs and as contributors to raising sustainability
successfully improved compliance with social and environmental standards on an ongoing basis.
standards, but also resulted in measurable increases in efficiency
and productivity, a 50% decrease in turnover, and significant
reductions in excessive overtime.89
58
P2.4: MEASUREMENT AND DISCLOSURE

Companies will disclose a list of their Tier 1 and 2 suppliers and measure
and disclose suppliers’ sustainability performance.
How to get there
New data may be needed to enable the ongoing tracking and

reporting of performance metrics in the supply chain.
Companies should employ measurement techniques sophisticated
enough to quantify the environmental and social impacts
across their supply chains in as much detail as their direct
operations. The aggregate data should be used to gain an in-depth
understanding of the materials their products contain and the
conditions under which their products are made. The data paints
a picture of the company’s supply chain impacts, such as water
use in areas of water stress, and Scope 3 GHG emissions.
The recently established Carbon Disclosure Project’s Supply
Chain Initiative aims to set robust guidelines for carbon emissions
disclosure, and to assist companies in fulfilling those guidelines
across the entire supply chain. Forty companies are participating
in the program by sending the CDP survey to a portion of their
suppliers. A report summarizing this effort is released annually
and access given to responses from suppliers that have agreed to
make their information publicly available.
SUPPLIER DISCLOSURE
Suppliers should be required to set and disclose sustainability
goals, and to measure and collect data on their social and
environmental performance using standardized indicators and
measurement protocols. Data should cover non-compliance
incidents, actions taken to remedy those incidents and measures
taken to contribute to the long-term prevention or mitigation of
specific concerns. Performance against goals should be reported
using GRI guidelines and appropriate sector supplements.
A company’s supply chain sustainability performance, risks
and opportunities should be disclosed to investors and other
stakeholders in sufficient detail and in such a way that all
suppliers can be identified separately and that each supplier’s
contribution to overall supply chain performance can be tracked.
The GRI report produced by South Africa’s Impahla Clothing
company demonstrates the level of disclosure possible
from supply chain partners. Impahla’s main clients include
Adidas, Levi, New Balance and PUMA; the supplier’s first GRI
sustainability report in 2007 was supported by collaboration with
PUMA, the German development agency GTZ and GRI. Impahla
noted the internal value of such reports, including data collection
and identification of efficiencies needed in management
systems and processes.
59
performance – transportation and logistics
P3: TRANSPORTATION AND LOGISTICS
EXPECTATION Companies will systematically minimize their sustainability

impact by enhancing the resiliency of their logistics. Companies
will prioritize low impact transportation systems and modes, and
address business travel and commuting.
In the U.S., transportation accounts for nearly 30% of total GHG
emissions, placing that activity second only to electric power generation
as a contributor to climate change.90 Globally, GHG transport-related
Trends
emissions have been rising more rapidly than any other source– up % Share of U.S. carbon dioxide emissions from fossil fuel
120% between 1970 and 2004.91 In some sectors, transportation can consumption by transportation from 1990 – 2007.96
account for as much as 70% of a company’s overall carbon footprint.92
McKinsey estimates that changes in transportation modes alone could
cut supply chain energy use by 4% by 2020 (see figure P3.2 for further
information).93 Logistics is therefore one of the most important areas of
opportunity for improving sustainability performance and reducing costs.
Major companies are already achieving dramatic energy savings by
greening their logistics programs. Novo Nordisk reduced the GHG
emissions of its fleet of 2,500 vehicles by 21% in the first six months
of 2009 by right-sizing its vehicles. The company is also training its
drivers on fuel-smart driving practices, such as minimizing idling. Novo
Nordisk’s fleet management practices have eliminated over 7,000
metric tons of emissions and saved $2.3 million in fuel purchases.94
Outsourcing transportation to a carrier does not absolve a company $ Percentage Share of U.S. C02 Emissions from Transport
of responsibility for its sustainability impacts. When logistics are
sub-contracted to a third party supplier, the company should ensure % Freight currently represents 50% of U.S. greenhouse gas
that its supplier is minimizing and managing sustainability issues. emissions attributed to the transportation sector, and freight
Many companies such as Best Buy, HP and Stonyfield Farm Inc., transportation energy use is projected to increase by 75%
have joined the U.S. Environmental Protection Agency’s SmartWay from 2003 – 2030.97
Transport Partnership. This program aims to cut 33– 66 million metric % A 2009 World Economic Fund report assessed the supply chain
tons of carbon dioxide emissions by 2012 by partnering companies decarbonization opportunities within the logistics and transportation
with freight carriers actively pursuing lower carbon strategies. industry to be in the order of 1,400 mega-tonnes CO2e.98
Marine shipping also merits strong consideration. Although ocean- % A 2009 survey by the Environmental Defense Fund of 300 U.S.
going vessels are among the most efficient modes of freight transport, fleet management companies found that:99
they generate substantial quantities of GHG emissions. Currently, – 72.7% reported having a program to improve fleet
total emissions from international shipping exceed the total annual environmental performance
GHG emissions from most of the nations listed in the Kyoto protocol – 30.3% reported that fleet management is among the top two
as Annex I countries (Kyoto Protocol 1997). Accelerated adoption of or three environmental priorities for the company.
cleaner marine fuels and use of existing pollution control technologies
would significantly reduce air pollution from this mode of transport.95
The themes of this section for reducing transportation impacts are “ Companies recognize that transportation has environmental and
focused on: the architecture of the transportation network, including bottom-line impacts. There is a great opportunity for companies
distances traveled; and specific transportation modes, including the to decarbonize global logistics by analyzing transportation
sustainability credentials of the energy sources used. modes, fuel sourcing and nearshoring.”
Resources: Environmental Defense Fund – Corporate Rick Samans, Managing Director

Fleet Emissions Survey Report, Union of Concerned World Economic Forum
Scientists – Clean Vehicles Program
60
P3.1: TRANSPORTATION MANAGEMENT

Companies will develop transportation criteria that incorporate
distance requirements from site to market and establish decentralized
and localized distribution networks.
How to get there
ASSESS, ANALYZE, SET GOALS

Given that the greatest impact associated with transportation ! FIGURE P3.1
is air pollution, one of the first steps companies can take to Supply Chain Decarbonization 103
improve transportation sustainability is to quantify air emissions

(greenhouse gases, NOx, SOx) produced by the current and
planned transportation modes. With this information, companies SUPPLY CHAIN DECARBONIZATION POTENTIAL ASSESSED INDEX
can begin to identify appropriate opportunities and strategies OPPORTUNITIES ABATEMENT MT CO2E OF FEASIBILITY
for emissions reduction and likely cost savings. Clean Vehicle Technologies 175 High
Despeeding the Supply Chain 171 High
LOCALIZE AND INCREASE NETWORK DENSITY Enabling Low Carbon Sourcing:
178 Medium
When creating or redesigning logistics networks companies should Agriculture
increasingly focus on creating more localized, denser centers Optimised Networks 124 High
Energy Efficient Buildings 93 High
of operation, that minimize distances traveled and provide for
Packaging Design Initiatives 132 High
future growth. In addition to reducing sustainability impacts,
Enabling Low Carbon Sourcing:
this approach creates a more resilient network that can withstand Manufacturing
152 Medium
fuel shortages or sudden changes in demand. It also allows Training and Communication 117 Medium
companies to maintain a national or global presence without overt Modal Switches 115 Medium
reliance on long-distance transportation of goods. Local Reverse Logistics / Recycling 84 Medium
manufacturing also allows companies to maintain a presence Nearshoring 5 Medium
in communities where they do business, strengthening ties and Increased Home Delivery 17 Medium
leading to greater understanding of customers. Reducing Congestion 26 Low
Source: World Economic Forum, January 2009. Supply Chain Decarbonization
LEVERAGE IT
Companies should adopt sophisticated information systems that
automate the analysis necessary to optimize vehicle use, route COLLABORATE WITH OTHER BUSINESSES
selection and use of space. Companies should seek opportunities to share logistics networks
Since 2003, UPS has eliminated 100 million miles from its within regions and within and beyond their sectors to reduce the
delivery routes using information systems. The company’s Package number and length of trips required.
Flow Technology reduces fuel consumption and emissions by Macy’s and Schneider National have both achieved greenhouse
optimizing the allocation of pick-ups and deliveries each day at gas reductions by using the Empty Miles Service run by the
each facility, and designing a delivery route that minimizes total Voluntary Interindustry Commerce Solutions (VICS) Association,
distance covered, driving time and idling time.100 GS1 Canada and GS1. The service matches a company’s trailers
that are returning empty with another company’s potential
LOAD FOR EFFICIENCY
loads that can be collected and delivered along the return route.
Companies should review their approach to vehicle loading to
identify opportunities for greater efficiency. PLAN FOR END OF LIFE
Food services and facilities management firm Sodexo is working on Where does a product go when it is no longer useful to the consumer?
the introduction of multi-temperature vehicles that allow ambient Reverse logistics is focused on ensuring that a product at the end
and chilled goods to be delivered together rather than in separate of its life is collected by or returned to the producer, sorted, and
vehicles. It is one of the initiatives that the company expects will then recycled into new products, reused or reconditioned. When a
help it cut some 465 tons of CO2 emissions annually in the UK.101 customer’s product is defective and needs to be repaired, instead
of shipping the item long distances, the company could appoint a
Combining multiple customer orders and products into fewer
local agent to sort through returned products and send just those
vehicles can often yield substantial fuel economies. In 2007,
that are defective for repair, locally if possible.104
SC Johnson’s Truckload Utilization Project cut the company’s fuel
usage by 168,000 gallons, eliminating 1,882 tons of greenhouse
gases and saving approximately $1.6 million.102
61
P3.2: TRANSPORTATION MODES

Companies will review logistics to prioritize low-impact
transportation modes.
How to get there
PRIORITIZE LOW-CARBON MODES OF TRANSPORT “ Our customers…need accurate information from the industry
Companies should evaluate their use of different modes of to calculate their own CO2 inventories and report them to the
transportation (e.g. truck, rail, plane or ship) and take advantage public. For that reason we advocate full disclosure (Scope 1, 2,
of opportunities to move to lower environmental impact and 3) for the transportation and logistics industry.” 111
alternatives. Often, such decisions also support greater flexibility
and efficiencies in supply and distribution networks. D. Scott Davis, Chairman and CEO
It is not just a case of selecting the right mode of transportation, UPS
but how that mode is being used. For road vehicles, for example,
companies should consider operational changes such as a no-idling ! FIGURE P3.2
policy to save fuel costs and reduce pollution. A six-cylinder
diesel vehicle that idles for one hour a day wastes more than Carbon Emissions by Transportation Type 106
$1,600 worth of fuel over the course of a year when gas costs
$2.50/gallon.105
Healthcare company Baxter International uses inland waterways
instead of road transport to move goods between operations centers
in Belgium and the Netherlands. Water transport saves 40% on
freight costs and uses 80% less fuel than ground transportation.107
ADOPT NEW VEHICLE TECHNOLOGIES
Companies need to move towards low-carbon fuels and more fuel-
efficient vehicles.
Carbon emissions can be directly reduced by switching to
alternative vehicle technologies. Possibilities include flexible fuel
vehicles using advanced biofuels, vehicles powered by hydrogen
fuel cells, electric vehicles using stored electricity produced from
$ Co2 Emissions by Transportation Type (kg/ton–km)
renewable sources, and plug-in hybrids.
According to a hybrid truck trial underway at FedEx, the use of
hybrids is expected to achieve fuel savings of 26.5% over SUPPORT SUSTAINABLE PUBLIC POLICY
18 months compared to using a fleet of traditional vans.108
Companies should support local, regional and national policies
Energy foods company Clif Bar saved $1 million and reduced that prioritize development of lower-carbon transportation
transportation-related carbon dioxide emissions by 97% through alternatives, such as higher standards for fuel efficiency and
a combination of actions, including moving the distribution broader use of low carbon fuels.
center closer to the bakery, packing truckloads more efficiently
In the U.S., California has passed a Low Carbon Fuel Standard
and switching their trucks to B100 biodiesel fuel.109
(LCFS), which requires a reduction of greenhouse gas emissions
Two of the largest energy firms in the U.S., FPL Group and Duke from transportation fuels by 10% by 2020, by mixing lower
Energy, are moving to switch their entire vehicle fleets – more carbon fuels into their product portfolio, or by buying credits for
than 10,000 vehicles – to electric and plug-in hybrid vehicles by the sale of lower carbon fuels. Various permutations of the
2020. These strategies are expected to reduce GHG emissions LCFS are under design or consideration in 26 states and four
by more than 125,000 tons.110 While this is a tiny fraction of Canadian provinces. In December 2009, eleven Northeast
these companies’ overall emissions, it should help them and Mid-Atlantic states signed an agreement to finalize a
advance large-scale deployment of plug-in, hybrid electric framework for a regional LCFS by early 2011.
vehicles (PHEVs).
The EU is also moving toward an LCFS through the development
of the “fuel quality directive” which is very similar to the California
LCFS. Several companies are supporting these policies and are
developing their own fuel sourcing policies to ensure that they
62
understand and address this aspect of their supply chain.
P3.3: BUSINESS TRAVEL AND COMMUTING

Companies will decrease greenhouse gas emissions from business
travel and employee commuting by 50% from a baseline of 2005.
How to get there
PROVIDE ALTERNATIVES TO BUSINESS TRAVEL SUPPORT LOW-CARBON COMMUTING

Companies should employ better planning to reduce the frequency Just as with business travel, companies can provide employee
and number of trips. When possible, companies should discourage programs to encourage sustainable commuting practices,
business travel by using teleconferencing technologies, saving or to enable working from home or other convenient locations.
costs and reducing stress on employees and the environment. Cisco’s These types of programs are fairly common and growing in
Carbon to Collaboration initiative uses the company’s own virtual their creativity and impact.
office software platform to reduce air travel. The software enables Siting facilities near to where the majority of employees live, where
an employee to plug in to the office phone and IT networks at biking and walking to work are real possibilities, and locating
home and work exactly as if they were in the office. Users can hold close to public transport hubs, ensures that employees have the
virtual meetings and collaborate without having to meet at one widest possible choice of low or no carbon commuting
physical location. The company has identified annual cost savings alternatives. Other incentives include offering public transit
of $277 million, while the productivity of remote workers has vouchers, company shuttles, bicycle parking with shower
been found to be as good as or better than those in the office.112 facilities, preferential parking for hybrid cars, and the coordination
PRIORITIZE AND INCENTIVIZE SUSTAINABLE of carpooling.
TRANSPORTATION At Google, if any employee comes to work using carpooling, public
Where business travel is necessary, companies should choose transport, the Google shuttle, or by walking or bicycling, then the
lower impact modes of transport. Trains, for example, have a company’s GFleet program gives that employee use of a car during
lower impact than flights for shorter distances and often take the day for errands or meetings. Those who need a work car thus
a comparable amount of time from door-to-door. Companies can avoid commuting in a single occupant vehicle.
also support the use of hybrid taxis or mass transit for business A “work anywhere” policy introduced by BT Global Services
journeys within metropolitan areas. Companies should examine quantified the carbon emission reduction from their flexible
their annual employee business travel needs and reward telecommuting arrangements at 58%, thanks to the elimination
departments that use virtualization and low-carbon travel modes of an estimated 1.5 million journeys annually.113
to reduce carbon emissions. There are opportunities to incentivize low-carbon commuting, too.
OFFSET EMISSIONS Pay-As-You-Drive (PAYD) car insurance covers the car owner
on a mileage or usage basis. Companies could encourage adoption
As a last resort, companies can offset business travel emissions
of PAYD insurance by means of a subsidy through the benefits
by buying carbon offsets. This step often acts as a catalyst for the
package. It is estimated that such insurance, if broadly held,
company to take a hard look at how much employees are traveling
would give employees a financial incentive sufficient to
and where they can and should cut back. Small changes to travel
encourage them to drive about 8% less on average and so to
policies can make a big difference to the company’s overall impact.
reduce U.S. national carbon emissions by an estimated 2%.114
63
performance – products and services
P4: PRODUCTS AND SERVICES
EXPECTATION Companies will design and deliver products and services that are
aligned with sustainability goals by innovating business models,
allocating R&D spend, designing for sustainability, communicating
the impacts of products and services, reviewing marketing practices
and advancing strategic collaborations.
Sustainability provides a business with a clear imperative and
framework for reinventing and reinvigorating itself for
the 21st century. Companies with business models that are
Trends
incompatible with this imperative must be open to deep-rooted % In 2008, annual global revenues from low-carbon energy
renewal. The complexity of the challenge requires investment production, energy efficiency and other climate-related
in new products and services that offer solutions to sustainability businesses reached $530 billion. HSBC Global Research is
problems, as well as the redesign of existing product portfolio to now predicting revenues to surpass $2 trillion by 2020.116
eliminate negative impacts. % A 2008 IBM global survey of more than 250 C-Suite
Innovation itself must be provoked and nurtured in new ways. executives found that 68% of them are already focusing on
Product impacts should be understood in terms of their entire life sustainability activities to create new revenue streams.117
cycle. Engagement with the company’s stakeholders will help Emerging Economies
identify possible opportunities for new business growth in meeting
% There are four billion people at the base of the pyramid
sustainability challenges, and accessing tools such as biomimicry
with annual incomes of less than $3,000, but together they
can help develop solutions based on an ecosystem approach. have purchasing power of $5 trillion per year. The BOP
Innovation carries sustainability risks, too, and companies will market varies by country but the largest market sector is for
need to apply the precautionary principle (see page 22) when food – $2.9 trillion.118
weighing new business development proposals.
Consumer Demand
As companies expand their capabilities in sustainable innovation,
%"" A 2009 BBMG poll of 2,000 U.S. consumers found that:
they should turn at least part of their focus towards emerging
markets. The Base of the Pyramid (BOP) refers to the four billion " % 67% agree it’s important to buy products with social
people living on less than $2 a day who face in their daily lives and environmental benefits.
many of the world’s most acute sustainability challenges.115 To " % 23% say they have “no way of knowing” if a product
sustainable businesses this population represents an opportunity is green or actually does what it claims.119
to tap resilient and creative entrepreneurs as well as to meet % In some markets, such as organic foods, consumers have
the needs of a growing pool of value-demanding consumers with started backing their sustainable intentions with action.
solutions that address environmental and social impacts. Sales of organic food in the U.S. grew from $11 billion in
Developing sustainability solutions and achieving their mass 2003 to nearly $24 billion in 2008.120
deployment can be too much for one enterprise. Meeting the
sustainability challenge requires companies to establish
strategic and tactical collaborations within and across sectors,
and through the selective pooling of intellectual property.
Finally, sustainable solutions should be marketed and delivered
in a sustainable way – one that promotes responsible use and
addresses the consumption patterns that have helped create some
of our present problems.
$ Trends in U.S. Organic Food Sales ($ Billion)
Investor Action
% In the U.S. there have been a number of shareholder resolutions
on use of toxic chemicals, particularly in consumer goods. Since
2006 resolutions relating to toxics have more than doubled with
28 resolutions in 2010.121
64
P4.1: BUSINESS MODEL INNOVATION

Companies will innovate business models to reduce material inputs and
prioritize a transition to sustainable products and services.
How to get there
RETHINK YOUR VALUE PROPOSITION “ The companies that our analysts have identified as providers
Businesses and stakeholders have begun to discover sustainable of sustainability solutions have performed extremely well
business value in re-conceiving the idea of a “product.” A as companies and as investments for their shareholders. The
key component of this is the transition from offering products to companies that are developing the new products and
offering utilities or services. Thus, an increasing array of business new processes are seeing benefits in the financial markets.”
software applications and data storage are being made available
as online utilities – so-called “cloud computing” – instead of through Abby Joseph Cohen, Chief Investment Strategist
desktop installation with its associated hardware demands. Goldman Sachs
Car leasing and short-term rental services are not new, but Zipcar
is taking it a step further. Zipcar offers customers use of car
in hourly units – effectively removing the need to own a car for
urban use. Zipcar also offers lower pricing for hybrid vehicles,
encouraging customers to use this cleaner mode of transport.
The company is growing 30% a year and now has over 325,000
members, with especially strong growth around university
campuses. Research shows that car sharers cut personal travel-
related emissions by as much as 50%.122
“ At our company we define sustainability as placing a priority

on people, technology and the power to bring the digitally-
connected world to life. We’re working to make sustainability
easy by providing the technology and services that can help
make a ‘smart home’ a reality for everyone.”
Brian Dunn, CEO

Best Buy Co., Inc.
Resources: Creative Commons, World Economic

Forum – Sustainability for Tomorrow’s Consumer: The
Business Case for Sustainability
65
P4.2: RESEARCH & DEVELOPMENT AND CAPITAL INVESTMENT

Companies will use sustainability as a primary filter through which all R&D and
capital investments are made. 50% of the R&D investment will be focused on
developing sustainability solutions.
How to get there
SET SUSTAINABLE PRODUCT GOALS

Companies should set revenue and R&D targets for making
existing products sustainable and developing new products and
services that contribute solutions to sustainability challenges.
General Electric sold $17 billion in ecomagination products in
2008 out of total revenues of $182.5 billion. The company aims
to increase this figure to $25 billion by 2010. GE has also set a
target for R&D investment in cleaner technologies: $1.5 billion by
2010, up from $1.4 billion in 2008 and $750 million in 2005.
Procter & Gamble, the consumer products company, has set a goal
of developing and marketing “sustainable innovation products”
(SIPs) – products with a 10% lower environmental footprint than
alternatives – generating $20 billion in cumulative sales by 2012.
By 2015, DuPont aims to achieve its Environmentally Smart Market
Opportunities goal: a doubling of investment to $640 million in
R&D programs with direct, quantifiable environmental benefits for
customers and consumers along the value chain.
ALIGN R&D INVESTMENT CRITERIA INNOVATE TO SOLVE SUSTAINABILITY CHALLENGES
Companies should integrate sustainability considerations into While technology cannot solve all the world’s sustainability
the criteria and decision-making process that determine capital problems, technological innovations, especially those that deliver
allocation product research and development. Environmental greater energy efficiency, are urgently needed on a far-reaching
and social risks and opportunities should weigh as heavily as scale. This need extends from the stove top to the desktop, from
commercial criteria in selecting investments. the homes and offices we occupy, to the cars we drive and the
planes we fly.
FILTER CAPITAL INVESTMENTS FOR SUSTAINABILITY
Innovations might extend the sustainability performance of
Many business capital investments are long-term in nature, with
existing products. By 2015, white goods producer Whirlpool will
payback horizons that extend into a future where regulatory
ensure that all of its electronically controlled appliances can
and resource constraints and sustainability concerns are likely to
receive and respond to signals from smart grids. Products will
be quite different from today. In order to ensure that capital
then be able to go into low power mode when the grid requests
investments bear positive returns in a more sustainability-focused
it, or to delay operation until peak demand is over.
world, companies should test the economics of major investments
against a variety of potential future sustainability scenarios. These Opportunities for sustainability-related innovation extend to services
scenarios can serve as both a positive and a negative screen, by, too. Fannie Mae is offering Energy Efficient Mortgages for low-and
for example, reducing the projected rate of return for projects with middle-income consumers. The plan allows a higher debt-to-income
high environmental or social impact, and improving the economics ratio by increasing the borrower’s assessed income by the amount
of more sustainable capital investments. of the anticipated energy savings, and also assumes a higher house
value based on the value of the energy efficiency measures.
Chevron for instance, is applying internal rate of return (IRR)
tests on all large-scale capital projects against a variety of future
carbon pricing scenarios, and as a result, has altered investment
in specific projects.
66
TARGET THE BASE OF THE PYRAMID (BOP) MARKET

FIGURE P4.2
!"
"
Low-income consumers in developing economies present
particular sustainability challenges but also untapped opportunities Base of the Pyramid Market Opportunities 123
for innovative solutions. They may have at best limited access

to resources essential to life such as reliable water supplies,
affordable housing and healthcare, let alone products and services
regarded as necessary in developed countries, such as banking
and communications technology.
Swiss Re has identified the rising climate-related financial losses
and a lack of risk transfer products in the developing world as an
opportunity for product innovation. Through the Climate Adaptation
Development Programme, Swiss Re is developing a financial risk
transfer market for the effects of adverse weather in emerging
economies in Africa and the Indian subcontinent. By partnering
with non-profits such as Oxfam International and Millennium
Promise, Swiss Re is able to play a direct role in providing the
financial assurances integral to a stable economy, while serving
vulnerable populations excluded from traditional markets.
Companies often have the core competencies necessary to respond
to the need to extend access while doing so in a way that helps
reverse negative social and environmental impacts and solve current
sustainability challenges. Doing so successfully offers companies
new avenues for profitable growth.
Some 40% of Unilever’s sales and much of its growth comes from
developing countries, and CEO Patrick Cescau regards addressing
social and environmental challenges in developing countries as
key to the company’s continued competitiveness. For example,
the company’s sales of soaps and shampoos in small, affordable
packages, coupled with sponsorship of public health campaigns
on clean water and sanitation, are reaching an estimated 44,000
villages and 100 million people in India.124
Dow Chemical Co has set a target of achieving at least three
breakthrough product innovations to address one of five identified
major sustainability challenges: affordable and adequate food
supply; decent housing; energy and climate change; sustainable
water supplies; and improved personal health and safety.
The SC Johnson Company has partnered with youth groups in the
Kibera slum of Nairobi, Kenya to build a community-based waste
management and cleaning company, providing home-cleaning,
insect treatment, and waste disposal services for residents.
67
P4.3: DESIGN FOR SUSTAINABILITY

Companies will approach all product development and product
management decisions with full consideration of the social and
FPO
environmental impacts of the product throughout its life cycle.
How to get there
ASSESS THE ENTIRE LIFE CYCLE Recent industry and cross-industry examples, such as the
The foundation of design for sustainability is the life cycle Sustainability Consortium spearheaded by Walmart, show
assessment (“LCA”) methodology. LCA is a well established burgeoning interest, understanding and use of life cycle analysis.
analytical tool and is subject to International Organization Apparel companies Patagonia, Timberland, Levi’s, and Anvil
for Standardization standards. There has been a resurgence Knitwear have all undertaken and disclosed life cycle analyses
of interest in LCAs as their use evolves from a limited scope for at least one of their products.
measurement scorecard to a real-time decision-making tool for Patagonia learned from an LCA that shirts made from regular
use across operations and supply chains. Companies find that cotton consume three times more petroleum in their lifetime than
accountability for products and services “from cradle to cradle” shirts made of synthetic fiber because of the fertilizers used to
enhances the business incentive to improve product durability grow the cotton and the extra effort needed to keep the garment
and develop more sustainable solutions. LCAs also open clean. Recognizing that the extensive use of these chemicals
up opportunities for cost savings, efficiencies and marketing has significant negative impacts on the water, soil, and health of
to consumers. farm workers, the company subsequently converted its sportswear
Companies should perform an LCA for each portfolio of products lines to 100% organic cotton where there is less chemical usage.
or for specific products to ascertain the full scope of their Patagonia also improved the life cycle of its polyester garments
sustainability impacts. This assessment should identify key such that garments can be reclaimed and their fibers recycled at
natural resource and social implications of the choice and the end of their useful life.125
sourcing of inputs, the manufacturing process itself, and each As the result of an LCA in product design, Canon USA opted
product’s use and disposal. to restrict the use of 24 hazardous substances in its new
Companies should use these findings to identify and prioritize imageRUNNER ADVANCE multifunction office devices and
opportunities for improvement, such as newly available materials, made some parts entirely out of recycled plastic and bioplastic.
new sourcing possibilities and manufacturing efficiencies. Canon also made the products smaller and lighter than
previous models and uses less packaging. The product’s power
“ Life Cycle Assessment provides a holistic yardstick of the consumption is 75% lower than previous models and overall
sustainability of products and services. Without an LCA, carbon dioxide emissions were reduced by 30%.126
you do not know whether your decisions make overall
sustainability improvement, or merely improve one thing by
making another thing worse. Using LCA does not mean that
we will not make errors, but it does mean that many of the
unintended consequences can be quantified ahead of time,
giving us a chance at better, more consistent, and more
transparent environmental decisions.”
Rita Schenck, Executive Director, Institute for Environmental

Research & Education
American Center for Life Cycle Assessment
68
SUSTAINABLE DESIGN The U.S. Environmental Protection Agency’s Design for the
Companies should design all products and services to reduce Environment program (DfE) focuses on helping companies move
environmental and social impacts throughout their life cycle. This towards use of safer chemicals in their products. Through its
means prioritizing the use of non-toxic materials, product durability, partnership with the automotive finishing industry it estimates
biodegradability, energy efficiency, packaging, and the recyclability it could help auto body shops to reduce releases of over 110
and reusability of parts through product take-back programs. million pounds of toxic pollutants, savings those firms up to
$650 million in reduced paint costs.129
Many companies find that designing for the environment mitigates
sustainability impacts while also opening up opportunities for cost Recyclebank is a company that focuses on products at end of life.
savings and production efficiencies. Its business model is built on rewarding consumers financially for
recycling and taking other green actions. Customers receive reward
The Emulsion Aggregation (EA) toner technology developed by
points when they recycle and they can then spend these points
Xerox was a major breakthrough in controlling the size, structure
for services or products with Recyclebank’s partner organizations.
and shape of toner particles, leading to reduced toner use and
improved print quality. In environmental terms, each printed A key ongoing challenge is to integrate social and economic
page now requires 40 – 50% less toner and 60 – 70% less energy. criteria alongside environmental factors in the LCA and design
Energy use in toner production itself has been cut by 25 – 35%. 127 process. Social impacts relevant in product and service design
include accessibility (such as the broad availability and
Foam used in furniture or bedding is made from polyurethane
affordability of patented medicines), design for people with
comprising petroleum-derived polyols. Cargill developed an
disabilities, user safety and addiction concerns, ease of repair
alternative of comparable quality – BiOH™ polyols – manufactured
and the local impact of product disposal at end of life.
from renewable, biological sources such as vegetable oils.
Compared to traditional polyols, each million pounds of BiOH™ Companies need to evaluate the relevance of a range of possible
polyols saves nearly 700,000 pounds of crude oil, using 23% less factors to their products and services and use appropriate tools
energy and producing 36% fewer carbon dioxide emissions. 128 to integrate this analysis in design decisions.
Ford’s product sustainability index shows the life cycle of some
Resources: McDonough & Braungart Cradle to
of its products against key metrics for a vehicle. These metrics Cradle Protocol, Sustainable Packaging Coalition
include GHG emissions, air emissions, recycled and renewable
materials, drive-by noise, and cost to owner over lifetime of
vehicle. Ford of Europe is using the product sustainability index
for all new products.
69
P4.4: MARKETING PRACTICES

Companies will align their marketing practices and product revenue
targets with their sustainability goals, and will market their designed-for-
sustainability products and services with at least the same effort as their
marketing of other products.
How to get there
MAKE SUSTAINABLE PRODUCTS COUNT COMMUNICATE CREDIBLY

Products designed to meet sustainability criteria or to meet Marketing and product promotion efforts should be an authentic
sustainability challenges should be promoted with as much reflection of the company’s sustainability policies. Making false
financial investment as other products. Companies should set or irrelevant claims of sustainability merely risks running afoul
revenue targets for their sustainable product offerings to ensure of marketing codes such as the U.S. Federal Trade Commission
their scale and success beyond niche markets. Green Guides, or of exposure and judgment at internet speed
by consumers engaged in the growing use of social media.
DO NO HARM
While false claims should be avoided, setting out the company’s
Long-established concerns about the appropriateness of marketing
stance on the need for responsible marketing policies are
of certain categories of products to particular audiences will
encouraged. For example, Mars, the confectionery company,
continue to grow. This trend has already moved beyond questions
has a global marketing policy that places constraints on its
of vulnerability – the marketing of violent video games or junk
marketing practices towards children. This policy restricts
food to children or of credit products to the poor – to more general
advertising in a range of media – including television, radio, print
questions of appropriateness, such as the marketing of alcohol or
and online – where children under 12 make up 25% or more of
tobacco to adults.
the audience. The company has also committed to ensure that
Companies need to have strong marketing codes that highlight its advertising does not depict children under 12 consuming the
and address sustainability issues in line with sustainability company’s products and that no child will act as spokesperson
commitments, but they also need to demonstrate that these codes for the brand.
are being implemented through clear systems and accountabilities.
Brown-Forman’s Responsible Marketing, Advertising and
Time Warner has implemented and kept under review a policy Promotional Guidelines requires that at least 80% of the
regarding its depiction of tobacco in films. Since the launch of company’s marketing audience to be over the legal drinking age.
its policy in 2005, the number of films the company produces The company supplements its strict marketing guidelines with
or distributes in the U.S. that contain tobacco depictions has support of anti-alcohol abuse efforts through groups including the
been reduced by 35%. Since January 2008, Time Warner filmed U.S. Ad Council, International Center for Alcohol Policies, and
entertainment companies also began including 30-second anti- the European Forum for Responsible Drinking.
smoking public service announcements (PSAs) suitable for all
In 2008, Aveda launched an advertising campaign in print
audiences in the front of DVDs distributed in North America of
advertising and in-store displays to support the company’s tag
first-run films released in theaters that contain tobacco products
line: “Beauty is as Beauty Does”. The campaign highlighted a
or imagery.
new sustainability topic every six to eight weeks. The first topic
“ Companies increasingly see that their values must be reflected was wind energy, highlighting the fact that Aveda products are
consistently in every decision they make, every marketing 100% manufactured with wind power. The second highlighted
campaign they run, and every partnership they form.”130 packaging waste, where Aveda uses up to 100% post-consumer
recycled (PCR) materials in packaging for its products.
Rosabeth Moss Kanter, Professor, Harvard Business School
Author of SUPERCORP: How Vanguard Companies Create Resources: Federal Trade Commission
Innovation, Profits, Growth, and Social Good Green Guides, GoodGuide, Green America
70
P4.5: STRATEGIC COLLABORATION

Companies will collaborate within and across sectors to innovate and scale
sustainable products and services, and contribute to the development of
open source solutions.
How to get there
IDENTIFY PARTNERSHIPS AND OPPORTUNITIES to support energy efficiency in the home including the transfer
Sometimes a single company just cannot go it alone. Companies of power to and from electric vehicles and plug-in hybrids. While
should assess the intra- and inter-industry landscape for GE brings utility-scale industrial expertise and manufacturing
collaborations that create business value and bring sustainability capacity, Google brings global-scale software expertise and an
solutions to scale. NGOs and other groups beyond industry can understanding of associated security issues and data protocols.
also be a valuable source of information and guidance. The early Meanwhile, Ford has teamed up with a number of utility
success of all such collaborative efforts has led to a variety of companies, the Department of Energy and the Electric Power
different combinations of organizations developing solutions that Research Institute (EPRI) to devise the new infrastructure that
contribute to sustainability performance. will connect electric vehicles to the grid. The collaboration
The U.S. economic stimulus bill has allocated funds for recently yielded a vehicle-to-grid communications and control
investment in developing a smart grid. This grid brings together system that will enable electric vehicles to plug-in and
software technology, energy efficient and renewable energy intelligently exchange power with the smart grid every day.
and showcases how innovative collaborations take shape. In
September 2008, Google and General Electric announced a
collaboration to develop software to support the “smart grid” and
! CASE STUDY
SCALING SOLUTIONS THROUGH OPEN SOURCING

To address the complexity of sustainability preferable patents have been contributed from companies including
challenges, many industry-leading Xerox, Dow, Bosch, Nokia, and Sony, among others.
companies are leveraging new ways to Nike, Best Buy, and the non-profit Creative Commons have developed
bring their sustainability solutions to the GreenXchange – a digital platform that allows companies,
scale. By open sourcing knowledge, tools, academics, and other stakeholders to explore and share sustainability
and technologies, these companies are innovations on a global scale. The idea behind GreenXchange is that
stimulating collaborative and innovative it will support community-based knowledge transfer by supporting
thinking while simultaneously transforming the development of patent pools – communities where patent owners
the traditional notion of intellectual capital. are encouraged to make their patent available for public licensing
IBM, the World Business Council for Sustainable Development and ideally with no or only a nominal fee and few or no use limitations.
other corporate partners took the idea of information sharing to a wider The focus of the patent pools is the creation of innovative solutions
audience with their launch of the Eco-Patent Commons, an open source to sustainability challenges. The platform launched in 2010.
platform bringing technology patents with environmental benefits into
the public domain. Since the launch in 2008, over 100 environmentally
71
performance – employees
P5: EMPLOYEES
EXPECTATION Companies will make sustainability considerations a core part

of recruitment, compensation, and training, and will encourage
sustainable lifestyle choices.
The commitment of employees and other workers will continue

to be a critical resource in moving a company towards
sustainability – especially if sustainability is going to drive a
Trends
competitive advantage for the company. % When in a 2008 survey the Aspen Center for Business
Education asked of MBA students at top business schools what
Before their commitment and energy towards meeting the company’s
the primary responsibilities of a company were, they found a
broader sustainability goals and policies can be counted upon, shift towards “creating value for the communities in which they
however, the company will need to demonstrate that employees are operate” and “complying with laws and regulations” ranked
themselves respected. Sustainability begins at home. higher than shareholder value maximization and satisfying
In the section on Governance for Sustainability we highlighted the customer needs. Also, more MBA students (26% in 2007
need for companies to adopt human rights policies committing compared to 15% in 2002) are attaching importance to finding
the company to uphold the highest standards in relation to, work that makes a clear contribution to society.133
among other things, employee health and safety, diversity and % The next wave of MBA students looks set to continue this trend.
inclusion, and labor rights. A 2007 survey of 2400 undergraduate students found that:134
While most companies have approached these issues, few have – 77% said they would seek socially responsible employment
met the highest standards. A survey by Calvert Investments found during their careers;
that only 3% of the 636 companies in the Calvert Social Index – 60% said they would seek such work immediately after
demonstrated what they classified as “diversity excellence.” graduating from college;
Furthermore, most companies’ performance fell into the bottom – 84% agreed that businesses should work towards the
half of the achievement categories used by the study.131 betterment of society by fostering a healthier environment,
Beyond treating its people properly, obtaining the engagement eradicating poverty, and addressing other societal issues;
of employees means demonstrating to them that sustainability – Only 19% believe most companies are currently working
is embraced at the core of the enterprise. Demonstrating such towards those goals.
commitment entails embedding sustainability deep into the
% A 2009 global survey of CFOs found that 52% viewed their
company culture. That culture begins with each new hiring company’s CSR efforts as a way of attracting, motivating, and
decision, and extends to training, performance management retaining talented employees.135
and the values that bind the company together as a community.
Where companies demonstrate a firm commitment toward
sustainability they benefit from improved recruitment and
retention rates, employee morale and productivity, and lower
healthcare costs. At least one recent study found that companies
that effectively engage employees on sustainability issues
outperform others by wide margins, demonstrating 2.6 times
higher earnings-to-share growth rates.
“ We need to invest in green jobs – green technology, energy

efficient retrofits of public buildings and the smart power grid.”132
Richard Trumka, President

AFL-CIO
Resources: Apollo Alliance, Blue Green

Alliance, Net Impact – New Leaders, New
Perspectives II, National Environmental
Education Foundation, Green for All
72
P5.1: RECRUITMENT AND RETENTION

Companies will incorporate sustainability criteria into recruitment
protocols, employee performance processes, compensation
and incentives.
How to get there
If sustainability is to be more than a company talking point then

sustainability criteria should be embedded in each employee’s
!CASE STUDY
goals, job responsibilities, and performance incentives – not just
in the incentive plans for senior executives.
SUSTAINABILITY
CREATES JOBS
REWARD SUSTAINABLE JOB PERFORMANCE
Many companies now include sustainability criteria in job
descriptions and performance assessments so that employees
and managers will be willing to consider projects other than those Green jobs are predicted to be part of the new foundation for
offering the greatest financial return on investment. In addition, rebuilding the global economy. The shift to cleaner energy
sources like solar, wind, and biofuels will produce hundreds of
credible corporate sustainability programs help companies stand
thousands of new jobs.138 Building a strong clean energy
out from the crowd as employers of choice to attract top talent.
sector is a focus of the U.S. 2009 economic stimulus package,
This is especially true given the current economic environment –
which is estimated to have created or saved around 600,000
many employers can no longer rely on or afford large compensation
jobs. These jobs and the additional jobs that will be created by
and bonus packages to entice new employees. comprehensive climate and energy legislation, are expected
A number of companies are integrating aspects of sustainability to total nearly 2 million jobs over the next decade.139
into their human resource recruitment and employee orientation With the creation of these new jobs, comes a clear need for a
processes, covering concerns such as labor relations, health and different type of skilled labor. The National Renewable Energy
safety, environmental protection and ethics. In Vancity’s well- Lab has identified a shortage of skills and training as a leading
established orientation program, participants hear from the CEO non-technical barrier to renewable energy and energy efficiency
and board of directors on the company’s ethics and workplace growth. Developing a low-carbon economy will not only require
policies, and a member of the Sustainability Group delivers a significant investment in new technologies and infrastructure,
presentation on the community leadership strategy. Energy but also investment in worker training and skills development.
company Suncor also integrates the company’s sustainability values Green jobs represent an opportunity for workers to transform
into its messaging with prospective employees both during the their current skills or develop new specialized skills to meet the
interview process and in employee orientation.136 needs of expanding industries that will promulgate energy
efficiency, renewable energy and other sustainability solutions.
In 2008 Intel began including environmental factors in the
calculation of corporate performance on which every employee’s
annual bonus is based. Three environmental performance goals
were included: product energy efficiency, the company’s reputation INSPIRE INNOVATION
for environmental leadership, and the completion of renewable Just as companies have continuous improvement systems in
energy projects and purchases of green energy. In 2009, Intel added place to engage workers in identifying and addressing quality
reducing the carbon footprint as a performance metric. issues, companies should have formal systems in place to
The components and structure of this employee compensation incentivize and capture employee ideas and feedback on the
should be disclosed in the company’s sustainability report by, sustainability vision and goals, and on innovations that will
for example, listing the percentage of overall compensation by help the company to achieve them.
environmental and social performance category. In 2008 Sun Microsystems (now part of Oracle Corporation)
launched its “Every Job is an Eco-Job” campaign. Using a range
of communications tools Sun encouraged employees to consider
how their jobs could contribute to the company’s social and
environmental sustainability goals.137
73
P5.2: TRAINING AND SUPPORT

Companies will develop and implement formal training on key
sustainability issues for all executives and employees, and facilitate
coaching, mentoring and networks for sustainability knowledge sharing.
How to get there
EMPOWER EMPLOYEES
Companies need to empower their employees to think systemically
about the company’s operations and sustainability.
The company should undertake training needs analysis and set
training goals and strategies in the same way that they do for
other aspects of an employee’s job. Results should be assessed
and the program improved based on feedback.
All employees should be trained on the broad sustainability
challenges facing the company such as energy use and diversity
and inclusion, as well as on the handling of specific issues they
encounter in the context of their individual roles.
Johnson & Johnson runs an Environmental Literacy program for
employees to increase understanding of global environmental
issues. All facilities are expected to implement a five-year literacy
plan that includes a different environmental education campaign
each year. In 2008, 97% of facilities ran a literacy campaign, the
majority of which concerned climate change.140
At Herman Miller they have implemented a peer-led, -designed
and -managed safety program. Routine work practices are the
subject of one-to-one peer reviews of safety practices against federal environmental legislation, and share knowledge to aid
on-site-specific critical behaviors. The observer provides positive colleagues in going green at work, in transit and at home.
feedback on safe behaviors, and then the observer and observee The company now provides a dedicated staff and small budget
discuss the root of any problems, and formulate actions for but the initiative remains grassroots in nature.142
remediation. Employee bonuses are also tied to safety performance.
For some employees specialized skills may be needed, such as
In the pilot study for this approach, the incident rate fell 40%.141
LEED or SA8000 certifications. In 2008, property firm Jones
Microsoft sponsors more than 40 employee affinity groups – termed Lang LaSalle announced that it was launching its Sustainability
Diversity Advisory Councils – that foster a range of activities University to provide education in support of sustainability
to advance the inclusion of particular groups in career, social commitments, including increasing the number of professionals
and product areas. Individual Councils meet monthly to share accredited in programs including LEED, BREEAM and Green
information and resources, determine group member training Globes. By mid-2009, over 500 Jones Lang LaSalle professionals
needs and develop strategies to complement the company-wide had been accredited. The University also develops and delivers
diversity program. curriculum and best practice training in sustainability services and
Initiated in 2007 as a grassroots effort by a group of 40 committed tools, and in support of specific business sustainability objectives.143
employees, eBay’s Green Team now boasts 2,300 employees in
23 countries. The employees organize volunteer projects and green
action activities for the employee community, support state and
74
P5.3: PROMOTING SUSTAINANBLE LIFESTYLES

Companies will promote sustainable lifestyle choices across their
community of employees through education and innovative employee
benefit options.
How to get there
PROVIDE TOOLS AND RESOURCES INCENTIVIZE SUSTAINABLE CHOICES

Companies should devote resources to employee education on Where information alone does not promote action, incentives can
sustainability and tools that empower them to take action at fill the gap. Companies should look at innovative ways to
work and outside of work. Results from these efforts should be encourage people to act in ways that promote sustainability.
tracked and quantified to identify effective programs and to Companies, for example, might offer socially responsible
support continuous learning. investment options on 401(k) plans, or pay for services that help
Alcoa’s global intranet site offers employees resources relating improve home energy efficiency.
to sustainability in their work but also sustainability in their Realizing that 70% to 75% of employee healthcare costs in the
home lives, with suggestions ranging from where to buy organic U.S. are attributable to lifestyle or modifiable behavior, PG&E
food to places to recycle cell phones. Their “Make an Impact” has launched “wellness accounts” for its non-union employees.
program offers employees in the U.S. and Australia a GHG The company credits an employee’s account when the employee
footprint reduction kit with a complementary training package completes certain activities or engages in healthy behaviors.
for employees and their communities. The account can be used to pay for eligible health care expenses.
Telecommunications company BT has a specific goal to engage its Energy food company Clif Bar offers employees a package of
workforce in reducing their carbon footprint at work and at home. incentives to embrace sustainability at home and on the commute
It runs a global energy saving campaign and has created “carbon to work. The program includes financial incentives for the
clubs” for staff. purchase of biodiesel vehicles or a high-mileage hybrid; financing
the purchase of a commuter bike; redeemable points earned
for the use of alternative transportation; and grants to make eco-
friendly home improvements.
In 2007 Swiss Re launched its CO You2 Reduce and Gain program
for employees. Employees can obtain a subsidy of up to CNF 5,000
(US$4,945) towards up to half the price of CO2 reducing solutions.
Over 5% of eligible employees worldwide have participated in
the program, many by buying hybrid cars, annual travel passes for
public transport, and solar panels and heat pumps.144
75
glossary of sustainability terms
ASSURANCE: A process whereby an independent third party RENEWABLE ENERGY GENERATION: The generation of
assesses and provides feedback on the quality of a electricity from renewable sources without generating greenhouse
company’s sustainability disclosure and efforts. This includes gases. Renewable sources typically include solar, wind, wave,
the communication of the feedback to the public. geothermal and run-of-the river hydro.
C-LEVEL EXECUTIVE: Members of a company’s executive RIGHT-SIZING: Ensuring that the size and efficiency of a vehicle
leadership team including the chief executive officer, or transportation mode is appropriate for distance traveled and its
chief financial officer, chief technology officer and chief purpose.
sustainability officer.
SCOPE 3 EMISSIONS: Within the WRI/WBCSD GHG Protocol,
CLOSED-LOOP MANUFACTURING: An approach to manufacturing Scope 3 emissions are those produced other than by a company’s
whereby industrial outputs, waste or products are reused in the direct operations and energy purchases. They include, for
same manufacturing process. example, employee travel, emissions embedded in products
purchased or processed by the company, and emissions produced
CLOUD COMPUTING: Technology for convenient, on-demand
by transporting or disposing of the company’s products.
network access to a shared pool of configurable computing
resources (e.g., networks, servers, storage, applications, and SMART GROWTH: Smart growth is an environmentally sensitive
services). Demand for processing power is moved from an pattern of development that provides people with additional
individual user’s computer into internet-based applications. transit, housing, and employment choices by focusing future
growth away from rural areas and closer to existing and planned
CRADLE-TO-CRADLE: A concept where industry models on
job centers and public facilities.147
nature’s processes and systems, and seeks to create business
practices, products and processes that are efficient and STAKEHOLDER: Stakeholders include those people or groups
essentially waste free.145 within or outside the company who affect, or are affected by the
company’s activities.
ENTERPRISE RISK MANAGEMENT (ERM): A management
framework for systematically identifying, assessing, responding to STAKEHOLDER MAPPING: The process of identifying all of a
and monitoring risk company-wide. company’s key constituency groups and the way in which they are
engaging with the company.
EXTENDED PRODUCER RESPONSIBILITY: An approach to
environmental policy that holds manufacturers and importers SUPPLY CHAIN: The system of organizations and people whose
of products responsible for the environmental impacts of their activities transform raw materials into a finished product or
products throughout the product life-cycle, including upstream service, delivered to the end consumer.
impacts inherent in the selection of materials for the products,
SUSTAINABILITY MANAGEMENT SYSTEM: A framework
impacts from manufacturers’ production process itself, and
for systematically managing and documenting a company’s
downstream impacts from the use and disposal of the products.146
sustainability activities and impacts.
LIFE CYCLE ANALYSIS (LCA): An analytical process for
TIER 1, 2, AND 3 SUPPLIERS: A categorization of a company’s
identifying comprehensively the environmental footprint of a
suppliers based on the proximity of the supplier relationship. Tier
product. The process takes into account everything from the
1 suppliers provide good and services directly. Tier 2 suppliers
extraction of raw materials to the transportation, biodegradability
have a relationship with the company through provision of
and reusability of components and the finished product.
goods and services to Tier 1 suppliers. Tier 3 suppliers provide
MATERIALITY ANALYSIS: The process of using stakeholders to engineered materials and specialist services.
identify and prioritize a company’s significant sustainability
VALUE CHAIN: A chain of activities within a business unit, each
issues and impacts.
step in the chain contributing value towards the finished product
NAMED EXECUTIVE OFFICERS: Defined in US SEC rules on or service, and encompassing both upstream and downstream.
executive compensation disclosure, NEOs include the CEO,
VERIFICATION: The process whereby corporate data and/or
the principal financial officer and the company’s three other
systems are checked for accuracy and completeness.
most highly compensated executive officers.
ZERO EMISSIONS: The use of facilities, buildings or equipment
OPEN SOURCE: A philosophy of methodology of making
without the emission of any waste products that pollute the
a product’s source materials – usually intellectual
environment or contribute to climate change.
property – accessible to others.
PUBLIC POLICY ENGAGEMENT: Lobbying of legislators and
regulators and financial aid to political campaigns, regarding
issues directly, or the election campaigns of candidates for
political office who hold particular positions.
76
resources
GOVERNANCE Deutsche Bank Climate Change Advisors The Greenhouse Gas Protocol Initiative –
WRI/WBSCD
Deloitte Review: The Responsible and The European Sustainable Investment
Sustainable Board Forum (Eurosif) – Shipping Human Rights Policies And Management
Practices of Fortune Global 500 Firms:
Ceres Governance Reports and 14-point HSBC Climate Index
Survey by John Ruggie
framework / Global Framework on Climate
Institutional Investors Group on Climate
Risk Disclosure International Federation of Accountants –
Change (IIGC)
International Standard on Assurance
CalPERS
NASDAQ Global Sustainability 50 Index Engagements (ISAE 3000)
CalSTRS
Principles for Responsible Investing International Standards Organization
Center for Political Accountability
Prudential Green Commodities Index KPMG International Survey of Corporate
The Corporate Library Responsibility Reporting 2008
Risk Metrics Group Global Climate 100
The European Sustainable Investment Index National Association of Insurance
Forum (Eurosif) – Investment Consultants Commissioners (NAIC)
Robeco Investment Management and Booz
and Responsible Investments Study
& Co. – Responsible Investing: A Paradigm Securities and Exchange Commission –
International Corporate Governance Shift Final Mandatory Reporting of Greenhouse
Network Gases Rule
Social Investment Forum
International Federation of Accountants – Social Investment Research Analyst
S&P/IFCI Carbon Efficient Index Network (SIRAN) – A Renewed Call to
Sustainability Framework/Business Strategy
United Nations Environment Program Action
International Finance Corporation –
(UNEP) Finance Initiative – Fiduciary Trends in Climate Risk Disclosure
Environmental and Social Standards
Responsibility
International Labor Organization UN Global Compact and GRI, Corporate
Conventions DISCLOSURE Human Rights Reporting: An Analysis of
Current Trends
Millstein Center for Corporate Governance AccountAbility – AA1000 Assurance
and Performance Standard PERFORMANCE – OPERATIONS
National Association of Corporate Directors Boston College Center for Corporate Brookings Institute – Shrinking the Carbon
Citizenship – How to Read a Corporate Footprint of Metropolitan America
Principles on Security and Human Rights Social Responsibility Report: A User’s
Risk Metrics – Governance White Papers Guide California Sustainability Alliance – Green
Leases Toolkit
Canadian Institute of Chartered
STAKEHOLDER ENGAGEMENT Center for Industrial Ecology
Accountants – Building a Better MD&A
IBM Global Business Survey – Attaining Center for Resource Solutions – Green-e
Carbon Disclosure Project Supply Chain
Sustainable Growth Through Corporate
Survey
Social Responsibility Clean Air – Cool Planet
Carbon Trust
HSBC Global Research The Gold Standard
Ceres and Environmental Defense Fund
Tellus Institute and FRP Green America – Green Business Network
(EDF) – Climate Risk Disclosure in SEC
World Resources Institute Publication – Filings Greening Corporate America article
Development without Conflict
The Climate Disclosure Standards Board Green Order
STAKEHOLDER ENGAGEMENT – (CDSB)
Harvard Business Review – Why
INVESTORS Domini Social Investments – Innovations Sustainability is Now the Key Driver of
Interfaith Center on Corporate in Social and Environmental Disclosure Innovation
Responsibility (ICCR) Outside the United States
Mayors and Climate Protection Best
Boston College Center for Corporate Environmental Product Declaration Practices
Citizenship – Handbook on Climate-Related Facility Reporting Project Registration, Evaluation, Authorisation
Investing Across Asset Classes and Restriction of Chemical Substances
Global Reporting Initiative
(REACH)
77
resources
Sustainable Energy Finance Initiative – PERFORMANCE – WATER Social Accountability International

Global Trends in Sustainable Energy
McKinsey & Company – The Global SustainAbility – Unchaining Value:
Investment, 2009 Report
Corporate Water Footprint Innovative approaches to sustainable
Triple Bottom Line supply
Pacific Institute
UN Global Compact Verite and CREA – Standards for the
UN CEO Water Mandate
Knowledge and Skills of Social Auditors
U.S. EPA Energy Star
UN Water – Coping with Water Scarcity
PERFORMANCE – TRANSPORTATION AND
PERFORMANCE – CLIMATE CHANGE World Business Council for Sustainable LOGISTICS
Intergovernmental Panel on Climate Development Global Water Tool
Brookings Institute – Pay-As-You-Drive
Change Water Footprint Initiative Auto Insurance: A Simple Way to Reduce
Climate Action Registry Driving-Related Harms and Increase Equity
PERFORMANCE – HUMAN RIGHTS
The Climate Group The California Energy Commission – Low
Business and Human Rights Resource Carbon Fuel Standard
Climate Leaders Centre
Environmental Defense Fund – Corporate
Green Power Partnership United Nations Human Rights – Human Fleet Emissions Survey Report
Rights Translated: A Business Reference
The Prince of Wales Corporate Leaders EPA SmartWay Transport Partnership
Guide
Group on Climate Change
Universal Declaration of Human Rights Forest Ethics
The Stern Review
PERFORMANCE – SUPPLY CHAIN International Council on Clean Energy
United States Climate Action Partnership Transport
US EPA, Inventory of U.S. Greenhouse Gas As You Sow – Unlocking the Power of the
Proxy Natural Resources Defense Council
Emissions and Sinks: 1990 – 2007
Automotive Industry Action Group Union of Concerned Scientists clean
Voluntary Carbon Standard vehicle program
World Wildlife Fund Bearing Point Management and Technology
Consultants – 2008 Supply Chain World Economic Fund Report – Supply
Chain Decarbonization
PERFORMANCE – BUILDINGS
Better Cotton Initiative
BRE Environmental Assessment Method PERFORMANCE – PRODUCTS AND
Business for Social Responsibility SERVICES
(BREEAM)
Ecovadis – Sustainable Procurement: a The 2009 BBMG Conscious Consumer
Building Owners and Managers
Crucial Lever to End the Crisis? Report
Association’s (BOMA) Guide to Writing a
Commercial Real Estate Lease Electronic Industries Code of Conduct Biomimicry Institute
Chicago Green Building Department Electric Utility Industry Sustainable Supply Center for a New American Dream
Chain Alliance
Green Building Initiative Chicago Waste to Profit Network
Ethical Trading Initiative
Green Globes Cone 2009 Consumer Environmental
Extractive Industries Transparency Initiative Survey
Jones Lang LaSalle Green Office Toolkit
Forest Stewardship Council Creative Commons
Rocky Mountain Institute’s (RMI) – Online
Library on Green Buildings Fair Labor Association Federal Trade Commission (FTC) Green
U.S. Green Building Council – LEED Green Suppliers Network Guides
World Business Council for Sustainable McKinsey Quarterly – Increasing the Energy GoodGuide
Development’s (WBSCD) Energy Efficiency Efficiency of Supply Chains Green Xchange
in Buildings project
McKinsey Quarterly – Climate Change and Institute for Environmental Research and
Supply Chain Management Education
Pharmaceutical Supply Chain Initiative International Conference on Engineering
Portal for Responsible Design, 2009 – Development of a
SupplyChainManagement Framework for Assessing Sustainability in
New Product Development
78 Rainforest Alliance
resources
Investor Environmental Health Network CERES REPORTS/PUBLICATIONS

(IEHN)
Ceres 20.20
McDonough Cradle to Cradle Protocol
Investor Network on Climate Risk (INCR)
Scientific Applications International (UPDATE FOR 2010 SUMMIT REPORT
Corporation – Life Cycle Assessment: WHEN AVAIL)
Principles and Practices
Climate Risk Disclosure in SEC Filings:
Sustainability Consortium An Analysis of 10K Reporting by Oil and
Gas, Insurance, Coal, Transportation and
Sustainable Packaging Coalition
Electric Power Companies
U.S. EPA – Design for the Environment
Energy Efficiency and Real Estate:
Partnership Highlights
Opportunities for Investors
World Business Council for Sustainable
Investors Analyze Climate Risks and
Development and IBM – Eco-Patent
Opportunities: A Survey of Asset Managers’
Commons
Practices
World Economic Forum – Sustainability for
From Risk to Opportunity 2008: Insurer
Tomorrow’s Consumer: The Business Case
Responses to Climate Change
for Sustainability
Corporate Governance and Climate Change:
PERFORMANCE – EMPLOYEES Consumer and Technology Companies
Apollo Alliance Murky Waters? Corporate Reporting on
The Aspen Institute – Where Will They Water Risk
Lead? MBA Student Attitudes About
Business & Society, 2008
Blue Green Alliance
Calvert Group – Examining the Cracks in
the Ceiling – A Survey of Corporate Diversity
Practices in the Calvert Social Index
Green America
Green for All
The Labor Network for Sustainability
National Environmental Education
Foundation (NEEF)
Net Impact – New Leaders, New
Perspectives II
79
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Ceres Roadmap For Sustainability

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Ceres Roadmap For Sustainability

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What is the purpose of the document?

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What topics does the document cover?

THE 21ST Advancing Sustainable Prosperity

FEATURING 20 EXPECTATIONS FOR COMPANIES BY 2020

THE GLOBAL CONTEXT FOR

letter from the president

Mindy S. Lubber, President of Ceres

TODAY, CORPORATIONS FACE

thought leader perspectives

“Integrating sustainability is not just a

“Our economic future depends upon

Anne Stausboll, CEO,

Enormous opportunities arise during transformative times. The

KEY DRIVERS OF SUSTAINABILITY

CONNECTIVITY AND COMMUNICATIONS

THE STAKEHOLDER PERSPECTIVE

BUSINESS PARTNERS AND SUPPLIERS

THE INVESTOR PERSPECTIVE

IN THIS ROADMAP, WE PRESENT AN INTEGRATED APPROACH

CERES’ 21ST CENTURY

P1 OPERATIONS facilitate disclosure of suppliers’

governance for sustainability

governance for sustainability

G1: BOARD OVERSIGHT

EXPECTATION The Board of Directors will provide oversight and accountability

How to get there

RECRUIT DIRECTORS WITH DIVERSE BACKGROUNDS MAKE A BOARD COMMITTEE RESPONSIBLE

governance for sustainability

G2: MANAGEMENT ACCOUNTABILITY

EXPECTATION The CEO and company management – from C-Suite executives

How to get there

ENGAGE THE C-SUITE

governance for sustainability

G3: EXECUTIVE COMPENSATION

EXPECTATION Sustainability performance results are a core component of

How to get there

BUILDING SUSTAINABILITY INTO THE BOARD

governance for sustainability

CERES AND GOVERNANCE FOR SUSTAINABILITY

BOARD OVERSIGHT WEIGHT

1 Board has explicit oversight responsibility for environmental affairs/climate change.

STRATEGIC PLANNING AND PERFORMANCE*

governance for sustainability

G4: CORPORATE POLICIES AND MANAGEMENT SYSTEMS

EXPECTATION Companies will embed sustainability considerations into

How to get there

Focus on Human Rights

governance for sustainability

governance for sustainability

G5: PUBLIC POLICY

EXPECTATION Companies will clearly state their position on relevant FPO

How to get there

BUSINESS FOR INNOVATIVE CLIMATE AND

Companies will regularly engage in robust dialogue with stakeholders across

Rising Investor Engagement

S1: FOCUS ENGAGEMENT ACTIVITY

EXPECTATION Companies will systematically identify a diverse group of