MIM 521/ BA 548 Evaluating and Measuring the Sustainability Performance for Global Organizations

1. MIM 521/ BA 548Evaluating and Measuring the Sustainability Performance for Global Organizations Reporting and Assurance, Examples Day 6, July 12

2. http://trasi.foundationcenter.org/browse_toolkit.php

3. Some assurance examples in here • Nike • Committee • Scottish Power two tomorrows • Caterpillar fluffy • Rio Tinto assurance report

4. Supplier Sustainability Assessment • Wal-Mart • Packaging Checklist • Sustainability Questionnaire

5. The 7 R’s of Sustainable Packaging: • The primary goal of the Packaging Sustainable Value Network is to be packaging neutral by 2025—all packaging recovered or recycled at our stores and Clubs will be equal to the amount of packaging used by the products on our shelves. • Remove: Eliminate unnecessary packaging, boxes or layers, and harmful materials. • Reduce: “Right-size” packages, optimize material strength, and design appropriately. • Reuse: All transport packaging will be reused or recycled through improved pallets and reusable plastic containers (RPCs). • Renew (able): Use materials renewable as measured using ASTM D6866, or select biodegradable materials that meet ASTM D6400 or ASTM D6868. • Recycle (able): Highest recycled content without compromising quality, including post-consumer recycled material (PCR) where appropriate. Components should be chosen based on recycle-ability post-use. • Revenue: Achieve principles at cost parity / savings; requires a supply chain approach. • Read: Get educated on sustainability and how suppliers play a part.

6. Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions • 1. Have you measured your corporate greenhouse gas emissions? • 2. Have you opted to report your greenhouse gas emissions to the CDP? • 3. What is your total annual greenhouse gas emissions reported in the most recent year? • 4. Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets? • Material Efficiency: Reducing Waste and Enhancing Quality • 1. If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Walmart for the most recent year measured. • 2. Have you set publicly available solid waste reduction targets? If yes, what are those targets? • 3. If measured, please report total water use from facilities that produce your product(s) for Walmart for the most recent year measured. • 4. Have you set publicly available water use reduction targets? If yes, what are those targets? • Natural Resources: Producing High Quality, Responsibly Sourced Raw Materials • 1. Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety? • 2. Have you obtained 3rd party certifications for any of the products that you sell to Walmart? • People and Community: Ensuring Responsible and Ethical Production • 1. Do you know the location of 100 percent of the facilities that produce your product(s)? • 2. Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of, and capacity for, production? • 3. Do you have a process for managing social compliance at the manufacturing level? • 4. Do you work with your supply base to resolve issues found during social compliance • evaluations and also document specific corrections and improvements? • 5. Do you invest in community development activities in the markets you source from and/or operate within?

7. People & Community section results are 20% of your overall assessment. Question 11: Do you know the location of 100% of the facilities that produce your product(s)? (Y/N) 40% Question 12: Before beginning a business relationship with a manufacturing facility, do you evaluate their quality of production and capacity for production? (Y/N) 15% Question 13: Do you have a process for managing social compliance at the manufacturing level? (Y/N) 25% Question 14: Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements? (Y/N) 15% Question 15: Do you invest in community development activities in the markets you source from and/or operate within? (Y/N) 5% Below Target (0% - 64%) Limited transparency into production practices and not addressing social impacts On Target (65% - 99%) Supply chain transparency with full visibility to all first-tier factories and subcontractors; addressing social impacts Above Target (100%) Full transparency to entire supply chain; actively addressing social impacts, and investing in community development

8. How will this information be used? • Walmart wants to better understand the practices of its suppliers. This helps us keep our promise to our customers of delivering great products that will help them save money and live better. We see our suppliers as partners in this endeavor, and this is a tool to help reinforce and advance those partnerships. Any absolute numbers provided in your answers will NOT be used for comparison to other suppliers unless explicitly stated. • We understand that there are many variables inherent in measuring energy use, greenhouse gas emissions, waste and water use, and in absence of common, transparent rules or protocols, one number cannot be legitimately compared with another. • Despite these complications, in the future we do intend to reward those suppliers who have measured impacts and show progress toward meeting stated reduction goals.

9. Tools from finance • Innovest (RiskMetrics, now MSCI as of June) • Sector overview • Secondary research • Primary research • Complete rating model • Prepare report (Novo 2005) • Sustainable Asset Management • Dow Jones Sustainability Index • Assurance

10. Intangible value assessment • Strategic governance— Strategy, strategic capability and adaptability, traditional governance concerns, intellectual capital/product development, product safety • Human capital— Employee motivation & development, labor relations, health & safety • Stakeholder capital— Strategy, customer/stakeholder partnerships, local communities, supply chain, human rights/child & forced labor, oppressive regimes • Environment— 17 issues, including: operating risks, certification, environmental performance, risk factors, environmental auditing systems…etc.

11. Life cycle analysis • LCA—the nuke/holy grail of environmental measurement for business • Intuitively, a summation of all environmental inputs and outputs related to the entire life of a product (process, business, whatever) • Practically, data-intensive summation of chosen environmental inputs and outputs within a chosen temporal and spatial boundary related to a product • Compare to Genuine Metrics

12. Definition—Life cycle assessment • Systematic approach to manage potential environmental impacts of product and service systems • Build a quantitative inventory of environmental burdens or releases (life cycle analysis), evaluate their potential impacts, and consider alternatives to interpret the results or improve environmental performance (life cycle assessment)

13. LCA process • Define aims, product system, scope • Inventory analysis • Extractions and emissions are quantified and related to product function (miles travelled, people housed, etc) • Impact assessment • Environmental relevance • Aggregation into relevant issues • Interpretation • Compare with the goal of the study

14. Core principles—per ISO • Life cycle perspective • Environmental focus • Relative approach around a functional unit • Iterative approach • Transparency • Comprehensiveness • Natural environment and resources, human health • Scientific approach • adapted from Fava (2005)

15. Drivers to do LCA • Companies are taking action • Customers want to know • Capture cost savings • Evolving regulations • adapted from Deloitte, 2009

16. Benefits of LCA • Innovation • Cost savings • Internal alignment • Regulatory preparedness • Corporate reputation • Risk reduction • adapted from Deloitte, 2009

17. ½ gallon = 3.75 # CO2e Tropicana, from the New York Times

18. LCA tools, reports, and sundry items • Patagonia—The Footprint Chronicles • Sustainability Consortium—the ultimate consumer-based sustainability measures (not an Index) • Proctor and Gamble’s carbon scorecard

19. Difficulty • No standard • ISO exists for guidance • Lots of room for variability • system boundaries, valuation techniques, underlying assumptions • False precision • Datasets are lacking and variable • LCA lite v. full-bore LCA • boundaries, environmental scope, data precision • adapted from Deloitte, 2009