The Triple Bottom Line of Business

1. The Triple Bottom Lineof Business Joe Kresse Steve Attinger San Jose State University December 2, 2003

2. Agenda • History of “Sustainability” and the“Triple Bottom Line” • CERES and GRI • Models for Sustainability • The Triple Bottom Line Business Case • Sustainability Ladder • Case Examples

3. History of Sustainability • 1962: Rachel Carson publishes “Silent Spring” • 1970: • First Earth Day celebration – April 22nd • Nixon establishes EPA • Fueled by industrialization and overpopulationimpacts • 1972: First UN conference on the Human Environment in Stockholm, Sweden

4. History of Sustainability • 1983 – UN establishes World Commissionon Environment and Development • Purpose: examine world’s critical environment and development problems and formulate solutions • 1987: Brundtland Commission Report • 3 components of Sustainable Development:Environmental protection, Economic growth,and Social equity • Defined Sustainable Development as… “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

5. History of Sustainability • 1992: Rio Earth Summit • Over 178 governments adopted… • Agenda 21: a global blueprint and plan of action for sustainable development in the 21st century • The Rio Declaration on Environment and Development • 27 principles that express the rights and responsibilities of nations as they pursue human development and well-being • The Forest Principles • A guide for the management, conservation, and sustainable development of all types of forests • 2002: Third UN conference on Environment and Development, Johannesburg, South Africa

6. The Triple Bottom Line • People, planet, and profits • Equity, environment, economy • TBL coined by John Elkington of “SustainAbility” (UK) in 1995 • Cannibals With Forks: The Triple Bottom Line of 21st Century Business (1997) • The Chrysalis Economy: How Citizen CEOs and their Corporations Can Fuse Values and Value Creation (2001) • www.sustainability.com

7. CERES • Coalition for Environmentally Responsible Economies (1989) • 10 principles for environmental management • Endorsing companies • American Airlines, B of A, Ben & Jerry's,Coca-Cola, Fleet Boston Financial, Ford, GM, Interface, Nike, Polaroid, The Timberland Co., and others • Launched Global Reporting Initiative (1997) • www.ceres.org

8. The CERES Principles • Protection of the Biosphere • Sustainable Use of Natural Resources • Reduction and Disposal of Wastes • Energy Conservation • Risk Reduction • Safe Products and Services • Environmental Restoration • Informing the Public • Management Commitment • Audits and Reports

9. GRI • Global Reporting Initiative (1997) • Voluntary globally applicable sustainability reporting guidelines • 341 organizations in 31 countries • Europe vs. US • www.globalreporting.org

10. Reports per Year

11. Type of Reports in 2002

12. Reports per Country

13. Models for Sustainability • The Natural Step www.naturalstep.org • 4 system conditions • McDonough Principles www.mbdc.com • Cradle-to-cradle design • Waste = Food • Natural Capitalism www.natcap.org/ • Radically increase resource productivity • Redesign industry on biological models with closed loops and zero waste • Shift from products to services • Reinvest in natural capital

14. The TBL Business Case • Short-term cost reduction • Energy efficiency and waste reduction • Longer-term return on investment • Investment in building improvements • Value creation - Existing markets • Value creation - New markets

15. Sustainability Ladder • Products and services • Processes • Business model • Company focus • Brand identity of company • Supplier web and value chain • Industry leadership and advocacy role

16. Dupont BP Shell Agilent HP Interface Nike Chaparral Steel Company Johnson & Johnson IdleAire Technology Corp. Lighting Components and Design Inc. Case Examples

17. Dupont An international corporation that manufactures healthcare products, electronics and other goods • Developed a “sustainable growth” mission • Reduced consumption of raw materials and energy • Used scientific and technical knowledge to create more environmentally-friendly products • Engaged stakeholders of the corporation • Created a “Carpet Reclamation Program” where they have reclaimed and recycled 90 million pounds of carpet • By combining the recycling and sorting process in one location, Dupont has vastly reduced both energy consumption and costs Source: The BSD Global website http://www.bsdglobal.com/viewcasestudy.asp?id=123

18. HP • Packaging Initiative • Lighter paperboard sleeve for ink cartridges • Reduced packaging weight by 34%, reducing costs by more than $700,000 a year • Reusable transit packaging for inkjet cartridges • Reduced waste by 2,400 tonnes in 2002, saving $1.5M • Bulk packaging for desktop computers • Reduced waste by 86%, saving $1.1M in 2002 • Expected savings of $4M in 2003 http://www.hp.com/hpinfo/globalcitizenship/gcreport/products/packaging.html

19. Interface Corporation • The largest commercial carpet manufacturer in the world • Vision: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits — by 2020 — and in doing so we will become restorative through the power of influence. www.interfaceinc.com

20. Interface Corporation The Seven Steps • Eliminate Waste — QUEST program • Benign Emissions —Elimination of molecular waste • Renewable Energy —Reducing overall usage; transitioning to renewables • Closing the Loop — Creating cyclical material flows. • Resource Efficient Transportation — Reducing movement of products/people in favor of data, e.g. plant location, video-conferencing, telecommuting • Sensitivity Hookup — A community within and around Interface that understands natural systems and our impact on them. • Redesign Commerce — Providing services rather than products

21. Nike • Created a “Transparency 101” Program, which ensures public awareness of Nike’s business practices • Transparency 101 also monitors its factories in each country to make sure its practices follow Nike’s code of conduct • Nike is phasing out the use of PVC and other harmful chemicals in its products through work with William McDonough • Created the “Reuse a Shoe”, a program that recycles shoes • Uses organic cotton in some of their clothing • Has certified its Oregon buildings in an effort to decrease energy use Source: The BSD Global website. http://www.bsdglobal.com/viewcasestudy.asp?id=81

22. Chaparral Steel Company Produces bar and structural steel products by recycling scrap steel • Created Systems and Technology for Advanced Recycling (STAR) • Collaborated with neighboring cement plant • Business opportunities for this technology in emission credit trading • Built advanced Automobile Shredder Residue (ASR) system • Plastics can be used as a clean, efficient fuel source. • Sale of clean plastics alone generates up to $500,000 a year. • Looking to market ASR for mining and selling of clean plastics (waste) rather than sending them to landfills Source: The BSD Global website http://www.bsdglobal.com/viewcasestudy.asp?id=51

23. Chaparral Recycling Facility

24. Johnson & Johnson • Has made a major effort to be more energy efficient by reviewing the usage of all aspects of its buildings (lights, fans, motors, etc.) • Received 1995 Green Lights Partner of the Year Award for large corporations • Received 1996 Sustained Excellence Award for completing and maintaining lighting upgrades for more than 94% of its workspace • Involved in a variety of different programs, including “ClimateWise”, “Energy Star Buildings”, and “Energy Star Computers” Source: The BSD Global website http://www.bsdglobal.com/viewcasestudy.asp?id=76

25. IdleAire Technology Corp. • 1.3 million long-haul trucks in US waste 4.4B gals. of diesel annually when drivers leave engines idling when resting. • Represents 2.6 % of all imported oil • IdleAire created a technology that allows trucks to heat and cool their cabs without idling their engines, thereby reducing the amount of fuel used and emissions released • IdleAire installs individual heat and air units above parking spaces at truck stops, charging $10 for 8 hours of service • Truck owners also save as much as 40% on fuel costs Source: Green Gazelles website http://www.geocities.com/greengazelles/new.html

26. Lighting Components and Design Inc. Engineering company that manufactures miniature lighting components • Created cross-functional team to create a template of energy efficiency improvements • Improved insulation of its facilities • Upgraded lighting to fluorescent lamps, including electronic ballasts • Upgraded HVAC system to reduce energy • Installed low-flow toilets and water-saving taps • Upgraded over 24 pieces of motorized manufacturing equipment with energy-efficient motors • Winner of the EnergyStar 2002 Small Business and Congregations Award • Result? Prevented over 300,000 pounds of CO2 emissions and saved $10,300 on utility bills per year Source: EnergyStar website http://208.254.22.7/index.cfm?c=sb_success.sb_2002winners#lighting

27. Thank you Q & A

28. GRI 2002 Guidelines - Summary

29. Committing to Sustainability