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Corporate Sustainability Metrics for Corporate Sustainability Metrics for Flexible Packaging Manufacturers –
G id P i C t Guidance on Preparing Corporate Sustainability Reports
Prepared for the Flexible Packaging Associationp g g
Barbara G. McCutchan, Ph.D.Senior Associate, PTIS
September 30, 2010
PROPRIETARY & CONFIDENTIAL
Summary of PTIS Research on C S i bili f FPACorporate Sustainability for FPA
• External forces demanding transparency• External forces demanding transparency
• Stakeholder goals driving sustainability requests
• Sustainability survey use increasing across value chain
• Response critical to business relationship
• Reporting guidance for most frequently requested• Reporting guidance for most frequently requested information
PROPRIETARY & CONFIDENTIAL
2
Project Deliverablesj
• Map stakeholder corporate sustainability goalsMap stakeholder corporate sustainability goals and requests of suppliers– Brand Owners– Retailers– Investment Firms
• Phone surveys with stakeholders• Develop guidance document
PROPRIETARY & CONFIDENTIAL
3
Value Filter Model Gleans Key Take Aways*Aways*
Develop Deep StakeholderMotivating
FPA DirectionpInsights
Identify Key Metrics & Information Desired
from Suppliers
MotivatingForces
Publicly Stated from Suppliers
Develop Guidance Document on
Sustainability Reporting
yCorporate Supplier
Surveys
Publicly Stated
Growth OpportunitiesVia Best Practices
FPA Environmental
Sub-TeamStakeholder
Phone Surveys
Publicly Stated Corporate Goals
Sub-Team
Inputs = Good Quality Data Converted to Insightful Information
Value Filter =Benefits/Risks
to Business
Outputs =Recommendations
Phone Surveys
PROPRIETARY & CONFIDENTIAL
4
to Business
* from PTIS
MOTIVATING FORCES
Net: The demand for corporate transparency of sustainable business practices across thesustainable business practices across the value chain continues to increase
PROPRIETARY & CONFIDENTIAL
5
Convergence of Forces Affecting P k iPackaging
Extended Producer ResponsibilityCommunity involvement
Emerging middle classEnd of life costs
Extended Producer Responsibility
Bottom of Pyramid
Emerging middle class
Biotechnology Population increase
Cost of energy
Land availabilityGreenhouse Gas Legislation
Biodiversity loss
Litigation risk
Water
Health and safety
Fair tradeLabor practices
Air quality
Peak oil
NGO’s
P fit bilit
Air quality
Greenwashing
Waste to valueConsumer convenience Product safety
PROPRIETARY & CONFIDENTIAL
TransparencyProfitability
Corporate accountability
GreenwashingSocially Responsible Investing
6
Forces Affecting Corporate Metricsg p
• Walmart’s Supplier Sustainability AssessmentWalmart s Supplier Sustainability Assessment (July 2009)
• P&G Supplier Environmental Sustainability• P&G Supplier Environmental Sustainability Scorecard (May 2010)
• Dow Jones Sustainability World Index “DJSI World” (1999)
PROPRIETARY & CONFIDENTIAL
7
Forces Affecting Corporate Metrics(C t)(Cont)
• Value chain alignmentValue chain alignment
– Global Reporting Initiative (GRI) and Carbon Disclosure Project (CDP) (2010)Disclosure Project (CDP) (2010)
• CDP Water Disclosure (new 2010)
• AIM-PROGRESS responsible sourcing forum (2002)
• ISO 26000 Guidance on Social Responsibility (Draft)
PROPRIETARY & CONFIDENTIAL
( a t)
8
Forces Affecting Corporate Metrics(C t)(Cont)
• Product/packaging focusedProduct/packaging focused
– The Sustainability Consortium (2009)
– Global Packaging Project (GPP) (2008) of The Consumer Goods Forum
Net: Disconnect between what should and is done. 88% CEOs say sustainability concerns should be included inCEOs say sustainability concerns should be included in their supply chains (SC); 54% actually do
PROPRIETARY & CONFIDENTIAL
9
The Value Chain: Forces Affecting the Flexible Packaging Industry*
•ConsumerConsumer
Research Organizations
Consultants
g g y
•Disposal / New •Value
•Retailer •Equipment / •Machinery Disposal /
New Value
Retailer
Food Service
Equipment / Machinery
•Brand Owner•Contract •Manufacturer
Food Service
ContractManufacturer
Brand Owner NGOs3PL, 4PL, 5PL
•Converter
•Raw Material Supplier
Converter
Raw Material Supplier
ConverterTrade
AssociationsAcademia
Net: The linear value chain model of the past is now a web of PROPRIETARY & CONFIDENTIAL
10
interconnected stakeholders demanding access to data and business practices to support standardized reporting frameworks
* from PTIS
RESEARCH: MAPPING OF RESEARCH: MAPPING OF SUSTAINABILITY SUPPLIER QUESTIONS AND QUESTIONS AND CORPORATE GOALS, PHONE SURVEYS WITH SURVEYS WITH STAKEHOLDERS
Net: Responding to stakeholder’s request is no longer just a nice thing to do – it is a
PROPRIETARY & CONFIDENTIAL
11
g j grequirement
Framework for Analysis of Stakeholder Sustainability ySurveys and Goals
• Mapping across sustainability dimensions
• Purpose:• Purpose:
– Identify who is asking for information of suppliersinformation of suppliers
– Detect trends
Net: Shareholder greenhouse gas resolutions PROPRIETARY & CONFIDENTIAL
g gup 40% in 2010
12
Tools for Reporting: Standardsp g
• Basis for corporate reporting consistency
– Greenhouse Gas Protocol (from WRI and WBCSD)
– Global Reporting Initiative (GRI) Reporting Framework
• And for packaging reporting consistency
S C ’ (S C) S– Sustainable Packaging Coalition’s (SPC) Sustainable Packaging Indicators and Metrics Framework
Gl b l P k i P j t– Global Packaging Project
Net: Use of standards facilitates comparability amongst ti i ti
PROPRIETARY & CONFIDENTIALreporting organizations
13
Mapping Stakeholder’s S t i bilit S d G lSustainability Surveys and Goals
• Brand Owners Baxter Kraft PepsiCo Sony
R t il
p yHormel McDonald’s P&G TysonJ&J Nestle SC Johnson Unilever
• Retailers
• Investment Firms
Safeway Walmart Walmart Private Brand
• Investment FirmsBloomberg Carbon Disclosure Project Deutsche Bank SAM (i.e. DJSI)Ceres Corp Responsibility Officer JPMorgan
• CollaborationsAIM-PROGRESS The Sustainability Consortium
PROPRIETARY & CONFIDENTIAL
14
Net: 24 Stakeholders assessed for both Metrics and Goals
Brand Owners, Retailers and I t t Fi Ph SInvestment Firms Phone Survey
• 12 phone surveys conducted• 12 phone surveys conducted– 5 “Food”– 4 “Brand Owners”4 Brand Owners– 3 “Investment Firms”
• Survey companiesy pBaxter J&J SC Johnson CeresHAVI Kraft Sony Bloomberg (2)Hormel PepsiCo Unilever
PROPRIETARY & CONFIDENTIAL
15
Stakeholder Phone Surveyy
• Corporate level interviewees, except oneCorporate level interviewees, except one divisional
P ti i t i t i d• Participants interviewed– Global Head or Director or Manager, Sustainability
(8)(8)– Director or Manager, Packaging (2)– Sr. Manager Investor Programsg g– VP, Advanced Research
Net: Targeted those without publicly available supplierPROPRIETARY & CONFIDENTIAL
Net: Targeted those without publicly available supplier questionnaires
16
Research Results
• 86% of Stakeholders ask corporate or project t i bilit ti f lisustainability questions of suppliers
– One is in development
– Another, inquiries depend on situation
• Walmart and P&G surveys are public• Walmart and P&G surveys are public, Bloomberg will soon post theirs on line
Net: Stakeholders are holding their suppliers accountablePROPRIETARY & CONFIDENTIAL
17
Research Results (Continued)( )
• Information: annual or project level• Information: annual or project level– ALL Brand Owners want their specific requested
information directlyinformation directly
“The more privately transmitted the data, the better the data quality“ (Director Sustainability)
– ALL Investment Firms want transparent GRI reporting
“Investors need standard information per GRI with standard units pto facilitate comparison by investors” (Sr. Manager Investor Programs)
PROPRIETARY & CONFIDENTIAL
18
Research Results (Continued)( )
• All groups want supplier’s– Greenhouse gas (GHG) emissions– Energy use
Water use– Water use– Waste generation
• Use global standards if available, i.e. GHG Protocol
Net: Flexible Packaging organizations should be prepared to provide these metrics
PROPRIETARY & CONFIDENTIALto provide these metrics
19
Research Results (Continued)( )
• All groups want:– Risk identification
– Actions to mitigate affect on brand or operations g pcontinuity
“All about reputation” (Director Sustainability)
“Reputation” (Director Sustainability)
“Their actions affect our reputation” (VP, Advanced Research)
Net: Investors are focused on a holistic assessment of their investments, leveraging Triple Bottom Line principles
PROPRIETARY & CONFIDENTIAL
investments, leveraging Triple Bottom Line principles
20
Research Results (Continued)( )
• Information requests of suppliers stem from corporate goalscorporate goals
– Goals of GHG, energy, water, wastes
• Request: GHG emissions, energy use, water use, waste disposal
– Goals of GHG in supply chain zero wastesGoals of GHG in supply chain, zero wastes,
packaging reduction, wood certification• Request: GHG water waste packaging scorecard forest• Request: GHG, water, waste, packaging scorecard, forest
certification
Net: Existing public supplier questionnaires indicate what might PROPRIETARY & CONFIDENTIAL
g p pp q ghappen with other non disclosing stakeholders
21
Research Results (Continued)( )
• Companies work behind scenes with their supplier surveys even if corporate goals are publicly stated
F l t l l i th– For example, corporate goals commonly in the areas of energy use, water use, solid waste, GHG, reduce packagingp g g
– But no publicly available supplier survey• Challenges to research: willingness to share
questions by those askingNet: Supplier sustainability requesting is still in infancy, will
PROPRIETARY & CONFIDENTIALevolve as corporate reporting and issues are clarified
22
Research Results (Continued)( )
• P&G’s scorecard driving standardizationg
– 50% of those without own, mention P&G scorecard“Tailoring our scorecard after P&G’s” (Director Sustainability)Tailoring our scorecard after P&G s (Director Sustainability)
• Harmonization is underway: e.g. AIM-PROGRESSy g– 5 Stakeholders are members
“will reduce audit fatigue” (Director Sustainability)
Net: Public availability of both Walmart’s and P&G’s surveys provide the platform for others to evaluate, improve and/or use
PROPRIETARY & CONFIDENTIAL
23
Research Results (Continued)( )
The Sustainability C ti AIM-PROGRESSConsortium
Safeway P&GP iC
KraftSCJohnsonWalmart
PepsiCoUnilever
Nestle
PROPRIETARY & CONFIDENTIAL
24
Research Results (Continued)Research Results (Continued)
• GHG emissions reported according to• GHG emissions reported according to GHG Protocol
• Beyond GHG, requests vary by stakeholder– Water: withdrawals, use, recycling and reuse,
discharges intensity verificationdischarges, intensity, verification– Wastes: total, non hazardous, hazardous, recycled, generated, to
landfill
Net: GHG protocol created common means for reporting GHG that is lacking in other areas, such as water (the next big focus) and wastes
PROPRIETARY & CONFIDENTIAL
25
Research Results (Continued)( )
• Support or accept compliance with an industry pp p p yassociation’s guideline on corporate sustainability?
– 67% supportive of considering acceptance67% supportive of considering acceptance
“Conceptually would, after scrutinizing” (Manager Packaging)“All via SEDEX” (Director Sustainability)All via SEDEX (Director Sustainability)
• Best practices can be taken across industry segments
“Evaluate the accuracy of the meters” (Director Sustainability)
Net: Align FPA guidance with specific stakeholdersPROPRIETARY & CONFIDENTIAL
Net: Align FPA guidance with specific stakeholdersrequests, a moving target as stakeholders definetheir expectations
26
Research Results (Continued)( )
• Responding to inquiries a condition for business– Reputation a key driver– Importance of responding (Rating: 10 extremely, 1 least)
10 25 f F d• 10.25 for Food• 9.25 for Brand Owners• 9.5 for Investment Firms
“If not getting the information, then shift the business” (Director Sustainability)y)
“They won’t get our contracts” (Director Sustainability)
“We view suppliers as long term partners” (VP Advanced Research)PROPRIETARY & CONFIDENTIAL
We view suppliers as long term partners (VP Advanced Research)
27
Key Findings from Researchy g
• Most asking suppliers for annual or project based data• All groups seek supplier’s:
– GHG, Energy, Water, Waste– Risk management
• Harmonization is underway– Most would consider industry association’s guideline
• Responding to inquiries a condition for businessResponding to inquiries a condition for business
Net: Responding to stakeholder’s request is no longer just a nice thing to do – it is a requirement
PROPRIETARY & CONFIDENTIAL
a nice thing to do – it is a requirement
28
GUIDANCE ON PREPARING GU NC ON NG CORPORATE SUSTAINABILITY REPORTSREPORTS
Net: Begin measuring and reporting to assess opportunities and financial benefits to reducing
PROPRIETARY & CONFIDENTIAL
29
pp genvironmental impacts
Guidance on Preparing Corporate S t i bilit R tSustainability Reports
• Purpose– Show how to calculate metrics– Provide definitions, best practices and references
• Audience – Your team member(s) tasked with metrics reporting ( ) p g
and external relations
• Based on direction/inputp– FPA Environmental Sub-team– External benchmarking
PROPRIETARY & CONFIDENTIAL– Phone surveys30
Guidance Document Content
• AddressesAddresses– Greenhouse gas emissions
– Energy use
– Water useWater use
– Waste generated
– Additional considerations
PROPRIETARY & CONFIDENTIAL
31
Guidance Document
• Assessment of critical issues that shouldAssessment of critical issues that should be addressed in sustainability reporting
• Stakeholder engagement and internal• Stakeholder engagement and internal assessment against GRI criteria are suggestedsuggested
PROPRIETARY & CONFIDENTIAL
32
Guidance Document Process
• Theoretical packaging facility providedTheoretical packaging facility provided
• Typical stakeholder questions provided
• Definitions stated
• Example calculations made for facility• Example calculations made for facility
• Best practices and references given
PROPRIETARY & CONFIDENTIAL
33
RT
Solvent Laden
Raw Material
O
Boiler P t
Laden Air
Water
Parts Washer
Wat
Lam
Ink P
Ink P
Supply
Product
er Ink Press
inator
Press (Steam)
Press Nat G
as
Electrical
Natural Gas Solid Waste
Haz Waste
PROPRIETARY & CONFIDENTIAL
34
Theoretical Flexible Packaging Facility
GHG Emissions, As an Example, p
• The following are calculated– Scope 1 (Direct)
• Natural gas combustion
• VOC combustion
• LPG from forklift use
F iti i i f f i t SF• Fugitive emissions from refrigerants, SF6
– Scope 2 from purchased electricity (Indirect)
S 3 ( h I di i i )– Scope 3 (other Indirect emissions)
– Applicability to the EPA Reporting Rule and EPA Tailoring Rule
PROPRIETARY & CONFIDENTIALTailoring Rule
35
GHG Protocol Emission Types
PROPRIETARY & CONFIDENTIAL
36From Business Performance Solutions (www.bpslink.com)
Table 1 to Show What Is Calculated
Emission Type Description Annual Actual (Metric tons CO2e)
Potential to Emit (short tons CO2e)
Scope 1 Direct Stationary combustion
851.94 5,124.75combustion
Scope 1 Direct Chemical processing 226.80 833.33
Scope 1 Direct Mobile combustion 28.84 N/A
Scope 1 Direct Fugitive Sources 53 07 N/AScope 1 Direct Fugitive Sources 53.07 N/A
Scope 1 Total 1,160.65Scope 2 Indirect from Electricity 1,958.90 N/A
Scope 3 Other Indirect Emissions Not reported N/Ap p
Total Reporting GHG 3,119.55 N/AEPA Reporting Rule Direct Stationary Fuel
Combustion 851.94 N/A
EPA Tailoring Rule Stationary Combustion of N/A 5,958.08a o g u e Stat o a y Co bust o oNatural Gas and VOCs
/ 5,958 08
Energy use total 34,510.14 GJPurchased Energy 17,100 GJ
PROPRIETARY & CONFIDENTIAL
37
Generated Energy 17,410.14 GJWater Intake 757.08 m3
Waste to Landfill 20.41 tonnesHazardous wastes 2.49 tonnes
What’s Next?
• The Guidance Document, a “living document”
– EPA GHG rules may change, Scope 3 GHG are not yet issued, Stakeholder changes
• Expect to see the PTIS written project report and Guidance Document this fall
• Begin assessments of your performance
• Start metering/recording
• Consider engaging your stakeholders with yourPROPRIETARY & CONFIDENTIAL
Consider engaging your stakeholders with your assessments
38
Summaryy
• Stakeholders interested in your operating processes
• GHGs, energy, water and wastes are primaryGHGs, energy, water and wastes are primary metrics
• Evaluate risks to business continuity or• Evaluate risks to business continuity or stakeholder’s brand
• Get prepared to engage annually
• Use the Guidance DocumentPROPRIETARY & CONFIDENTIAL
39
Appreciation Extendedpp
• FPA Environmental Sub-Team: – Bernie Medwith, Exopack– Howard Hofmeister, Bemis Company– Dave Ellison, Amcor Flexibles– Todd Wiederhold, Printpack Inc
D Willi S l d Ai C ti– Dan Williams, Sealed Air Corporation
PROPRIETARY & CONFIDENTIAL
40
Appreciation Extendedpp
• Task Force: – Dave Ellison, Amcor Flexibles– Sal Pellingra, Ampac Packaging
Howard Hofmeister Bemis Company– Howard Hofmeister, Bemis Company– Mark Montsinger, Bryce Corporation– Jeff Wooster Dow Chemical CompanyJeff Wooster, Dow Chemical Company– Shanna Moore, Dupont Company– Bernie Medwith, Paul Kearns & Lani Craddock, Exopackp– Todd Wiederhold, Printpack Inc– Ron Cotterman & Dan Williams, Sealed Air Corporation
PROPRIETARY & CONFIDENTIAL
41
CONTACT:
Barbara G. McCutchan, Ph.D.Packaging & Technology Integrated Solutions LLCPackaging & Technology Integrated Solutions, LLCPO Box 408Shelbyville, MI 49344 USAPhone: 203-912-1976Fax: 269 353 4716Fax: 269-353-4716E-mail: [email protected] Site: www.ptisglobal.com
“PTIS Addi V l Th h P k i ”PTIS™ is the one-stop full service packaging solution center for all
your technical and management challenges. We know consumer, channel and technology trends and marketplace insights. PTIS can
“PTIS – Adding Value Through Packaging”
help you make the right decisions because we have the right information and knowledge and the best resources available
across the packaging value chain.
PROPRIETARY & CONFIDENTIAL
42