Corporate sustainability S-DSS-10-Pike-Research

Developing a Sustainability Strategy Corporate Motivations, Program Design, Planning and Execution, Focus Areas, and Case Studies Published 1Q 2010

Charul Vyas Industry Analyst Clint Wheelock Managing Director

Developing a Sustainability Strategy

Section 1 EXECUTIVE SUMMARY Regardless of size, companies are feeling the pressure from employees, customers, and the market to develop a corporate sustainability strategy and act in an environmentally responsible manner. Doing so in an effective manner is not an easy task. According to a 2008 survey conducted by the Vandiver Group, less than 50% of companies have a sustainability strategy. At the same time, businesses of all sizes recognize the importance of sustainability; 70% of survey respondents felt that sustainability is important or would become important. In a 2009 survey by Crowe Horwath LLP and the Center for Business Excellence at the Farmer School of Business at Miami University, only 40% of executives rated their own corporate sustainability efforts as “excellent” or “very good.” Moving forward with a sustainability plan is often easier said than done. A company looking to implement environmentally responsible practices for the first time faces a number of challenges: determining exactly how to approach sustainability, setting goals and priorities, and measuring results, just to name a few. Companies that are considering formalizing a sustainability strategy must grapple with the additional challenges of limited resources and lack of support. Furthermore, costs are often associated with initial sustainability rollouts, or other activities may take priority over the task of sustainability planning. For companies without a clearly defined sustainable strategy, the time to act is now. As Figure 1.1 shows, companies have several reasons for developing their sustainability strategies. Figure 1.1

Reasons for Implementing a Corporate Sustainability Plan

(Source: Pike Research)

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Developing a Sustainability Strategy In tight economic times, one of the primary drivers for companies to implement sustainability plans is to find ways to cut costs. This can take a variety of forms including looking for ways to consume less and waste less, or to curb electricity consumption. In some regions, governmental regulations for businesses are increasingly strict. In other areas, the pressure to be more environmentally conscience comes from a firm’s customers, stakeholders, or employees. Lastly, a desire exists to “do the right thing” and ensure that a business is a good corporate citizen. As more companies step forward with hard data and concrete measurements related to their sustainability efforts, other firms are realizing that environmental responsibility and corporate growth are not mutually exclusive. As a company works to define its own sustainability strategy, it is important to realize that one size does not fit all. The efforts a company undertakes will need to be tailored to the individual business and its needs, customers, employees, and other stakeholders. This report explores the key steps in designing a sustainability plan, corporate sustainability approaches, and other areas of consideration. It also provides an overview of how some companies have approached their own sustainability planning, and considerations for the future.

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Developing a Sustainability Strategy

Section 2 CREATING A SUSTAINABILITY STRATEGY Each company is different, and approaches to environmental responsibility must be tailored to the individual needs of the business as well as its employees, customers, and stakeholders. Regardless of the business or industry, some commonalities exist for approaching the development of a sustainability plan. Figure 2.1 highlights the key steps in developing a corporate sustainability strategy. Figure 2.1

Designing a Sustainability Strategy

(Source: Pike Research)

2.1

The Starting Point: Executive Buy-In While employees may support environmentally responsible practices, businesses will find it difficult to make inroads into sustainability without buy-in from the various levels of its executive management. Therefore, the starting point for any successful sustainability plan is having support from top management. Executive support for sustainability initiatives will likely equate to resources (money and/or time) to pursue activities related to environmental responsibility, and increased employee engagement as employees take their cues from management.

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Developing a Sustainability Strategy For some companies, this is a simple process if key executives are already aware of the importance of environmental responsibility, or if a culture of environmental responsibility already exists. For others, a little more effort is required in order to convince executives of the importance of sustainable business practices. For those companies whose executives have reservations about environmental responsibility, pointing out cost savings, brand impact, and customer demands can help convince them of the need to take action now.

2.2

Establishing a Sustainability Committee and Developing High-Level Priorities Sustainability initiatives should not be a top-down type of process dictated by high-level executives, but top-level management is often involved in the next step of the process. Many companies with successful sustainability efforts have found it useful to establish a governing board or sustainability committee. These sustainability committees are typically made up of high-level executives and managers from multiple divisions. Large companies commonly involve managers from various regional offices and divisions to ensure that opportunities are being addressed at every level. These committees then take on the task of establishing the high-level sustainability focus areas and shaping the sustainability strategy. The majority of activities the company pursues will be centered on these priorities. This is also the time to consider any upcoming customer requirements and/or government mandates that the company will be required to meet in the short to medium term and to incorporate into the sustainability focus areas. Some companies have also found it useful to approach sustainability by appointing a sustainability officer and/or setting up a sustainability office. These individuals typically dedicate all or of most of their time to ensuring that planned projects match up to the sustainability strategy the company decided upon, building consensus for activities, and coordinating the gathering of data and information. They are also often charged with communicating priorities, acting as a resource for other groups within the firm, and gathering feedback from employees about environmentally responsible practices in which the company is engaged.

2.3

Outlining Specific Projects and Execution Once a company has established its sustainability priorities, it is important to identify specific activities that will be pursued. Activities and projects are as individual as the business itself, but some common areas of consideration are discussed in the following section. It is also important to tie the specific activities back to the high-level sustainability goals outlined by the company’s sustainability committee or team. The next step is focused on execution; the company now determines what projects are worth pursuing in the near term, and which projects can be tabled for the immediate future. This determination can be based on return on investment (ROI) or on what projects are easiest to implement. In today’s tough economic environment, some companies have requirements that ROI must be demonstrated within a certain amount of time. However, other firms may choose to move forward with a project if the environmental impact will be significant, even if the ROI is not immediately known or quantifiable, or if government regulation or customer demands mandate it. At this time, it is also common for companies to consider publishing their first corporate sustainability report (CSR). A company must first decide if a formal CSR is in order, and if so, how often such a report should be published and updated. Some companies will publish or update a report on a yearly basis, while others choose every other year as their

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Developing a Sustainability Strategy method of reporting. The first CSR a firm publishes often begins by explaining the individual focus areas as well as accomplishments, detailing progress made to date. Even companies new to sustainability have probably been active to some extent in the space, even if their activities have not been formalized, so the CSR provides a method to make these activities known. Measurements are also becoming a key element in corporate sustainability planning and strategies. Measurements are useful because they provide quantifiable data on activities, and clearly show the company’s progress or its shortcomings. In today’s environment, when consumers are skeptical that companies are “greenwashing” their activities, measurements provide clear evidence that the company is “walking the walk.” Finally, correlating sustainable business practices and the impact on the bottom line can help a company win over naysayers or those who believe employing environmentally responsible practices are unnecessary.

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Developing a Sustainability Strategy

Section 3 SUSTAINABILITY AREAS TO CONSIDER After a company has decided to move forward with a sustainability plan, one of the major considerations is determining what areas will comprise the core sustainability pillars. Of course, this will depend a great deal on the industry and type of business in which the company is involved. Examining the business and how it consumes resources is a good first step. For example, a technology services company may be able to have a significant impact if it focuses on its employees (decreasing business travel, encouraging use of public transportation, or allowing for telecommuting) and purchasing energy efficient office equipment. A manufacturing company may have a greater bearing on the environment if it retrofits its factories or looks for ways to curb wastewater. Figure 3.1 outlines the various approaches, methods of measurement, and elements for companies to consider as they detail their sustainability strategies.

Figure 3.1

Sustainability Approaches and Focus Areas

(Source: Pike Research)

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Developing a Sustainability Strategy 3.1

Approaches Some companies approach sustainability by looking at the triple bottom line. The triple bottom line is a process in which a company evaluates its success, decisions, and goals based on the impact on the environment, society, and the economics of the company. The business goals of the company are tied into long-term impacts on the environment and society, and the traditional reporting structure is expanded beyond financial considerations to incorporate environmental and social impacts. Companies that take this approach often work to implement business practices that benefit employees, laborers, and the community in which they operate along with environmental considerations. Other companies decide to base their sustainability plans on the waste hierarchy, which refers to the 3Rs: reduce, reuse, and recycle. This strategy focuses on decreasing consumption of resources, energy, and materials in the manufacturing process, diverting material from landfills by reusing or remanufacturing items, and recycling material after its initial use. Still other companies take a less structured approach to corporate sustainability. In some cases, this involves tackling projects that have the most impact on the environment or the bottom line, or the activities that are the easiest to execute at the present time.

3.2

Starting Point for Measurements: Carbon Footprinting and Life Cycle Analysis A high-level goal for many companies is to reduce the amount of carbon dioxide (CO2) and greenhouse gases (GHGs) they produce. Therefore, many businesses find that measuring their carbon footprint and conducting a life cycle analysis (LCA) is a starting point for their sustainability efforts. A carbon footprint measures the amount of GHGs emitted by an organization or product. Measuring a business’s carbon footprint allows the company to establish a baseline reading of consumption and waste. This basic information allows a business to develop realistic, but attainable goals for the short, medium, and long terms. At first, companies focus on reducing their direct carbon footprint and the impact they themselves have on the environment. Over time, they may also look to reduce their indirect impact, areas in which their impact is based on the supply chain or their customer’s activities. Some firms also conduct a LCA, which evaluates the environmental and social impact of a business or product. This type of comprehensive and holistic assessment looks at the entire “life” of a product, from raw materials to disposal/end of life. In addition, a LCA can help a business assess the amount of GHGs emitted, toxic substances and pollutants created, and the amount of land and fossil fuels depleted. Having a LCA is also useful when businesses evaluate the impact of certain changes to products. Some non-profits and many businesses will help companies determine the carbon footprint of the organization or product line and assist with conducting a LCA. Software is also available to help companies track their GHG emissions and changes in the life cycle of the firm or products. After establishing a baseline, a company can see how it stacks up against others in the same industry, discovering areas where they excel as well as areas needing additional improvements.

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Developing a Sustainability Strategy 3.3

Elements to Consider Aside from measuring GHGs and conducting a LCA, companies often look at several other ways they can positively impact the environment. By examining what the company produces, businesses can institute specific programs that cut down on packaging, reduce fuel consumption by implementing more efficient fleet management systems, or enable the “greening” of data centers. Other broader areas include examining ways to decrease energy usage, constructing more energy efficient buildings, reducing the consumption of water, and reducing the amount of toxins used or produced.

3.3.1

Energy Use Energy costs are expected to rise in the coming years and into the foreseeable future, so finding ways to curb energy consumption is a hot topic for many businesses. Those with their own buildings can improve lighting and HVAC systems or install more metering systems, more efficient boilers, or solar panels. Even businesses that lease office space can achieve cuts in their electricity consumption by utilizing power strips to turn off idle office equipment at night, and by investing in more energy efficient equipment. Improvements can be made within factory settings if companies invest in more efficient production equipment or storage processes, such as refrigeration. Many businesses will also consider the option of purchasing green energy if offered by their utility, sometimes even if a small increase in price is incurred.

3.3.2

Green and LEED Certified Buildings Developed by the U.S. Green Building Council (USGBC), the Leadership in Energy and Environmental Design (LEED) program is an internationally recognized green building certification system. LEED certified buildings have less impact on the environment, make more efficient use of energy and water, and improve indoor air quality. Businesses that need additional space can consider building facilities that meet LEED certification, or consider adding as many elements of sustainable building practices as possible to new construction. Those with older buildings can factor in green building practices when remodeling or retrofitting existing buildings.

3.3.3

Water and Wastewater Business not building new facilities can alter existing facilities to reduce water consumption. For example, low flow toilets and faucets can be installed in office buildings and factories as well as rainwater collection systems. In the factory setting, companies can explore ways to reuse “grey water” and reuse water consumed in the production process. In addition, external water usage should also be considered. By investing in more efficient irrigation systems and installing native plants or xeriscaped landscaping, a business may be able to significantly curb water usage.

3.3.4

Toxins and Other Pollutants Companies involved in the production of goods may also choose to tackle the problem of toxic chemicals or contaminants. On this front, companies can work to reduce or eliminate toxins in raw materials and/or the number and amount of toxins created in the production process. For some companies, toxins are created as a by-product or are emitted from the products themselves. To address this issue, companies may choose to use less toxic chemicals in the production process, or to redesign manufacturing processes so that fewer toxins are produced and emitted.

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Developing a Sustainability Strategy

Section 4 INTERNAL, EXTERNAL, AND COMMUNITY EFFORTS Sustainability efforts cannot be executed in a vacuum. In order for sustainability initiatives to reach their full potential, it is important for companies to involve their employees at all levels, and communicate the company’s activities to external stakeholders.

4.1

Internal Sustainability Efforts As previously mentioned in this report, having executive buy-in and high-level management that openly discusses the benefits of sustainability programs can help companies raise the bar of employee awareness and involvement. But executives can only do so much; in order for environmentally responsible business practices to meet their full potential, all employees must be engaged. The first part of employee education involves explaining the meaning of sustainability, the company’s chosen areas of focus, and why these focus areas were chosen. Employees who understand their company’s sustainability initiatives are more likely to approach managers with ideas and prospective projects, which can aide sustainability efforts in ways not previously considered. Therefore, it is important to provide employees with a way to offer feedback and suggestions. To further engage employees, some companies also offer incentives for departments or offices that find creative ways to save money and benefit the environment. Some companies also find it useful to help employees do their own part to aid the environment by educating them, and providing incentives for making sustainable lifestyle choices. Today, companies are using numerous methods to communicate sustainability goals including company newsletters, the internet and intranet, and internal meetings and guest speakers who lecture on environmental responsibility. These steps help companies create a culture of sustainability.

4.2

External and Community Sustainability Efforts It is equally important to be open about sustainability efforts when communicating with other stakeholders, such as investors and customers. Today, firms are using the internet to spread the word about what their companies are doing in regard to environmental responsibility. As efforts expand, it is also possible to utilize other communication medium, such as podcasts, user conferences, and social media. Discussing sustainability initiatives outside the firm provides companies with the ability to educate other ecosystem players and extol the benefits of sustainability efforts. It is likely that as a company opens up a dialog about its sustainability program, it will receive feedback from its external audience. This will allow a business to better understand customer needs and wants, and discuss ways it is addressing these requests. Companies new to sustainability should also look for areas in which they can collaborate with community groups, and for partnerships that will benefit the company and the organization. For example, some firms provide grants to local non-profit organizations whose goals are in tune with the company’s core sustainability pillars, while others donate a portion of sales to an environmental group.

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Developing a Sustainability Strategy

Section 5 CASE STUDIES As discussed earlier in this report, developing and executing a sustainability strategy is not a “cookie cutter” exercise. The issues related to developing a sustainability plan are often as varied as the companies that implement them. In this section, Pike Research provides three case studies of companies that are developing, or have recently formalized, their corporate social responsibility strategies.

5.1

Research In Motion Limited Founded in 1984 and based in Waterloo, Ontario, Canada, Research In Motion (RIM) is a designer, manufacturer, and marketer of wireless solutions. The company is best known for its BlackBerry smart phone devices, which provide end users mobile access to email, phone, SMS messaging, internet, and intranet-based applications. RIM had $11 billion in revenue for fiscal year 2009. RIM began to look into setting up a formalized sustainability practice in 2008. While the company had various sustainability efforts in place for some time, no corporate vision was guiding the activities. To get the process started, RIM established a corporate responsibility team to develop a strategic program, report externally, and communicate internally. In addition, it is the sustainability team that reaches out to employees to let them know about sustainability efforts, and will recruit champions within different business units. Another area of focus for the team will be to look forward and anticipate what is in store for the company and the industry in terms of environmentally responsible practices, such as additional restrictions to markets, anticipated rules/goals from governments, and end-user requirements. RIM states that its biggest challenge is achieving buy-in from the executive level. While sustainability efforts can be bottom up, at some point, senior management needs to become involved. RIM believes that its executives now understand the benefits sustainable practices can offer the company, which are likely to include cost savings and improved brand perception. RIM’s primary customers are mobile network operators across the globe as well as enterprises. The company has found that, in recent years, its clients began demanding information on sustainability. RIM has noticed that customer requirements vary by geographic region, and understands that it must be prepared to address the different needs of customers. As RIM develops its sustainability plan, the company will reach out to different mobile operators, and will talk to its own carrier sales team to educate them about what it is doing in this space. It is also working to establish support for sustainability across the different silos and business units. As part of an ongoing effort to develop a formalized sustainability plan, the company has developed a product sustainability framework, which establishes a collaborative link across various internal stakeholders including its carrier sales teams up to its senior executives. Also tied into the process are key external stakeholders including mobile operators, major enterprises and governmental clientele.

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Developing a Sustainability Strategy The company is looking to address sustainability in the following areas:  Product oriented activities – compliance activities, developing more energy efficient handsets, contributing financially to handset recycling programs.  Product packaging – reducing packing for devices, which is expected to have a beneficial impact both financially and environmentally.  Ethical supply chain - looking at sourcing, the impact of the supply chain on the environment, and component issues.  Buildings – building to LEED standards when possible.  Green IT – efforts will mainly focus on improving data center efficiency.  Green infrastructure. RIM has found that other companies are a good source of information for environmentally responsible practices. While its customers and other companies are often tight-lipped about certain business issues, most companies that RIM has reached out to are quite willing to share their experiences and insight regarding their sustainability efforts. RIM is also working to get employees thinking about the meaning of social and environmental responsibility, and relevant topics that need to be addressed in this area. The company’s efforts in this space will likely range in scope from corporate philanthropy to carbon disclosure. RIM is also working to establish a baseline for measurements, determining what its goals will be and how that translates into activities and progress. The company’s activities in regard to sustainability are expected to be published in its first sustainability report in June 2010 along with its annual report.

5.2

Shaw Industries Group Inc. Shaw Industries Group Inc, a subsidiary of Berkshire Hathaway Inc, is the world's largest carpet manufacturer and a leading floor covering provider with more than $4 billion in annual sales and approximately 24,000 associates. Headquartered in Dalton, Georgia, the company manufactures and distributes carpeting, rugs, hardwood, laminate, and ceramic tile for residential and commercial applications worldwide. Shaw is also the largest recycler of post-consumer carpet. The company published its first sustainability report in the fall of 2009. Over the years, Shaw has developed sustainable products, such as its Epic sustainable engineered hardwood flooring and EcoWorx, the first fully recyclable commercial carpet backing system. The company has numerous other products that fit into the “Cradle-toCradle” design strategy, meaning products are designed to meet rigorous standards for environmental health and safety, renewable energy, water efficiency and quality, social responsibility and materials reutilization. Cradle to Cradle products are also designed so that they can be recycled back into themselves numerous times, thereby eliminating waste and curbing the use of virgin raw materials. Investment in Cradle to Cradle manufacturing is evidenced by Shaw’s unique Evergreen post-consumer carpet facility in Augusta, Georgia where nylon 6 carpet is recycled back to its starting material to manufacture new nylon 6 fiber. The development of a sustainability strategy was an evolution for Shaw. The company had been active on this front in various ways since its founding, often from conservation and cost perspectives; for example, reducing material waste in conjunction with increasing cost efficiencies.

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Developing a Sustainability Strategy But the company found that its markets had also begun to demand green products and were looking for companies that embraced environmentally responsible practices. Therefore, the company decided to move towards formalizing a sustainability strategy, tying initiatives to larger corporate goals, and developing an internal group to facilitate this process. The company’s Growth and Sustainability Council, comprised of its executive and senior leadership, is responsible for setting goals, planning, and setting targets and initiatives. The company developed a sustainability business platform two years ago, and formally started implementing its commitment to the triple bottom line, which it defines as: “acting in a manner that is responsible, efficient, and effective in our application of human and material resources to meet the current and future expectations of our employees, customers and stakeholders.” The company has also found it useful to develop and deploy a corporate sustainability scorecard across business divisions and groups, so everyone knows the direction in which the company is moving. Shaw’s sustainability practices are funded through normal channels, through general capital planning, and product planning. Sustainability objectives and goals are incorporated into budgets, and it uses existing processes to implement new sustainability strategies. While the company favors projects with quick ROI, some flexibility is possible in terms of which projects are pursued, as some risk taking is acceptable. Over the past three years, the company has seen an increase in Requests for Proposals (RFPs) that have some sustainability aspect. Even with the economic slowdown, the company has found that its customers remain committed to using environmentally responsible products. Shaw believes its sustainability leadership gives the company a competitive advantage, and will help it meet the future needs of customers, given the fact that consumers, businesses, and governments remain focused on green building and environmentally responsible business practices.

5.3

CA CA is a global information technology management software firm that helps companies manage IT in all environments including mainframe, distributed, virtualized, and cloud computing. CA works with the majority of the Forbes Global 2000 companies as well as government organizations and thousands of companies in diverse industries worldwide. Founded in 1976, CA serves customers in nearly every country in the world, and reported fiscal year 2009 revenue of $4.3 billion. CA started down the path towards building a sustainability strategy in 2006, with the establishment of the CA Office of Sustainability. During this time period, discussion continued about climate change in society, and the company was hearing from customers who wanted to know how CA might be able to use IT management software to assist with solutions to address these concerns. The company worked to develop a framework that addressed the concerns and interests of customers, employees, shareholders, the investment community, and the media. After conducting research and speaking with other companies about their sustainability activities, CA decided to model its efforts around the United Nations Global Compact guidelines along with the Global Reporting Initiative (GRI G3) guidelines. CA uses the guidelines for its corporate responsibility efforts and currently self-reports sustainability information to top executives.

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Developing a Sustainability Strategy CA looks at a variety of issues when deciding what sustainability efforts to pursue including cost savings, reputational risk, and revenue opportunities. All of these factors are part of the decision making process. Because this can be a challenge, the company has built technology, called CA ecoSoftware, which helps its sustainability office align project proposals with the company’s goals, assisting in forecasting returns and time-to-value. Each project proposal is weighed and scored against goals. That being said, CA closely examines ROI when considering sustainability practices and deciding what projects to pursue. The company forecasts ROI, lists the investment level and expected time-to-value for each project. This allows CA to easily execute on those projects that most closely align with its goals and fit within budgets. All of CA’s sustainability programs have returned initial investments, plus some, within one to two years. The company has found that sustainability programs have actually improved operating margins, made the company a better corporate citizen, improved employee morale, and made it easier to hire and retain employees. CA believes that executing on environmentally responsible business practices is tied to being able to collect data, contextualizing that data, and reporting and forecasting results versus goals. The company’s efforts have allowed it to do just that, and it believes the resulting successes are clear. CA has reduced its global carbon footprint by 30% in just two years.

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Developing a Sustainability Strategy

Section 6 CONTINUING THE MOMENTUM Once a sustainability plan is developed, and specific goals outlined, companies face the task of keeping the momentum going. Aside from recognizing that moving a company’s sustainability strategy forward is an ongoing process, a firm can take several steps to maximize sustainability efforts over the long term. These concepts are highlighted in the figure below, and discussed in this section. Figure 6.1

Sustainability Next Steps

(Source: Pike Research)

Constant evaluations. Most companies that have developed a sustainability plan, and published a sustainability report, find it useful to evaluate progress yearly or every two years. This allows the firm to see areas in which it has excelled and or fallen short. Equally as important is looking at why some things worked well, while other efforts fell short of expectations. Continuous measurements. As a company continues to pursue sustainability efforts, it is critical to keep measurements in mind. If a business is able to detail the ways environmental responsibility have simultaneously helped the company’s bottom line and the environment, it is more likely to get support and buy-in for activities, and find future © 2010 Pike Research LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Pike Research LLC and may not otherwise be accessed or used, without the express written permission of Pike Research LLC.

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Developing a Sustainability Strategy funding for sustainability projects. Having quantifiable data also helps show that the company is serious about sustainability, and not “greenwashing” activities. Keep a pipeline of projects. Many companies approach sustainability with grand plans, but quickly learn that some projects will have to be sidelined due to cost or resource considerations. Therefore, it is beneficial to keep a pipeline of projects on hand. Some projects that were not feasible one or two years ago because of high costs may be within reach now due to price reductions or government subsidies. In such situations, having a pipeline can speed up the implementation processes as circumstances change. Flexibility. While the core sustainability focus areas a corporation defines should be enduring and created with the long term in mind, a firm should also be willing to alter theses focus areas as needed. Just as overall business and product strategies change, corporate citizenship goals and activities should evolve along with the business and the market. Planning. As a company progresses in its sustainability activities, it should work to incorporate sustainability planning and begin to build aspects of sustainability into its business practices. This includes taking steps to consider the environmental impact of new products and services as they are developed, looking for ways to incorporate more environmentally responsible business practices into existing processes, and allocating resources for sustainability efforts. Beyond the corporation. Once a company has addressed key sustainability issues in its own business, it can be beneficial to look for ways to have an impact outside the company. Some companies might involve the customer in recycling efforts, while others might engage vendors in their supply chain in sustainable business practices. Whatever additional efforts a business undertakes, it is likely to have a greater impact if it is able to inspire change beyond its own four walls. Continuous learning. It is likely that companies investigated what others in their industry were doing on the sustainability front as they developed their own strategies. It is equally important to continue this practice, adding to the base of knowledge by actively seeking new data on environmental responsibility, attending sustainability conferences and Webinars, and talking to other companies and organizations active in the field of sustainability. Sharing information. Companies that have had sustainability plans in place for many years find it useful to create formalized mechanisms that allow various groups, offices, and employees to share information and best practices. A common method for achieving the desired disbursement of information is to dedicate time during sustainability committee meetings, or other regularly scheduled times when various department heads are present, to highlight and share learnings across the company.

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Developing a Sustainability Strategy

Section 7 ACRONYM AND ABBREVIATION LIST Carbon Dioxide

CO2

Corporate Sustainability Report

CSR

Greenhouse Gas

GHG

Global Reporting Initiative

GRI

Life Cycle Analysis

LCA

Leadership in Energy and Environmental Design

LEED

Request for Proposal

RFP

Return on Investment

ROI

Short Messaging Services

SMS

US Green Building Council

USGBC

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Developing a Sustainability Strategy

Section 8 TABLE OF CONTENTS Section 1 ...................................................................................................................................................... 2  Executive Summary .................................................................................................................................... 2  Section 2 ...................................................................................................................................................... 4  Creating a Sustainability Strategy............................................................................................................. 4  2.1  The Starting Point: Executive Buy-In ............................................................................................ 4  2.2  Establishing a Sustainability Committee and Developing High-Level Priorities ........................... 5  2.3  Outlining Specific Projects and Execution .................................................................................... 5  Section 3 ...................................................................................................................................................... 7  Sustainability Areas to Consider ............................................................................................................... 7  3.1  Approaches ................................................................................................................................... 8  3.2  Starting Point for Measurements: Carbon Footprinting and Life Cycle Analysis .......................... 8  3.3  Elements to Consider .................................................................................................................... 9  3.3.1  Energy Use .............................................................................................................................. 9  3.3.2  Green and LEED Certified Buildings ....................................................................................... 9  3.3.3  Water and Wastewater ............................................................................................................ 9  3.3.4  Toxins and Other Pollutants .................................................................................................... 9  Section 4 .................................................................................................................................................... 10  Internal, External, and Community Efforts ............................................................................................. 10  4.1  Internal Sustainability Efforts....................................................................................................... 10  4.2  External and Community Sustainability Efforts ........................................................................... 10  Section 5 .................................................................................................................................................... 11  Case Studies .............................................................................................................................................. 11  5.1  Research In Motion Limited ........................................................................................................ 11  5.2  Shaw Industries Group Inc. ......................................................................................................... 12  5.3  CA ............................................................................................................................................... 13  Section 6 .................................................................................................................................................... 15  Continuing the Momentum....................................................................................................................... 15  Section 7 .................................................................................................................................................... 17  Acronym and Abbreviation List ............................................................................................................... 17  Section 8 .................................................................................................................................................... 18  Table of Contents ...................................................................................................................................... 18  Section 9 .................................................................................................................................................... 19  Table of Figures ........................................................................................................................................ 19  Section 10 .................................................................................................................................................. 20  Scope of Study .......................................................................................................................................... 20  Sources and Methodology ....................................................................................................................... 20 

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Developing a Sustainability Strategy

Section 9 TABLE OF FIGURES Figure 1.1  Figure 2.1  Figure 6.1  Figure 6.1 

Reasons for Implementing a Corporate Sustainability Plan .................................................... 2  Designing a Sustainability Strategy ......................................................................................... 4  Sustainability Approaches and Focus Areas........................................................................... 7  Sustainability Next Steps....................................................................................................... 15 

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Developing a Sustainability Strategy

Section 10 SCOPE OF STUDY This Pike Research report examines the value of creating a sustainability plan, issues of consideration, areas of exploration, and ways to communicate plans and goals to constituents. The report also includes three case studies that detail how several companies have approached sustainability within their own firms. Finally, the report provides guidance for companies as they move from the planning stage to execution, and work towards meeting long-term sustainability goals.

SOURCES AND METHODOLOGY Pike Research’s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Pike Research’s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Pike Research’s analysts and the firm’s staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analyst’s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Pike Research’s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Pike Research is an independent market research firm whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. The firm is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets.

© 2010 Pike Research LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Pike Research LLC and may not otherwise be accessed or used, without the express written permission of Pike Research LLC.

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Developing a Sustainability Strategy

Published 1Q 2010 ©2010 Pike Research LLC 1320 Pearl Street, Suite 300 Boulder, CO 80302 USA Tel: +1 303.997.7609 http://www.pikeresearch.com

This publication is provided by Pike Research LLC (“Pike”). This publication may be used only as expressly permitted by license from Pike and may not otherwise be reproduced, recorded, photocopied, distributed, displayed, modified, extracted, accessed or used without the express written permission of Pike. Notwithstanding the foregoing, Pike makes no claim to any Government data and other data obtained from public sources found in this publication (whether or not the owners of such data are noted in this publication). If you do not have a license from Pike covering this publication, please refrain from accessing or using this publication. Please contact Pike to obtain a license to this publication.

© 2010 Pike Research LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Pike Research LLC and may not otherwise be accessed or used, without the express written permission of Pike Research LLC.

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