Supplier Sustainability Index: Getting Started

1. Supplier Sustainability Index:Getting Started Ted Fox www.sustain.biz 2/17/10

2. Agenda Brown and Wilmanns Environmental, LLC The WM Supplier Sustainability Index Your Choices Getting your company on board The what and why of carbon footprints Simple steps to building a carbon footprint Resources

3. Supplier Sustainability Index Brown and Wilmanns Environmental, LLC • 15 questions • Energy and climate • Material efficiency • Natural resources • People and community • These four groups are NOT unique to Walmart…they ARE the fundementals • Leveraging all four delivers bankable value

4. Energy and Climate Brown and Wilmanns Environmental, LLC First three questions • Have you measured your corporate greenhouse gas emissions? • Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)? • What is your total annual greenhouse gas emissions reported in the most recent year measured?

5. Three Basic Options Brown and Wilmanns Environmental, LLC • Ignore it • Simple Footprint and register as a ‘S&ME’ • Complete footprint and register all Scopes 1-3 “If you can’t get out of it…GET INTO IT”

6. First Things First (know what you don’t know) Brown and Wilmanns Environmental, LLC • Get educated: CDP, online, books, classes etc. • Develop your elevator speech (engage your HQ) • Increase awareness and gain support • Provide guidance and solutions • Get help and get it done • Stay engaged after it’s done…the value is in the increased profits…the value to you is the education & deeper connection to retailers

7. Some Terminology Brown and Wilmanns Environmental, LLC Greenhouse Gases (GHGs)are trace gases that control energy flows in the Earth's atmosphere by absorbing infra-red radiation. Some GHGs occur naturally in the atmosphere, while others result from human activities. There are six GHGs in the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) sulphur hexafluoride (SF6).

8. What is your Company Carbon Footprint? A carbon footprint is "the total set of GHG (greenhouse gas) emissions caused directly and indirectly by your company Activities with greenhouse gas emissions Process emissions Energy use Transport/logistics Business travel, commuting, etc. Brown and Wilmanns Environmental, LLC

9. Getting Started on Your Footprint Brown and Wilmanns Environmental, LLC • Keep it simple– It’s as easy as 1, 2 and wait on 3… • Scope 1: focus on direct emissions from your facilities and vehicles • Scope 2: electricity and other energy sources purchased to power your facilities • Scope 3: all other business related activities that cause GHG’s. (business travel, commuters, shipping, etc.)

10. Getting Help from the Inside Brown and Wilmanns Environmental, LLC Key internal resources • Accounting can help get info off the utility bills and set up tracking systems • Facilities may already track utility use; they can also help identify direct emission sources and equipment • Engineering may be helpful with equipment characteristics • Fleet managers may help with fuel use and vehicle characterization

11. Some Suggestions Brown and Wilmanns Environmental, LLC • Track data in common metric • MJ or kWh for electricity and fuels for heating • Use standard conversion factors • Document everything! • Ask utilities and fuel vendors • Standard factors to convert MJ or kWh of electricity, therms, cubic meters of natural gas, etc. to CO2e emissions • Provide historical data electronically • Set up systems to automate data collection and tracking • Use the GHG protocol www.ghgprotocol.org

12. GHG Protocol Brown and Wilmanns Environmental, LLC • Already built Excel spreadsheets • Straightforward when you have information and data about your facilities’ equipment and vehicles fuel and electricity use • Gets complicated when: • Lots of potential emission sources • Ownership issues • Leases that incorporate utilities in rent payments, etc. • It provides means to ask for specific information that is needed to create a credible footprint

13. Example of Excel Tracking Brown and Wilmanns Environmental, LLC

14. Going Beyond Your Facilities (Scope 3) Brown and Wilmanns Environmental, LLC • Indirect Emissions—First steps • Business travel, employee commuting, etc. • Inbound and outbound shipping by common carrier • Raw materials/products inbound to your facilities • Products trans-shipped among your facilities • Products outbound to your customers • Collect data, set up tracking systems, automate data collection and analysis

15. Standard unit of measure Brown and Wilmanns Environmental, LLC • Calculated as carbon dioxide equivalent (CO2e) emissions based on Global Warming Potential (GWP) • Carbon dioxide (GWP 1) • Methane (GWP 25) • Nitrous oxide (GWP 298) • HFCs (GWP 124-14,800) • Perfluorocarbons (GWP 7,310 – 22,800) • And more (CFCs, HFEs, etc.) • Typically reported as metric tons CO2e emissions

16. Choosing Resources Brown and Wilmanns Environmental, LLC • Supplier Education: low & no cost options • CDP, online, DBB, 8th & Walton, Universities • Consultants (Carbon & Sustainable practices) • Look for expertise in footprints, emission reduction products/strategies and climate change. • (know what you don’t know) RFP recommended • Carbon offset marketers • They sell offsets (shares of projects that result in displacement of emissions) and typically have resources to generate carbon footprint • Footprint calculators • On-line calculators to generate carbon footprint • May use your data or may use estimates based on facility type, size, number of employees, location, etc.

17. Knowing what you know & don’t knowbefore you get help will: Brown and Wilmanns Environmental, LLC • Expedite the process • Lower confusion • Increase accuracy • Lower costs

18. Questions to Ask:External Resources Brown and Wilmanns Environmental, LLC Experience and expertise Which protocols do they follow? Can we just do Scope 1 and Scope 2? Can we choose which, if any, Scope 3 activities to measure? How can we minimize the cost? How can you teach us the basics? Can the carbon footprint be certified? Will the carbon footprint be accepted by CDP?

19. Recap Get on the learning curve Four areas of focus: Carbon, Waste, People, Profits Learn to fish and eat for a lifetime Engage your HQ with your IQ Take the lead Leverage the need Get help Know what you don’t know Find resources that fit …RFP Stay involved It’s good for your company It’s good you Brown and Wilmanns Environmental, LLC

20. & some more Terminology Brown and Wilmanns Environmental, LLC Base Year "A historic datum (a specific year or an average over multiple years) against which a company’s emissions are tracked over time.” Carbon Footprint The total set of greenhouse gas emissions caused by an individual or organization, event or product. It should be expressed in carbon dioxide equivalent (CO2e) Carbon Trust. Emission Factor "A factor allowing GHG emissions to be estimated from a unit of available activity data (e.g. tonnes of fuel consumed, tonnes of product produced) and absolute GHG emissions.” Life Cycle Analysis "Assessment of the sum of a product’s effects (e.g. GHG emissions) at each step in its life cycle, including resource extraction, production, use and waste disposal.” Scope 1 Direct GHG emissions occur from sources that are owned or controlled by the company, for example,emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment. Scope 2 Scope 2 accounts for GHG emissions from the generation of purchased electricity2 consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 3 Scope 3 is an optional reporting category that allows for the treatment of all other indirect emissions. Scope 3 emissions are a consequence of the activities of the company, but occur from sources not owned or controlled by the company.

21. Resources Brown and Wilmanns Environmental, LLC http://www.ted.com/talks/lang/eng/ray_anderson_on_the_business_logic_of_sustainability.html http://www.epa.gov/climatechange/emissions/ind_calculator.html http://stage.cdproject.net/ https://webadmin.cdproject.net/en-US/Respond/Documents/CDP_2009_Definitions.pdf http://www.ghgprotocol.org http://hara.com/ http://www.planetmetrics.com http://www.sustain.biz http://www.bw-environmental.com http://www.8thandwalton.com/videos/(coming soon)