Corporate Sustainability Metrics for Flexible Packaging ...1).pdf · Corporate Sustainability ... Gid P i C t Guidance on Preparing Corporate Sustainability ... G Supplier Environmental

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


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


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


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


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


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)


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)


( 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


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


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


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


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)


18


• 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


• 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


investments, leveraging Triple Bottom Line principles

20


• 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


• 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


• 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


23


The Sustainability C ti AIM-PROGRESSConsortium

Safeway P&GP iC

KraftSCJohnsonWalmart

PepsiCoUnilever

Nestle


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


25


• 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


• 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


a nice thing to do – it is a requirement

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GUIDANCE ON PREPARING GU NC ON NG CORPORATE SUSTAINABILITY REPORTSREPORTS

Net: Begin measuring and reporting to assess opportunities and financial benefits to reducing


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


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


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


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


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


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


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


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


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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

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your technical and management challenges. We know consumer, channel and technology trends and marketplace insights. PTIS can

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help you make the right decisions because we have the right information and knowledge and the best resources available

across the packaging value chain.


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