Voice of the Industry

Kimberly-Clark

Wegmans

Blue Horseshoe

GENCO

Jim ButlerBlue Horseshoe

Why Sustainability Matters

• Consumers have a growing concern regarding their products origins and lifecycle

• Current and future legislation requirements are driving investment in sustainable operations

• Corporate image and public relations• Lower Costs – less waste and optimized processes

3 Tiers of Sustainability

• Tier 1 – Get the Basics Right– Power down lights, PC’s etc.– Recycle materials– “Reduce Carbon Footprint” – telecommute, teleconference

• Tier 2 – Learn to Think Sustainably– Companies begin to realize need to embed sustainability into the supply chain– Supplier Management, Product Design, Distribution Optimization

• Tier 3 – The Science of Sustainability– Governing sustainable supply chain– Auditing & benchmarks– Companies recognize cost savings through green operations as truly significant

*The Future Laboratory Ranking System

Sustainable Supply Chain

B Corp Certified

• 1,100 companies, 35 countries, 121 industries• We must be the change we seek in the world• All business ought to be conducted as if people and place

mattered• Through their products, practices, and profits, businesses

should aspire to do no harm and benefit all

New Belgium Brewing

• Embrace sustainable operations daily– Employees given “Fat Tire” Bicycle on 1st anniversary and encouraged to

ride to work– 3 parking lots at the “mother ship” are separated by average MPG for the

vehicle being driven (ie. Prius up close, Suburban far away)– Solar panels take advantage of 300+ days of sunshine in Ft. Collins

• 18% of their electricity comes from panels– Measure water, waste, emissions

• 99.9% of waste escapes landfill

Why sustainability matters

• Managing and improving environmental, social and economic performance throughout supply chains: – Conserve resources– Optimize processes– Uncover product innovations– Save costs– Increase productivity– Promote corporate values.

In short, the business case for supply chain sustainability is growing

Ryan KellyGENCO

GENCO’s Commitment

“To make sustainability – in the environment, the community, and the workplace – an economically

sound, integral element of everything we do.”

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GENCO’s Sustainability Journey

• False start – 10 yard penalty• Do it right or don’t do it• Define the problem• Total buy-in• We already had a Sustainability program• Build upon success

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WorkplaceSafety

Health & WellnessTraining & Development

CommunityVolunteering

Charitable ContributionsSupplier Diversity

GENCO Sustainability

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EnvironmentReduce, Reuse, Recycle

Energy ReductionTransportation Efficiency

Lance MillerWegmans

Wegmans Sustainability

• Operationalize sustainability– CNG– Hydrogen– CO2

• Business continuity planning• Customer engagement• Values-based company

– Organic, natural farming– Localization

Jane HartKimberly-Clark

Three truths about supply chain brand responsibility

1. There is no such thing as a secret

2. If you don’t tell your story, someone else will

3. Doing the right thing is never wrong

“Wrong” is viewed through the eyes of the paying customer.

Reduce Risk and Create Stability

Customer is informed about supply chain behaviors:• Availability of information (Look what I found!)

• Media elevation of global manufacturing issues (Headline News!)

• Public ridicule and brand bashing (Did you hear?)

Corporate motivation for addressing its supply chain:• Fear of falling revenue in response to violating customer

expectations (Mitigate financial risk!)

Sustainability means reducing risks and creating stability throughout the supply chain.

Examples of headlines to avoid

How the iPhone Helps Perpetuate Modern-Day Slavery

Samsung Suspends Ties with Supplier Accused of Child Labor

Bolivia Passes Law to Allow 10-Year-Olds To Work

Shrimp Supply Tainted with Modern Slavery: Global Business Transparency in Needed

Toxic plastic toys may pose health hazard to young children

Five NY Firms charged with Importing Toxic Toys from China

LEGO_Everything_is_not_Awesome

Addressing supply chain sustainability within Health Care

• Material Content– 13 Questions for every product on GPO agreements

• Conflict Minerals Reporting to the SEC

• Adherence to Principles of The Global Compact Regarding Human Rights and the Environment:– Documented Signed Agreements with all vendors– Audit for Compliance to Principles– Externally Reported Measureable Results

Supply chain has grown through a shift in customer expectations

• Disposal of the waste and post-use content of products is a growing demand of customers.

• Companies or brands are blamed for the waste associated with its products.

• Companies or brands are expected to solve the problem for customers.

WHAT’S NEW? The supply chain added a link!

Chris WeberKimberly-Clark

Responsible & Resilient Supply Chains

Lower business risk Drive innovation Enhance corporate / brand reputation

Generate cost savings

• Reputational risk• Regulatory risk• Security of supply• Quality of supply• Litigation risk

Focus on total life-cycle costs when sourcing goods and services rather than just price.

• Reputational benefit of responsible supply

Development of new products, services and packaging that are more sustainable and socially responsible.

Why is it important?

• Increasingly global supply chains• Increasing risk exposure

• Increasing brand exposure• Customers, Governments, NGO’s and

Shareholders pay attention

What is our target?

Business Resiliency is initial priority for any supply chain sustainability program

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K-C Supply Chain Sustainability programs

Corporate Social Compliance

Material Sustainability

Supplier Engagement

Social compliance standards declarationIntegration of standards with contracts, T&C’sExpanded auditing program, including internal manufacturingSupport for customer-driven auditing program

Supply Chain mapping – traceability & transparencyMaterials of concern / Chemicals of concernSustainable alternate materialsLong-term fiber consumption strategy

Supplier surveying & benchmarkingImpact assessment & supplier goal settingStrategic partnerships in sustainabilityLeverage suppliers as force multiplier for sustainability programs

Human Rights remains a critical risk

…Rana Plazaexcessive hoursunsafe working conditions …

…Wing Star Shoesdebt bondage industrial pollution

Establishment & acceptance of principles Identify supplier risk profile

Audit against principles & standards Promote improvement to build capability

• Set expectations for suppliers for human rights, labor principles, environmental stewardship and anti-corruption. Include them in T&C’s, contracts.

• Confirm supplier acceptance of principles.

• Focus on regions & industries where violations are most likely to occur.

• Benchmark audit scope with peers / organizations (Sedex, Verité, AIM-Progress)

• Audit & re-audit on established frequency• Utilize third party expertise

• Engage in improvement with suppliers to address audit findings

• Exit only when suppliers deny participation

Social Compliance program approach

Building supplier capability is our collective social mission and impacts lives

…Foxconn

Supply chain risk can be far removed from direct operations

How much do we know about our supplier’s suppliers? And their suppliers?How exposed are we to risks from …

…materials contributing to deforestation?…minerals sourced from conflict zones?…materials containing chemicals of concern?

…supplier facilities impacted by climate

change?…suppliers violating environmental regulations?…ENGO direct action in our supply chain?

Supply chain maps enable greater risk analysis depth

Depth of understanding of supply chain partners beyond direct suppliers is necessary to understanding where risk hot-spots exist.

Monitoring of at-risk supply chains can prevent costly process outages.

Shorter response to specific concern areas (conflict minerals, chemicals of concern, customer inquiries, etc.)

Supply Chain Mapping

Extrapolate environmental risksCritical threats can be explored once an understanding exists of where supply chain nodes run.

Do water-intensive processes exist in countries that are water stressed?

Do suppliers located in regions with flooding issues have business continuity plans to account for floods?

Do suppliers source packaging from companies that contribute to deforestation in threatened areas?

Supplier engagement

• Top-to-top engagement

• Mutually beneficial project platforms on sustainable innovation

• Supports objectives for sales, marketing or product-supply sustainability initiatives.

• Participate in sustainability surveys

• Integrated sustainability objectives in procurement SRM

• Works with procurement on supplier-driven innovation with sustainable benefits.

• Accountability to K-C supplier expectations for sustainability.

• Participation in Corporate Social Compliance

• Response & participation in concern area actions (e.g. Conflict Minerals, etc.)

Baseline Sustainability Expectations

Supplier-specific goals / objectives

Supplier / Partner engagement

Define & Structure Measure & Set Targets Incentivize and Innovate

Sustainability impacts multiply when we reach beyond our own organization

Questions?

Thank you!

Jim Butler

VP Sales & Marketing

Blue Horseshoe

Ryan Kelly

SVP Strategy

GENCO

Lance Miller

Manager of Operations

Wegmans

Jane Hart

Global Sustainability Leader

Kimberly-Clark

Chris Weber

Sr. Consultant for Supply Chain Sustainability

Kimberly-Clark