Panorama green and sustainable retailers

Panorama : Green and Sustainable Retailers May, 2014

Disclaimer This document is the proprietary and exclusive property of Sutherland Global Services except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Sutherland Global Services. The information contained in this document is subject to change without notice. The information in this document is for information purposes only. Sutherland Global Services® disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement. All confidential or proprietary information contained in Sutherland’s response shall at all times be and remain the sole and exclusive property of Sutherland Global Services, Inc.

©©2014 GlobalServices Services Inc., rights reserved. Privileged and confidential information of Sutherland Global 2010Sutherland Sutherland Global Inc., All All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. Services Inc.

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Sustainability or Going Green: Retail vis-à-vis other sectors Average Disclosure Rate for Energy, Water and Carbon Productivity

36%

23%

Automobiles & Components

13%

26% Banks

24%

Commercial & Professional Serv

14%

12%

Consumer Durables & Apparel

21%

Diversified Financials

29%

Energy

18%

36% Insurance

25%

Materials

Pharmaceuticals, Biotechnology

Real Estate

33% Telecommunications Services

Retailing

25%

Software & Services

21%

Most Retailers begin by developing programs and practices, and deploying those with means of technologies – taking help from internal and external experts where needed

Media

8%

11% Semiconductors

Household & Personal Products

14%

12%

22%

Food Beverages & Tobacco

36%

Health Care Equipment & Services

Retail companies’ sustainability programs have been following a developmental and learning curve

Consumer Services

22%

14%

Food & Staples Retailing

Capital Goods

Vis-à-vis other industries, however, Retail does have a long way to go in terms of implementation of ‘green practices’ and execution of consistent disclosure of the same

Technology Hardware & Equipment

34% Transportation

Utilities

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Areas where Sustainability has found application in Retail

Wastage reduction and disposal

Packaging optimization

Transport Optimization

Green Product marketing

Water management

Green buildings and energy consumption

Plastic bag usage reduction

Chemical of Concern (CoC) management

Greenhouse gas emission management

Green leasing

Promotion of Highefficiency lighting

HVAC retrofitting Green and organic product sales

Land fill reduction

Material recycling

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Key themes of Sustainability in Retail

As per The Retail Industry Leaders Association (RILA) survey of over 65,000 locations representing over $1 trillion in global revenue, Sustainability in Retail has following key take-aways:

“ … RILA members are committed to implementing sustainability across their organizations because they recognize the inherent business value that those programs generate ... These (sustainable) management and operational strategies are strengthening retail businesses and positioning them for long-term success ... ” - Adam Siegel, VP of sustainability & retail operations, RILA

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“ ... It’s incredibly encouraging to see the collective impact the retail industry is having on this important work (of sustainability) ... at Target, we look forward to continuing to do our part, working with fellow retailers to create lasting, sustainable change ... ” - Kate Heiny, senior group manager of sustainability, Target



Sustainability teams are growing Most companies act on sustainability investments that expect a two- to three-year payback Breadth of sustainability activities is increasing Most retailers measure energy, fuel, material usage, and waste generation; more than 25% companies will begin to measure code of conduct compliance, water usage, renewable energy generation, chemicals of concern and more over the next 2 years Pressure for retail sustainability efforts is strongest from employees, competitors, and regulators

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Case studies

Disclaimer This document is the proprietary and exclusive property of Sutherland Global Services except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Sutherland Global Services. The information contained in this document is subject to change without notice. The information in this document is for information purposes only. Sutherland Global Services® disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement. All confidential or proprietary information contained in Sutherland’s response shall at all times be and remain the sole and exclusive property of Sutherland Global Services, Inc.

©©2014 GlobalServices Services Inc., rights reserved. Privileged and confidential information of Sutherland Global 2010Sutherland Sutherland Global Inc., All All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. Services Inc.

www.sutherlandglobal.com

Walmart

Retailer

Quote Unquote “ ... As we work toward our ambitious goal to be supplied 100% by renewable energy, solar energy continues to be an important part of our renewable energy portfolio ...with our size and scale, Walmart is in a unique position to encourage innovation and accelerate the adoption of cost-effective, clean energy alternatives, including solar power ... ” - Kim Saylors-Laster, Vice president for energy Walmart

Goals

Current Success

1. As the world's largest retailer, Walmart believes that Environmental sustainability is an essential ingredient to doing business responsibly and successfully

1. Walmart has more than 180 renewable energy projects in operation or development around the world, generating enough energy to power 78,000 American homes annually. Renewable energy provides 21% of Walmart's electricity globally, and Walmart is now the largest onsite green power generator in the United States according to the EPA Green Power Partnership 2. Since 2007, Walmart has completed more than 200 solar projects that provide hours of energy annually to its stores, clubs and distribution centers 3. In 2012, Walmart reached a goal of a 20% reduction in its greenhouse gas emissions

2. It has set three aspirational sustainability goals: o To be supplied 100% by renewable energy o To create zero waste o To sell products that sustain people and the environment 3. By 2020, Walmart wants to procure 7 billion kWh of renewable energy

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Ikea

Retailer

Quote Unquote “ ... Sustainability will be a decisive factor in terms of which businesses will be here in 20 or 30 years time. It is the future of business. ...And we use sustainability to drive innovation, steer our investments and develop new business opportunities ... ” - Steve Howard, Chief Sustainability Officer, Ikea

Goals

Current Success

1. “We want to have a positive impact on the environment, which is why by 2020 we’re going to be 100% renewable–producing as much renewable energy as we consume using renewable sources, such as the wind and sun. We’re also making our buildings more efficient, so we need less energy to run them.” 2. IKEA is committed to own 137 wind turbines in near future 3. €1.5 billion committed for renewable energy investments up to 2015

1. 34% of IKEA’s energy came from renewable sources in 2012-13. Since FY 2010, the company’s energy efficiency efforts in stores and warehouses have saved $54 million. 90% of IKEA’s locations in the US use photovoltaic power. It now owns wind farms in more than six countries. Ikea installed 550,000 solar panels in 2013 and committed to own 137 wind turbines 2. Ikea is committed to sell and use only LED lights in its products, and has sold 12.3 million LED light bulbs and 12.1 other products that use LED technology as of 2013; saving each customer $9.45 in electricity costs per bulb, per year 3. In 2013, 72% of the cotton used by Ikea came from sustainable sources. Ikea has saved $54 million in warehouse energy efficiency programs since 2010

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Target

Retailer

Quote Unquote “ ... We are working to cut excess miles from our U.S. supply chain, limit packaging waste, and help our guests increase their use of reusable shopping bags, which has reduced plastic-bag consumption in our stores over the past four years … Since announcing our plans for Target Canada in 2011, we’ve built a strong Canadian team, pursued LEED certification for the 124 stores … ” - Gregg Steinhafel, CEO, Target

Goals

Current Success

1. Increase organic food selection by 25% by the end of 2017. Offer a 100% sustainable seafood selection in its stores by 2015 2. Enhance at least 50 owned-brand packaging designs to be more sustainable by 2016 3. Improve the efficiency of general merchandise transportation outbound from distribution centers by 20% and more fuel-efficient transportation practices 4. Reduce Scope 1 and Scope 2 greenhouse gas emissions by 10 % per square foot by 2015 5. Earn the ENERGY STAR for at least 75% of U.S. Target buildings 6. Reduce the amount of operating waste sent to landfill by 15% and water use by 10 % per square foot by 2015

1. 11 sustainable packaging projects completed by 2012 to reduce materials and include more recycled and renewable content, resulting in an annual savings of more than 813,000 pounds of material 2. Improved the inbound transportation efficiency by 26% to 1.4 cartons per mile over 2009 baseline. Also improved outbound transportation efficiency by 24% to 12.3 cartons per mile over 2009 baseline 3. As of 2012, achieved 50% of its seafood assortment to be sustainable, traceable or in a time-bound improvement process 4. Greenhouse gas emissions per square foot decreased 8.4% over 2007 baseline 5. 45% of US buildings are ENERGY STAR certified

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The Home Depot

Retailer

Quote Unquote “ ... Sustainability will be a decisive factor in terms of which businesses will be here in 20 or 30 years time. It is the future of business. ...And we use sustainability to drive innovation, steer our investments and develop new business opportunities ... ” - Steve Howard, Chief Sustainability Officer, Ikea

Goals

Current Success

1. Reduce energy use in stores by 20% by 2015 2. Reduce Green House Gas emissions from the domestic supply chain by 20% by 2015 from the 2008 levels 3. To improve efficiencies in buildings, force improvements in technology and share best practices with retailers from around the country 4. Reach 20 kWh per square foot of energy usage by 2015

1. First national retailer to provide CFL light bulbs and rechargeable battery recycling for consumers - over 1.6 million pounds of CFL bulbs and 3 million pounds of rechargeable batteries were recycled 2. 81 water reclamation tanks were installed b/n 2010 and 12. Each tank saves an average of 500,000 gallons per year 3. In 2012, recycled approximately 174k tons of used cardboard 4. Lodi California store is being designed to be 50% more energy efficient than the ASHRAE code, 2007 5. Sells more Forest Stewardship Council (FSC) certified wood than any retailer in North America 6. Since 2009, has had an absolute carbon emission reduction of 1.8 metric tons

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Whole Foods Market

Retailer

Quote Unquote “ ... We have had customers asking about sustainability: ‘How is this particular kale raised or where do these flowers come from? What is the sustainability of earth ... how does this affect my health … as people are told to eat more fruits and veggies, that's an important question to ask ... we want to be able to give tools to our customers to make better decisions for themselves ... ” - Margaret Wittenberg, Global VP - Quality Standards and Public Affairs, Whole Foods

Goals

Current Success

1. Reduce: paperless ordering systems, reducing paper waste, supporting carpooling and public transportation, implementing the use of power monitors to reduce energy consumption, using compostable supplies for food and wine sampling, banning plastic grocery bags 2. Reuse: using reusable grocery bags, implementing the use of reusable and compostable plates and bowls in dining areas, eliminate Styrofoam use in shipping 3. Recycle: Replacing disposable batteries with rechargeable ones, holding company and community recycling drives for electronics, using recycled paper with a high percentage of post-consumer waste whenever possible, providing receptacles for glass and plastic recycling in dining areas along with collection boxes in many stores

1. First major retailer to offset 100% of energy use with wind energy credits - has avoided c. 551,000 metric tons of carbon dioxide pollution 2. Many stores have achieved a waste stream diversion rate of more than 80%, with some approaching and even exceeding the 90% level 3. Composting has reduced landfill waste by up to 75% in some regions 4. As of March 2010 had ten LEED rated stores, including two LEED Gold 5. On its way to reducing energy usage by 25% per square foot by 2015 over 2010 baseline 6. Discontinued the use of disposable plastic grocery bags at the checkouts at our stores in the US, Canada and the UK from Earth Day 2008

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What’s the take on future of sustainability?

Scott Lercel Director of Social Responsibility & Sustainability Target Corporation

“ … Sustainability is good for business … All major retailers seem to be looking at the sustainability space and how to integrate it into their current business model ... why? One reason is that ‘driving operational efficiencies within your supply chain’ makes you more competitive and reduces operating costs … ”

Ryan Young Vice President, Sustainable Apparel Coalition, San Francisco

“ … The way that our economic system is truly set up is that companies are motivated to sell more and more products … bringing sustainability into that equation is really critical because of the impact that we have on the planet and on the workers who are associated with making those products …”

James Mitchell Senior seafood campaigner, Oceans Program Greenpeace

“ … In 2008, when we first surveyed 20 different retail chains against our sustainability criteria, not a single retailer passed … however, by 2013, things changed significantly … Three retailers scored ‘good,’ and 15 passed using the same criteria. On the whole, we’re seeing a positive trend in the marketplace. By and large, sustainable seafood sourcing is now a higher priority for many retailers than it was in the past… ”

Hannah Jones Vice President, Sustainable Business and Innovation Nike Inc.

“ ... Companies need to be seeding innovation and new ideas now in order to thrive in a resource constrained world. We need thoughtprovoking research like Fashion Futures to help us collaborate and advocate for the right future solutions around the most important issues on sustainability....”

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