How Human Impact Drives Profit: Higher Returns for Both Stakeholders + Shareholders Triple Bottom Line Investing (TBLI) Paris, France - Europe 2007 R. Paul Herman CEO + Founder

Today’s Discussion Who We Are Unfulfilled Stakeholder Expectations The HIP Framework & Scorecard How to Deliver Human Impact + Profit ©2007 All rights reserved

Who We Are

Unfulfilled Stakeholder Expectations

The HIP Framework & Scorecard

How to Deliver Human Impact + Profit

Our Cross-Sector Experience Is Global Sara ©2007 All rights reserved

Today’s Discussion Who We Are Unfulfilled Stakeholder Expectations The HIP Framework & Scorecard How to Deliver Human Impact + Profit ©2007 All rights reserved

Who We Are

Unfulfilled Stakeholder Expectations

The HIP Framework & Scorecard

How to Deliver Human Impact + Profit

Executives See Sustainability As Mission-Critical, But See a Large Gap In Capability ©2007 All rights reserved Source: McKinsey survey of 4,238 executives, July 2006

Customers Use Their Dollars to “Vote” REPEL THE NEGATIVE “ What have you ever done in response to a firm’s behavior you considered against the best interest of society ?” 67% took some form of action 49% refused to BUY products 38% recommended others NOT buy 19% refused to INVEST in that stock Source: Fleishman Hillard / National Consumer League consumer survey, 2006/07 SEEK THE POSITIVE 65% want to buy products & services from firms that deliver social good How firms treat employees & the environment and NOT its charity 47% have researched a company on the Internet to check their social or environmental performance 66% see social impact as a strong indicator of whether to invest in a stock Source: McKinsey survey of 4,063 consumers, July 2006 ©2007 All rights reserved

REPEL THE NEGATIVE

“ What have you ever done in response to a firm’s behavior you considered against the best interest of society ?”

67% took some form of action

49% refused to BUY products

38% recommended others NOT buy

19% refused to INVEST in that stock

SEEK THE POSITIVE

65% want to buy products & services from firms that deliver social good

How firms treat employees & the environment and NOT its charity

47% have researched a company on the Internet to check their social or environmental performance

66% see social impact as a strong indicator of whether to invest in a stock

Staff Looking to Employers for Purpose “ Commitment to social issues” is a major factor for Americans deciding… 77% 66% 72% Source: ConeCause survey of 1096 consumers in 2001, 2004 and 2007 ©2007 All rights reserved

“ Commitment to social issues” is a major factor for Americans deciding…

Investors Want Quantitative Human Impact Measures Linked to Profit 71% of investors want info on a company’s human, social and environmental performance 100% of financial advisors to social investors desire quantified “units of output” of companies’ impact on society Nearly 10% of assets under professional management ($2.3 Trillion) have an active social-investment mission 263% growth over past decade Trusted financial brands set benchmarks FTSE4Good, Dow Jones Sustainability Index Equator Principles (social/environmental criteria) adopted by global banks providing 80% of project finance capital ©2007 All rights reserved

71% of investors want info on a company’s human, social and environmental performance

100% of financial advisors to social investors desire quantified “units of output” of companies’ impact on society

Nearly 10% of assets under professional management ($2.3 Trillion) have an active social-investment mission

263% growth over past decade

Trusted financial brands set benchmarks

FTSE4Good, Dow Jones Sustainability Index

Equator Principles (social/environmental criteria) adopted by global banks providing 80% of project finance capital

HIP Companies Outperform Benchmarks GS Sustain outperforms +25% beyond MSCI World in 22 months ©2007 All rights reserved

Today’s Discussion Who We Are Unfulfilled Stakeholder Expectations The HIP Framework & Scorecard How to Deliver Human Impact + Profit ©2007 All rights reserved

Who We Are

Unfulfilled Stakeholder Expectations

The HIP Framework & Scorecard

How to Deliver Human Impact + Profit

Solving Four Core Human Problems Leads to Sustainable, Profitable Growth ©2007 All rights reserved

1) Health: Products save lives …if affordable The PET image shows concentrations of cancer cells in a color spectrum just as weather radar shows varying concentrations of precipitation. The anatomical image generated by the CT scan acts as the 'map' showing physicians precisely where the cancer is located. The Discovery platform combines both of these images and like a television radar, pinpoints activity and location fused into one image. ©2007 All rights reserved

2) Wealth: Are all customers served? Pensions for Unemployed! Investment banks & finance firms are launching new product lines: ING : offers carbon reduction on auto leases ( € 5 monthly) Citigroup: micro-finance lending unit is a full profit center & attracts global staff Goldman Sachs : offers high-net-worth investment pools to low-income markets ©2007 All rights reserved

Investment banks & finance firms are launching new product lines:

ING : offers carbon reduction on auto leases ( € 5 monthly)

Citigroup: micro-finance lending unit is a full profit center & attracts global staff

Goldman Sachs : offers high-net-worth investment pools to low-income markets

2b) Wealth: Increasing access to capital Unbanked = 10% of US families; 10 million households Frequently pay high fees relative to frequent transactions New services increase wealth for customers: Money in: Lower check cashing fees Money out: Easier shopping at Wal-mart, car rentals, hotels Transfers: Trusted remittances to family abroad Investments: Access to ShareBuilder partnership ©2007 All rights reserved … and more retailers are invading financial services Home Depot: auto financing and insurance Kroger: mortgages, home equity, pet insurance

Unbanked = 10% of US families; 10 million households

Frequently pay high fees relative to frequent transactions

New services increase wealth for customers:

Money in: Lower check cashing fees

Money out: Easier shopping at Wal-mart, car rentals, hotels

Transfers: Trusted remittances to family abroad

Investments: Access to ShareBuilder partnership

… and more retailers are invading financial services

Home Depot: auto financing and insurance

Kroger: mortgages, home equity, pet insurance

3) Earth: Barclays Breathe-Free Card Targets UK customers focused on climate change In USA by comparison, 10 MM “dark greens” and 30 MM “light greens” This segment values “green” characteristics, so card is made of eco-friendly materials Connects existing practices (e-billing, online changes) with lower emissions brand promise Also differentiates by donating half of profits to eco-projects (min. ₤ 1 MM; max. ₤5MM ) ©2007 All rights reserved

Targets UK customers focused on climate change

In USA by comparison, 10 MM “dark greens” and 30 MM “light greens”

This segment values “green” characteristics, so card is made of eco-friendly materials

Connects existing practices (e-billing, online changes) with lower emissions brand promise

Also differentiates by donating half of profits to eco-projects (min. ₤ 1 MM; max. ₤5MM )

4) Equality: Diverse Owners Add Value Only a dozen US companies buy $1 billion or more from women- and ethnic-owned suppliers Consumer : Altria, AT&T, P&G, Verizon, Wal-Mart Auto : DaimlerChrysler, Ford, GM, Toyota USA Industrial : IBM, Johnson Controls, Lockheed Martin Innovation is the core benefit says P&G “ A diverse organization (and supply chain) will out-think, out-innovate and out-perform a homogenous organization every time” ©2007 All rights reserved

Only a dozen US companies buy $1 billion or more from women- and ethnic-owned suppliers

Consumer : Altria, AT&T, P&G, Verizon, Wal-Mart

Auto : DaimlerChrysler, Ford, GM, Toyota USA

Industrial : IBM, Johnson Controls, Lockheed Martin

Innovation is the core benefit says P&G

“ A diverse organization (and supply chain) will out-think, out-innovate and out-perform a homogenous organization every time”

Today’s Discussion Who We Are Unfulfilled Stakeholder Expectations The HIP Framework & Scorecard How to Deliver Human Impact + Profit ©2007 All rights reserved

Who We Are

Unfulfilled Stakeholder Expectations

The HIP Framework & Scorecard

How to Deliver Human Impact + Profit

“ Fast Company” magazine First Annual HIP Scorecard ©2007 All rights reserved

How HIP Practices Deliver Profit Five Core Areas Leading Examples Leading Firms Vision 50% by 2015 AMD Zero by 2020 Interface Measures 10-point balanced scorecard PG&E Financials $10B, $20B, $50B revenue GE $400mm cost savings Interface +2% more; 40% less energy Liberty Property Solar tax credits Walgreens Accountability Board committees; GE Performance targets for Intel VPs, managers, staff Herman Miller Decision Making Approval / integration of United Tech’s new product designs Nike These 5 disciplines increase both Human Impact + Profit delivering higher shareholder value and societal benefit ©2007 All rights reserved

Five Core Areas Leading Examples Leading Firms

Vision 50% by 2015 AMD Zero by 2020 Interface

Measures 10-point balanced scorecard PG&E

Financials $10B, $20B, $50B revenue GE $400mm cost savings Interface +2% more; 40% less energy Liberty Property Solar tax credits Walgreens

Accountability Board committees; GE Performance targets for Intel VPs, managers, staff Herman Miller

Decision Making Approval / integration of United Tech’s

new product designs Nike

Drivers of HIP Revenue Differ By Firm The more HIP Practices followed, the higher the share of revenue that delivers sustainable, profitable growth 2006 Revenue Share Rated HIP – Segmented by Human Impact ©2007 All rights reserved

The more HIP Practices followed, the higher the share of revenue that delivers sustainable, profitable growth

How Will Your Portfolio Be HIP? ©2007 All rights reserved