1. Let’s talk: sustainability Q2 2014
A new point of view for business leaders
23 April 2014

2. Page 2 Let’s talk: sustainability Q2 2014
Disclaimer
► This material has been prepared for general informational
purposes only and is not intended to be relied upon as
accounting, tax, or other professional advice. Please
refer to your advisors for specific advice.
► The views expressed by the presenters are not necessarily
those of EY.
► This presentation is © 2014 EYGM Limited. All Rights Reserved.
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please visit ey.com.

3. Page 3 Let’s talk: sustainability Q2 2014
Circular 230 disclaimer
► Any US tax advice contained herein was not intended
or written to be used, and cannot be used, for the purpose
of avoiding penalties that may be imposed under the
Internal Revenue Code or applicable state or local tax
law provisions.
► These slides are for educational purposes only and are
not intended, and should not be relied upon, as
accounting advice.

4. Page 4 Let’s talk: sustainability Q2 2014
Today’s moderator
Leisha John
EY Americas Director of
Environmental Sustainability
#EYSustainabilityJoin today’s Twitter discussion:

5. Page 5 Let’s talk: sustainability Q2 2014
Let’s talk: sustainability
A new point of view for business leaders
Sustainability on the go
Access our thought leadership
anywhere with EY Insights,
our new mobile app.
► Visit
ey.com/us/sustainability
to download the report

6. Page 6 Let’s talk: sustainability Q2 2014
Today’s presenters
Nancy Gillis
Ernst & Young LLP
Climate Change and Sustainability Services
Senior Manager
Chris Hagler
Ernst & Young LLP
Climate Change and Sustainability Services
Southeast Practice Leader
Allie Rutherford
Ernst & Young LLP
EY Center for Board Matters
Director — Corporate Governance
Ben Miller
Ernst & Young LLP
Climate Change and Sustainability Services
Senior Manager
The information contained herein is a summary in nature. Viewers should consult their
own professional advisors to address their individual circumstances and concerns.

7. Page 7 Let’s talk: sustainability Q2 2014
Today’s agenda
► Nine key elements of a sustainability strategy
► Proxy season 2014: preview of the environmental
and social shareholder proposals
► Banking on the benefits of accounting for GHG
emissions
► Using sustainability for competitive advantage in
government procurements
► Setting credible sustainability goals that drive real
business value Join now:
#EYSustainability

8. Page 8 Let’s talk: sustainability Q2 2014
Nine key elements that frame the
sustainability strategy discussion
Sustainability
Tax
implications Climate
change
Beyond
compliance
Emissions
Energy
agendaInnovation
Reporting
Social
impact
Supply
chain
Join now:
#EYSustainability

9. Page 9 Let’s talk: sustainability Q2 2014
Today’s agenda
► Nine key elements of a sustainability strategy
► Proxy season 2014: preview of the
environmental and social shareholder proposals
► Banking on the benefits of accounting for GHG
emissions
► Using sustainability for competitive advantage in
government procurements
► Setting credible sustainability goals that drive real
business value Join now:
#EYSustainability

10. Page 10 Let’s talk: sustainability Q2 2014
Proxy season 2014: preview of the
environmental and social shareholder proposals
Sustainability
Tax
implications Climate
change
Beyond
compliance
Emissions
Energy
agendaInnovation
Reporting
Social
impact
Supply
chain Beyond
compliance
Innovation
Reporting
Climate
change
Supply
chain
Social
impact
Emissions
Join now:
#EYSustainability

11. Page 11 Let’s talk: sustainability Q2 2014
Opinion check
Is your company actively engaging with your
investors on environmental sustainability, social
topics (such as global labor) and/or supply chain
topics?
Select all that apply
A. Yes, on environmental sustainability
B. Yes, on social topics
C. Yes, on supply chain
D. No
E. Don’t know or does not apply (EY, faculty, other)

12. Page 12 Let’s talk: sustainability Q2 2014
Environmental and social (E&S) proposals
► Dominant category of shareholder proposals
► More than half of all proposals submitted
► Leading area for proposals withdrawn prior to going to
vote
► Due to successful company-investor engagement and
agreement
Join now:
#EYSustainability

13. Page 13
Top 10 most common shareholder proposals
in 2014 (publicly disclosed through March 21)
0 10 20 30 40 50 60 70
Adopt majority vote to elect directors
Appoint independent board chair
Limit executive compensation
Eliminate classified board
Increase diversity on the board
Disclosure and oversight of lobbying spending
Disclosure and oversight of political spending
Assess and report on global labor practices/human rights
Set and report on GHG emissions reduction targets
Report on sustainability
Environmental and labor sustainability Other proposals overlapping environmental sustainability Governance proposals

14. Page 14 Let’s talk: sustainability Q2 2014
2014 E&S shareholder proposals
► First-time or enhanced sustainability reporting
► Increased focus — supply chain and company-specific
situations
► Greenhouse gas (GHG) emissions cuts
► Requests to adopt and disclose quantitative measures
► Environmental impact of a financial institution’s lending
portfolio and financing activities
► Review of and reporting on global labor practices and
human rights
► Risk assessments across a company’s global supply chain
Join now:
#EYSustainability

15. Page 15 Let’s talk: sustainability Q2 2014
Next steps
► Understand the environmental and social priorities of your
investors
► Ensure there is a process in place to handle requests from
shareholders on these topics
► Plan for ongoing dialogue to:
► Secure investor support
► Mitigate against receipt of future proposals
► Identify opportunities
Join now:
#EYSustainability

16. Page 16 Let’s talk: sustainability Q2 2014
Today’s agenda
Join now:
#EYSustainability
► Nine key elements of a sustainability strategy
► Proxy season 2014: preview of the environmental
and social shareholder proposals
► Banking on the benefits of accounting for GHG
emissions
► Using sustainability for competitive advantage in
government procurements
► Setting credible sustainability goals that drive real
business value

17. Page 17 Let’s talk: sustainability Q2 2014
Banking on the benefits of accounting for
GHG emissions
Sustainability
Tax
implications Climate
change
Beyond
compliance
Emissions
Energy
agendaInnovation
Reporting
Social
impact
Supply
chain
Reporting
Emissions
Beyond
compliance
Reporting
Climate
change
Join now:
#EYSustainability

18. Page 18 Let’s talk: sustainability Q2 2014
Measuring GHG emissions throughout the
value chain
Availability of
methods to
measure impact
Impact
Directly generated
emissions
Established standards
exist
Moderate to high
Financed
emissions —
emissions of
investment projects
and loan portfolios
Standards in
development
Potentially high
Banks can reduce their direct energy use and emissions,
but they may be able to have a bigger impact via their
investments, loans and financial instruments.

19. Page 19 Let’s talk: sustainability Q2 2014
Response of financial institutions
► Develop and implement methods to measure both the
operational and financed emissions
► Know the information — then decide how to use it
► Internal decision making
► External reporting
► Stay one step ahead
► Influential environmental groups and investors are armed
with substantial information
Join now:
#EYSustainability

20. Page 20 Let’s talk: sustainability Q2 2014
Unlocking business value
► New business opportunities: focus on reducing
GHG emissions may produce new opportunities
for financial institutions
► Green bonds
► Green mortgages — financing for consumer homes
► Improved reputation
► Positions financial institution as a leader
► Demonstrates a clear commitment to strong ESG programs
► Increased transparency leads to credible measurement
and reporting of sustainability efforts
Join now:
#EYSustainability

21. Page 21 Let’s talk: sustainability Q2 2014
What’s next
► Aligning with emerging standards for measuring
GHG emissions
► World Resources Institute (WRI) working group to
create Financial Sector Guidance for the Greenhouse
Gas Protocol’s Corporate Value Chain (Scope 3)
Accounting and Reporting Standard
► Beyond financial institutions to institutional investors
► Examine how this might be applicable to the supply
chains (or value chains) of other industries
Join now:
#EYSustainability

22. Page 22 Let’s talk: sustainability Q2 2014
Today’s agenda
Join now:
#EYSustainability
► Nine key elements of a sustainability strategy
► Proxy season 2014: preview of the environmental
and social shareholder proposals
► Banking on the benefits of accounting for GHG
emissions
► Using sustainability for competitive advantage
in government procurement
► Setting credible sustainability goals that drive real
business value

23. Page 23 Let’s talk: sustainability Q2 2014
Using sustainability for competitive
advantage in government procurement
Sustainability
Tax
implications Climate
change
Beyond
compliance
Emissions
Energy
agendaInnovation
Reporting
Social
impact
Supply
chain
Reporting
Innovation
Join now:
#EYSustainability
Beyond
compliance
Supply
chain
Climate
change

24. Page 24 Let’s talk: sustainability Q2 2014
Opinion check
Does your company’s procurement function
consider the environmental and social performance
of your suppliers when making purchasing
decisions?
A. Yes
B. No
C. Don’t know or does not apply (EY, faculty, other)

25. Page 25 Let’s talk: sustainability Q2 2014
Just like companies, government agencies:
► Look for ways to reduce costs
► Need to meet requirements set by various stakeholders
► Federal Acquisition Regulation (FAR) 23.103
► Office of Management and Budget (OMB) Sustainability
and Energy Scorecard
► Think in terms of Total Cost of Ownership, i.e., add
maintenance and disposal costs to the “price”
If a company can demonstrate that its solution is more
efficient to run and maintain, and less expensive to dispose
of, those benefits equate to real cost savings for the agency.
Why sustainability matters to government
agencies (and other institutional purchasers)

26. Page 26 Let’s talk: sustainability Q2 2014
Making sustainability a competitive
advantage in government procurement
Advantage for supplier organizational sustainability
► Pass savings on to government
► Energy-efficient buildings
► Conferencing versus travel
► Package and ship efficiently
► Link your sustainability
initiatives to a Strategic
Sustainability Performance
Plan (SSPP)
► Agencies must meet SSPP goals
► Agencies can leverage supplier initiatives
► Mitigate environmental risks that may cause supply disruptions
► Government is risk adverse
Competitive advantage:
highlight sustainability
initiatives related to
agency SSPP goals
and risk concerns

27. Page 27 Let’s talk: sustainability Q2 2014
How to use sustainability for procurement
competitive advantage
Communicating your sustainability value
effectively could make the difference between
winning or losing an important contract.
► Know your sustainability benefits — company and product
► Effectively communicate them in procurements
► Link them to agency goals and risk concerns
Join now:
#EYSustainability

28. Page 28 Let’s talk: sustainability Q2 2014
Today’s agenda
Join now:
#EYSustainability
► Nine key elements of a sustainability strategy
► Proxy season 2014: preview of the environmental
and social shareholder proposals
► Banking on the benefits of accounting for GHG
emissions
► Using sustainability for competitive advantage in
government procurements
► Setting credible sustainability goals that drive
real business value

29. Page 29 Let’s talk: sustainability Q2 2014
Setting credible sustainability goals that
drive real business value
Sustainability
Tax
implications Climate
change
Beyond
compliance
Emissions
Energy
agendaInnovation
Reporting
Social
impact
Supply
chain
Reporting
Beyond
compliance
Innovation
Reporting
Social
impact
Emissions
Join now:
#EYSustainability

30. Page 30 Let’s talk: sustainability Q2 2014
Opinion check
Which of the following business drivers are most
relevant to your sustainability goal setting?
A. Brand reputation
B. New revenue opportunities
C. Operational/costs savings
D. Social license to operate
E. Risk mitigation
F. Don’t know or does not apply (EY, faculty, other)

31. Page 31 Let’s talk: sustainability Q2 2014
Business value
► Environmental goals
► Many can be directly linked to driving cost savings
Financial
capital
Dependency
on natural
capital
Example:
energy efficiency
► Social goals
► Reputational risks could be hiding in the supply chain and
erode reputational capital
► Transparency with stakeholders through goal setting can
build reputational capital Join now:
#EYSustainability

32. Page 32 Let’s talk: sustainability Q2 2014
Business value
► Goals should:
► Be relevant to your organization’s value drivers and
focused on the key resources and relationships your
organization depends on for success
► Be specific, measurable and realistic
Goal setting plays a crucial role in ensuring
that an organization’s sustainability program
is driving real business value.
Join now:
#EYSustainability

33. Page 33 Let’s talk: sustainability Q2 2014
Challenges to setting relevant goals
► Defining commitments in a clear manner
► Engaging top-level executives and middle management
► Determining what counts and setting priorities
► Identifying quantifiable metrics while balancing costs of
reporting with usefulness of the output
► Building infrastructure to produce reliable and complete
data for progress statements
► Maintaining focus on continuous improvement
► Sustainability isn’t ‘once and done’
► Update goals and seek new sustainability opportunities
Join now:
#EYSustainability

34. Page 34 Let’s talk: sustainability Q2 2014
Tips for goal setting
► Assemble the right team — get buy-in from executives
and frontline implementers
► Focus goals on material areas and do not over extend
► Identify instruments to measure and monitor performance
before you finalize goals
► Provide relevant and meaningful context for goals that are
relevant to your company’s impact to the business, the
local community and the global community (science-
based environmental goals)
► Be prepared for the naysayers — sustainability goals will
be scrutinized, so clearly define key terms in your
commitments

35. Page 35 Let’s talk: sustainability Q2 2014
One-minute recap

36. Page 36 Let’s talk: sustainability Q2 2014
Continue the conversation
► Let’s talk: sustainability
A new point of view for business
leaders — April 2014
► Tomorrow’s investment rules
Global survey of institutional
investors on nonfinancial performance
► Let’s talk: sustainability
Addressing risks, overcoming challenges
and achieving results
Connect with us:
► ey.com/us/sustainability
► @EYnews
► @EY_Sustainable

37. Page 37 Let’s talk: sustainability Q2 2014
Opinion check
Which of these topics would you like us to address
in an upcoming webcast?
A. Conflict minerals reporting round-up
B. Using the Environment, Health and Safety
program to improve the culture of compliance
C. Why carbon still matters
D. Risks and opportunities in oil and gas
E. Other (Use the QA feature to send your topic ideas)
Select all that apply

38. Page 38 Let’s talk: sustainability Q2 2014
Contact us
Nancy Gillis
Chris Hagler
@chrishagler
Leisha John
Ben Miller
@benleemiller
Allie Rutherford
+1 703 3281493
nancy.gillis@ey.com
+1 404 817 5799
chris.hagler@ey.com
+1 305 415 1480
leisha.john@ey.com
+1 604 891 8320
benjamin.l.miller@ca.ey.com
+1 202 327 7026
allie.rutherford@ey.com

39. Page 39 Let’s talk: sustainability Q2 2014
Thanks for participating.