Johnson & Johnson partnered with Deloitte to develop a sustainability valuation model that estimates the financial value of market leadership in sustainability for Johnson & Johnson's Medical Device & Diagnostics sector franchises. The model focuses on "product stewardship" as a differentiator and estimates potential revenue gains or losses from shifts in market share due to sustainability leadership or lack thereof. Initial results found potential revenue gains of $40 million from sustainability leadership and potential losses of $100 million from a competitor taking market share on sustainability. Caesars Entertainment defines its social sustainability through pillars of human rights, labor practices, society, and environment. It aims to highly integrate sustainability into its business and highly leverage company assets for social impacts.

1. Conquering Uncharted
Territory in the ROI of
Sustainability
Daniel Aronson, Deloitte
Erol Odabasi, Johnson & Johnson
Gwen Migita, Caesars Entertainment
Bea Boccalandro, VeraWorks

2. Quantifying Sustainability:
A Valuation Model
Erol Odabasi, Director, Sustainability
Johnson & Johnson – Medical Devices & Diagnostics
Daniel Aronson, Director and Practice Leader
Sustainability Transformation
Deloitte Consulting, LLP
2

3. What We’ll Cover Today
• Who is Johnson & Johnson Medical Device & Diagnostics?
• Broader context – health care sustainability challenges
• Customers and marketplace trends
• How Johnson & Johnson is responding
• Sustainability Valuation Model for MD&D
• Takeaways and future evolution
3

4. Johnson & Johnson
4
Sixth-largest
consumer health
company
Largest and most
diverse MD&D
company
Eighth-largest
pharmaceutical
company
• Founded in 1886
• 128,000 employees worldwide
• 275 operating companies in 60 countries
• $67 billion in revenues in 2012

5. Confidential – For J&J Use Only
We Are Three Global Operating Committees. . .
Medical Device & Diagnostics
Global Surgery Group Global Medical Solutions Global Orthopaedics
5

6. Our Definition of Sustainability
We define sustainability as
fulfilling Our Credo
responsibilities so people,
planet & business can all
live in good health, today
& tomorrow.
Customers
Employees
Our Communities
Stakeholders

7. Health Care Sustainability Challenges
• GDP: 17% in U.S. and growing
• Energy: 2nd largest energy user of any industry
(Open 24/7)
• GHG emissions: U.S. hospitals contribute 8% of
nation’s total emissions
• Water: Top 10 users
• Waste: U.S hospitals generate 5.9 million tons
annually
• Chemicals of Concern: Mercury in waste stream,
4th largest U.S. source
• Continued pressure on health care systems:
Aging population and chronic diseases
• Access to health care: Increasing pressures to
provide options to billions of people globally
7

8. Customer & Marketplace Trends
Purchase Drivers of Sustainable Products
87% of hospitals incorporating
sustainability into their operations
54%
Of hospitals say
green attributes are
very important in
their purchasing
decisions
40%
Of hospitals expect
their future RFPs to
include
questions/criteria
regarding green
attributes of products
85%
Of hospitals rate being
free of heavy metals
and latex, end-of-life
solutions and energy
efficiency as important
attributes
35%
Of hospitals switched
suppliers due to
additional
green/sustainable
product offerings

9. Customer & Marketplace Trends
9
• 20% of hospitals have an
Environmental Preferred Purchasing
program
• Sustainability Scorecards
standardized and integrated
• Growing influence of Group
Purchasing Organizations
Uses sustainability in
purchasing decisions
Asks about sustainability but
doesn’t currently use it in
decision making
Does not consider
sustainability in decisions

11. Customers
requiring
sustainability
information during
procurement
Competitors
developing
customer
sustainability
solutions
“Green” attributes
no longer an
option
Global regulations
will impact
products now and
in the future
Sustainable
product innovation
Chemicals of
Concern
Drivers for Action Sustainable Outcomes
More sustainable
product portfolio
reduces customer’s
environmental impact
Become customer
partner of choice
Assure compliant
and sustainable
products are
available to our
customers

12. Product Stewardship
12
Focus on entire product lifecycle to ensure
sustainable products are available to customers
Grow: Increase sustainable
product offerings to promote
competitive advantage
Protect: Manage regulatory
compliance and align with
Healthy Future 2015 Goals
Engage/Sustain: Drive
internal engagement around
product stewardship

13. 13
What is EARTHWARDS®?
A design and evaluation process that supports sustainable product
innovation within the Johnson & Johnson Family of Companies, moving
us towards a healthier future.
Product Stewardship: EARTHWARDS®

14. 14Confidential
Can Sustainability be Valued?

15. One key challenge in valuation is not missing any of the categories of value
e.g., Obsolescence
e.g., Supply Context
e.g., Brand
e.g., Management
Cost
e.g., Customer
Relationship
Tangible Intangible
e.g., Materials Above the
“Waterline”
Somewhat Submerged
Deeply Submerged

16. Sustainability Valuation Model
16
• Johnson & Johnson partnered with Deloitte to develop a model that
estimates financial value of market leadership in sustainability for MD&D
sector franchises
• Model focused on “Product Stewardship” as a differentiator:
– Opportunity for increasing market share
– Revenue at risk by not differentiating and allowing competitors to get
there first
• Limited number of “product stewardship” factors were analyzed:
– Use of recycled material in product or packaging
– Product end-of-life solutions
– Use of chemicals of concern in products
– Reduced packaging
– External supply chain management
– Competitors’ commitment to sustainability (i.e. policy, reporting)
Confidential

17. Sustainability Valuation Model
17
• Identify fraction of customers who use
sustainability in decision making
• Determine weight of sustainability in
purchasing decisions
Confidential
• 20% currently have EPP
programs
• Those with EPP programs
give sustainability 10%
weighting
Model inputs: Customer Segmentation

18. Sustainability Valuation Model
18
• Identify fraction of products that are
minimally differentiated, enabling
sustainability to make a difference
Confidential
• Determine percentage of the time
franchise wins when products are
minimally differentiated
Model inputs: Product Differentiation
Model inputs: Sustainability Leadership Position
• Identify position of leadership:
competitor, franchise, neither
• Determine financial results of
shifting a fraction of minimally
differentiated business through
sustainability

19. Sustainability Valuation Model
19
Model Outputs Revenue Risk & Opportunity
Could Johnson &
Johnson MD&D use
sustainability to attain
a competitive
advantage over a
competitor and
capture market share?
Yes, recognized
sustainability
platforms could result
in potential revenue
gains of approximately
$40M.
Could a competitor
take business and
market share away
from Johnson &
Johnson MD&D
based on the
competitor having a
more sustainable
offering?
Yes, with potential
revenue losses that
approximates $100M.

20. Takeaways and Future Evolution
• Cannot rest on laurels; must build on Johnson
& Johnson’s legacy
• Integrating sustainability into business model
critical to maintain or advance market
leadership
• Model will be a tool for investment decisions,
but it’s not a silver bullet
• Future application of model
20

21. Thank You
Erol Odabasi
EOdabasi@its.jnj.com
Daniel Aronson
daronson@deloitte.com

22. Social ROI
An External Approach to Sustainability ROI
Gwen Migita, Caesars Entertainment & Bea Boccalandro of VeraWorks

23. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
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Driving Principle: The Code of Commitment
A Commitment
to all our
employees
to treat them
with respect
and provide
satisfying
career
opportunities
The Caesars Code of Commitment governs the
conduct of our business.
It is a public pledge to our employees, guests,
communities, and the environment to honor the
trust they have placed in us.
A Commitment
to all our
customers
to promote
responsible
gaming
A commitment
to responsible
stewardship of
the
environment
A commitment
to all our
communities
to help make
them healthy
and vibrant
places to live
and work

24. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
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•Mitigation measures of operations
with significant impact to local
communities (RG)
•Training in anti corruption practices
•Public policy positions and
lobbying
•Anticompetitive behavior
•Compliance
•RG compliance & violations
•Customer satisfaction practices
•Marketing & Advertising Code
and violations
•Customer privacy and data
violations
•Monetary value for fines
•Employment
•Labor Management Relations
•Occupational Health & Safety
•Training & Education
•Diversity & Equal Opportunity
•Investment & procurement
practices
•Non-discrimination
•Freedom of association &
collective bargining
•Child labor & Forced Labor
•Security practices
•Indigenous rights
•Remediation
Human
Rights
Labor
Practices
& Decent
Work
Society
Product
Respon-
sibility
Social Sustainability

25. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
25
At Caesars we define Community
Involvement as Philanthropy & ECI
Foundation
63%
Property
28%
Corporate
9%
Discretionary Giving Comes from Property
Planned Operating Income* of Giving 2012 Budgets
Property $2 Million
Foundation $5.6 Million
Corporate $1 Million
*Exceptions are Tribal, JV
and International Properties
In many jurisdictions, we also have “mandated giving” as part of our gaming licenses. In 2012, this
was about $60M to Foundations, Infrastructure, Education, and Development Authorities

26. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
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Community Employees Guests Environment
Community Relations &
Each property hosts a HERO team as the primary form of Employee
Community Involvement 600+ events annually
Found/Corp/Propy
Philanthropy
Foundation requests
require a volunteer
component for
employees
Many property/corporate
relationships do as well
Engagement
Business
Resource Groups
(Las Vegas,
Rincon) have
community
outreach goals
Social Impact
Each property
has a RG Chair
with links to local
Problem
Gaming/
Responsible
Gaming bodies
Responsible Gaming
Sustainability
Employees build
CodeGreen into
their jobs and
through
community
projects
Environmental
Employees participate in the community through each
pillar of the Code
Volunteerism

27. 27
Overall Goal: Highly integrated and highly
leveraging of company assets for social impacts
Sources: Based on the work of Michael Porter and Mark Kramer.
high
high
low
low
Integration into
business
functions
Leveraging of corporate assets for
the benefit of societal causes
• High business
effectiveness (ROI)
• Low societal
effectiveness (SROI)
• High business
effectiveness (ROI)
• High societal
effectiveness (SROI)
• Low business
effectiveness (ROI)
• Low societal
effectiveness (SROI)
• Low business
effectiveness (ROI)
• High societal
effectiveness (SROI)

28. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
2828
• Caesars Foundation
contributed $400K to
bring a soap recycling
facility to Las Vegas
 Facility services
hotels in Western
U.S.
• All Caesars resorts in
North America collect
lightly used soaps and
shampoo amenities
• Over 50 Tons collected
annually
Leverages Our Assets with High
Societal Impact

29. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
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30. CAESARSENTERTAINMENT®|PROPRIETARYANDCONFIDENTIAL
30

31. Q: What are the monetized social benefits associated with the company’s societal
contributions and how do these compare to the average for US companies?
A:
1. Agreed that is would be only an
estimate and to be upfront about its
limitations.
2. Included only the societal
benefits that were already
measured, could be
monetized with a
reasonable level of validity
and for which there was
benchmark data: monetary
giving, taxes, volunteering
and salaries & benefits.
4. Converted both company
and benchmark data, if
necessary, to per dollar
revenue figures for each
type of benefit.
3. Identified external
benchmark data for each
type of benefit.
5. Got estimate of benchmarked
monetized social benefits!
Bea Boccalandro www.veraworks.com