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SB'12 - Cristian Barcan - BASF, Charlene Wall-Warren - BASF, James Reagan - National Cattlemen’s Beef Association, Jeff Rice - Walmart, Mike Fuepel - The Sustainability Consortium

The document outlines the importance of materiality metrics and decision-making in pursuing value-added sustainability within various industries, particularly focusing on collaborations among major companies like BASF and Walmart. It emphasizes the need for holistic approaches in assessing supply chains, consumer behavior, and innovative practices that enhance sustainability while addressing the challenges of resource scarcity and changing demographics. Additionally, it discusses the role of the Sustainability Consortium in developing standardized measurement and reporting systems to drive improvement across product lifecycles.

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MATERIALITY METRICS AND DECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Cristian Barcan, BASF Charlene Wall-Warren, BASF James Reagan, National Cattlemen’s Beef Association Jeff Rice, Walmart Mike Faupel, The Sustainability Consortium
MATERIALITY METRICS AND DECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Charlene Wall-Warren, BASF
Creating “chemistry” for sustainability Sustainable Brands June 4, 2012 San Diego Charlene Wall-Warren, BASF
1 | Chemistry & connections… 2 | Agenda for today 3 | Let’s get started! 4 4
What new bonds can we create amongst common elements? n  How do we … n  holistically & broadly consider the value chain n  determine & prioritize the top issues n  create a common language, common objectives n  consider the end-consumer product n  reach outside of our walls - upstream & downstream n  maximize the impact of our actions 55
Company Overview: BASF – The Chemical Company §  The world’s leading chemical company §  Serves all major industries §  385 production facilities including six Verbund sites §  World-class, innovative, high-value products §  Intelligent, sustainable system solutions §  2011 Sales: €73.5 Billion §  Employees: 111,000+
DRAFT Why – our purpose We create chemistry for a sustainable future. BASF Strategy: We create chemistry 7
Sustainability will become even more important SUPPLY Earth’s resources DEMAND + Annual Human beings now regenerative demand more from capacity the Earth than can be 1976 2010 of the planet regenerated Consumption of Earth’s resources BASF Strategy: We create chemistry Source: Accenture. 8
Demographic challenges set the stage for the future Nine billion people in 2050 but only one earth Resources, Food & Nutrition Quality of life Environment & Climate Chemistry as enabler 9 9
Sustainability drives innovations in new growth fields Resources, Environment Food & Nutrition Quality of life & Climate Chemistry as enabler Customer industries Transportation Construction Consumer Health & Energy & Goods Nutrition Electronics Agriculture Resources Batteries Heat Organic Plant Energy management Enzymes Medical management Electronics biotechnology Lightweight Functional Rare earth composites crop care metals recycling Heat Wind energy Growth management fields* Water solutions BASF Strategy: We create chemistry 10
1 | Chemistry & connections… 2 | Agenda for today 3 | Let’s get started! 11 11
Agenda for today n  Need & direction for the future - Walmart n  "The increased importance of sustainability in consumer goods value chains" Walmart, Jeff Rice - Director, Sustainability 1:40-2:10 n  Collaborative global approach - TSC n  "Enabling collaboration for sustainable consumer goods" The Sustainability Consortium, Mike Faupel - Director, Operations 2:10 – 2:40 n  Break - 2:40 – 2:55 12 12
Agenda for today n  Conceptual approach - BASF n  "SET for more sustainable brands" Cristian Barcan - Applied Sustainability Director, BASF Nutrition & Health) – 2:55 – 3:10 n  Case Study - NCBA n  "More sustainable beef program" National Cattlemen's Beef Association, J.O. Reagan - Executive VP– 3:10 – 3:25 n  You guys work! n  "How to create the right chemistry along your value chain" - 3:25 – 4:20 n  Conclusions…- 4:20 – 4:30 13 13
1 | Chemistry & connections… 2 | Agenda for today 3 | Let’s get started! 14 14
15
DISCLAIMER: This document, or any answers or information provided herein by BASF, does not constitute a legally binding obligation of BASF. While the descriptions, designs, data and information contained herein are presented in good faith and believed to be accurate, it is provided for your guidance only. Because many factors may affect processing or application/use, we recommend that you make tests to determine the suitability of a product for your particular purpose prior to use. It does not relieve our customers from the obligation to perform a full inspection of the products upon delivery or any other obligation. The claims and supporting data provided in this publication have not been evaluated for compliance with any jurisdiction’s regulatory requirements and the results reported may not be generally true under other conditions or in other matrices. Users must evaluate what claims and information are appropriate and comply with a jurisdiction’s regulatory requirements. NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE MADE REGARDING PRODUCTS DESCRIBED OR DESIGNS, DATA OR INFORMATION SET FORTH, OR THAT THE PRODUCTS, DESIGNS, DATA OR INFORMATION MAY BE USED WITHOUT INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. IN NO CASE SHALL THE DESCRIPTIONS, INFORMATION, DATA OR DESIGNS PROVIDED BE CONSIDERED A PART OF OUR TERMS AND CONDITIONS OF SALE. 16
MATERIALITY METRICS AND DECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Jeff Rice, Walmart
Sam Walton’s Vision “ Give the world an opportunity to see what it's like to save and have a better life.”
Sustainability unlocks the true potential of Walmart’s mission: Save Money, Live Better “ Taking costs out of the business, getting rid of waste, buying in a more responsible way, and giving back to our communities, is simply staying true to who we are. By bringing together save money with live better, we make our business stronger.” Mike Duke President and CEO, Wal-Mart Stores, Inc.
Approach to sustainability Operations Operate for Less Buy for Less associates suppliers sustainability 360 Grow Sales Saving people money so they can live better. Sell for Less communities customers Productivity Loop www.walmartstores.com/sustainability
We began in 2005 with three aspirational goals that guide everything we do in sustainability To be supplied 100% by renewable energy To create zero waste To sell products that sustain people and the environment
Sustainability unlocks the true potential of Walmart’s mission: Save Money, Live Better “ As Walmart continues to grow and become a better and more sustainable business, those suppliers who partner with us in building a responsible supply chain will be the suppliers that will grow with us. And you too will become a better and more sustainable business. Reducing waste, being more efficient, and doing the right things the right way will lower costs for your factories, for your businesses and, ultimately, for the Walmart customer.” Mike Duke President and CEO, Wal-Mart Stores, Inc.
First, we focused on specific product innovations Driving scale and lowering the cost of money saving, more efficient products. Building the market and leveling the playing field Supporting new product launches Increasing offerings, changing assortment, adding new suppliers. Leading through our private brands
In 2009, we committed to the Sustainability Index Sustainability Index: Tools that will… • Improve the sustainability of the products our customers love • Integrate sustainability into our core business • Drive the productivity loop by reducing cost, increasing product quality and finding supply chain efficiency “If we work together, we can create a new retail standard • Increase customer’s trust in us and the brands for the 21st century." we carry by leading in transparency
Walmart will Integrate Sustainability Into our Business “ we are building sustainability into the nuts and bolts of what we do as a retailer – buying and selling merchandise. I believe we are at a turning point in retail history… Working in partnership with nearly 100 other companies, we think we’ve found an innovative way to drive change. The Sustainability Consortium has begun delivering tools to our product buyers to help us evaluate product and supplier sustainability Duncan Mac Naughten President and CEO, Wal-Mart Stores, Inc.
TSC’s Work Can Supports Multiple Uses ▪  Training / Incentives ▪  Discussion Guides ▪  Scorecarding ▪  Prioritization and goal setting ▪  Product Design ▪  Customer Engagement
Sustainability Index: Core Components Science and Alignment Integrate and Act Engage Customers The Sustainability Integrate Into Engage Our Consortium Business Customers ▪ Science / Standards ▪ Supplier / Category ▪ Lead industry in metrics customer transparency ▪ Industry Alignment ▪ Incentives ▪ Build customer trust ▪ Stakeholder Engagement ▪ Business Processes ▪ Engage across channels ▪ External Credibility ▪ Training
We are training our buyers based on TSC science Identify priority issues Highlight improvement opportunities Sustainable Value Networks Walmart Stores, Inc. Confidential
TSC KPIs are Driving Category Scorecards Identify leaders and laggards Highlight opportunities Set goals, track progress
Walmart US: Integrating into Core Business Processes Annual Joint Business Business Planning Planning Category Line Strategy Reviews
Building into the Sam’s Club Brand Promise: Great Quality Merchandise at an Amazing Value EVP Portfolio Strategy Merchandise Portfolio Category Group SVP Category Strategy Joint Business Category Planning VP DMM Item Value Framework Buyer
We’re going to ‘make it real’ with incentives “ Every buyer will have sustainability goals as part of his or her objectives, and we will use the Index as the tool to measure progress against those goals. We’ll recognize and reward those buyers and suppliers who are doing well. We will also ask suppliers who aren’t performing well to develop plans to improve, and we’ll hold them accountable for showing progress. Duncan Mac Naughten President and CEO, Wal-Mart Stores, Inc.
Questions? Jeff Rice Director, Sustainability Jeffrey.Rice@Wal-mart.com
MATERIALITY METRICS AND DECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Mike Faupel, The Sustainability Consortium
Creating Connections for Value Chain Sustainability Mike Faupel, TSC June 4, 2012
Measurement and reporting systems are crucial to progress in product sustainability but are coupled with an array of challenges. Today Challenges include Science is enabling an Lack of a harmonized understanding of social and measurement and reporting environmental impacts and approach: benefits •  Complexity driven by the vast variety of products Various corporate and social initiatives launched •  No holistic view of the value in attempt to address chain product sustainability •  No capability to credibly differentiate products based Global regulations on sustainability are emerging with unpredictable metrics •  Need for consistency and transparency in measurement and reporting But challenges exist… Source: TSC team analysis 37
The Sustainability Consortium improves decision making for product sustainability throughout the entire product life cycle across all sectors. Vision To advance science to drive a new generation of innovative products and supply networks that address environmental, social, and economic imperatives Enabling the consumer goods industry to do things that matter Mission about things that matter. To design and implement credible, transparent and scalable science-based measurement and reporting systems accessible for all producers, retailers, and users of consumer products Source: The Sustainability Consortium 38
1 TSC is uniquely bringing together stakeholders and creates unparalleled opportunity for collaboration. Credibility Leading universities and NGOs using science-based approach to identify areas of adverse impact in the supply chain Efficiency Academic Minimizing multiple similar efforts Institutions and reducing supplier burden of variable information requests Harmonization The Creating clear agreed upon terms Sustainability and definitions by all stakeholders Consortium Identifying common life cycle stages, metrics, and reporting categories Non-profit Corporations organizations Source: TSC 39
Translating TSC’s mission into impact requires doing four things: Using a multi-stakeholder … to create practical 1 2 approach… measurement tools… Approach … that enable proactive … and unlock value in the 3 innovation in sustainability… 4 supply chain Impact Source: TSC team analysis 40
TSC tools will enable sustainable innovation across the value chain Current products Future products Understand Share Declare product category hotspots1 and drivers information on best Differentiate Communicate to consumers practices products against baseline Level 1 – Level 2 – Category level Product level ▪  Broad product ▪  Product-specific categories ▪  Quantitative tool to ▪  Qualitative benchmark against assessment of hotspots1 baseline 1 Areas of adverse environmental and social impact across product supply chain 41
2 TSC category-level products have 3 major components… Category Sustainability Key Performance Category Dossier Profile (CSP) Indicators (KPIs) Collection of evidence on Synthesis of product Metrics / questions to product category and its sustainability knowledge measure and track product supply chain, environmental and improvement category sustainability and social hotspots, and opportunities improvement opportunities Source: TSC 42
2 … to be used by buyers and suppliers to address product sustainability in a cost efficient way TSC provides Buyers Communicate efficiently and effectively with suppliers: •  Ask category-specific questions •  Track supplier performance using KPIs Improved product •  Hotspots sustainability •  Improvement and cost opportunities Suppliers •  KPIs Address product sustainability efficiency more effectively and efficiently: •  Use a single reporting tool across buyers •  Enhance product development •  Reduce spending on sustainability research and reporting •  Evaluate quality of input materials Source: TSC 43
2 TCS is working on 100 Level 1 products across 8 sectors. Food, Beverage Electronics Automotive & Agriculture Toys Paper Other Home & Personal Care Apparel Source: TSC Knowledge Base (please see complete list of product categories in Appendix) 44
3 TSC’s tools and frameworks enable proactive innovation Companies recognized and Transparent, differentiated by creating standardized products that address areas that and harmonized matter systems Drives at-scale improvements by Proactive coordinating and sharing best Innovation practices Collaborate with stakeholders on Key environmental sustainability solutions and social hotspots “TSC can bring manufacturers, retailers, and consumer advocacy groups together to think how to develop a campaign to drive consumer behavior” TSC member company Source: TSC member interviews; team analysis 45
4 TSC’s measurement and reporting system will drive impact by unlocking the value in the supply chain. Harmonized and transparent system Transparency reduces complexity and saves costs of Reporting throughout the supply chain Standard metrics enable suppliers Standardization and buyers to work together on the of Metrics same environmental and social goals Reducing cost and complexity of Reduced Cost sustainability research and reporting and Complexity allows companies to tackle impact areas faster and more efficiently 46
47
Supporting Slides 48
Product Prioritization Selection and prioritization draws on scientific and practical considerations •  Contribu-on  to  total  impact  of  Consumer  Goods  Industry  (where   Impact  =  Consumer  spending  x  es8mated  impact  from  economic  input/ Category  Selec-on   output  data),  and   Criteria   •  Member  and  Stakeholder  Preferences  (e.g.  categories  with  the  most   member  overlap  (produced  or  sold)  and/or  known  cri8cal  issues  (e.g.   WWF’s  cri8cal  agro-­‐commodi8es)   Mul-ple  Criteria.  General  theme:  Efficient  delivery:   • Categories  that  are  the  most  complete  (e.g.  Laptops,  Detergents)   • Available  informa8on  or  ini8a8ves  to  build  upon  (e.g.  Milk,  Wine)   Priori-za-on  of   • Categories  with  similar  inputs  (e.g.  Breakfast  Cereals,  Beer,  Bread)   Wave  1  Products   • Spread  the  workload  (e.g.  <=3  categories  per  produc8on  group)       Waves  2  &3  –  Sector  members  have  opportunity  to  shape  sequence  of   categories   49
KPI Development and Use Definition ▪  KPIs are questions that members can use to track organizational progress on issues and opportunities described in a sustainability profile. Required Elements of KPIs ▪  Must stem from an item identified in the CSP and described on the Dossiers. KPIs must be tied to one more of the following: ▪  Hotspots ▪  Critical Issues ▪  Stakeholder Concerns ▪  Must be objective ▪  Must be actionable Things to Consider When Developing KPIs ▪  Complexity and variety of types of products within categories ▪  Geographic variety ▪  Limits of innovation, difficulties in addressing KPIs technically and financially ▪  Verification of resulting actions ▪  Thresholds for respondent successc 50
Anti-Trust Statement The Sustainability Consortium is committed to facilitating a robust, open and honest exchange of ideas and information among its participants on subjects relevant to the agenda of Consortium meetings. It is also committed to compliance with all applicable laws, including antitrust and competition laws. To avoid any possible problems, communications and exchanges of information at or attendant to any Consortium‐related proceeding should directly relate to the issues on the agenda. There should be no discussions or exchanges of information regarding (1) what price any participant has or may charge for its products or services; (2) strategic business plans or (3) whether or not to do business with any person or entity. The Sustainability Consortium does not condone disparagement or untrue statements in any form. Violation of these policies could jeopardize other participants and the goals of the Consortium and will not be tolerated. Please let Kevin Dooley or Jon Johnson know immediately if you have a concern or question about a possible violation of this policy. 51
MATERIALITY METRICS AND DECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Christian Barcan, BASF
SET for More Sustainable Brands Cristian Barcan SET for Applied Sustainability, Nutrition & Health, BASF Corporation San Diego, June 4-7 2012
With 9 billion people on Earth predicted by 2050…. … And the need to use as much as 2.5 x planets worth to satisfy demand at current pace…. Changes Need to Happen! August  2011   December 2011 BASF  Nutri8on  &  Health   54   54
Major market trends – opportunities for growth Aging Growing Sustainability population urbanization Food safety Raise of the Health & Food security middle class Wellness December 2011 55 Copyright BASF SE
Geting into the Sustainability gear n  Start thinking holistic n  Plan SUSTAINABLE (beyond Society tomorrow) n  Strengthen partnerships with well positioned supply chain partners Ecology n  Go beyond price: Focus on supplying VALUE n  Collaborate Economy n  Employ measuring tools “You cannot manage what you don’t …know” December 2011 BASF Nutrition & Health 56
Sustainability – an opportunity, not a challenge n  A differentiation and innovation opportunity – making sustainability brand relevant n  Measurable along the entire value A journey, chain not a destination n  Not an “either or”: any product can be more sustainable n  Improving a products’ sustainability over time è continuous improvement December 2011 57 Copyright BASF SE
Sustainable development over time is a journey Starting point Path forward Next steps “Better for SET puts your product your Future” Consumer on a journey to Product more sustainability or Brand December 2011 58 Copyright BASF SE
Helping on The Journey Our SET Initiative to Selective Partners SUSTAINABLE “Better for Your Future” o  Corporate reporting o  Stakeholder perception analysis (Hot Spot Analysis) DESIRABLE DISTINCTIVE o  Eco-Efficiency Analysis® Consumer o  Eco-Efficiency Product or Online Manager® Brand o  Whole-chain traceability program o  Consumer and stakeholders CREDIBLE marketing & positioning December 2011 59 Copyright BASF SE
Reliable and sustainable value chains Our vision for tomorrow §  Supplier reliability §  Trust in the whole value chain §  Sustainable value chains - the norm §  Long term strategic partnership §  Innovation driven collaborations §  Fair trade practices §  Consumer focus §  “Better for our future” business December 2011 60 Copyright BASF SE
MATERIALITY METRICS AND DECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY James Reagan, National Cattlemen’s Beef Association December 2011 62
U.S. Beef Sustainability Project: Meeting the Growing Demand for Beef
9 billion people by 2050 70 % more food
Global Beef Cow Numbers 220,000 215,000 Million Head 210,000 205,000 200,000 195,000 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 YEARS
Beef Cow Inventory 40 F2011  DOWN  400,000  HEAD   39 38 37 36 Million Head 35 34 33 32 31 30 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Source: USDA F Projected 2011 YEARS
U.S. Beef Cow Operations 1,050,000 1,000,000 Number of Operations 950,000 900,000 850,000 800,000 750,000 700,000 650,000 600,000 YEARS Source: USDA
How  Do  We  Address  the   Challenge?     § Must  improve  the  Sustainability  of  all   Agricultural  Products     § Develop  Sustainability  Ini8a8ves   designed  to  enhance  Efficiencies  and   drive  Sustainability  in  the  beef  industry.    
Purpose & Approach •  Conduct  a  comprehensive  cow/calf  to   plate  sustainability  assessment  of  the   U.S.  Beef  Industry.       Ø Quan%fy  all  systems  inputs  and  outputs   Ø Iden%fy  areas  for  improvement  
Ultimate Goal Enhance  the  sustainability  of  U.S.  beef  to  ensure   a  beYer  quality  of  life  for  today’s  global   popula8on  as  well  as  genera8ons  to  come.  
Asking the Right Questions
Project Scope Hotspot Analysis §  Literature review §  Stakeholder’s survey Life Cycle Assessment §  Environmental, cost and social parameters Producer tool §  Eco-Efficiency Mgr Optimization Tool; Producer Tool
Long-Term Sustainability Project Benefits •  Supply chain focus in the right areas for improvement –  Will actually make a difference –  Avoid arbitrary imposed “sustainable” practices that are costly and impractical •  Create value for all participants in the value chain •  Effectively address the needs for more sustainable alternatives
Keep in mind 1.  Continuous improvement over time 2.  A journey, NOT a destination 3.  More sustainable product, rather than a sustainable product
Progress to Date ü Stakeholder survey has been finalized ü Interviews were completed in March ü  HSA was completed in April ü First modeling was held in April ü LCA work initiated on pre- and post-knocking box •  Industry rollout scheduled for mid-January 2013 •  Eco-efficiency model; Producer tool
SB'12 - Cristian Barcan - BASF, Charlene Wall-Warren - BASF, James Reagan - National Cattlemen’s Beef Association, Jeff Rice - Walmart, Mike Fuepel - The Sustainability Consortium
SB'12 - Cristian Barcan - BASF, Charlene Wall-Warren - BASF, James Reagan - National Cattlemen’s Beef Association, Jeff Rice - Walmart, Mike Fuepel - The Sustainability Consortium

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SB'12 - Cristian Barcan - BASF, Charlene Wall-Warren - BASF, James Reagan - National Cattlemen’s Beef Association, Jeff Rice - Walmart, Mike Fuepel - The Sustainability Consortium

  • 1.
    MATERIALITY METRICS ANDDECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Cristian Barcan, BASF Charlene Wall-Warren, BASF James Reagan, National Cattlemen’s Beef Association Jeff Rice, Walmart Mike Faupel, The Sustainability Consortium
  • 2.
    MATERIALITY METRICS ANDDECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Charlene Wall-Warren, BASF
  • 3.
    Creating “chemistry” for sustainability Sustainable Brands June 4, 2012 San Diego Charlene Wall-Warren, BASF
  • 4.
    1 | Chemistry& connections… 2 | Agenda for today 3 | Let’s get started! 4 4
  • 5.
    What new bondscan we create amongst common elements? n  How do we … n  holistically & broadly consider the value chain n  determine & prioritize the top issues n  create a common language, common objectives n  consider the end-consumer product n  reach outside of our walls - upstream & downstream n  maximize the impact of our actions 55
  • 6.
    Company Overview: BASF –The Chemical Company §  The world’s leading chemical company §  Serves all major industries §  385 production facilities including six Verbund sites §  World-class, innovative, high-value products §  Intelligent, sustainable system solutions §  2011 Sales: €73.5 Billion §  Employees: 111,000+
  • 7.
    DRAFT Why – ourpurpose We create chemistry for a sustainable future. BASF Strategy: We create chemistry 7
  • 8.
    Sustainability will becomeeven more important SUPPLY Earth’s resources DEMAND + Annual Human beings now regenerative demand more from capacity the Earth than can be 1976 2010 of the planet regenerated Consumption of Earth’s resources BASF Strategy: We create chemistry Source: Accenture. 8
  • 9.
    Demographic challenges setthe stage for the future Nine billion people in 2050 but only one earth Resources, Food & Nutrition Quality of life Environment & Climate Chemistry as enabler 9 9
  • 10.
    Sustainability drives innovationsin new growth fields Resources, Environment Food & Nutrition Quality of life & Climate Chemistry as enabler Customer industries Transportation Construction Consumer Health & Energy & Goods Nutrition Electronics Agriculture Resources Batteries Heat Organic Plant Energy management Enzymes Medical management Electronics biotechnology Lightweight Functional Rare earth composites crop care metals recycling Heat Wind energy Growth management fields* Water solutions BASF Strategy: We create chemistry 10
  • 11.
    1 | Chemistry& connections… 2 | Agenda for today 3 | Let’s get started! 11 11
  • 12.
    Agenda for today n Need & direction for the future - Walmart n  "The increased importance of sustainability in consumer goods value chains" Walmart, Jeff Rice - Director, Sustainability 1:40-2:10 n  Collaborative global approach - TSC n  "Enabling collaboration for sustainable consumer goods" The Sustainability Consortium, Mike Faupel - Director, Operations 2:10 – 2:40 n  Break - 2:40 – 2:55 12 12
  • 13.
    Agenda for today n Conceptual approach - BASF n  "SET for more sustainable brands" Cristian Barcan - Applied Sustainability Director, BASF Nutrition & Health) – 2:55 – 3:10 n  Case Study - NCBA n  "More sustainable beef program" National Cattlemen's Beef Association, J.O. Reagan - Executive VP– 3:10 – 3:25 n  You guys work! n  "How to create the right chemistry along your value chain" - 3:25 – 4:20 n  Conclusions…- 4:20 – 4:30 13 13
  • 14.
    1 | Chemistry& connections… 2 | Agenda for today 3 | Let’s get started! 14 14
  • 15.
  • 16.
    DISCLAIMER: This document, orany answers or information provided herein by BASF, does not constitute a legally binding obligation of BASF. While the descriptions, designs, data and information contained herein are presented in good faith and believed to be accurate, it is provided for your guidance only. Because many factors may affect processing or application/use, we recommend that you make tests to determine the suitability of a product for your particular purpose prior to use. It does not relieve our customers from the obligation to perform a full inspection of the products upon delivery or any other obligation. The claims and supporting data provided in this publication have not been evaluated for compliance with any jurisdiction’s regulatory requirements and the results reported may not be generally true under other conditions or in other matrices. Users must evaluate what claims and information are appropriate and comply with a jurisdiction’s regulatory requirements. NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE MADE REGARDING PRODUCTS DESCRIBED OR DESIGNS, DATA OR INFORMATION SET FORTH, OR THAT THE PRODUCTS, DESIGNS, DATA OR INFORMATION MAY BE USED WITHOUT INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. IN NO CASE SHALL THE DESCRIPTIONS, INFORMATION, DATA OR DESIGNS PROVIDED BE CONSIDERED A PART OF OUR TERMS AND CONDITIONS OF SALE. 16
  • 17.
    MATERIALITY METRICS ANDDECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Jeff Rice, Walmart
  • 19.
    Sam Walton’s Vision “ Give the world an opportunity to see what it's like to save and have a better life.”
  • 20.
    Sustainability unlocks thetrue potential of Walmart’s mission: Save Money, Live Better “ Taking costs out of the business, getting rid of waste, buying in a more responsible way, and giving back to our communities, is simply staying true to who we are. By bringing together save money with live better, we make our business stronger.” Mike Duke President and CEO, Wal-Mart Stores, Inc.
  • 21.
    Approach to sustainability Operations Operate for Less Buy for Less associates suppliers sustainability 360 Grow Sales Saving people money so they can live better. Sell for Less communities customers Productivity Loop www.walmartstores.com/sustainability
  • 22.
    We began in2005 with three aspirational goals that guide everything we do in sustainability To be supplied 100% by renewable energy To create zero waste To sell products that sustain people and the environment
  • 23.
    Sustainability unlocks thetrue potential of Walmart’s mission: Save Money, Live Better “ As Walmart continues to grow and become a better and more sustainable business, those suppliers who partner with us in building a responsible supply chain will be the suppliers that will grow with us. And you too will become a better and more sustainable business. Reducing waste, being more efficient, and doing the right things the right way will lower costs for your factories, for your businesses and, ultimately, for the Walmart customer.” Mike Duke President and CEO, Wal-Mart Stores, Inc.
  • 24.
    First, we focusedon specific product innovations Driving scale and lowering the cost of money saving, more efficient products. Building the market and leveling the playing field Supporting new product launches Increasing offerings, changing assortment, adding new suppliers. Leading through our private brands
  • 25.
    In 2009, wecommitted to the Sustainability Index Sustainability Index: Tools that will… • Improve the sustainability of the products our customers love • Integrate sustainability into our core business • Drive the productivity loop by reducing cost, increasing product quality and finding supply chain efficiency “If we work together, we can create a new retail standard • Increase customer’s trust in us and the brands for the 21st century." we carry by leading in transparency
  • 26.
    Walmart will IntegrateSustainability Into our Business “ we are building sustainability into the nuts and bolts of what we do as a retailer – buying and selling merchandise. I believe we are at a turning point in retail history… Working in partnership with nearly 100 other companies, we think we’ve found an innovative way to drive change. The Sustainability Consortium has begun delivering tools to our product buyers to help us evaluate product and supplier sustainability Duncan Mac Naughten President and CEO, Wal-Mart Stores, Inc.
  • 27.
    TSC’s Work CanSupports Multiple Uses ▪  Training / Incentives ▪  Discussion Guides ▪  Scorecarding ▪  Prioritization and goal setting ▪  Product Design ▪  Customer Engagement
  • 28.
    Sustainability Index: CoreComponents Science and Alignment Integrate and Act Engage Customers The Sustainability Integrate Into Engage Our Consortium Business Customers ▪ Science / Standards ▪ Supplier / Category ▪ Lead industry in metrics customer transparency ▪ Industry Alignment ▪ Incentives ▪ Build customer trust ▪ Stakeholder Engagement ▪ Business Processes ▪ Engage across channels ▪ External Credibility ▪ Training
  • 29.
    We are trainingour buyers based on TSC science Identify priority issues Highlight improvement opportunities Sustainable Value Networks Walmart Stores, Inc. Confidential
  • 30.
    TSC KPIs areDriving Category Scorecards Identify leaders and laggards Highlight opportunities Set goals, track progress
  • 31.
    Walmart US: Integratinginto Core Business Processes Annual Joint Business Business Planning Planning Category Line Strategy Reviews
  • 32.
    Building into theSam’s Club Brand Promise: Great Quality Merchandise at an Amazing Value EVP Portfolio Strategy Merchandise Portfolio Category Group SVP Category Strategy Joint Business Category Planning VP DMM Item Value Framework Buyer
  • 33.
    We’re going to‘make it real’ with incentives “ Every buyer will have sustainability goals as part of his or her objectives, and we will use the Index as the tool to measure progress against those goals. We’ll recognize and reward those buyers and suppliers who are doing well. We will also ask suppliers who aren’t performing well to develop plans to improve, and we’ll hold them accountable for showing progress. Duncan Mac Naughten President and CEO, Wal-Mart Stores, Inc.
  • 34.
  • 35.
    MATERIALITY METRICS ANDDECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Mike Faupel, The Sustainability Consortium
  • 36.
    Creating Connections for ValueChain Sustainability Mike Faupel, TSC June 4, 2012
  • 37.
    Measurement and reportingsystems are crucial to progress in product sustainability but are coupled with an array of challenges. Today Challenges include Science is enabling an Lack of a harmonized understanding of social and measurement and reporting environmental impacts and approach: benefits •  Complexity driven by the vast variety of products Various corporate and social initiatives launched •  No holistic view of the value in attempt to address chain product sustainability •  No capability to credibly differentiate products based Global regulations on sustainability are emerging with unpredictable metrics •  Need for consistency and transparency in measurement and reporting But challenges exist… Source: TSC team analysis 37
  • 38.
    The Sustainability Consortiumimproves decision making for product sustainability throughout the entire product life cycle across all sectors. Vision To advance science to drive a new generation of innovative products and supply networks that address environmental, social, and economic imperatives Enabling the consumer goods industry to do things that matter Mission about things that matter. To design and implement credible, transparent and scalable science-based measurement and reporting systems accessible for all producers, retailers, and users of consumer products Source: The Sustainability Consortium 38
  • 39.
    1 TSC is uniquely bringing together stakeholders and creates unparalleled opportunity for collaboration. Credibility Leading universities and NGOs using science-based approach to identify areas of adverse impact in the supply chain Efficiency Academic Minimizing multiple similar efforts Institutions and reducing supplier burden of variable information requests Harmonization The Creating clear agreed upon terms Sustainability and definitions by all stakeholders Consortium Identifying common life cycle stages, metrics, and reporting categories Non-profit Corporations organizations Source: TSC 39
  • 40.
    Translating TSC’s missioninto impact requires doing four things: Using a multi-stakeholder … to create practical 1 2 approach… measurement tools… Approach … that enable proactive … and unlock value in the 3 innovation in sustainability… 4 supply chain Impact Source: TSC team analysis 40
  • 41.
    TSC tools willenable sustainable innovation across the value chain Current products Future products Understand Share Declare product category hotspots1 and drivers information on best Differentiate Communicate to consumers practices products against baseline Level 1 – Level 2 – Category level Product level ▪  Broad product ▪  Product-specific categories ▪  Quantitative tool to ▪  Qualitative benchmark against assessment of hotspots1 baseline 1 Areas of adverse environmental and social impact across product supply chain 41
  • 42.
    2 TSC category-level products have 3 major components… Category Sustainability Key Performance Category Dossier Profile (CSP) Indicators (KPIs) Collection of evidence on Synthesis of product Metrics / questions to product category and its sustainability knowledge measure and track product supply chain, environmental and improvement category sustainability and social hotspots, and opportunities improvement opportunities Source: TSC 42
  • 43.
    2 … to be used by buyers and suppliers to address product sustainability in a cost efficient way TSC provides Buyers Communicate efficiently and effectively with suppliers: •  Ask category-specific questions •  Track supplier performance using KPIs Improved product •  Hotspots sustainability •  Improvement and cost opportunities Suppliers •  KPIs Address product sustainability efficiency more effectively and efficiently: •  Use a single reporting tool across buyers •  Enhance product development •  Reduce spending on sustainability research and reporting •  Evaluate quality of input materials Source: TSC 43
  • 44.
    2 TCS is working on 100 Level 1 products across 8 sectors. Food, Beverage Electronics Automotive & Agriculture Toys Paper Other Home & Personal Care Apparel Source: TSC Knowledge Base (please see complete list of product categories in Appendix) 44
  • 45.
    3 TSC’s tools and frameworks enable proactive innovation Companies recognized and Transparent, differentiated by creating standardized products that address areas that and harmonized matter systems Drives at-scale improvements by Proactive coordinating and sharing best Innovation practices Collaborate with stakeholders on Key environmental sustainability solutions and social hotspots “TSC can bring manufacturers, retailers, and consumer advocacy groups together to think how to develop a campaign to drive consumer behavior” TSC member company Source: TSC member interviews; team analysis 45
  • 46.
    4 TSC’s measurement and reporting system will drive impact by unlocking the value in the supply chain. Harmonized and transparent system Transparency reduces complexity and saves costs of Reporting throughout the supply chain Standard metrics enable suppliers Standardization and buyers to work together on the of Metrics same environmental and social goals Reducing cost and complexity of Reduced Cost sustainability research and reporting and Complexity allows companies to tackle impact areas faster and more efficiently 46
  • 47.
  • 48.
  • 49.
    Product Prioritization Selection andprioritization draws on scientific and practical considerations •  Contribu-on  to  total  impact  of  Consumer  Goods  Industry  (where   Impact  =  Consumer  spending  x  es8mated  impact  from  economic  input/ Category  Selec-on   output  data),  and   Criteria   •  Member  and  Stakeholder  Preferences  (e.g.  categories  with  the  most   member  overlap  (produced  or  sold)  and/or  known  cri8cal  issues  (e.g.   WWF’s  cri8cal  agro-­‐commodi8es)   Mul-ple  Criteria.  General  theme:  Efficient  delivery:   • Categories  that  are  the  most  complete  (e.g.  Laptops,  Detergents)   • Available  informa8on  or  ini8a8ves  to  build  upon  (e.g.  Milk,  Wine)   Priori-za-on  of   • Categories  with  similar  inputs  (e.g.  Breakfast  Cereals,  Beer,  Bread)   Wave  1  Products   • Spread  the  workload  (e.g.  <=3  categories  per  produc8on  group)       Waves  2  &3  –  Sector  members  have  opportunity  to  shape  sequence  of   categories   49
  • 50.
    KPI Development andUse Definition ▪  KPIs are questions that members can use to track organizational progress on issues and opportunities described in a sustainability profile. Required Elements of KPIs ▪  Must stem from an item identified in the CSP and described on the Dossiers. KPIs must be tied to one more of the following: ▪  Hotspots ▪  Critical Issues ▪  Stakeholder Concerns ▪  Must be objective ▪  Must be actionable Things to Consider When Developing KPIs ▪  Complexity and variety of types of products within categories ▪  Geographic variety ▪  Limits of innovation, difficulties in addressing KPIs technically and financially ▪  Verification of resulting actions ▪  Thresholds for respondent successc 50
  • 51.
    Anti-Trust Statement TheSustainability Consortium is committed to facilitating a robust, open and honest exchange of ideas and information among its participants on subjects relevant to the agenda of Consortium meetings. It is also committed to compliance with all applicable laws, including antitrust and competition laws. To avoid any possible problems, communications and exchanges of information at or attendant to any Consortium‐related proceeding should directly relate to the issues on the agenda. There should be no discussions or exchanges of information regarding (1) what price any participant has or may charge for its products or services; (2) strategic business plans or (3) whether or not to do business with any person or entity. The Sustainability Consortium does not condone disparagement or untrue statements in any form. Violation of these policies could jeopardize other participants and the goals of the Consortium and will not be tolerated. Please let Kevin Dooley or Jon Johnson know immediately if you have a concern or question about a possible violation of this policy. 51
  • 52.
    MATERIALITY METRICS ANDDECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY Christian Barcan, BASF
  • 53.
    SET for More Sustainable Brands Cristian Barcan SET for Applied Sustainability, Nutrition & Health, BASF Corporation San Diego, June 4-7 2012
  • 54.
    With 9 billionpeople on Earth predicted by 2050…. … And the need to use as much as 2.5 x planets worth to satisfy demand at current pace…. Changes Need to Happen! August  2011   December 2011 BASF  Nutri8on  &  Health   54   54
  • 55.
    Major market trends– opportunities for growth Aging Growing Sustainability population urbanization Food safety Raise of the Health & Food security middle class Wellness December 2011 55 Copyright BASF SE
  • 56.
    Geting into theSustainability gear n  Start thinking holistic n  Plan SUSTAINABLE (beyond Society tomorrow) n  Strengthen partnerships with well positioned supply chain partners Ecology n  Go beyond price: Focus on supplying VALUE n  Collaborate Economy n  Employ measuring tools “You cannot manage what you don’t …know” December 2011 BASF Nutrition & Health 56
  • 57.
    Sustainability – anopportunity, not a challenge n  A differentiation and innovation opportunity – making sustainability brand relevant n  Measurable along the entire value A journey, chain not a destination n  Not an “either or”: any product can be more sustainable n  Improving a products’ sustainability over time è continuous improvement December 2011 57 Copyright BASF SE
  • 58.
    Sustainable development overtime is a journey Starting point Path forward Next steps “Better for SET puts your product your Future” Consumer on a journey to Product more sustainability or Brand December 2011 58 Copyright BASF SE
  • 59.
    Helping on TheJourney Our SET Initiative to Selective Partners SUSTAINABLE “Better for Your Future” o  Corporate reporting o  Stakeholder perception analysis (Hot Spot Analysis) DESIRABLE DISTINCTIVE o  Eco-Efficiency Analysis® Consumer o  Eco-Efficiency Product or Online Manager® Brand o  Whole-chain traceability program o  Consumer and stakeholders CREDIBLE marketing & positioning December 2011 59 Copyright BASF SE
  • 60.
    Reliable and sustainablevalue chains Our vision for tomorrow §  Supplier reliability §  Trust in the whole value chain §  Sustainable value chains - the norm §  Long term strategic partnership §  Innovation driven collaborations §  Fair trade practices §  Consumer focus §  “Better for our future” business December 2011 60 Copyright BASF SE
  • 62.
    MATERIALITY METRICS ANDDECISION MAKING FOR A VALUE-ADDED SUSTAINABILITY JOURNEY James Reagan, National Cattlemen’s Beef Association December 2011 62
  • 63.
    U.S. Beef SustainabilityProject: Meeting the Growing Demand for Beef
  • 64.
    9 billion peopleby 2050 70 % more food
  • 65.
    Global Beef CowNumbers 220,000 215,000 Million Head 210,000 205,000 200,000 195,000 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 YEARS
  • 66.
    Beef Cow Inventory 40 F2011  DOWN  400,000  HEAD   39 38 37 36 Million Head 35 34 33 32 31 30 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Source: USDA F Projected 2011 YEARS
  • 67.
    U.S. Beef CowOperations 1,050,000 1,000,000 Number of Operations 950,000 900,000 850,000 800,000 750,000 700,000 650,000 600,000 YEARS Source: USDA
  • 68.
    How  Do  We  Address  the   Challenge?     § Must  improve  the  Sustainability  of  all   Agricultural  Products     § Develop  Sustainability  Ini8a8ves   designed  to  enhance  Efficiencies  and   drive  Sustainability  in  the  beef  industry.    
  • 69.
    Purpose & Approach • Conduct  a  comprehensive  cow/calf  to   plate  sustainability  assessment  of  the   U.S.  Beef  Industry.       Ø Quan%fy  all  systems  inputs  and  outputs   Ø Iden%fy  areas  for  improvement  
  • 70.
    Ultimate Goal Enhance  the  sustainability  of  U.S.  beef  to  ensure   a  beYer  quality  of  life  for  today’s  global   popula8on  as  well  as  genera8ons  to  come.  
  • 71.
  • 72.
    Project Scope Hotspot Analysis §  Literature review §  Stakeholder’s survey Life Cycle Assessment §  Environmental, cost and social parameters Producer tool §  Eco-Efficiency Mgr Optimization Tool; Producer Tool
  • 73.
    Long-Term Sustainability Project Benefits •  Supply chain focus in the right areas for improvement –  Will actually make a difference –  Avoid arbitrary imposed “sustainable” practices that are costly and impractical •  Create value for all participants in the value chain •  Effectively address the needs for more sustainable alternatives
  • 74.
    Keep in mind 1. Continuous improvement over time 2.  A journey, NOT a destination 3.  More sustainable product, rather than a sustainable product
  • 75.
    Progress to Date ü Stakeholdersurvey has been finalized ü Interviews were completed in March ü  HSA was completed in April ü First modeling was held in April ü LCA work initiated on pre- and post-knocking box •  Industry rollout scheduled for mid-January 2013 •  Eco-efficiency model; Producer tool