Rethink

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Rethink Discovery - IIIOpening Doors to
Innovation and Learning-- A Thought Leadership
Program Don Carli Innovation Panel
North Carolina State University Pulp Paper
Foundation Annual Meeting -- October 10, 2002
Raleigh, North Carolina

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Program Overview

• Introductory Remarks -- Background Program
  Overview Kathy Buckman Davis
• Keynote Richard Phillips
• Panel Session 1
• Innovation Pathways or Dead ends? Ben Thorp
• Panel Session 2
• Learning Doorways or Roadblocks? Mike Kocurek
• Summary Wrap-up Jim McNutt
• Adjourn

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Sustainable Business Process Innovation --
Translating Vision into Value
Don Carli Principal CEO Nima Hunter, Inc.
www.greeningofprint.com 212-922-9899 vox
insight_at_nimahunter.com
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What Is the Mission of the Pulp Paper Industry?
to create products and services that enable the
packaging of knowledge and goods profitably
while employing natural and human capital
sustainably.
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How Will We Grow Sustainably?
Source C. K. Prahalad and Kenneth Lieberthal,
The End of Corporate Imperialism, Harvard
Business Review on Corporate Strategy, 1999.
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Where Is Paper In The Value Chain?

• Advertising Promotion
• Marketing Communications
• Regulatory Compliance Documents
• Products, Packaging, Labels Tags
• Internal Office Communications
• Bills, Statements, Invoices
• Supply Chain Product Documentation
• Note Pads, Post-it Notes, Flip Easels and Forms
• Tissue, Towels, Bags, Boxes Envelopes
• Training Education Materials
• Policy and Contractual Documents
• Business Cards Stationery
• Commercially printed documents
• ?

gt15 of Corporate Revenues
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Digital Alternatives to Paper?
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Analog Alternatives to Paper As We Know It?
How can we design a pleasantly tactile paper
that can be cycled infinitely (cradle to cradle)
without loss of quality? Imagine a
cradle-to-cradle paper system that utilizes a
polymer film for paper and prints information
with inks that can be easily and safely removed
for true recycling.. These 'future' materials
exist today. This system is indeed possible.
It's a question of collaborating within a
network of manufacturers, suppliers, printers,
paper users, and materials re-utilizersto name a
few of the rolesto create a true cradle to
cradle life cycle for paper. Cradle to Cradle
is a signal of intention for the future of
printed matter an example of what it might look
and feel like. Joseph Rinkevich -- McDonough
Braungart Design Chemistry, LLC (MBDC)
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Why Make Print Sustainable?
... Because Literacy is the Fresh Running Water
of Civilization
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The Evolution of Sustainable Businesses
Source PriceWaterhouseCoopers
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Sustainable Innovation and -- Cultural Change

• It is rarely possible, if ever, to clean up a
  river system or conserve the habitat of an
  endangered species without at least a basic level
  of understanding, commitment and involvement
  among the people, organizations and industries
  whose everyday decisions directly influence the
  management of that catchment or that habitat.
• Sustainability issues are as much about social
  technologies - how to engage people and
  organizations effectively - as they are about the
  technical aspects of, for example, catchment
  hydrology or biodiversity conservation.
• The nature of most environmental and natural
  resource problems - their sheer scale in space
  and time, their technical complexity and the need
  to trade off competing values and interests -
  means that a range of stakeholders must be
  involved at all stages in the process from
  problem identification to program implementation,
  if lasting solutions are to be found. "
• Sue Marriott -- Secretariat for International
  Landcare -- Hamilton, Australia

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Why Should You Change?

• Broadening public concern about corporate
  behavior could damage companies' reputations and
  finances, and jeopardize relationships with
  customers, suppliers and financial institutions,
• PricewaterhouseCoopers 2002
  Sustainability Survey.
• ..Companies may find that being recognized for
  responsible business practices embedded in what
  we call Total Responsibility Management (TRM),
  becomes the new business imperative. Sandra
  Waddock, Center for Corporate Citizenship, Boston
  College
• Every sector, whether it be pharmaceuticals or
  oil and gas is going to be hit by the
  sustainability debate. Mark Campanal,
  Henderson Global Investors

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Trends in Sustainable Investing

• Over 200 retail socially responsible investment
  funds represent 2.3 trillion (13) of the 16.3
  trillion in professionally managed assets in the
  US.
• Between 1999 and 2001 growth in socially
  responsible investment in North America increased
  by 40 versus 15 across broader markets.
• Dow Jones Sustainability Index 135 return
  versus 95 return for the Dow Jones Global Index
  1993-2000.
• A record 251 social and environmental shareholder
  resolutions have been filed with a total of 177
  US companies in 2002.

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Growth in Corporate Environmental Reports
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CERES Principles GRI Reporting

• Protection of the biosphere
• Sustainable use of natural resources
• Reduction and safe disposal of waste
• Energy conservation
• Risk reduction
• Safe goods and services
• Environmental restoration
• Informing the public
• Enhancing management commitment
• Disclosing the above in the form of a CERES
  report

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Key Valuation Reporting Trends

• Within the next 5 years, 70 of North American
  and European companies will assign Board
  responsibility for areas of reputation and social
  responsibility.
• Within the next 10 years, the majority of global
  multinationals will publish a broader range of
  key non-financial information alongside financial
  data, covering areas such as environment,
  diversity, community development and
  anti-corruption.
• The future credibility of audits will depend on
  the audit firm's ability to review and give
  opinions on non-financial performance, inevitably
  in conjunction with non-audit professionals,
  including non-governmental organizations. Source
  Price Waterhouse Coopers

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Sustainability and The Pathway Hypothesis
"Sustainability is not a unique target or fixed
point, but rather involves a range of acceptable
or desirable outcomes, as well as a range of
feasible courses to reaching those outcomes. The
pathway to sustainability is defined in a broad
sense by the limits we establish as a society to
bound that range of feasible courses. This
involves economic considerations and social
choices, as well as ecological criteria that need
to be carefully weighed in formulating public
policy. The struggle to live in harmony with
our environment is unending a challenge for
which there is no perfect, permanent solution."
Fedkiw, J. 2001. Sustainability and the Pathway
Hypothesis. American Society for Environmental
History/Forest History Society Joint Annual
Meeting (March 28-April 1, 2001). Durham, NC.
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Some Key Issues For Pulp Paper

• Sustainable Growth
• Reduced capital, underwriting and regulatory
  costs
• Change from production focus to product and
  service focus
• Radical innovation in products.
• Reduction in the net consumption of water and
  power
• Increase in power self-sufficiency and renewable
  power production
• Reduction in emissions - solid, liquid and gas
• Increased attention to biodiversity impacts and
  process intensification
• Optimization of biomass yield and resilience
• Sustainable substitutes for filler, pigment and
  chemical feedstocks
• De-centralization and re-location of production
  nearer to markets

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Rethink Discovery As Turning Vision into Value
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Sources of Value at Six Levels of Focus
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Building the Business Case -- Value Drivers
Source Laszlo, Sherman Whalen The AHC Group
Fall 2002 Summit
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Framework for For Sustainability
Source Laszlo, Sherman Whalen, The AHC Group
Fall 2002 Summit
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Strategies Tactics for Managing CSR

• Transparency
• CERES/GRI -- www.ceres.org
• EMAS -- Eco-Management and Audit Scheme
• SA8000 -- Social Accountability Standard
• AA1000 -- Accountability Standard
• Active Stakeholder Engagement
• Independent audit and verification of CSR
  performance
• (continued)

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Strategies Tactics for Managing CSR

• Total Performance Management
• ISO 14001
• ISO 9000 / Six Sigma
• Balanced ScoreCard Tools
• Real Options Analysis
• Lifecycle Analysis

66 of respondents to a recent Nima Hunter
Inc./Ethical Corporation Magazine survey said it
was extremely important or very important for
management compensation to be linked to corporate
social responsibility performance.
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What can you do to innovate -- Sustainably?

• Come together across the value chain (publishers,
  papermakers, ink-makers, press-makers, binders,
  converters, distributors, users, waste managers
  and stakeholders)
• Align vision, values, policies, strategies,
  tactics and measures of triple bottom line
  performance.
• Work together with your customers, vendors,
  suppliers and other stakeholders to re-think and
  renew the packaging of knowledge and goods for
  sustainable human consumption.
• Build industry and application-specific goals,
  objectives, gap closure strategies,
  implementation tactics, milestones, budgets and
  metrics to ensure the greening of paper and print
  over the next 50 years.
• Communicate measurable benefits of sustainable
  technologies and socially responsible business
  practices to your customers and other
  stakeholders.
• Align publishing, printing and packaging industry
  RD, capital investment, education and training
  with realistic sustainable development and
  eco-efficiency goals.
• Dont try to predict the future invent it!

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The Bottom Line

• Business ignores sustainability at its own
  peril. There's no way a business enterprise can
  survive as an island of prosperity in a sea of
  disarray. It just won't happen. Companies that
  don't meet their responsibilities to all their
  constituencies will have a difficult time.
• Responsible customers won't want to buy their
  products.
• Talented people won't want to work for them.
• Enlightened communities won't want them as
  neighbors.
• Wise investors won't entrust them with their
  economic futures.
• William S. Stavropoulos, Chairman, Dow
  Chemical