Sustainability

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Sustainability

• Ethics March 14th

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Sustainability

• Economics The Dismal Science
• Population growth is exponential
• Resource growth is linear at best, diminishing or
  finite at worst

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The Natural Step

• Sustainable (Business) Systems
• Keep the earths natural resources in the earth
  as long as possible.
• Manage the production of toxic substances.
• Not displace, over harvest or otherwise degrade
  our natural ecosystem.
• Use the earths resources fairly and efficiently
  to meet basic human needs worldwide.
• References Robèrt Karl-Henrik. 2002. The Natural
  Step Story Seeding a Quiet Revolution (Gabriola
  Island, BC New Society Publishers) (2002),
  available at www.newsociety.com The Natural
  Step, at www.naturalstep.org (Natural Step system
  conditions, also called principles of
  sustainability, define basic conditions that need
  to be met in a sustainable society).

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Ford

• As we endeavor to become a leading contributor
  to a more sustainable world, corporate
  citizenship has become an integral part of every
  decision and action we take.

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McDonalds

• Yes, McDonald's is committed to social
  responsibility. We are committed to doing the
  right thing. We want to make a positive
  difference to the world. - Jack Greenburg,
  Chairman and CEO, McDonalds

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Nike

• As a citizen of the world , Nike must Do the
  Right Thing - try to be transparent about what we
  are doing right, and about what we are doing
  wrong embrace diversity drive sustainability.
  - Phil Knight - Chairman and CEO, Nike.

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The Macroenvironment

• The Natural Environment

• Concern for the natural environment has grown
  steadily, increasing the importance of these
  trends
• Shortage of raw materials
• Increased pollution
• Increased governmental intervention

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China Looming

• China second largest consumer of oil (after the
  U.S.) Currently at 8
• China has been responsible for nearly two-fifths
  of the increase in global consumption since 2000.
  
• China's surge in energy demand is also the main
  reason for the doubling in the world price of
  coal over the past year. Last year China consumed
  40 of all the coal and 30 of all the steel in
  the world.

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The Macroenvironment

• Many companies use recycling to help protect
  natural resources

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The Political Environment

• EPA
• This growing, changing product stream presents
  new challenges and responsibilities in designing
  and managing electronic products to reduce their
  life-cycle environmental impacts. By applying the
  principles of product stewardship, electronic
  equipment can be made with fewer toxic
  constituents and designed with upgradeability,
  durability, and recyclability in mind, making
  these product systems more sustainable.

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Carpet

• . The disposal issues surrounding used carpet
  are of concern because of carpet's relatively
  significant contribution to the nation's waste
  stream and the inherent difficulties with its
  recycling. According to carpet industry
  estimates, approximately 4.7 billion pounds of
  carpet were discarded in the United States in
  2002. Most years, carpet accounts for over 1
  percent of all municipal solid waste by weight or
  about 2 percent by volume.

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• Only 3.8 percent of total carpet discards were
  recycled in the United States in 2002. Under the
  National Carpet Recycling Agreement, industry has
  set a goal of achieving a 20 to 25 percent
  recycling rate by 2012.

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Packaging Laws

• In most parts of the developed world, packaging
  constitutes as much as one-third of the
  non-industrial solid waste stream. At least 28
  countries currently have laws designed to
  encourage reduced packaging and greater recycling
  of packaging discards. Many of these countries
  require manufacturers to take back packaging
  discards or pay for their recycling.

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• In green packaging, corn replaces petroleum

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• Organic farming is practiced in approximately 100
  countries throughout the world, with more than 24
  million hectares (59 million acres) now under
  organic management. Australia leads with
  approximately 10 million hectares (24.6 million
  acres), followed by Argentina, with approximately
  3 million hectares (7.4 million acres) both have
  extensive grazing land. Latin America has
  approximately 5.8 million hectares (14.3 million
  acres) under organic management, Europe has more
  than 5.5 million hectares (13.5 million acres),
  and North America has nearly 1.5 million hectares
  (3.7 million acres).The World of Organic
  Agriculture 2004-Statistics and Future Prospects,
  February 2004. www.soel.de/inahlte/publikationen/s
  /s_74.pdf.

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• "Organic is a niche, but a very profitable niche.
  Give consumers what they truly want/need and they
  will dig deeply into their pockets. Organic dairy
  is mainstream. Two-thirds of the organic milk and
  cream is delivered to consumers via conventional
  supermarkets, not the 'health food stores'
  frequently associated with the organic of days
  gone by. Half of the organic cheese and yogurt
  sold in this country passes through a
  conventional supermarket. Organic is here to
  stay, not a fad marching by in the night. Several
  dairy companies have their arms around the
  organic segment of the business. Others will
  likely get involved. Whether you opt in or not,
  it certainly is a category worth watching. It
  gives us one more window into the minds of
  consumers." Jerry Dryer, J/D/G Consulting, in
  "Organic Lessons," Prepared Foods, January 2003
  www.preparedfoods.com/archives/2003/2003_1/0103org
  anic.htm.

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Consumer Behavior

• Here's a pop quiz Two products are sitting next
  to each other in a store. They're practically
  identical, but one is environmentally better --
  lets say it's recycled, recyclable,
  biodegradable, less toxic, or contains less
  packaging. Both are priced about the same.

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• So, given that public-opinion surveys report that
  roughly three Americans in four call themselves
  "environmentalists," and that marketing studies
  tell us that roughly 7 in 10 consumers would
  gladly choose the greener product over its
  less-green counterpart, why has green consumerism
  remained a largely marginal aspect of shopping?

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According to the Business for Social
responsibility

• 1. There's no mandate.
• 2. The public is dazed and confused.
• 3. People lack perspective.
• 4. Companies making greener products are afraid
  to speak up.
• 5. Green benefits aren't always evident.

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Some more sources

• http//www.greenmarketing.com/Green_Marketing_Book
  /Chapter06.html
• http//eartheasy.com/article_green_consumers.htm
• http//www.pmmag.com/CDA/ArticleInformation/featur
  es/BNP__Features__Item/0,2379,4034,00.html
• http//www.greenmoneyjournal.com/article.mpl?newsl
  etterid27articleid277
• http//www.life.ca/nl/94/LOHAS.html

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Segmenting, Targeting, Positioning
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The Green Team

• Measure for measure Starbucks philosophy is to
  continuously seek ways to reduce waste from our
  system in the first place, whenever possible.
• Waste Audit Results from the study indicated that
  five materials dominate Starbucks retail waste by
  volume cardboard, milk jugs, paper cups, pastry
  boxes and milk cartons. Based on the findings,
  Starbucks is exploring additional ways to divert
  waste through packaging reduction, reuse and
  recycling.
• Commuter Mug Discount One way Starbucks reduces
  waste is by encouraging customers and partners
  (employees) to use reusable mugs. Customers who
  use their own mugs receive a 0.10 discount. In
  2003, customers used commuter mugs more than 13.5
  million times, keeping an estimated 586,800
  pounds of paper from landfills.
• Grounds for Your Garden Coffee grounds make up
  the heaviest portion of the waste stream in
  Starbucks stores. Through the Grounds for Your
  Garden program, Starbucks encourages reuse of
  spent coffee grounds by giving them to customers
  and parks as nitrogen-rich soil amendment.

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Recycling

• In 2003, Starbucks managed the waste and
  recycling at 1,544 of our stores, of which 61
  have a recycling program.

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• Environmental impact Starbucks measures the
  environmental performance of our store design and
  operations by the amount of electricity, gas and
  water consumption per square foot of retail
  space. Additionally, Starbucks looks at recycling
  rates and our customers use of commuter mugs as
  indicators of environmental performance.
  Information about these areas for a sample of
  stores where data is available is represented in
  the accompanying graphs. Starbucks is exploring
  innovative solutions to improve performance in
  all of these areas.

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NIKES Corporate Responsibility

• Nikes corporate responsibility (CR) mission is
  simple and straightforward. It is clear
  acknowledgement that CR work should not be
  separate from the business but should instead
  be fully integrated into it.
• CR mission
• We must help the company achieve profitable and
  sustainable growth.
• We must protect and enhance the brand and
  company.
• Sustainable can have many meanings, all of
  which apply here. Sustainable growth suggests
  that Nike will be around for generations, that
  Nike is planning for the long haul. Sustainable
  growth also requires us to find ways of
  generating profit while minimizing our
  potentially negative impact on communities or
  nature.

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Sustainable Product Innovation

• Nikes two environmental long-term aspirations
  eliminating waste and eliminating toxics
• Nikes footwear teams use a Sustainability Index
  to assess each footwear categorys progress
  toward reaching their sustainability goals. They
  currently use the Index to measure the five
  best-selling shoes per category, as a way of
  focusing on where we might have the greatest
  impact.

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Nikes Top Sellers of 2000

• The top-selling shoes, based on units sold, for
  the week ending Sept. 3, 2000, are as
  follows1. Nike Jr. Tiempo youth soccer
  cleat2. Nike Land Shark 3/4 football cleat3.
  Nike Twitch Shark 3/4 high football cleat4. Nike
  Air Jordan Retro 6 basketball shoe5. Nike Air
  Amenity cross trainer gray/obsidian/white

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What is the real reason??

• The real reason why the famous shoe company is so
  sustainable and doing so well is not only because
  of its great sales in apparel and shoes and not
  because of the different product designs to fit
  the needs of the consumers, but its employee
  benefits and diversity programs and environmental
  initiatives and community investment.

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Those Key Elements

• Employee benefits
• Diversity programs
• Environmental initiatives and community
  investment
• Those key elements are how companies of today are
  growing and can remain in todays markets. Nike
  has done a wonderful job of growing into a
  successful business and remains a sustainable and
  profitable company that it is.

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Treat Your Employees Right!!!

• In recent years, Nike has focused on refining our
  skills at
• (a) identifying risk of code compliance
• (b) uncovering issues
• (c) implementing strategies that can be used to
  drive performance and enable change within Nike
  internally and on a broader level.
• Nike has evolved from a focus on a Code of
  Conduct to advocating common standards across the
  industry. Weve evolved from outsourcing labor
  monitoring to relying on a trained team of
  internal monitors and support for common
  monitoring platforms such as the Fair Labor
  Association.

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Employees Make a Difference

• If a U.S. based employee contributes to a
  qualified non-profit organization, we match the
  contribution, dollar-for-dollar, up to 5,000 per
  employee per year. When a U.S. based employee
  volunteers for a qualified non-profit
  organization, we donate 10 for every qualifying
  hour of volunteer work.
• In Europe, employee activism is encouraged
  through our Sport4ACause Fund. When employees
  engage in charitable sporting events, Nike
  matches the funds they raise. In the UK, our
  EXTRA TIME program gives employees six days per
  year for volunteer activities.

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Nike is Diverse

• In 2004, for the third year in a row, Nike
  received a perfect score on the Human Rights
  Campaign Foundations Corporate Equality Index.
  The Index rates corporate Americas treatment of
  gay, lesbian, bisexual and transgender employees.
  
• Nike established its Global Womens Leadership
  Council (GWLC) to promote and support the career
  advancement of women within the company it is
  focused on advocacy, building connections,
  catalyzing action, and measuring results.
  Advisory Teams, involving 155 men and women from
  across Nike, were created to support the Council.

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Reuse- A-Shoe

• Reuse-A-Shoe is a key component of Nike's
  long-term commitment to waste elimination by
  helping to close the loop on the life cycle of
  literally millions of pairs of old, worn-out or
  otherwise unusable athletic shoe material.
  Reuse-A-Shoe also plays an important role in
  Nike's long-term commitment to help increase the
  physical activity of young people to improve
  their lives by reusing this old athletic shoe
  material in new places for kids to play and be
  active.

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Philanthropy

• Nike is donating half of its proceeds to various
  Tsunami Aid Relief organizations from sales in
  all of its stores nation wide.
• Nike also has a foundation in which it helps less
  fortunate children get an education in public
  schools.

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Product Development
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Hybrids
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Branding Oregon Forest Products

• The lumber industry in Oregon is in desperate
  need of change. Hundreds of lumber mills have
  closed and over 20,000 jobs have been lost since
  1990 in spite of a decade with the highest number
  of housing starts and lumber consumption on
  record. One of the major reasons for the decline
  in demand of Oregon lumber has been an increase
  in imported lumber.

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• Because Oregon lumber companies cannot compete
  with the imported lumber on price and still
  maintain a profit, they have to find new ways to
  differentiate themselves from their competitors.
  One of the main strengths, according to the
  Oregon Department of Forestry, is the
  environmental friendliness of the harvesting
  techniques and the sustainability of Oregon
  forests. According to Rick Fletcher, an Oregon
  State University extension forester, Its not
  being driven by regulation its being driven by
  the marketplace (KOIN 6)

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• Companies such as Timber Pro UV have had a great
  deal of success in recent years because of their
  environmentally safe wood stains. Consumers are
  willing to pay a premium price for
  environmentally friendly products

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• It shouldnt be hard to receive the environmental
  approval seal since Oregon already has strict
  laws governing harvest practices. Most Oregon
  businesses lumber already follows the
  reforestation provisions of the Oregon Forest
  Practices Act since it has 99 percent compliance
  according to the Oregon Department of Forestry.

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• In 2003, Home Depot experienced a sixty-five
  percent growth in the sales of FCS wood. Home
  Depot is one of the 500 U.S. retailers who
  participate in the chain-of-custody
  certificationlumber that is guaranteed to have
  come from an FSC certified forest

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• Will Oregon be able to brand its forests?
• Does branding a commodity work?
• Sunkist oranges
• California Cheese
• Got milk
• Will it provide a strategic competitive to Oregon?

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• http//www.promotewood.com/branding-newproduct/pro
  duct-branding.htm
• http//www.energy.state.or.us/industry/lumber.htm
• http//www.odf.state.or.us/DIVISIONS/management/as
  set_management/logppage.asp
• http//www.globalwood.org/market/market_prices_ame
  rica.htm
• Brand Oregon. April 30, 2004. http//www.oregon.go
  v/BRANDOREGON/news.shtml
• Geist, Wendy. Telling their Oregon stories.
  Gazette-Times. January 31, 2005.
• Milstein, Michael. Oregon might brand lumber with
  green seal of approval. The
• Oregonian. April 25, 2005.
• Oregon Considers Branding 'Green' Lumber. KOIN 6
  News. April 26, 2005.
• http//www.koin.com/news.asp?RECORD_KEY5Bnews5D
  IDID5Bnews5D2294
• http//egov.oregon.gov/ODF/STATE_FORESTS/docs/mana
  gement/resource_policy/FAQ/TFA-Oregons_Facts_Figur
  es.pdf
• http//oregon.gov/ODF/STATE_FORESTS/state_forest_m
  anagement.shtml

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Quick Facts

• Started in November of 1993
• Milk Sales for the previous 15 years had been
  going down and at an increasing rate.
• 2 billion annually spent to advertise beverages
  (had to do something different to stand out)
• 23 million budget for milk

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Results of Campaign

• Exceeded expectations
• 60 ad recall awareness in 3 months, 70 in 6
• Improved consumption in California from an 18
  million decline the previous year to a 13
  million increase
• Became part of the pop culture landscape

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• Jury still out on the cheese campaign