The International Association of Outsourcing Professionals

Addressing the challenges that

come with greater levels of

outsourcing is going to take a new breed of outsourcing professional.

The International Association of Outsourcing Professionals®

(IAOP®)

Global Standard-Setting Organization and Advocate for the Outsourcing Profession.www.outsourcingprofessional.org

Global Membership-Based Organization for Customers, Providers and Advisors

Only Professional Quality Standard for the Field of Outsourcing

Proven Track Record of Delivering Value – 85% of Customer Members Credit IAOP for Improved

Outsourcing Outcomes

IAOP® is the largest and fastest growing network of outsourcing professionals in the world

Most of the World’s Top Organizations are

Leveraging IAOP’s Programs and Services100+ Founding & Corporate Members, including:

Abbott Laboratories, Accenture, Aegis, Affiliated Computer Services (ACS), Ajuba International, Allstate Insurance, American Express, Anthem BCBS (Wellpoint), Apple Inc, Applied Materials, Assurant, Atlantic Canada Atlantique, AT&T, Avasant Global Sourcing, Belcan Corporation, Best Buy Company, BeyondCore, BIPORIS, Bleum, Blue Cross/Blue Shield of Florida, Blue Shield of California, Bomgar, Booz & Company, Business Catalyst International, Capgemini, Capital One, Carnegie Mellon University, CB Richard Ellis, ChinaSoft International, Chris Disher & Associates, Cinteger LLC, Computer Associates, Convergys, Copenhagen Business School, CORFO (Chile), Colliers International, CPA Global, DataPipe, Delve Group, Dextrys, Discover Financial, DNL Global, Duke Energy, Duke University, Emerio Globesoft, Enlighta, Expense Management Solutions, Fasken Martineau DuMoulin LLP, First American Global, Firstsource, Foley & Lardner, GASSCOM/E.Services Africa, General Motors, Gorrissen Federspiel, GSOS, Hospira, HOV Services, IDA Singapore, Infosys, Innodata Isogen, Insigma Hengtian Software, Janus Associates, J & J Consumer Group, Kelly OCG (BPO), Kirkland & Ellis LLP, Kraft Foods, LawScribe, Inc., Liberty Mutual, LifeMasters, Marsh & McLennan Co, Mayer Brown LLP, Microsoft, Multimedia Development Corp. (MdeC), NetSol Technologies, NCS, Neusoft Corporation, Newmark Knight Frank, Nike, North Dakota Dept. of Commerce, Océ Business Services, Orange Business Systems, Ordina, Ortho-McNeil Janssen, PA Consulting Group, PepsiCo, Pfizer Inc, Pratt & Whitney/UTC, Pretium Partners, PricewaterhouseCoopers, Procter & Gamble, Procurisource, ProNicaragua, Qantas Airlines, Quint Wellington Redwood, Salmat, Singtel Optus (Australia), Sitel, SPi Technologies, State Farm Insurance, Strategic Systems Solutions, Sun Microsystems, Symantec, Syracuse University, TeleTech, Thomson Legal & Regulatory, TransUnion Interactive, Trellis, VanceInfo, Vantage Partners, WaMu, Whirlpool, Wipro Technologies, WNS Global Services and Xceed.

1000+ Professional Members• 100,000+ Associate Members• 40+ Chapters Around the Globe

IAOP Structure and Programs Strategic Advisory Board & Outsourcing Standards Board Research, Training, Services, Advocacy & Outreach Committees Geographic, Industry, Topical Chapters Online Member Directory, IAOPNetwork & Customer-only IAOPNetwork The Outsourcing World Summit® Regional Summits - part of the Outsourcing World Summit Conference Series Topical Forums as part of the Outsourcing Leadership Series IAOP Member of the Year Awards Outsourcing Hall of Fame Awards IAOP Knowledge Center (Firmbuilder.com®) Certified Outsourcing Professional® (COP) Program COP Master Class The Global Outsourcing 100™ Program (The Global Outsourcing 100 list and

sublists, World’s Best Outsourcing Advisors list and The Global Outsourcing 100

Plus Report) Outsourcing Professional Code of Ethics

Other IAOP Upcoming Dates of Interest

2010 Outsourcing World SummitFebruary 15-17, 2010 - Lake Buena Vista, Florida

New Member Services from IAOPAt IAOP, we are always looking for programs & services that will add value

to your membership and we have three new offerings for you!

Value Health Check Survey – An exciting new diagnostic tool that will enhance the value of your outsourcing contracts & relationships! Each IAOP Corporate Member receives two complimentary survey’s as part of their annual

corporate membership – Call us today to learn more! BestOutsourcingJobs.com – Companies seeking the best talent for

outsourcing jobs, as well as professional looking for employment opportunities, can benefit from our new online portal for outsourcing jobs!

OperatorEvaluator – An exciting new solution available as part of our suite of outsourcing skills and professional development offerings. Call us today to find out more about this dynamic service!

Contact Michael Forbes at [email protected] for more detailed information on any of these new service offerings!

mailto:[email protected]

With more than 100,000 members and affiliates worldwide, IAOP® is leading the effort to transform the world of business

through outsourcing.

If you are not already a member, you can begin taking immediate advantage of IAOP’s programs and services by

going to www.outsourcingprofessional.org

Green Sourcing: Tips for Outsourcing Professionals

David BaumannSVP and General Counsel

TechNexxus

Overview

• What is Green Sourcing vs Green Washing?• Why Going (and Staying) Green Makes Sense

– Corporate Responsibility– Reduce Cost– Reduce Risk (Cradle to Grave)

• Domestic• International

– Tax Benefits• How to Grow Green• Green Strategies• Green Sourcing Tips for Outsourcing Professionals• Green Sourcing Tips for Outsourcing Providers

2

Green Sourcing

• What is Green Sourcing– Purchasing goods or services that have a reduced adverse impact on health and the

environment– Requirements in contractual relationships with suppliers to require goods, services,

policies and practices that reduce adverse environmental impacts or promote positive environmental impacts

– Acceptance of responsibility for the environmental consequences of actions and decisions

– Corporate direction encouraging the consideration of environmental factors in decision – making

• Incorporate standards that consider– Suppliers with established environmental policies and programs embedded into their

products, programs and processes– Whether materials can be reduced, recycled, returned, or reused– Vendors who offer an Extended Product Responsibility (EPR) program– IT commodities must be certified to meet sustainability standards where possible– Physical building standard certifications (e.g., LEED certification)

3

Why Green Outsourcing Makes Dollars and Sense

– Corporate Responsibility– Public Perception– Marketing Advantage / Competitive Differentiation– Product Diversification– Reduce Cost

• Energy• Disposal• Compliance

– Reduce Risk (Cradle to Grave)• Domestic• International

– Tax Benefits

4

Green Retail Facts

• "63 million American consumers are eating organics."

"61.9% of Consumers say they use some type of environmentally-friendly product."

"20% Price premium they are willing to pay for "clean, green products over non-sustainable alternatives."

"59% of Retailers are saying that implementing a responsible and green-oriented sourcing and procurement plan is a crucial element of success."

"89% of Retailers see at least some value in green initiatives."

5

Green Washing

• Green Washing– Disingenuously spinning products or services as environmentally friendly– Beware of the “Green Sheen” (and new FTC rules)

• The “Six Sins of Greenwashing” (TerraChoice)– Sin of the Hidden Trade-Off: e.g. “Energy-efficient” electronics that contain hazardous materials. – Sin of No Proof: e.g. Shampoos claiming to be “certified organic,” but with no verifiable

certification. – Sin of Vagueness: e.g. Products claiming to be 100% natural when many naturally-occurring

substances are hazardous, like arsenic and formaldehyde– Sin of Irrelevance: e.g. Products claiming to be CFC-free, even though CFCs were banned 20

years ago– Sin of Fibbing: e.g. Products falsely claiming to be certified by an internationally recognized

environmental standard like EcoLogo, Energy Star or Green Seal. – Sin of Lesser of Two Evils: e.g. Organic cigarettes or “environmentally friendly” pesticides

6

http://en.wikipedia.org/wiki/EcoLogo�

http://en.wikipedia.org/wiki/Energy_Star�

http://en.wikipedia.org/wiki/Green_Seal�

Green Drivers

7

Awareness vs Action

8

Cost Drivers

9

Why Going Green Matters

10

Triple Bottom Line

11

How to Grow Green

12

IT Sustainability Standards

IT Sustainability Standards• EPA Energy Star Rated

Desktop and notebook (laptop) computers, integrated computer systems, desktop-derived servers and workstations bearing the EPA ENERGY STAR logo are capable of entering a low-power state to reduce significantly the energy it uses. Energy Star is the most widely recognized certification system

• The Electronic Product Environmental Assessment Tool (EPEAT) Products rated bronze, silver or gold under the EPEAT ratings. Ratings based on: Energy efficiency, Design (product longevity/life extension/toxic materials/recyclability), Product take-back, Packaging, and Overall environmental performance of the manufacturer

• If Information Technology (IT) commodities do not meet sustainability standards, then further review is required to ensure: the respective company has an environmental policy in place and an established environmental program is operational, the use of energy-efficient components are embedded into the manufacturing process, and the vendor’s procurement policy includes responsible purchasing from like-minded companies that offer sustainable products

13

ISO 14001 certification

• ISO 14001:2004 gives the generic requirements for an environmental management system.

– Whatever the organization's activity, the requirements of an effective EMS are the same.

– ISO 14001:2004 does not specify levels of environmental performance.

– ISO has many other standards dealing with specific environmental issues.

– framework for a holistic, strategic approach to the organization's environmental policy, plans and actions.

• Requires, a commitment to compliance with applicable environmental legislation, along with a commitment to continual improvement – for which the EMS provides the framework.

ISO 14001 approval of Products indicates that these issues have been vetted:

• Design and functionality of the product

• Extraction and processing of materials

• Manufacturing processes• Packaging and distribution• How the product is used• Recycling, reuse and disposal

Slide #14

Green Strategies

Black Book of Outsourcing 2009

15

Green Sourcing Tips for Buyers

• Cultivate Support for Buying Green• Develop a “Cradle to Grave” View of your Lifecycle Supply Chains• Build the Business Case for Going Green (e.g., energy audit)• Identify Key Regulatory Drivers and Risk Mitigation Factors• Develop a Formal Green Sourcing Program and Market It• Build Green into Your

– Goals and Objectives– Specifications– Cost Models / Sensitivity Analyses– RFx (and vendor due diligence / reference checks)– Contracts, Schedules and Contract Management Programs

• Carefully manage power, water and other environmental costs in Contracts

• Measure and Manage Your Progress and Report the Results 16

Green Sourcing RFx Questions

• Have you optimized the energy utilization of your data centers, and what steps would you take to optimize the environmental efficiency of our operations?

• How do your pricing methodologies and processes encourage the use of energy efficient strategies like virtualization and cloud computing?

• Do you have a Social and Environmental Corporate Responsibility Program?• Do you have an environmental management system (EMS)?• Do you consider environmental issues in the design process?• Do you provide any data on your company’s environmental impacts?• Are any toxic materials used in your operations or processes? If so, please identify.• Do you have energy efficient production technology?• Do you have facilities running on renewable energy?• What are your waste management strategies (i.e. recycling or landfill or composting)?• Do you incorporate any recycled material, particularly from post-consumer sources, in your production?• Are you Forest Stewardship Council (FSC) certified?• Are you Sustainable Forestry Initiative (SFI) certified?• Are you ISO 14001 certified?• Are your computers, and computers proposed for our operations, EPEAT Bronze, Silver or Gold?

17

Green Sourcing Tips for Providers

• Assess Your Green Strengths and Market Them• Identify Green Marketing Opportunities, E.g.,

– Outsourcing to reduce carbon footprint, power, etc.– Green outsourcing matters to customers

• Avoid Greenwashing– “Don’t underestimate people’s intelligence or overestimate their interest”

• Factor environmental costs / benefits into pricing models (e.g., disposal)

• Re-evaluate Supply Chain Models (e.g., JIT may be inefficient)• Identify Tax and Grant Opportunities and Share the Benefits• Monitor/Comply with REACH and Carbon Offset regulations• Develop best practices for reducing environmental impacts18

TechNexxus

• IT and Business Process Outsourcing Consulting• Integrated Business, Technology and Legal Services• Focus on Technology, Communications and Environment• Green Sourcing Group• Clients include 70% of the Fortune 100 and a majority of the Fortune

500• Headquarters in Potomac, MD (outside of Washington, DC)• 60 Consultants• David Baumann

– (301) 365 – 6869– [email protected]– www.TechNexxus.com– www.GreenSourcing.us

19

mailto:[email protected]�

http://www.technexxus.com/�

http://www.greensourcing.us/�

APPENDIXTechNexxus Green Sourcing Tips

20

Green Metrics

21

Power Usage Effectiveness

22

Where Does It All Go?

23

Data Center Infrastructure Efficiency

24

Data Center Productivity

25

Other Metrics

26

Kill-A-Watt Tactics

27

© 2009 Wipro Ltd - Confidential

Green Outsourcing

Partnership model for Greening of enterprises

© 2009 Wipro Ltd - Confidential2 © 2009 Wipro Ltd - Confidential2

Green and Outsourcers


EcoEye - Ecoaction at Wipro

• Wipro’s initiative towards

Ecological Sustainability

• “Eco Eye” signifies Wipro’s

endeavor to apply the lens of

ecological sustainability to the

way we work

• Concerted corporation-wide

initiative to transform the way

we do business & engage all our

stakeholders

• Going beyond compliance

• Being responsible

• Making Wipro ecologically

sustainable in every dimension

Wipro wants to be a leader in ecological sustainability in every dimension of the organization,

enhancing partnership with all our stakeholders in building a sustainable future.

1. Ecological surplus organization

2. Business investments

3. Beyond Wipro

4. Transparent reporting

5. Risk planning & mitigation

EcoEyeThemes


Green Agenda for enterprises

Various Green Initiatives

WaterManagement

BiodiversityBuilding

Management Waste / e-Waste

Disposal

Energy Management

Green IT Plan

Strategic Framework &

Roadmap

Organization Change

Green Procurement Policy

Audio / Video Conferencing

DC OptimizationCapacity

UtilizationInfrastructure Rationalization

End User Computing

IT Specific Improvements

Stra

tegy

Facilities and Operations

People

Awareness

Involvement In Policy Making

Power & Building Management

Space & Layout Management

Cooling & Lighting

Management

Behavior Change (Reduce Print

etc.)

Enablement (Virtual Work etc.)

Print & Paper Management

Adoption of Renewable

Energy Source

Green strategy is a mix of people, process, IT, non-IT, and investment


Sustainability projects and operations

Reduction in Energy

Desktop, Lab IT infrastructure

energy management

Smart Data center & buildings

Hosted Intelligent Document

management

Reduction in Complexity

Automation, Complex

event processing

Business process

Modelling

Reduction in Resources

WSoftware through

SaaS model

eb 2.0 frameworks for

collaboration

Reduction in

infrastructure

Server/DC Consolidation

Virtualization

Utility Computing

Technology transformation

Energy efficient technologies

Migration=>Legacy to NGN

Consolidation of Assets &

operations

Reduction in travel

Tele-presence

Telecommuting

Car pooling

Work and Asset management

GIS for assets

Green ITGreen dashboardsCarbon foot-printing toolEnergy managementMonitoring of non-IT devices

Green ITGreen infrastructureGreen operations


Green Outsourcing

People

Process Technology

Operations•Managed energy operations•Managed buildings•Managed water•Managed resources

Policy• Sustainability goals•Employee policy•Supplier policy•IT policy•Investments

Competencies•Energy management•Water management•Resource management•Low carbon projects

Organization•Metrics &KPI•SLA•Training & certification•Roles & responsibility

Investments•Renewable energy•Greening of IT•Remote monitoring•Applications•Carbon management

Projects•Knowhow•Experience•Green metrics/KPI•Deployable Solutions


Sample project portfolio for outsourcing

Green solution framework for an end to end visibility of energy landscape with respect to consumption, source, supply, wastages/ losses and operating conditions across the infrastructures and associated supply chains

Manage and monitor the energy associated operations and parameters across both active and passive infrastructures

Optimize the supply chain processes with respect to procurement and Inventory and evaluates the possibility of alternate, renewable sources of energy.

Energy Intelligence - Carryout Energy Profiling, Energy Modelling and Energy Analytics through trending and predictive model analysis.


Outsourcing maturity in Sustainability

In-house Outsourced

Turnkey

Managed

IT infr

astr

uctu

re

Energy infrastructure

Energy operations

Facilityinfrastructure

Facilityoperations

Green policy & strategy

Water operations

Business process

Energy Audits

Carb

on

report

ing


Technology enablers

In-house Outsourced

Turnkey

Managed

Clo

ud

Serv

ices

Renewable energy & waste heat

Smart metering

HVAC systems

Building Automation

Green policy & strategy

Water operations

Waste management

Energy Audits

Managed

Carb

on -

SaaS

Managed Services or Hosted services

Consulting or Turnkey projects

Outsourced Staffing

Internal org


Wipro’s Green portfolio

Green Consulting (A practitioner’s perspective)

Green Building, Shared Service, Waste Management, etc.

Green IT

DC consolidation

Next generation DC

Energy Assessment framework

IT for Green

Carbon management

Business process optimization

Green Supply chain design

Green Lighting Solutions

LED lighting solutions

Clean Energy Solutions

Eco-energy solutions

Consult, Implement, manage renewable energy

Water Reuse

Solutions

Ultra filtration solutions

Water –reuse solutions


Green IT Initiatives @ Wipro

•Carbon management SaaS service for Wipro CDP 07 reports

•Wipro wide Energy savings through Zero weekend Lab power

•Data center consolidation for Telecom IT data center

•Facilities infrastructure management for Retail stores

•Energy monitoring & management for Data centers

•Paperless claims process implementation in BFSI sector

•Supply chain optimization for reduction in production waste

•SMART tool framework for Sustainable manufacturing

•Rollout of desktop power savers @ Wipro

Smart Facilities Management

DCinfrastructure

Sustainability Solutions

IT for Green

Consolidation

Energy management

Carbon Management

Paperless office

Supply chain

Green dashboard

© 2009 Wipro Ltd - Confidential12

Thank You..

A Customer’s PerspectivePresented by Nick Sarkisian

Sr. Contract Specialist

Responsible Outsourcing

© Nicholas Sarkisian

2

Overview

o What is “Responsible Outsourcing”?

o Socially responsible outsourcing

o Environmentally responsible outsourcing

o Increasing visibility of customers’ CSR status

o Environmentally Preferable Purchasing

o Impact on customers’ supply chains – customer cases

• Walmart

• Kaiser Permanente

o Standards for environmental and social responsibility

o Conclusion

o Resources


3

“Responsible Outsourcing”

1Generally managed under a company’s corporate social

responsibility, or “CSR”, management and policies.

Consists of two broad areas of corporate responsibility:• One: social responsibility

• Two: environmental responsibility (“ER”)2

Typically, a company’s ER policies and initiatives are

managed under its CSR programs.3


4

Customer foci related to social responsibility in outsourcing

o Impact on FTE reductions and domestic labor pool

o Labor practices of offshore & near shore partners

• Compensation package; fair wages?

• Compensation package; health, pension, and vacation benefits?

• Occupational health and safety; working conditions?

• Worker pool; forced and/or child labor?

• Working hours and work breaks

• Human rights; disciplinary practices and union policies

o Anti‐corruption; ethical business and financial practices of outsourcing partners

o Promotion of community development


5

Customer foci related to environmental responsibility in outsourcing

o Primary focus: provider impact on customer

• Impact on customer’s carbon footprint/GHG reporting

• And, impact on customer’s carbon footprint/GHG reporting

• Also: impact on customer’s carbon footprint/GHG reporting

• Leads to:

– Addressing providers’ carbon emissions/GHG footprint

‣ Measure, report, 3rd party validation, disclose

‣ Energy reduction/conservation measures and practices

o Secondary foci: best practices of partners (may not be very relevant to

information‐based outsourcing)

• Toxicity; use of toxic materials and their remediation/disposal

• Recycling and waste disposal practices

• Water usage practices

1

2


6

Increasing visibility of customers’ CSR status

Harvard Business Review:

(from ‘Why Sustainability is Now the Key Driver of Innovation’, Sept. 2009 issue)

“Our research shows that sustainability is a mother lode

of organizational and technological innovations…. Just

as some internet companies survived the bust in 2000

to challenge incumbents, so, too, will sustainable

corporations emerge from today’s recession to upset

the status quo.”


7

41%Employees

52%Business Strategy

Increasing visibility of customers’ CSR Boston College “2009 State of Corporate Citizenship in the U.S.” Report (Sept. 2009)

Among large companies:

• 63% have sustainability goals and objectives

• 58% measure the business impact of related initiatives

• 47% have environmental performance goals for managers

0

50

100

Drivers of Corporate Responsibility

62%

Company Values

62%

Reputation

57%

Customers


8

69%

Competitive advantage

66% PR/ Media coverage45%

Talent acquisition

41%

Staff retention

35%

Shareholder demand

Increasing emphasis by customers on CSR Siemens and McGraw‐Hill “2009 Greening of Corporate America” Report

Conclusions:

• Sustainability is becoming embedded within corporate culture

• Public reporting and transparency is becoming routine

0

100

Drivers Promoting Sustainability

92%

Energy/ Cost savings

80%

Technology changes

69%

Customer need

20

40

60

80

60%

Incr. regulation


9

49%Use renewable energy

46%Engage NGO’s & sust. Programs30%

Publish sustainability

Increasing visibility of customers’ CSR status Siemens and McGraw‐Hill “2009 Greening of Corporate America” Report

Trends among top 203 companies (representing 75% of the equities market):

• 60% of building portfolios are “green”

• 71% plan to realize cost savings from sustainable initiatives

• 56% provide sustainability related products

Sustainability Practices

89%

Reduce waste & recycle

71%

Engage employees

49%

Have “Green” bldgs.

0

100

20

40

60

80


10

Increasing visibility of customers’ CSR

o In 2005, 52% of Fortune Global 250 issued CSR reports

• 90% projected by 2010

o $2.3 trillion out of $24 trillion invested with companies having high CSR score

o In Europe, CSR reporting is required of companies in order to list on some stock

exchanges

• The top Global 500 companies with the highest CSR rating are generally from Europe

o A 2007 report found that 63% of Fortune 500 companies measured their carbon

footprint using the GHG Protocol


11

Increasing visibility of customers’ CSR Media reports and lists

* Newsweek’s “Green Rankings” ‐ “Top 100” companies

Carbon Disclosure Project’s “Global 500 Report”*

Dow Jones’ “Sustainability Index” and “100 Best Corporate Citizens (based on

Russell 1000 companies)*

Fortune’s “Global 100 Most Sustainable Companies”*

Ethisphere Institute’s “World’s Most Ethical Companies”*


12

Impact of customers’ CSR programs on its supply chain

o 40% to 80% of companies’ total carbon footprints estimated to reside upstream in their

supply chains

o Major focus now on indirect GHG emissions (“scope 3”) –including companies’ supply

chains

o GHG Protocol’s Product and Supply Chain Initiative has been convened to produce new

standards on value chain accounting and reporting –likely completed in 2010

• 94% of public companies plan to add “green” clauses to their outsourcing renegotiation

process

• Of those outsourcing for the 1st time in 2007, 43% included green factors in their

selection process


13

Emergence of environmentally preferable purchasing (“EPP”) policies

o Companies are incorporating environmental responsibility into their procurement

process. A number of organizations are providing guidance in implementing such

purchasing policies such as the following:

• Environmentally Preferable Purchasing Program and Database, U.S. Environmental

Protection Agency ‐ Comprehensive source of information on green purchasing.

Database includes green contract language, voluntary standards and guidelines.

(www.epa.gov/oppt/epp)

• European Green Purchasing Network ‐ A network that aims to bring together

governments, businesses, and other purchasers to promote sustainable innovation and

competitiveness along the entire supply chain. (www.epe.be/programmes/egpn)


14

Emergence of environmentally preferable purchasing (“EPP”) policies

• European Union Coalition for Green and Social Procurement ‐ NGO coalition that aims

to strengthen environmental and social provisions in EU procurement policies, including

consideration of environmental, health, and labor impacts.

(www.eeb.org/activities/product_policy/main.htm)

• GreenOrder ‐ A New York‐based consulting firm that helps Fortune 500 companies and

top government agencies green their procurement and operations.

(www.greenorder.com)


15

EPP policies can cover ER outsourcing

o Additional resources that may be helpful:

• National Resources Defense Council EPP site

– http://www.nrdc.org/enterprise/greeningadvisor/gpp‐purch_policy.asp

• Responsible Purchasing Network site

– http://www.responsiblepurchasing.org

• Carbon Disclosure Project Supply Chain site

– http://search.cdproject.net/supply‐chain.asp

resources


16

Case of Walmart’s China supply chain

A company that cheats on overtime and on the age of its

labor, that dumps its scraps and chemicals in our rivers,

that does not pay taxes or honor its contracts, will

ultimately cheat on the quality of its products.

Lee Scott, Long time, and now former, Walmart CEO


17

Walmart’s Footprint

Single largest U.S. importer of Chinese consumer goods1

100,000 suppliers globally; 30,000 in China alone2

With $351 billion in revenue, the company is bigger than 160 nations3

Walmart is China’s eighth largest trading partner, ahead of all but 7 countries4


18

Walmart’s Sustainability Summit

Partnered with Carbon Disclosure Project and Environmental Defense Fund

to plan summit approx. 1 year in advance1

In October, 2008, held its first ever Sustainability Summit with approx. 1,000

of its top suppliers2

Rolled out its new sustainability requirements that will eventually apply to all

global suppliers3

EDF to implement; CDP to manage reporting4


19

Walmart’s sustainability requirements

o Required demonstration of compliance with environmental laws and regulations

o Improved supplier efficiency

• Goal: top 200 factories to achieve 20% reduction by 2012

o Supply chain transparency: disclosure of every upstream supplier

o Stricter ethical standards

• Suppliers must source 95% of production from factories with high social and

environmental audit scores

o Completion of 15‐question Sustainability Product Index


20

Walmart’s sustainability requirements

If we don’t pose these questions, our customers will. In the

age of YouTube, social networks and bloggers, there is no

trust without transparency and ownership.”

Mike Duke, Current Walmart CEO

To be rolled out globally by end of 2009

If we don’t pose these questions, our customers will. In the

age of YouTube, social networks and bloggers, there is no

trust without transparency and ownership.”

To be rolled out globally by end of 2009


21

Kaiser Permanente & environmentally preferable purchasing

o Operates in 9 states and D.C., and is the largest not‐for‐profit HMO in the U.S., with 8.3

million members, 134,000 employees, 11,000 physicians, 30 medical centers, 431

medical offices, and $22.5 billion in annual revenues, every week buys 200,000 products

o With NGOs, Center for Health Design and Health Care Without Harm, as well as other

health care companies, founded Global Health and Safety Initiative (“GHSI”) to develop

a purchasing task force to prioritize safer and environmentally sustainable products and

supplies, as well as cleaner energy and innovative green technologies in its facilities

o In October 2009, launched supplier product disclosure requirement & ER scorecard for 8

largest suppliers (30% of spend).


22

Kaiser Permanente EPP Policy

Policy Statement

• In support of Kaiser Permanente’s (KP) mission to improve the health of our members

and the communities we serve, the procurement and supply staff within KP are

committed to applying guidelines and specifications of Environmentally Preferred

Purchasing to all major, strategic, and critical purchasing decisions. KP’s Sourcing Core

Groups, supported by purchasing and environmental stewardship staff, will evaluate the

environmental impacts (e.g., waste, toxicity) of products and services in their effort to

select healthy and safe products and services that are also environmentally sound.

• KP personnel involved with product selection are required to communicate to the

marketplace that KP expects suppliers to continuously develop price competitive

products that conform to our EPP guidelines and specifications as defined in this policy.

policy statement


23

Kaiser Permanente EPP Policy

Guidelines

• KP prefers products and services that address environmental impacts throughout the

lifecycle. These products and services should:

– Use greener chemicals, chemicals that are inherently less hazardous and release little to no toxic

by‐products across their lifecycle.

– Promote the use of renewable materials by increasing the use of sustainable, bio‐based

materials and reducing the use of fossil fuel‐based materials.

– Support healthy food systems by sourcing food products that are local, seasonal, nutritious and

produced in a way that minimizes degradation to human and environmental health and vitality.

– Promote land stewardship by cultivating healthy ecosystems and protecting natural resources.

– Promote sustainable energy by using renewable energy sources and reducing energy use.

– Protect clean air by minimizing pollutants.

– Contribute to the availability of clean water by minimizing water use and pollution, and avoiding

bottled water products.

– Minimize waste by implementing the three “Rs”: reduce, reuse and recycle.

– Use environmentally sound waste disposal technologies where reuse, reduction and recycling

cannot be achieved.


24

KP EPP Implications for Manufacturers and Suppliers

The EPP policy is also meant to convey to manufacturers and

suppliers the importance that Kaiser Permanente places on

reducing our life‐cycle ecological footprint while continuing to

improve overall public health. We count on our suppliers to heed

this policy and see it as encouragement to innovate to meet and

exceed our expectations.

We also expect our suppliers to complete our supplier disclosure

process by providing KP with honest and complete information on

corporate social responsibility and product performance as it

pertains to environmental and public health.


25

Standards related to social responsibility

o Social Accountability International (“SAI”)

• SA 8000 Standard

• As of Dec 2008, 1,067,703 workers in 66 countries and 67 industrial sectors were

employed at 1,874 factories, stores and farms certified to SA8000 standard

o United Nations Global Compact

• Not a regulatory instrument

• Ten principles in the areas of human rights, labor, the environment and anti‐corruption

o International Organization for Standardization

• ISO 26000


26

ISO 26000

ISO Working Group for Social Responsibility to finalize standard in 20101

International standard2

Not intended to be used for certification3

Not considered an “international standard” or “guideline” under WTO rules4


27

Standards related to environmental responsibility ‐ International

World Resources Institute (“WRI”) & WBCSD

GHG Protocol Initiative

One of the first and certainly most widely recognized

Basis for most other major international or country‐specific standards

Identifies scope 1 (GHG producing), scope 2 (purchased energy), and scope 3

(indirect) sources


28

GHG Protocol Supply Chain Initiative

Intended to address measurement and reporting indirect (Scope 3) GHG

emissions1

Steering Committee and 7 Technical Working Groups with 160 participants

from 20 countries actively developing, possibly finalizing in 20102

Specifically addresses reporting on the emissions of a company’s supply chain3


29


ISO 14064 and ISO 14065

Incorporates GHG protocol into a truly global GHG reporting framework

ISO 14064‐1 and 14064‐2 address measurement and reporting

ISO 14065 addresses auditing of GHG reporting


30


Carbon Disclosure Project

Provides audit/ verification services for corporations

Based in England with international reach

Some say less rigorous and transparent than ISO and The Climate Registry

Used by Walmart as reporting vehicle for its supply chain

Over 2,500 corporations use CDP to report GHG


31

Standards related to environmental responsibility – North America

The Climate Registry

Essentially the national evolution of California Climate Action Registry

Based upon the GHG Protocol

Requires 3rd party validation

U.S. E.P.A. Climate Leaders Program

Based upon the GHG Protocol

Reviewed but not verified

Requires energy reduction goals


32

Standards related to environmental responsibility – India

India GHG Inventory Program

Based upon GHG Protocol

Program follows a similar model to the U.S. EPA Climate Leaders Program

Launched in Delhi on May 28, 2008

Development and Climate, and Confederation of Indian Industry Sohrabji

Godreg Green Business Center (CII‐GBC)


33

Standards related to environmental responsibility – China

China Corporate Energy Conservation and

GHG Management Program

Launched June 1, 2007

Based upon GHG Protocol

Joint initiative of WRI, WBCSD, and China Business Council for Sustainable

Development

Goals include setting standards, developing calculation tools and software,

training, and registry formation


34

GHG Standards Compared

nononoyes Limited to public

companies

United StatesUnited StatesInternationalInternationalCountry specific or internt’l

resources @

no cost

limited

resources @ no

cost

framework

onlyresources @ cost

Framework only or access

to resources (cost/no cost)

yes nononoEnergy reductions required

noyesyesnoMore rigorous

n/rlimitedn/rvery fullPublic disclosure required

(full, limited, n/r)

noyesnono3rd party verification

required

noUses GHG Protocol

EPA Climate

Leaders Program

The Climate

RegistryISO 14064

Carbon

Disclosure

Project

Standard Feature


35

Conclusions

External and internal drivers will impose on customers increased CSR behavior

Walmart and Kaiser Permanente and many other companies are demonstrating now what most customers will soon be requiring of their supply chains

Such policies will apply across the supply chain, and thus to outsourcing service providers


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Which standards should be adopted by the outsourcing industry?

o For environmental responsibility:

• For fullest transparency, and offshore, ISO 14064/14065

– Industry already uses ISO standards

– International and not country‐specific (and the latter are still in development)

• For domestic, The Climate Registry or EPA’s program

• CDP (or possibly ISO 26000 ) may be tactically sufficient

o For social responsibility

• Unless certification is required, ISO 26000 may be sufficient

• Otherwise (for certification) SAI’s SA 8000 needs to be used


37

Final Note

While CSR is driving responsible outsourcing up the supply chain, perhaps the more

compelling intersection of the environment and outsourcing is weather destabilization

and its potential to impact business continuity

•In one week (10/09), several weather disasters were reported, including:

–Philippines was recently hit by two cyclones, submerging parts of Manila and other cities with

one month’s rain in 9 hrs.

–In southern India, flooding displaced 2.5 million, while the worst drought since 1972 occurred

in northern India


37

Documents

The International Association of Outsourcing Professionals