Edward Butt and Sally Vivian

IEMA Conference 5th June 2008
Corporate Climate Change Strategy Case Study from a Global Brand
Edward Butt
VP Sustainability Reckitt Benckiser
Sally Vivian
Associate Director URS Corporation
Copyright Reckitt Benckiser & URS Corporation, 2008
Agenda
Introduction
Climate Change Strategy Why, What & How

RBs Climate Change Strategy CASE STUDY
Climate Change Impact / Carbon Footprinting

RBs Carbon 20, Total Carbon Footprint CASE STUDY
10 key elements of Climate Change Strategy

Q&A
World leader in household cleaning, health and personal care >75% of net revenues from No. 1 or No. 2 brands Global company operations in > 60 countries, sales in circa 180 countries 42 manufacturing facilities in 29 countries 23,400 employees FTSE 25, 2007 net revenue > 5bn and operating profit > 1bn Recent acquisitions 2006, Boots Healthcare International (e.g. Neurofen & Strepsils) c. 1.9bn 2008, Adams Respiratory Therapeutics Inc. c. 1.1bn
World No. 1 in
Surface Care Personal Antiseptics Fabric Treatment Depilatories Automatic Dishwashing
Sore Throat Disinfectant Cleaning Water Softeners Lavatory Care
World leading engineering & environmental consultancy* 2,000 professionals in Europe 55,000 globally US $4.24 billion turnover in 2006 Add value to new projects, transactions and operation of facilities / infrastructure as well as environmental, economic and social returns Broadest technical expertise in the industry Strong track record (provider to Fortune 500 & FTSE 100 companies) Global Resources - Local Solutions
*URS ranked No. 1 Design Firm by Engineering News-Record for 6th consecutive year
Agenda
Introduction



Q&A
WHY - Climate Change Strategy ?

Legislative Requirements EU ETS, Business Review, Climate Change Bill Customer Expectations (B2B) Consumer Expectations (B2C) Stakeholder Expectations Brand / Reputation Business Risks / Opportunities Wal-Mart, Tesco, M&S an increasing issue shareholders, NGOs close link to financial value resource availability / cost, USP, barriers to entry
e.g. Customer Expectations

TESCO "I am determined that Tesco should be a leader in helping create a low-carbon economy.. For Tesco this demands that we transform our business model so that the reduction of our carbon footprint becomes a central business driver.
Sir Terry Leahy, 18 January 2007, speech to Forum for the Future conference
WAL-MART We believe working families should not have to choose between a product they can afford and a sustainable product. We want our merchandise to be both affordable and sustainable. Because when it is, we empower our customers to make the right decisions.
H. Lee Scott, Jr., February 1, 2007 Cambridge Programme for Industry Lecture
e.g. Consumer Expectations
Climate Change has jumped from 8th to 4th biggest concern in a year, more than doubling its % score
Source: c. 47 countries; AC Nielsen / University of Oxford, 2007

e.g. Stakeholder Expectations Carbon Disclosure Project

CDP5 (2007) Signatory Investors CDP5 Response Rate
$41 trillion under management FTSE350 70% (49%)
FTSE250 61% (36%) FTSE100 92% (80%)
CDP5 Quantitative Disclosure GHG Protocol Scope 1 Best Reporting Companies

Scope 1, 2 & estimates re. 3
46% (27%) 38% (10%) 45 of 245 FTSE (18%) incl. Reckitt Benckiser
WHAT IS Strategy ?
the direction and scope over the
long-term: which achieves advantage

through configuration of resources to meet the needs of markets and to fulfil stakeholder expectations
Johnson & Scholes, Exploring Corporate Strategy
WHAT IS - Climate Change Strategy ?

Identifies material climate change aspects / impacts of: a) your business b) your products / services c) your supply chain Identifies financial & non-financial risks / opportunities Understands issues / stakeholders and their drivers / strategy Drives: Measurement, Objectives, Targets & KPIs Defines, Demonstrates & Communicates CC Commitment Must be Action-orientated
HOW TO DO - Climate Change Strategy ?
SOURCE: Johnson & Scholes, Exploring Corporate Strategy

HOW TO DO - Climate Change Strategy ?

Map CO2e aspects / impacts
Identify Risks / Opportunities
Understand the Business Case
Measure & Report / Communicate
RBs - Climate Change Strategy 1

There is potential for our competitiveness to be both positively and negatively influenced at sector, company and product levels by climate change, policy / businesses responses to climate change and / or adaptation / attitudes to climate change (climate change issues). Reckitt Benckisers industrial sector (personal care and household products) is generally acknowledged as not being high-risk for climate change issues, and the operations of the Company itself are not generally energy- or emissions-intensive. Therefore, although there are potential business risks / opportunities relevant to Reckitt Benckiser arising from climate change issues, these are not currently deemed to be material to the short or long term value of the Company. We have previously established and shall maintain:
Strategic awareness of our impact, risks and opportunities Senior Management Accountability / Responsibility CO2e Emissions Management and Reporting Emissions Trading Regime Strategy (Monitoring + Early Engagement) Programmes in Place Formal Objectives, KPIs & Targets
RBs - Climate Change Strategy 2

There is a close connection between maintaining sustainable, longterm shareholder value and making continuous improvement in the (environmental) sustainability of our business. Cradle-to-grave, Life Cycle Management Approach to the climate change aspects / impacts of our global business / products We shall take real action - achieving measurable, reported results - to mitigate our direct and indirect climate change aspects / impact, incl. supply chain and consumer use of our products We shall under-promise and over-perform on our climate change achievements We shall not be PR-driven and shall avoid green wash
Agenda
Introduction



Q&A
WHAT IS A Carbon Footprint ?

Carbon Footprint: A measure of the IMPACT that a person / organisation / product has on the environment in terms of CO2-equivalent greenhouse gases emissions.
Primary Footprint: A measure of the DIRECT CO2e emissions generated through process emissions and the combustion of fossil fuels for energy & transportation. Secondary / Life Cycle Footprint: A measure which includes the DIRECT & INDIRECT CO2e emissions from the entire lifecycle of a product or service, including those associated with raw materials, use and disposal / recycling.
a 20% reduction per unit in our products Total Carbon Footprint by 2020
The first major FMCG* company to set a Total Carbon Footprint target
* Fast Moving Consumer Goods
What is RBs Total Carbon Footprint ?

Raw & Packaging Materials Product Manufacturing Product Distribution Retail Operations Consumers Product & Packaging Disposal / Recycling
The total contribution in terms of climate change emissions across our products lifecycle
Our direct business impact The impact from our business partners in creating raw and packaging materials, in distribution and retail sale Consumers impact in purchasing, using and disposing of our products
How does our methodology compare?

Raw & Packaging Materials Product Manufacturing Product Distribution Retail Operations Consumers Product & Packaging Disposal
Carbon Trust (initial) Carbon Label Methodology Draft PAS 2050:2008 (& revised Carbon Trust) Reckitt Benckiser Total Carbon Footprint
How are we measuring it ?

TRIAL (2006 data)
Question: can we measure our Total Carbon Footprint; cradle to grave; across 100s products / 1,000s SKUs globally? Developed and trialled with URS (a true team effort) during 2007
built on 6 years experience of measuring RBs direct carbon footprint mapped energy / carbon aspects and information needs explored data availability within organisation, supply chain and externally developed calculation methods / approaches in line with Draft PAS 2050 and GHG Protocol
Conclusion: Yes; we can measure it to a reasonable degree of accuracy, correct shape and to enable focus / informed action

BASELINE (2007 data)
2007 = baseline year Objectives and aspirations
clear, robust, transparent and auditable measurement system more specific and less generic data ongoing opportunities for improving the measurement system reduction in size and number of assumptions
Continuous improvement
continuing to explore organisational knowledge and data availability (incl. marketing, market research, human resources, procurement ) focusing effort to improve accuracy for significant contributions targeting robust & credible external sources

FINAL STAGES (OF BASELINE)
Final stages
ongoing challenge and review of Scope and Coverage assured data sources, assumptions, references testing robustness of scope, data & assumptions via in-company knowledge centres and sensitivity analysis third-party, external assurance of methodology & process
Reporting
findings will be reported in annual Sustainability Reports baseline year in 2007 report to be published July 2008 external assurance statement in report case studies of improvement programs / projects across life cycle
(its a journey not a destination!)

What are we measuring?

Raw materials and components Packaging materials Transport to factories
RB Factories 3rd-party Factories RB Offices & R&D Centres Business Travel
Logistics Centres Product Distribution
Retailers: - Logistics Centres - Distribution - Stores
Shopping journeys Product use:

e.g. - ADW - Laundry - Air Care - Surface Care - Hand washing
Product & Packaging Disposal / Recycling
HOW BIG is our Total Carbon Footprint ?

Outcomes of Trial
Total Footprint c.15m tonnes of CO2 equivalents / year

= emissions from 2.7 million average UK households / year = emissions from 4.3 million UK medium sized family cars / year
A 20% reduction (c. 3m tonnes CO2e) equates to:

= emissions from > 0.5 million average UK households / year = emissions from almost 1 million UK medium sized family cars / year
WHERE is our Total Carbon Footprint ?

30-40%

2-6%
1-5%
2-6%
50-70%
3-7%
Largest portion in Consumer use (e.g. in dishwashers / washing machines) can be influenced Second largest portion in Raw and Packaging Materials can be influenced Direct impact of our operations is relatively small, but in our direct control
Key Areas for Action

Energy Reduction / Efficiency Optimised Materials Recycled Packaging Lower Carbon Materials & Packaging
Energy Reduction / Efficiency Renewable & Highly Efficient Energy Sources Lower Carbon Product Design
Logistics Optimisation: - combining Less than a Truck Load (LTL) shipments - avoiding Empty Running - Inter-Modal transport
Mutually optimised packaging Mutually optimised logistics
Changing consumer behaviour to achieve energy reduction / efficiency in using Reckitt Benckiser products
Reducing Product / Packaging Waste Packaging Designed for Recycling
10 key elements of a CC strategy

Commitment from the top Identify material CC aspects / impacts from a clean slate Borrow with pride Recognise business Risks and Opportunities Define SMART objectives with KPIs Focus Resources and define Boundaries Reporting, Communication and Engagement Independent opinion, comments & assurance TAKE ACTION Avoid green wash, over-claiming & being PR-driven
Thank You
Q&A

Edward Butt and Sally Vivian

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IEMA Conference 5th June 2008

Corporate Climate Change Strategy Case Study from a Global Brand

Copyright Reckitt Benckiser & URS Corporation, 2008

Climate Change Strategy Why, What & How

Climate Change Impact / Carbon Footprinting

10 key elements of Climate Change Strategy

Surface Care Personal Antiseptics Fabric Treatment Depilatories Automatic Dishwashing

Sore Throat Disinfectant Cleaning Water Softeners Lavatory Care

Copyright Reckitt Benckiser & URS Corporation, 2008

Copyright Reckitt Benckiser & URS Corporation, 2008

Climate Change Strategy Why, What & How

Climate Change Impact / Carbon Footprinting

10 key elements of Climate Change Strategy

WHY - Climate Change Strategy ?

e.g. Customer Expectations

Copyright Reckitt Benckiser & URS Corporation, 2008

e.g. Consumer Expectations

Source: c. 47 countries; AC Nielsen / University of Oxford, 2007

e.g. Stakeholder Expectations Carbon Disclosure Project

CDP5 Quantitative Disclosure GHG Protocol Scope 1 Best Reporting Companies

Copyright Reckitt Benckiser & URS Corporation, 2008

long-term: which achieves advantage

Copyright Reckitt Benckiser & URS Corporation, 2008

WHAT IS - Climate Change Strategy ?

HOW TO DO - Climate Change Strategy ?

SOURCE: Johnson & Scholes, Exploring Corporate Strategy

HOW TO DO - Climate Change Strategy ?

Identify Risks / Opportunities

Understand the Business Case

Measure & Report / Communicate

Copyright Reckitt Benckiser & URS Corporation, 2008

RBs - Climate Change Strategy 1

RBs - Climate Change Strategy 2

Copyright Reckitt Benckiser & URS Corporation, 2008

Climate Change Strategy Why, What & How

Climate Change Impact / Carbon Footprinting

10 key elements of Climate Change Strategy

WHAT IS A Carbon Footprint ?

Copyright Reckitt Benckiser & URS Corporation, 2008

What is RBs Total Carbon Footprint ?

How does our methodology compare?

How are we measuring it ?

How are we measuring it ?

Copyright Reckitt Benckiser & URS Corporation, 2008

How are we measuring it ?

(its a journey not a destination!)

What are we measuring?

Raw materials and components Packaging materials Transport to factories

RB Factories 3rd-party Factories RB Offices & R&D Centres Business Travel

Logistics Centres Product Distribution

Retailers: - Logistics Centres - Distribution - Stores

Shopping journeys Product use:

Product & Packaging Disposal / Recycling

Copyright Reckitt Benckiser & URS Corporation, 2008

HOW BIG is our Total Carbon Footprint ?

Total Footprint c.15m tonnes of CO2 equivalents / year

A 20% reduction (c. 3m tonnes CO2e) equates to:

WHERE is our Total Carbon Footprint ?

Key Areas for Action

Mutually optimised packaging Mutually optimised logistics

Reducing Product / Packaging Waste Packaging Designed for Recycling

Copyright Reckitt Benckiser & URS Corporation, 2008

10 key elements of a CC strategy