Road To 2020 - Full Report

the roAd to 2020:
CorporAte progress
on the Ceres roAdmAp
for sustAinAbility
A joint report by Ceres And sustAinAlytiCs
www.ceres.org/roadto2020
ACknowledgements
report pArtners:
ACknowledgements
Ceres isanadvocateforsustainabilityleadership.Ceres
mobilizesapowerfulnetworkofinvestors,companiesandpublic
interestgroupstoaccelerateandexpandtheadoptionof
sustainablebusinesspracticesandsolutionstobuildahealthy
globaleconomy.
Ceres and Sustainalytics would like to acknowledge the following

people for their leadership in the development of this report:
Sustainalytics providesenvironmental,socialandgovernance
(ESG)researchandanalysisaswellasresponsibleinvestment
servicestoinvestorsaroundtheworld.Thefirmoffersglobal
perspectivesandsolutionsthatareunderpinnedbylocal
experienceandexpertise,servingbothvalues-basedand
mainstreaminvestorsthatintegrateESGinformationand
assessmentsintotheirinvestmentmanagement.
Sustainalyticsprovidedthedataandanalysisforthisreport.
design
PatriciaRobinsonDesign
printer
RecycledPaperPrinting
www.recycledpaper.com
From Ceres: AndreaMoffat,KristenLang,PeytonFleming,

PeterZheutlin,NatashaScotnickiandMaryGardiner.
From Sustainalytics: HeatherLang,BobMann,AnnieWhite
andZacharyParis.
speCiAl thAnks
Ceres and Sustainalytics also wish to extend special thanks
to those colleagues that provided insightful feedback
and assistance:
From Ceres: AmyAugustine,BerkleyAdrio,DanBakal,
BrookeBarton,GlennGutterman,AndrewLogan,KevinMaley,
AlbaMunoz,VeenaRamani,CarolLeeRawn,BrianSant,
AnuSaptharishi,BrianThomas,KatinaTsongas,RobWittenberg,
andAaronZiulkowski.
From Sustainalytics: MatthewBarg,GurneeshBhandal,
KirstenBoer,Jean-FlorentHelfre,DanielJoseph,
NonvignonKpadonou,StephanieLeNguyen,DaynaLinley,
JenniferPenikett,SheilaOveido,andMartijnvanSchaik.
photos
iStockPhotoLPwww.istockphoto.com
TheopinionsexpressedinthisreportarethoseofCeresand
Sustainalyticsanddonotnecessarilyreflecttheviewsofanyof
ourclients,donorsormemberorganizations.Ceresand
Sustainalyticsdonotendorseanyoftheorganizations,whichare
usedasexamplesorreferencedinthereport.Thispublication
hasbeenpreparedforgeneralguidanceonmattersofinterest
only,anddoesnotconstituteprofessionaladviceorinvestment
advice.Theinformationhereinreflectsthesituationasofthe
dateofthereportandisthussubjecttocontinuousmodification.
Theinformationhereinwasobtainedfromcorporateandthirdpartysourcesthatareconsideredtobereliable.Thoughthe
greatestpossiblecarewastakenintheresearchandanalysis,
norepresentationorwarranty(expressorimplied)isgivenasto
theaccuracyorcompletenessoftheinformationcontainedin
thispublication.CeresandSustainalyticsdonotacceptany
liabilityfordamagearisingfromtheuseofthisreport.
for more informAtion, ContACt:

Andrea Moffat
VicePresident,CorporateProgram,
Ceres
moffat@ceres.org
Heather Lang
Director,ResearchProducts,NorthAmerica,
Sustainalytics
heather.lang@sustainalytics.com
Full report: www.ceres.org/roadto2020
tAble of Contents
02
03
Foreword
Letter from Ceres and Sustainalytics
04
04
05
06
EXECUTIVE SUMMARY
Introduction
The Ceres Roadmap
Summary of Key Findings
07
07
08
09
METHODOLOGY
Methodological Approach
Research Methodology
What We Measured: Indicator Mapping
12
KEY FINDINGS
13
14
15
16
17
GOVERNANCE FOR SUSTAINABILITY

Board Oversight
Management Accountability
Executive Compensation
Corporate Polices and Management Systems
18
19
20
21
STAKEHOLDER ENGAGEMENT
Focus Engagement Activity
Substantial Stakeholder Dialogue
Investor Engagement
22
23
24
25
26
DISCLOSURE
Standards for Disclosure
Disclosure in Financial Filings
Vehicles for Disclosure
Verification and Assurance
27
28
29
31
32
34
35
36
37
38
39
41
42
43
44
45
46
PERFORMANCE
Operations
Greenhouse Gas Emissions and Energy Efficiency
Facilities and Buildings
Water Management
Human Rights
Supply Chain
Policies and Codes
Align Sourcing Practices
Engaging Suppliers
Measurement and Disclosure
Transportation & Logistics
Transportation Management and Modes
Products & Services
Design for Sustainability
Employees
Training and Support
47
47
CONCLUSION
Take Action
roAd to 2020: foreword

CalPERSisoneoftheworldslargestinstitutionalinvestors.The
investmentdecisionswemakewillhaveanimpactonthelives
ofmillionsofpeopletomorrowandfordecadestocome.Inlight
ofourlong-termliabilities,weneedtounderstandthecritical
risksandopportunitiesfacedbythecompaniesinourportfolio.
Today,thatincludestheseriousrisksfinancial,physical,and
reputationalassociatedwithissuessuchasclimatechange,
naturalresourcescarcity,supplychainpressuresandother
globalsustainabilitychallenges.Anycompanythatignoresthese
risks,andfailstodevelopalong-termstrategytoaddressthem,
isdiminishingitscompetitivenessinthe21st century.Atthe
sametime,thereareenormousopportunitiesforbusinessesthat
fullyembracesustainability.
Thisreportisthefirstassessmentofcompanysustainability
performanceinrelationtotheRoadmap.ForCalPERS,this
reportprovidesvaluableinformationaboutcompaniesthatwill
helpusinouranalysisandfutureengagement.Itexamines
progressinfourareaskeytobuildingasustainable21st century
corporation:governance,stakeholderengagement,disclosure
andperformance.Therearemanycompaniessettingouttheir
policiesandpracticesonsustainability,whichprovideexamples
forotherstofollow.
Weknowfromdiscussionswithcompaniesandtheirboardsthat
agrowingnumberofU.S.companiesareevaluatingenvironmental
andsocialrisksandlookingforcompetitiveadvantages.Wealso
knowthatwheninvestorsaskthetoughquestionsaboutlongtermstrategy,companies
Thefuturewillbelongto
havethebackingtodevelop
innovativecompaniesthat
actionplans.Weunderstand
understandthatbuilding
thattheseplansaresectorlong-termshareowner
specific.Whetherits
the future will belong to innovAtive
valueandbeingan
reducingtheircarbon
industryleaderrequires
CompAnies thAt understAnd thAt building
footprint,monitoringtheir
theintegrationof
long-term
shAreowner
vAlue
And
being
An
impactonwatersheds,or
sustainabilityprinciplesat
payingcloseattentionto
industry leAder requires the integrAtion
everylevel,fromtheCtransparencydemandsfrom
suitetooperations,and
of sustAinAbility prinCiples At every
stakeholders,anincreasing
throughthesupplychain.
level, from the C-suite to operAtions,
numberofcompaniesare
demonstratingsustainability
Buttheresponsibilityfor
And through the supply ChAin.
leadership.Hopefully,this
buildingasustainable
reportwillencouragemore
economydoesntjustfall
companiestointensify,
ontheshouldersof
expandandacceleratetheir
companies.Investors,too,
efforts,intheknowledge
haveacriticalrole.We
thattheirlong-terminvestorsseethesignificantroleof
havetoapplythesesamesustainabilityprinciplestoour
sustainabilityinvaluecreation.
investmentpracticesandintegratethemthroughoutour
decision-making.Weneedtopressforrobustpublicdisclosure
Investorslargeandsmallarecriticalintheparadigmshifttoa
bycompaniessowecandeterminewhethertheyarepreparing
sustainableeconomy.U.S.companiesarecompetinginaglobal
tomeetglobalchallenges,suchasenergyandwaterconstraints,
economywheretheserisksandopportunitiesareshapingthe
andtheeconomicandreputationalrisksassociatedwithhealth
future.Ourroleastheprovidersofcapitalistoensurethat
andsafetyissues.CalPERShasdevelopeditssustainability
companieshavethesupportofshareownersintacklingthese
frameworkaroundtheconceptofthreeformsofcapital:
challengesandcontributingtosustainableeconomicdevelopment.
financial,humanandphysical.Weknowthatlong-termreturns
Thiswillgeneratethefinancialreturnsthatpaypensionsforfunds
toourfundwillrestupontheabilityofcompaniestomobilizeall
likeours,andalsomeettheexpectationsofwidersociety.
threetocreatevalue.
InMay2011,CalPERSand30otherlargeinvestorssentaletter
totheCEOsofeverycompanyintheRussell1000stockindex.
Weencouragedthemtodevelopsustainablebusinessstrategies
andtodisclosetheirsustainabilityriskstoinvestorsthrough
analystcalls,financialfilingsandannualmeetings.Wealso
recommendedtheyconsiderThe 21st Century Corporation:
The Ceres Roadmap for Sustainability asaguideforintegrating
sustainabilityacrosstheiroperations.
the roAd to 2020: CorporAte progress on the Ceres roAdmAp for sustAinAbility
Anne Stausboll
CEOCalPERS
letter from Ceres & sustAinAlytiCs

CLIMATE CHANGE AND A GROWING GLOBAL POPULATION PLACING EVER
INCREASING DEMANDS ON ENERGY, WATER AND OTHER NATURAL RESOURCES
MEANS THAT SUSTAINABILITY PRINCIPLES MUST BE AT THE CORE OF BUSINESS
STRATEGY FOR EVERY COMPANY IN THE 21ST CENTURY. THESE CHALLENGES,
AND THE ECONOMIC OPPORTUNITIES IN MEETING THEM, REQUIRE PROFOUND
CHANGES IN HOW BUSINESS DOES BUSINESS. THOSE THAT ADAPT WILL BE
POSITIONED FOR SUCCESS; THOSE THAT DONT WILL BE LEFT BEHIND.
In2010,CeresreleasedThe 21st Century Corporation: The
Ceres Roadmap for Sustainability,avirtualownersmanualfor
thesustainablecorporation.ForthisreportCeresand
Sustainalyticsteameduptoevaluatetheprogressof600U.S.
companiesalongtheroadtosustainabilitytwoyearslater.
TheRoadmap definedwhatasustainablecorporationshould
looklike:itoutlinedthenecessarygovernancestructures;the
typesofengagementcompaniesshouldbepursuingwith
stakeholders;andthestandardsandscopeofpublicdisclosure
andtransparencythatareessentialtothesustainablecorporation.
Importantly,theRoadmap containedtwentyspecificexpectations
forsustainableperformance,boldmetricsforreducing
environmentalimpactsandimprovingworkerconditionsin
operations,supplychainsandtherestofthecorporateenterprise.
Forthefirsttimecompanieshadatooltohelpthemvisualize
andre-engineerthemselvesforsuccessinaworldchallenged
byunprecedented,large-scaleenvironmentalandsocialchanges
thatthreatenoureconomyandourplanet.TheRoadmaps
expectationsarehighbecausethechallengeswefaceare
formidable,complexandimmediate.
TheRoadmap canbeapowerfultoolifcompaniesputitinto
practice.Forthisfirstreportmeasuringcorporateprogresson
theRoadmap,wehadseveralgoals:first,wewantedabroad
assessmentofwhetherandhowmajorcompaniesare
respondingtosustainabilitychallenges;second,wewantedto
identifycompaniesthataredemonstratingsustainability
businesspracticesthatcouldinspireotherstofollowsuit;and,
third,wewantedtoacceleratethepaceofchangebecausewith
eachpassingyearthechallengebecomesincreasinglyurgent.
Theresultsareclear:thereareencouragingpocketsof
sustainabilityleadershipintheU.S.businesscommunity,butfar
toomanycompaniesareonlytakingsmall,incrementalsteps.
Sustainabilityhasyettogaintractionatanywherenearthescale
andspeedrequirediftheRoadmap expectationsaretobewidely
metby2020.Companiesneedtomovebeyondone-offprojects
andinitiativestocomprehensivesustainablebusinessstrategies
thatareimplementedfromtheboardroomtothecopyroomand
throughoutthesupplychain.
Farfromseeingthisasadauntinghilltoclimb,weseeitas
aworldofopportunityforcompaniestoimprovecompetitiveness,
realizelargesavingsthroughenergyefficiency,investintheir
workers,strengthentheirsupplychainsand,inmanysectors,
reapthebenefitsoftheenormousinvestmentopportunitiesin
cleantechnologyandcleanenergy.
Intheend,closingthesustainabilitygapwillrequireacollaborative
effortamonginvestors,businesses,non-governmental
organizationsandotherstakeholdersconcernedaboutthefuture
oftheplanetandtheeconomy.Cereshasalonghistoryofthese
typesofendeavors,includingengagingwithinstitutionalinvestors
andbusinessesonsettingnewexpectationsforsustainability
leadership,supportinginvestorstoaskcompaniesabouttheir
sustainabilityrisksandcompetitiveopportunities,andthe
establishmentofclearpoliciesthatrewardsustainability
performance.Sustainalyticshastypicallyworkedwithinstitutional
investorsandhasbeenfocusedonhelpingthemdrivechangeby
integratingclimate,waterandothersustainabilityperformance
considerationsintotheirinvestmentdecision-makingprocesses.
Buildingasustainableeconomyisntaluxury,itsanecessity
andtimeisshort.Wehopethisreportservesasacatalystfor
actionbecauseinactionisntanoptionforanycompanythat
hopestothriveinthe21stcenturyeconomy.
Mindy S. Lubber
PresidentandCEOofCeres
Michael Jantzi
CEOandFounder,Sustainalytics
www.Ceres.org/roAdto2020
eXeCutive summAry:
CorporAte progress on the Ceres
roAdmAp for sustAinAbility
IT IS TIME TO RESET BUSINESS
STRATEGIES FOR THE 21ST CENTURY
WITH SUSTAINABILITY AT THE CENTER.
Forbusinessesinallsectorsoftheeconomy,sustainabilityis
astrategyforbuildinglong-termshareholdervalue,managing
environmentalandsocialrisks,andimprovingcompetitiveness.
Environmentalandsocialsustainabilityissuesarematerial
balancesheetissues.Theyposerisksandofferopportunities
thatwilldrivethesuccessofcorporations.
Thereareeverincreasingexpectationsofbusinessfrominvestors,
customers,employeesandcommunitiestosolveenvironmental
andsocialchallenges,andtobetransparentindoingso.The
needtojumpfrombusinessstrategiestosustainablebusiness
strategiesisurgentifwearetotackleissuessuchasclimate
change,waterscarcityandhumanrights,particularlyasthe
globalpopulationeclipsessevenbillionandacceleratestowards
ninebillionby2050.Thistransformationwillrequireboldness,
innovationandperseverance;andthecompaniesthatmakethis
switchwillbebestpositionedtodrivesolutionstothese21st
centurychallenges.
The Road to 2020: Corporate Progress on The Ceres Roadmap
for Sustainability (www.ceres.org/roadto2020)assesseshow
U.S.businessesareprogressingonsustainabilityandusesasa
framework,The 21st Century Corporation: The Ceres Roadmap
for Sustainabilityaguideforintegratingsustainabilityacrossa
companysentireenterprise.Specifically,itevaluateswhere600
largepubliclytradedcompanies1 standonsustainabilityissues
intermsofgovernance,stakeholderengagement,disclosure
andperformance.
Theanalysisshowstherearepocketsofleadershipand
innovation,andidentifiesmanyspecificexampleswherelessons
canbelearnedandappliedbyotherbusinesses.Butitalso
revealsthattwoyearsintothe2020timeframewestillhavea
longwaytogo.Forexample,just26percentofthe600companies
areintegratingsustainabilitywithingovernanceandmanagement
systems;onlyaquarteraredisclosingsupplychainmonitoring
andperformance;andonlyathirdaresettingtargetsforreducing
greenhousegasemissions.Thefindingsareclearmore
companiesshouldbetakingstrongeractionnow.
VIEW THE FULL REPORT ONLINE

Visitwww.ceres.org/roadto2020 toviewthefullreportandkey
findings.Thewebsiteoffersinteractivecharts,whichareuseful
toolsforunderstandingtheresults,comparingperformanceof
peerswithinsectorsandidentifyingkeyopportunitiesfortaking
action.Thewebsitealsofeaturesdetailsonthemethodology,
additionalanalysesforeachofthenineprioritysectorsand
additionalresourcesandreports.
Check it out at www.ceres.org/roadto2020.
1 ThevastmajorityofcompaniesincludedwithinthisreportarebasedintheU.S.;onlytencompaniesareheadquarteredelsewhere.
the Ceres roAdmAp for sustAinAbility
In2010,CeresreleasedThe 21st Century Corporation: The

Ceres Roadmap for Sustainability (Roadmap),averitable
ownersmanualforthesustainablecorporation.Asnotedthen,
Enormousopportunitiesariseduringtransformativetimes.And
thesearetrulytransformativetimes.Thishasbeenprovenagain
andagainasthefinancialmarketsstruggletoregaincredibility,
OccupyWallStreetandtheArabSpringmovementschallenge
thestatusquoandextremeweathereventsupendbusinesses
andcommunities.In2011,U.S.insurerssawadoublingin
lossesfromextremeweatherevents,suchasmorepronounced
heatwavesanddrought.Tomitigatethedeeperimpactsof
climatechangetocome,theentireenergyeconomymustbe
transformed.Companiescansavebillionsofdollarsrightnow
throughenergyconservationandefficiency.Clean,renewable
energy,animperativeforreducingourfossilfueldependency,
isamulti-trilliondollarbusinessopportunity.Businessisalready
beingaffectedbysustainabilitychallengesandsoitmustalso
bethedrivingforcebehindthesolutions.
TheRoadmap contains20specificexpectationsforcorporate
performancebroadlydividedintofourareasofactivity
governance,stakeholderengagement,disclosureandperformance.
GovernanCe: Companieswillembedsustainabilityintocore
buildingblocksmanagementandboardstructures,goal-setting
andstrategicdecision-making.
Stakeholder enGaGement: Companieswillproactivelyengage
inrobustdialoguewithstakeholdersacrossthewholevalue
chain,andwillintegratestakeholderfeedbackintostrategic
planningandoperationaldecision-making.
diSCloSure: Companieswillregularlyreportonsustainability
strategiesandperformance.Disclosurewillincludecredible,
standardized,independentlyverifiedmetricsencompassingall
materialstakeholderconcerns,anddetailedgoalsandplansfor
futureaction.
PerformanCe: Companieswillroutinelyandsystematically
improveenvironmentalandsocialmetricsacrosstheiroperations,
supplychainsandproducts,includingreducedwaterandenergy
use,lowerfootprintsforcarbonemissionsandwasteand
respectforhumanrights.
ThisistheframeworkThe Road to 2020 usedtoevaluatethe
progressof600U.S.companiesonsustainability,twoyearsafter
thereleaseoftheRoadmap.
summAry of key findings

the ndings of this report represent a collaborative effort by Ceres and Sustainalytics to assess the progress
of companies and to identify noteworthy trends and business practices. our conclusion? Companies are moving,
albeit too slowly, given the urgency of the sustainability challenges we face.
4
4
4
4
WithrespecttoeachkeyexpectationoftheRoadmapevaluated,
companieswereplacedinaperformancetier.
Somecompanieshavemadegreatstrides;othersarestandingstill;
andmostaresomewhereinbetween.Thismeansthatformost
companiestheopportunitiestotransformthemselvesarevast.
Someofthemostsignificantfindingsinclude:
governAnCe f0r
sustAinAbility
26 percent of the 600 companies
(157 companies) including Alcoa, Xcel
and Intel are in Tiers 1 and 2 for their
governance strategies on sustainability.
More than half are in Tier 4.
Tier 1: SettingthePace
Tier 2: MakingProgress
Tier 3: GettingonTrack
Tier 4: StartingOut
stAkeholder
engAgement
Almost 24 percent of companies have
some degree of meaningful stakeholder
engagement, including Baxter and Ford
who demonstrate ongoing and long-term
engagement with a diversity of stakeholders
and disclose how they consider stakeholder
feedback in business decision-making
and strategy. However, nearly half of the
companies assessed disclose no efforts
on stakeholder engagement.
disClosure
Of the 600 companies, 49 percent (293
companies) are publishing sustainability
reports, with 29 percent (176 companies)
using the Global Reporting Initiative
guidelines. This still leaves almost half
of the companies without a sustainability
report.
performAnCe
reduCing ghg emissions
wAter mAnAgement
humAn rights
supply ChAin
Nearly half of the companies

(47 percent) are making
some progress in reducing
greenhouse gas emissions by
reducing electricity demand,
procuring renewable energy
and ramping up energy
efficiency. A third of the
600 companies have in
place time-bound targets
for reducing GHG emissions
for direct operations.
Among four particularly

water-intensive sectors
analyzedFood & Beverage,
Footwear & Apparel,
Oil & Gas and Utilities
25 percent of companies,
including The Coca-Cola
Company and Exelon, have
undertaken assessments
to identify specific waterrelated risks, such as
geographic-specific exposure.
Only 13 percent (80

companies) of the 600
companies evaluated on
human rights policies and
programs are ranked in
Tiers 1 & 2. Top performing
companies for this expectation
include 3M, General Electric
and Hess, for which policies
covering freedom of
association, elimination of
discrimination, human rights,
and working conditions were
evaluated.
Nearly half43 percent or

259 companiesof the 600
companies have a supplier
code in place and nearly
10 percent (55 companies)
make explicit reference to
relevant International Labor
Organization (ILO) conventions.
Overall, only 25 percent of
the 600 companies disclose
some amount of supply chain
monitoring and performance
information including Nike
and Hewlett Packard.
visit the web report to see all of the key findings and interact with the online charts and graphs.
methodology
this report evaluates if and how 600 large u.S. companies are
meeting many of the expectations outlined in the Roadmap. the
Roadmap was designed to be a leadership framework that is
grounded in practical examples of where and how companies
are meeting the expectations of a 21st century sustainable
corporation. as the journey toward business sustainability
progresses, we will look for new and innovative practices
from companies and will adapt The Road to 2020 assessment
methodology to reflect these developments.
the data used for this assessment report was compiled and
evaluated by analysts at Sustainalytics, an independent
environmental, social and governance (eSG) research provider
with substantial experience and expertise in evaluating best
practices in the eSG performance of publicly-traded companies.
each of the companies included in this report is profiled in
Sustainalytics Global Platform, where a broad range of indicators
are used to assess eSG policies, management systems and
performance outcomes. the Platform was adapted to align with
the expectations detailed in the Roadmap using the Sustainalytics
standard research process and methodological approach.
methodologiCAl ApproACh
thecontinuousimprovementandunderstandingofsustainability
issuesarereflectedintheassessmentprocess.Pleaseseethe
chartonpage9,whichmapseachoftheRoadmap expectations
totheindicatorsusedtomeasureprogressandalsonotesthose
Roadmap expectationsnotcoveredinthisassessment.
universe of Coverage
Theresearchuniverseforthisreportincludes600companies
listedonatleasttwooutofthreeofthefollowingindices:S&P
500,Russell1000andMSCIDevelopedMarkets.Thevast
majorityofthecompaniesareU.S.-based;however,ten
companieshaveheadquartersthatarelocatedelsewhere,yet
aretradedontheS&P500andeithertheRussell1000orthe
MSCIDM.Allcompaniesincludedarepubliclytraded
corporations;limitedpartnershipandliabilitycompanieshave
beenexcludedfromtheresearchuniverse.
Sectors
The600companieshavebeenorganizedinto19distinctsectors
basedontheiruniquebusinessmodelsandoperations.The
sectorheadingsarealignedwiththeGlobalIndustryClassification
System(GICS).Thereportexaminednineofthesesectorsin
greaterdetail:Autos&Transportation,FinancialServices,Food
&Beverage,Footwear&Apparel,Oil&GasProducers,Retail,
TechnologyHardware,TechnologySoftware&Servicesand
Utilities.Tosupplementthemainreport,overviewsofeachof
theseprioritysectorsareavailableonline,allowinguserstodelve
deeperintosector-specificperformanceontheRoadmap
expectations.Dependinguponresourcesanddataavailability,
additionalsectorsmaybeaddedtothislistinthefuture.
indicators & Weights

Thisreportisbasedonthefindingsof57coreandsectorspecificindicators.Forty-nineoftheseindicatorswereselected
fromalargerpoolofindicatorstrackedinSustainalyticsGlobal
Platform.Theseindicatorswereusedasproxiestomeasurethe
Roadmap expectations,andeightnewindicatorsweredeveloped
toallowforamorecomprehensiveindicatormapping.Forthis
firstreportitwasnotpossibletocaptureallofthedatarequired
tofullyassesstheRoadmap expectations.However,wewillbe
lookingatadditionalindicatorsinthefuturetocapturethe
meaningoftheexpectationsmorecompletelyandtoensurethat
Ofthe57indicatorstracked,27arecoreindicatorsassignedto
allsectors,while31aresector-specificindicatorsassignedon
thebasisofsectorimpactandexposure.Giventheconsistent
setofexpectationsassignedtoallsectorsintheareasof
governance,stakeholderengagementanddisclosure,weightings
wereuniformlyassignedtotheaccountabilityexpectations.
Customizedweightingswereappliedattheperformance
expectationlevelforeachsector.Forexample,supplychain
operationsareweightedmoreheavilyforsectorswith
considerableexposurebyvirtueoftheirlengthysupplychains,
suchasTechnology:HardwareandFootwear&Apparel.
Controversy assessment Process

Sustainalyticshasarigorousmonthlycontroversyassessment
processthatdistinguishesthelevelofincidentseveritybasedon
variablessuchasrecurrence,degreeofimpactandcompany
response.Thisscreeningwasappliedtothe600companies
includedinthisstudyasanextralayerofanalysis,butwasnot
accountedforintheperformanceassessmentweighting.Itis
notuncommonforacompanytohaveastrongenvironmental
managementframeworkorhumanrightspolicyinplace,yetstill
beembroiledinenvironmentalorhumanrightscontroversies
duetopoorimplementation.Thisscreenwasusedtoavoid
acknowledgingcompaniesforhavingstrongperformanceon
agivenexpectation,ifthebusinesswasalsoimplicatedin
significant,relatedcontroversies.Itisrecognized,however,that
withbusinessesandsustainabilityissuesmovingquickly,this
processmaynothavecapturedeverynegativeincidentinvolving
acompanysimpact.Itisalsoimportanttonotethatsinglingout
acompanysperformanceonagivenexpectationdoesnotimplyit
isanoverallsustainabilityleader.RatherexamplesfromTier1and
2companiesareusedtoillustratespecificpracticesotherscan
emulateoradaptforimplementationwithintheirownbusinesses.
tiering System
Thisreportisnotabenchmarkanddoesnotdiscloseindividual
scores.Instead,itisatoolforcompaniestoassesstheir
performanceagainstsectorpeersandlearnfromsustainability
initiativesothersectorsareadopting.Itisnotanabsolute
measureofperformancebutarelativeone.Simplybecause
acompanyisperformingbetterthanitspeerswithregardto
aspecificRoadmap expectationdoesnotmeanithasfully
metthatexpectation.Thereportfocusesonsolutionsand
improvementscompaniescanmaketomeettheCeres
Roadmap expectationsby2020.Atieredapproachhasbeen
appliedtoassessandpresentcompanyperformance.
Tier 4: StartingOut
data availability
Interactivechartsandgraphsareavailableinanonlineformat
(www.ceres.org/roadto2020)souserscanviewperformance
resultsaccordingtoRoadmap chaptersandexpectations.At
boththechapterandexpectationlevelsgraphsillustratehowthe
600companiesevaluatedarepositionedacrossthefourtiers.
ACCountAbility ChApters
Forthefirstthreechaptersfocusedonaccountabilitymeasures
forsustainabilityGovernance,StakeholderEngagementand
Disclosureinformationisavailableforeachofthe600
companies.Forthegraphsdisplayingoverallprogressforthese
chapters,userswillbeabletofilterresultsforeachofthe19
sectorsassessedandviewalistofcompaniesincludedwithin
eachofthefourtiers.Attheexpectationlevelforthefirstthree
chapters,userswillbeabletoviewthefulllistof600companies
andhowtheyarepositionedacrossthefourtiers.
performAnCe ChApter
WithinthePerformancechapter,tierassessmentsforoverall
progressarenotdisclosed.Datalimitationsforcertainsectorsand
expectations,alongwithsector-specificenvironmentalandsocial
impacts,wouldrendersectorcomparisonsmeaningless.Therefore,
onlyperformanceinformationattheexpectationlevelisdisclosed.
ForcertainPerformancechapterexpectations,all600companies
wereassessed.Forothers,asmallernumberofcompanieswere
assessedforreasonscitedabove.ForthePerformance
expectations,thefilteringoptionislimitedtotheninepriority
sectors(orasub-setdependingupontheexpectation)and
userswillonlybeabletoviewalistofcompanieswithinthose
sectorstoseehowtheyarepositionedacrossthefourtiers.
reseArCh methodology
data Sources
Theanalysisforthisreportissupportedbyacomprehensivesetof
datagatheredthroughavarietyofprimaryandsecondarysources
andspecializedthird-partydataproviders.Withtheexceptionof
directcompanyfeedback,thesourcesconsultedarepublicly
available,thoughoftenthroughsubscription.Companyreporting
constitutesthestartingpointforresearch,withkeysources
includingsustainabilityreports,financialreportingandwebsites.
Acompanyspokespersoniscontacteduponcompletionofeach
fullprofileupdateandsentadraftcopyoftheirreportfor
verification.Anyrelevantfeedbackcommunicatedbycompanies
trackedinthisreporthasbeenprocessedandincorporated.
Sustainalyticsanalystsuseacentralizedmediadatabaseto
conductamonthlysearchforallcompanies(includingtheir
subsidiaries);anextensivelistofNGOsourcesisalsocentrally
trackedonamonthlybasis.OthercoresourcesincludetheCarbon
DisclosureProject,UNGlobalCompact,OrganizationforEconomic
Co-operationandDevelopment(OECD)Watch,andBusiness&
HumanRights.Regionalsourcesareconsultedforlaborrelations,
environmental,andhealthandsafetydata(e.g.OSHA,EPA,and
NLRBintheU.S.).Further,eachanalystalsotracksindustryspecificsourcestailoredtothekeyESGissuesintheirsectors.
data Collection frequency and Process

Thedataassessedinthisreportrepresentsasnapshotof
companyESGperformancebasedondatahousedin
SustainalyticsGlobalPlatformasofJanuary2012.Assuch,
companyreportingcorrespondstoFY2010or2011,depending
onfiscalyear-endandreportingschedules.Sustainalyticshas
updatedinformationderivedfrommediaandNGOsourceson
amonthlybasis,whileothercentralizeddatapointsareupdated
onaquarterlytosemi-annualbasis.
Quality Control Process

Sustainalyticsappliesarigorousqualityassuranceprocess,
whichincludesaninternalpeerreviewofallprofilespriorto
companyverificationandtabulationofscores.Thepeerreview
processensuresoverallconsistencyinaccordancewith
Sustainalyticsanalystguidelinesandqualitystandards.Aquality
assuranceteamatSustainalyticsthatoverseesbroaderquality
controlinitiativeswasexplicitlytaskedwithsupportingthisreport
byfactcheckinganumberofscoresacrossabroadsampleof
companiesandindicators.
Onpages9-11isamappingofproxyindicatorsusedtomeasure
progress againsteachRoadmap expectationandalistofsectors
coveredperexpectation.
food & beverage
footwear & Apparel
oil & gas producers
retail
tech: hardware
tech: software
utilities
board oversight
financial services
Ceres roadmap
expectation
All sectors
All sectors
All sectors
Policy on Bribery and Corruption
All sectors
Whistle Blower Programs
All sectors
Signatory to UN Global Compact
All sectors
Signatory to the UN Principles

for Responsible Investment
Formal Policy Statement
on Responsible Investment
Financial Services; Banks & Insurers;

Real Estate
Financial Services; Banks & Insurers;
Real Estate
Member of UNEP Fincial Services Initiative Financial Services; Banks & Insurers
Equator Principles and Related Reporting
Financial Services; Banks & Insurers
Formal Environmental Policy
All sectors
Environmental Management System
All sectors
Formal Policy on Freedom of Association
All sectors
Formal Policy on Elimination

of Discrimination
All sectors
Formal Policy on Working Conditions
Autos & Transportation; Footwear & Apparel;

Retail; Technology Hardware; Consumer
Discretionary; Industrials; Materials;
Professional Services; Semiconductors
Formal Policy on Human Rights
Oil & Gas Producers; Energy Services &

Refining; Industrials; Materials; Professional
Services; Telecom Services
External Certification of EMS
All sectors
All sectors
All sectors
All sectors
All sectors
All sectors
Participation in CDP
All sectors
Sustainability Reporting
and GRI Guidelines
All sectors
Investor Communication
All sectors
All sectors
sustainalytics indicator name
Board oversight of ESG Issues
Executive management oversight

of ESG Issues
Executive Compensation Tied
executive Compensation to ESG Performance
stAkeholder
engAgement
governAnCe
management
Accountability
Corporate policies &

management systems
NOT COVERED
public policy
focus engagement
Disclosure on Stakeholder Engagement
Activity
substantive stakeholder Quality of Stakeholder Dialogue
dialogue
investor engagement
Investor Communication
NOT COVERED
Sustainability Reporting
standards for disclosure and GRI Guidelines
Disclosure of material sustainability risks
disclosure in
and opportunities in financial filings.
financial filings
disClosure
C-level engagement
vehicles for disclosure
verification & Assurance External Verification of CSR Reporting

scope & Content
product transparency
summary of priority sector Coverage

Autos & transportation
roadmap Chapter
whAt we meAsured: indiCAtor mApping
NOT COVERED
NOT COVERED
summary of indicator Coverage
footwear & Apparel
oil & gas producers
retail
tech: hardware
tech: software
utilities
facilities & buildings
food & beverage
ghg emissions
& energy efficiency
financial services
Ceres roadmap
expectation
roadmap Chapter
Scope of Corporate Reporting

on GHG Emissions
Programs and Targets
to Reduce Direct GHG Emissions
Programs and Targets
to Increase Renewable Energy Use
All sectors
All sectors
All sectors
Carbon Intensity
All sectors
Carbon Intensity Trend
All sectors
% Primary Energy Use from Renewables
All sectors
Scope 3 Emissions
All sectors
Carbon Intensity of Energy Mix
Utilities
Programs & Targets to Increase

Investments in Sustainable Buildings
Programs & Targets to Reduce Water Use
Financial Services; Food & Beverage; Footwear

& Apparel; Retail; Technology Hardware
Food & Beverage; Footwear & Apparel;
Oil & Gas Producers; Utilities
Oil & Gas Producers; Utilities
Utilities
Formal Policy on Freedom of Association
All sectors
Formal Policy on Human Rights
Utilities; Energy Services & Refining;

Industrials; Materials; Professional Services;
Telecom Services
Formal Policy on Elimination

of Discrimination
All sectors
Local Community Development Programs
Oil & Gas Producers; Materials
Community Involvement Programs
Oil & Gas Producers; Retail; Utilities;

Industrials; Materials; Telecom Services;
Real Estate
Policy on Indigenous People

and Land Rights
Oil & Gas Producers; Materials
operAtions
Water Risk Assessment

water management
Water Disclosure
human rights
supply ChAin
Scope of Supply Chain Standards
All sectors
Quality of Social Supply Chain Standards
Autos & Transportation; Food & Beverage;

Footwear & Apparel; Retail; Technology
Hardware; Consumer Discretionary;
Industrials; Semiconductors; Telecom Services
All sectors
All sectors
Programs and Targets for

Environmental Improvement of Suppliers
External Social Certification of Suppliers
Supply Chain Monitoring System
Autos & Transportation; Footwear & Apparel;

Technology Hardware; Utilities;
Consumer Discretionary; Industrials;
Semiconductors; Telecom Services
All sectors

Supply Chain Audits and Related Reporting Technology Hardware; Consumer Discretionary;
Industrials; Semiconductors; Telecom Services
Footwear
& Apparel; Technology Hardware;
Reporting on Supply Chain Monitoring
and Enforcement
X
X
Supply Chain Monitoring System
10
Formal Policy or Program

Align sourcing practices on Green Procurement
measurement
& disclosure
NOT COVERED
policies & Codes
engaging suppliers

Industrials; Materials;
Professional Services; Semiconductors
Formal Policy on Working Conditions

eliminate waste
X
X
Programs & Targets to Promote Sustainable Food & Beverage; Retail

Food Products
& Transportation; Footwear & Apparel;
Sustainability Related Products & Services Autos
Retail; Technology Software; Utilities
Programs & Targets to Increase
Real Estate
Investments in Sustainable Buildings
produCts & serviCes
Sustainability Related Financial Services

design for sustainability Revenue from Clean Technology or
Climate Friendly Products
oil & gas producers
financial services
-
X
X
Financial Services; Banks & Insurers
X
X
Oil & Gas Producers; Industrials
business model innovation

r&d
& Capital investment
marketing practices
strategic Collaboration
NOT COVERED
Footwear & Apprel; Technology Hardware;

Materials; Semiconductors; Telecom Services
Food & Beverage; Retail;
Consumer Discretionary
Food & Beverage; Retail;
Consumer Discretionary
NOT COVERED
NOT COVERED
NOT COVERED
training & support
Employee Enagement
All sectors
Systematic Integration of Environmental

Considerations at R&D Stage
Organic Products
Fair Trade Products
employees
utilities
NOT COVERED
tech: software
Autos & Transportation; Food & Beverage;

Footwear & Apparel; Retail;
Technology Hardware
Retail; Technology Hardware
tech: hardware
Targets and Programs to Improve the

Environmental Performance of Logistics
and Fleet Management
Programs & Targets to Reduce GHG Emissions
from Outsourced Logistics Services
retail
business travel
& Commuting
footwear & Apparel
transportation
management & modes
Ceres roadmap
expectation
food & beverage
trAnsportAtion
& logistiCs
roadmap Chapter
recruitment & retention NOT COVERED

promoting
NOT COVERED
sustainable lifestyles
11
key findings & AnAlysis

this analysis of 600 u.S. companies2 shows that a relatively small cluster of businesses are leading on
sustainability practices and performance, but broad corporate action remains tenuous. this reports primary goal
is to identify and highlight examples of how companies are working to meet the expectations set forth in The 21st
Century Corporation: The Ceres Roadmap for Sustainabilityand the business case for doing soin the hopes
that many more companies will follow.
TheRoadmap wasusedastheframeworkforevaluatingthe600
companieswithinthisreport.Releasedin2010,theRoadmap is
acomprehensiveplatformfordesigningasustainablebusiness
strategythatwillpositioncompaniesforsuccessinthelowcarbon,resourceconstrained21st centuryglobaleconomy.
SettinG the PaCe tier 1

makinG ProGreSS tier 2
GettinG on traCk tier 3
TheRoadmaps barforleadershipisahighone,reflectingthat
sustainabilitychallengesarecomplexandrequirebusiness
innovationpairedwithrobustaccountabilitysystems.Ouranalysis
illustratesthatsustainabilityleadershipistheexceptionand,
unfortunately,belowaverageperformancewithlimitedpockets
ofactionarestillthenorm.Theemphasisofthisreport,however,
isnotonindividualscores,butontiersofperformanceand
practicalpathsforimprovement.Wehavehighlightedexamples
ofcompaniesthathavestrongperformanceonagivenRoadmap
expectationsothatotherscanlearnfromthem,butthisdoesnot
necessarilymeanthatthecompanyisanoverallsustainability
leader.Infact,everycompanyinthisreporthasareaswhereit
canimproveperformanceagainsttheRoadmaps expectations.
StartinG out tier 4
ToevaluatecorporateprogressontheRoadmap,Cerespartnered
withresearchproviderSustainalyticstoidentifyindicatorstobe
usedtomeasureeachoftheRoadmap expectationsassessedin
thisreport.Detailsoftheindicatorsmappedtoeachofthe
expectationscanbefoundinthemethodology.Inordertoillustrate
progressagainsttheexpectations,companyperformanceresults
arecategorizedacrossfourTiersdefinedasfollows:
products and services, andemployee engagement.The

Roadmap performanceexpectationscallforimprovingwater
managementandriskassessment,reducingthecarbon
footprintandbuildingsustainabilitythroughoutthesupplychain,
amongstotherexpectations(seethemethodologyforafulllistof
theRoadmapperformanceexpectationsevaluatedinthisreport).
Tier 4: StartingOut
Thereportfindingsarepresentedunderthesamechapterand
expectation-levelheadingsoutlinedintheRoadmap.Thefirst
threechaptersfocusonthosesustainabilitystrategiesthatdrive
accountabilitythroughoutthecorporationGovernance,
Stakeholder Engagement andDisclosure.Companiesshouldbe
strivingtomeettheseexpectationsregardlessoftheirsector,
operationsorlocations.Therefore,theanalysisandweightingof
resultsforthethreeaccountabilitychaptersandexpectations
areequallyappliedtoall600companiesincludedinthereport.
ThereportsPerformance chapterfocusesongoalsandresults
inimprovingenvironmentalandsocialperformancein
operations, supply chains, transportation and logistics,
Theenvironmentalandsocialperformanceimpactsof
companiesmayvarybysector.Therefore,theindicatorsusedto
measuretheRoadmap expectationsinthePerformancechapter
aresector-specific.Consequently,theanalysisandkeyfindings
inthePerformancechapteraremorespecificallyfocusedona
sub-setof251companiesacrossnine priority sectors,including:
Autos&Transportation,FinancialServices,Food&Beverage,
Footwear&Apparel,Retail,TechnologyHardware,Technology
Software&Services,Oil&GasProducersandElectricUtilities.
Thisreportisdesignedtobeanonlineexperience.Weinvite
youtovisitthewebsitetointeractwiththeonlinecharts,which
areusefultoolsforunderstandingtheresults,comparing
performanceofpeerswithinsectorsandidentifyingkey
opportunitiesfortakingaction.Thewebplatformalsofeatures
detailsonthemethodology,additionalanalysesforeachofthe
nineprioritysectorsandadditionalresourcesandreports.
2 Eachofthe600companiesevaluatedinthisreportislistedonatleasttwoofthreeofthefollowingindices:S&P500,Russell1000andMSCIDevelopedMarkets.
12
governAnCe f0r
sustAinAbility
VISION: COMPANIES WILL EMBED SUSTAINABILITY FROM THE BOARDROOM
TO THE COPY ROOM AND WILL MANAGE THEIR ENTIRE VALUE CHAIN FROM
A SUSTAINABILITY PERSPECTIVE.
Just over 26 percent of the 600 companies157 companiesare included in Tiers 1 and 2 for their
governance of sustainability. More than half of the companies (358) fell in the 4th Tier.
Governance for Sustainability

number of Companies per performance tier
number of Companies
400
354
200
89
122
35
tier 4
Starting Out
tier 3:
tier 1
tier 2
Getting on Track Making Progress Setting the Pace
Performance tier
Companiesthatembracegoodgovernancepracticehavealways
beenbetterpositionedtomitigaterisksandcapitalizeon
emergingopportunities.Thesameholdstruewhenconsidering
governanceforsustainability.Thesystematicintegration
ofsustainabilitythroughoutthebusinessmustbeginwith
acomprehensiveassessmentofthechainofaccountability.
Inthischapter,usingdatagatheredbySustainalytics,the600
companieswereevaluatedbasedonkeygovernanceactivities
suchas:boardofdirectoroversightforsustainability;management
accountability;executivecompensationlinkstoESGperformance;
andstrengthofsustainabilitypoliciesandmanagementsystems.
Additionalanalysisforthe251companieswithintheninepriority
sectorscanbefoundinthewebreportat
www.ceres.org/roadto2020.
Overall,theresultsshowthereisroomforimprovementby
companiesacrossallsectors.Only26percentofthecompanies
evaluated157companieswereincludedinTiers1and2for
theireffortstointegratesustainabilityintogovernance.The
UtilitiesandMaterialssectorshadthestrongestperformance
resultsoverall,followedbyIndustrialsandOil&GasProducers.
Thisisnotparticularlysurprisinggiventhatthesesectorsface
significantsocialandenvironmentalexposure,requiring
considerableinvestmentinriskmanagementprocesses.
Nevertheless,withmorethan50percentofthe600companies
evaluatedfallinginTier4,farmoreworkisneededtointegrate
sustainabilityintooverallcorporateaccountabilitysystems.
13
governAnCe f0r
sustAinAbility
boArd oversight of sustAinAbility
the board of directors will provide oversight and accountability for corporate sustainability
strategy and performance. A committee of the board will assume specific responsibility for
sustainability oversight within its charter.
Of the 600 companies assessed in this report,

28 percent (170 companies) have instituted
board oversight of sustainability issues,
39 percent (235 companies) have instituted
executive management oversight and
23 percent (135 companies) have both.
Theboardofdirectorsisresponsibleforprovidinginsight
andoversightonbothrisksandopportunitiesforthebusiness,
andsustainabilityissuesshouldbeconsideredpartofthis
responsibility.Forthisexpectation,theassignmentofa
corporateboardmemberoraboardcommitteewithexplicit
responsibilityforsustainabilitywasexamined.Ofthe600
companiesassessedinthisreport,28percenthaveinstituted
boardoversightofsustainabilityissues,39percenthave
institutedmanagementoversightand23percenthaveboth.
Leadingcompaniesarerecruitingadiverserosterofboard
members,drawingupontheiruniqueperspectivesshaped
bypersonalattributes(suchasgender,race,geography)and
professionalexperience,notablyincludingsustainability
expertise.Adiversityofbackgroundsandexperiencesensures
thatawide-rangeofviewpointscanbeofferedregarding
businessrisksandopportunitieswhich,foracompanyoperating
inthe21st century,includesenvironmentalandsocialissues.
Forexample,Prudential Financial recentlyaddedsustainability
andcorporateresponsibilityskillsasoneofitscriteriaforboard
memberselection.Doingsonotonlyillustratesthecompanys
commitmenttosustainabilityatthehighestlevels,butalso
enablestheboardtoprovidemeaningfuloversightforemerging
environmentalandsocialissuesthatconfrontthebusiness.
Toformalizeboardoversightonsustainabilityissues,a
designatedboardcommitteeshouldbetaskedwithrelated
oversight.Companies,includingConsolidated Edison, Merck
andWeyerhaeuser,incorporatespecificlanguageinboard
committeechartersdetailingtheboardsroleinprovidinginput
andguidanceacrossthecompanysenvironmentalandsocial
sustainabilitystrategies,goals,policiesandpractices.
Boardoversightcantakeseveralforms.Somecompanies
establishstand-alonecommittees,suchasMcDonalds
CorporateResponsibilityCommittee,whileothersassign
functionalresponsibilitytoanexistingcommittee,suchas
EMCs CorporateGovernanceandNominatingCommittee.The
typeofcommitteeislessimportantthanthescopeandambition
ofitsmandate,whichshouldincludecompany-wideoversight
onissuessuchasclimatechange,humanrights,sustainable
supplychainmanagement,healthandsafety,aswellas
sustainableproductsandservices.Leadingcompanies,for
exampleNike,provideboardmemberswithregulartrainingand
educationonkeysustainabilityissues.Thiseducationpromotes
amorestrategic,long-termapproachtotheboardsoverall
assessmentofthecompanysbusinessperformance.
GROWING TRENDS
IN BOARD OVERSIGHT
Accordingtoareport releasedbyCalvertandTheCorporateLibrary
(nowGMIRatings)3 in2010,65percentofS&P100companies
hadassignedboard-leveloversightforsustainabilitythroughboard
committeecharters.However,theextentofoversightandscopeof
thesecommitteesvariesgreatly.Thereportidentifiessevenkey
factorsrelatingtosustainabilitythatboardsshouldbeaddressing,
including:oversightforpoliciesandcompliance;trendassessment;
strategyandperformance;riskmanagement;stakeholder
engagement;sustainabilityreporting;incidentmanagement;and
environmentalandsocialimpactassessmentofbusinessdecisions.
Whilemostreviewandmonitorcorporatepolicies,lessthanhalf
provideoversightinanyoftheothercategoriesthatareequallyas
vitaltoidentifyingbusinessvalueandaddressingrisks.
Thereisstillmuchtobedonetoestablishrobustgovernanceof
materialsustainabilityissuesattheboardlevel.Boardoversight
mustextendbeyondacompliance-focustoaddressthecritical
environmentalandsocialimpactsthatareorwillbefacing
acompany.
3 Dalheim,Stu,MikeLombardo,AditiMohapatra,AnnalisaBarrettandKimberlyGladman.Board Oversight of Environmental and Social Issues: An Analysis of Current North American Practice.
CalvertInvestmentsandTheCorporateLibrary.2010.Retrievedfrom:http://info.thecorporatelibrary.com/download-free-report-on-board-oversight-of-social-and-environmentalissues/?utm_campaign=UNPRI-Calvert-Website&utm_source=CalvertWebsite.
14
governAnCe f0r
sustAinAbility
mAnAgement ACCountAbility
the Ceo and company managementfrom C-suite executives to business unit and functional
headswill be responsible for achieving sustainability goals.
The 167 companies (28 percent) included

in Tier 1 have formal executive management
committees tasked with ESG oversight
responsibilities and the 68 companies
(11 percent) in Tier 2 have informal
accountability systems in place.
ManagementoversightofESGissuessignalsaclearcommitment
tocompany-wideintegrationofsustainability.Todetermine
whethercompaniesweremeetingthisexpectation,weassessed
whetherthecompanyhadmanagementaccountabilitysystemsin
placetooverseesustainabilityperformance.Theassessment
foundmanagementoversighttobemorecommonthanboard
oversight,withthe167companies(28percent)includedinTier1
havingformalmanagementcommitteestaskedwithESGoversight
responsibilitiesandthe68companies(11percent)inTier2
havinginformalaccountabilitysystemsinplace.
Integratingresponsibilitythroughoutacompany,ratherthan
limitingittoasingledepartment,legitimizessustainabilityfor
allemployeesandencouragesinterdepartmentalcooperation
inmeetingESGtargets.Dells SustainabilityCouncilincludes
executive-levelrepresentationfromacrosstheenterprise,
includingtheCEO,InvestorRelations,Communications,Human
Resources,Procurement,Finance,andEngineeringleaders.
Thisgroupmeetssemi-annuallytodiscussrelevantsustainability
risksandopportunitiesfacingthebusiness.Successful
sustainabilitycommitteesarecross-departmentalandtake
athoughtful,long-termapproachtosustainabilitychallenges.
Theyidentifyimmediateprioritiesforthecompany,continuously
monitorprogressandwithaneyetowardsemergingrisksand
opportunitieschangecoursewhennecessary.
Sprint, forexample,hasintegratedsustainabilityintothecurrent
rolesofseniorexecutivesbyassigninganexecutivesteering
committee,chairedbyCEODanHesse,withresponsibilityfor
ensuringtheimplementationofsustainabilitystrategies.Other
companies,includingCA Technologies andAlcoa,haveassigned
formalresponsibilitytoaChiefSustainabilityOfficerwhoreports
directlytotheCEOandaboard-levelcorporateresponsibility
committee.Therearevariationsinthestructureoftheinternal
accountabilitysystems,butleadingcompaniesareabletoclearly
demonstratethatsustainabilityisapartofallbusinessdecisions
fromstrategytooperationstohumanresources.
Integrating responsibility throughout a company, rather than

R limiting
it to a single department, legitimizes sustainability
for all employees and encourages interdepartmental
cooperation in meeting ESG targets.
15
governAnCe f0r
sustAinAbility
eXeCutive CompensAtion tied to esg performAnCe
sustainability performance results are a core component of compensation packages and

incentive plans for all executives.
executive Compensation tied to eSG Performance
7%
9%
84%
7%
Tie executive compensation explicitly

to ESG performance targets
9%
Tie executive compensation to ESG,

but do not cite explicit targets
84% Do not link ESG performance to

executive compensation
Investorsexpectcorporateexecutivestobecompensatedbased
ontheircompanysfinancialperformance.Increasingly,weare
seeingthedirectimpactsthatsustainabilityrisksand
opportunitiescanhaveonbusinessfromthecostssavings
foundthroughimplementingenergyefficiencystrategiestothe
reputationalrisksofsourcingmaterialsfromirresponsible
suppliers.Giventhebusinesscase,investorsarestartingtoask
companiestoincentivizesustainabilityperformanceandbuild
ESGcriteriaintocompensationsystems,atrendexpectedto
expandinthefuture.
16
Despitesuchefforts,thisevaluationshowsthatwhilecompensation
linkagestoESGperformancearegainingsupport,theyarestill
ananomaly.Ofthe600companiesassessed,onlysevenpercent
(39companies)haveformallytiedESGperformancetoexecutive
compensation,whileanadditionalninepercent(53companies)
aremakingsuchlinkageswithoutexplicitlydisclosingrelated
targetsandweights.Thereisahugeopportunityforaction
acrossallsectors.
MostofthecompaniesthatexplicitlylinkESGperformance
toexecutivecompensationfocusonhealthandsafetyand/or
diversitytargets,butasmallnumberarebroadeningthescope
toincludeamorecompleterangeofsustainabilityperformance
criteria.Thisisacriticalstepindevelopingaccountability
mechanismsthatrecognizetheinterconnectednessbetween
social,environmentalandtraditionalbusinessperformance.
AcleartrendsetterisIntel which,since2008,haslinkedthe
variablecompensationpackageofeachofitsemployees,
includingexecutives,tothecompanysachievementof
environmentalsustainabilitymetricsinthreeareas:energy
efficiencyofproducts,reductionsingreenhousegas(GHG)
emissionsandenergyuse,andimprovementsinitsreputation
asanenvironmentalleader.Inthefouryearssincethisprogram
started,Intelhasreducedenergyuseby8percentanditsGHG
emissionsby23percent.
Xcel Energys executivecompensationpackageisbasedon
anumberofperformancemeasuresincludingnotonlysafety
targets,butalsoenvironmentalperformancetargetssuch
asincreasingtheamountofrenewableenergyavailablefor
commercialoperation,reducingemissions,improvingenergy
efficiencyandintegratingnewtechnologies.
Todetermineincentivecompensationforexecutivesandother
employees,Campbell Soup usesabalancedscorecardthat
includessustainabilityperformancemetrics.Theseinclude
energyandwaterusereductions,increasingrecyclingefficiency,
improvingdiversityandadvancingrenewableenergyprojects.
BonusesforDeltas corporateanddivisionalexecutivesaretied
toperformanceagainstthecompanysannualFlightPlan,a
setofprioritiesthatdrivecompanyinitiatives.In2011,theFlight
Planincludedagoaltoimprovefuelconsumptionperblockhour
throughground,flight,andaircraftinitiatives,demonstratingthe
companyscommitmenttoreducingitslargeenergyfootprint.
governAnCe f0r
sustAinAbility
CorporAte poliCies And mAnAgement systems
Companies will embed sustainability considerations into corporate policies and risk management
systems to guide day-to-day decision-making.
Most companies have adopted policies that

cover broad international norms for corporate
conduct and that are compliance-oriented, such
as bribery and corruption (97 percent) and
elimination of discrimination (92 percent).
Oversightforsustainabilityrequireskeenattentiontointernational
environmentalandhumanrightsstandardsalongwithsectorspecificcriteria,suchasbiodiversityorresponsiblelending
practices.Forthisexpectation,socialandenvironmental
sustainabilitypolicieswereevaluated,aswellmanagement
systemsforimplementingthosepolicies.
Theassessmentfoundthatmostcompaniesevaluatedhave
adoptedpoliciesbasedoninternationalnorms,butfewer
companiesareadoptingsector-specificpolicies,whichtend
toaddressareasofdirectexposureandimpact.Acrossthe
600companiesassessed,themostfrequentlyinstitutedpolicies
includethosethataddressbriberyandcorruptionandelimination
ofdiscrimination,aswellaspoliciesstatingoverallenvironmental
sustainabilityobjectives.
Companiesthatadoptinternationalstandards,suchasthe
InternationalLaborOrganizations(ILO)coreconventionsand
aresignatoriestotheUnitedNationsGlobalCompact(UNGC),
demonstratebothanunderstandingoftheimportanceof
sustainabilityissuesandacommitmenttoimplementchanges
intheirbusiness.Usingtheseframeworksandtransparently
disclosingtheimpactstheyhaveonthebusinesscanprovide
internationallegitimacytoacompanyssustainabilitycommitment
andsendsasignaltoinvestorsinglobalmarkets.Companies
includingGE andManpower Group haveadoptedbothofthese
frameworks.However,whenanalyzingthe600companiesonly
7percent(42companies)werefoundtobesignatoriestothe
UNGC.Applyingcodesbaseduponinternationalstandardsis
important,butitisnotenoughtosimplybeasignatory,companies
mustalsodemonstratehowtheyareintegratingthesestandards
intobusinessdecision-making.
Dependinguponbusinessimpacts,companiesmayalsoadopt
sector-orientedsustainabilitypolicies.OneexampleistheEquator
Principles.ThePrinciplesareacreditriskmanagementframework
fordetermining,assessingandmanagingenvironmentaland
socialriskinprojectfinancetransactions.4 Somefinancial
servicescompaniesaretakingtheEquatorPrinciplesand
expandingtheirapplicationbeyondprojectfinancingtoother
lendingpractices.Ofthe19companiestowhichtheprinciples
applyintheFinancialServicesandBanking&Insurersectors,
onlyfourBank of America, Citigroup, JP Morgan and
Wells Fargoaresignatories.
Forbusinessesengagedinnaturalresourceextraction,operations
cansignificantlyaffectthelivelihoodandculturalintegrityof
indigenouscommunitiesthatmaintainstrongcultural,economic
andspiritualtiestotraditionallandsandresources.Thatswhy
customizedpoliciesandmanagementsystemsareacriticalfirst
stepinsolicitingasociallicensetooperatefromlocal
communitiesforsuchcompanies.WithintheMaterialsandOil
&Gassectors,23percentofcompanies(10of44companies)
havepoliciesconcerningindigenouspeopleandlandrights,
despitethesocialandenvironmentalimpactsthatthesecompanies
canhaveonthecommunitieswithinwhichtheyoperate.
Companiesmustalsodemonstratehowtheyareimplementing
policiesthataddressmaterialsocialandenvironmentalrisks
acrossalldirectglobaloperations,subsidiaries,jointventures
andsuppliers.Citigroup,forexample,employsarobust
EnvironmentalandSocialRiskManagementpolicythatgoverns
majortransactionsandguidesdecision-making.Thepolicyhas
enhancedduediligencearoundspecificsectors,including
forestry,mountaintopremovalmining,nuclearandcoal-fired
powerplants,aswellasstandardsfortransactionsinemerging
markets.Policies,however,areonlyusefuliftheyareapplied
inaconsistentandcrediblemannerthatleadstoimproved
performance.Intheirpublicdisclosurescompaniesneedto
makeadirectconnectionbetweenstrongpolicies,management
systemsandactualperformanceimpacts.
Environmentalmanagementsystems(EMS)arenowabaseline
expectationforinvestorsandotherstakeholderswhowant
assurancesthatcompaniesunderstandpotentialrisksand
aretakingstepstomitigatethoserisks.Ofthe600companies,
58percent(350companies)haveimplementedformal
environmentalmanagementsystems.Yetonly12percent
(71companies)havetheirEMSexternallyverified.External
verificationtointernationalstandards,suchastheInternational
OrganizationforStandardization(ISO)14001,enhances
credibilitytoexternalstakeholders,particularlyinvestors.
DespitetheconsiderableuptakeofEMS,comparablesystems
tomonitorsocialrisksarelacking.Forexample,comparedto
the58percentofcompanieswithanEMS,only25percenthave
aformalsupplychainmonitoringprograminplace.
4 EquatorPrinciples.AbouttheEquatorPrinciples.Retrievedfromhttp://www.equator-principles.com/index.php/about-ep onApril16,2012.
17
stAkeholder
engAgement
VISION: COMPANIES WILL REGULARLY ENGAGE IN ROBUST DIALOGUE
WITH STAKEHOLDERS ACROSS THE WHOLE VALUE CHAIN,
AND WILL INTEGRATE STAKEHOLDER FEEDBACK INTO STRATEGIC PLANNING
AND OPERATIONAL DECISION-MAKING.
Stakeholder engagement
600
number of Companies
456
400
200
103
33
tier 4
Starting Out
tier 3:
tier 1
tier 2
Performance tier
Robuststakeholderengagementwithemployees,NGOs,local
communitiesandinvestorsisinvaluableforidentifyingkeyrisks
andopportunitiesonpressingsustainabilitychallenges.Almost
24percentofcompaniesaredemonstratingsomedegreeof
meaningfulstakeholderengagement,whereasnearlyhalfofthe
companiesassesseddonotdisclosetheirengagements.
Leadersinthisarenaconductfrequent,substantiveanddiverse
engagementswithanarrayofkeystakeholders,includinginvestors.
Theyseekfeedbackandtakecriticismsseriously,disclosingthis
dialogueinatransparentwaythatencouragesongoingengagement
andevaluation.The41companiessevenpercentincludedin
18
Tiers1and2foroverallStakeholderEngagementeffortsarealso
assimilatingthisextensivefeedbackintostrategicplanning,
businessdecisions,reportingframeworksandformalgoalsetting.
The600companieswereassessedacrosskeyareasof
stakeholderengagement,suchasfocusedengagementactivity,
substantivestakeholderdialogueandinvestorengagement.
Thesecriteriaforstakeholderengagementaresophisticatedand
requirealeadershipcommitmenttomeettheexpectationsset
intheRoadmap.Additionalanalysiswasprovidedforcompanies
inthenineprioritysectorsandtheanalysiscanbefoundinthe
webreportatwww.ceres.org/roadto2020.
stAkeholder
engAgement
foCus engAgement ACtivity
Companies will systematically identify a diverse group of stakeholders and regularly engage with
them on sustainability risks and opportunities, including materiality analysis.
Nearly 30 percent (171 companies) are

providing some level of disclosure on efforts to
engage in dialogue with external stakeholders.
Forthisexpectation,companieswereevaluatedforpublic
disclosureofstakeholdermapping,engagementactivity,
feedbackgatheredandthecompanysresponsetostakeholder
guidance,aswellascompanyeffortstoincludestakeholdersin
thedeterminationofstrategicpriorities.Ofthe600companies
evaluated,nearly30percent(171companies)areproviding
somelevelofdisclosureoneffortstoengageindialoguewith
externalstakeholders.
Throughstakeholdermapping,companiescansystematically
identifykeystakeholders,determinematerialissuesofinterest
forthosegroupsandascertainspecificstakeholdersthatcan
helpwiththeprioritizationofkeyareasrequiringaction.The
mosteffectivemulti-stakeholderengagementstrategieswill
solicitadiversityofperspectivesincludingthoseofinvestors,
localcommunities,indigenousgroups,customers,employees,
contractorsandsuppliersandcivilsociety(unions,NGOs,etc.).
Comericas SustainabilityReportclearlyidentifieskey
stakeholdersanditseffortstoengageeachgroup.Italso
providesastakeholderoverlaytoamaterialitymatrixthatmaps
areasofexposureontoagrid,identifyinglevelofimpactforthe
companyandimportancetostakeholders.Baxter International
andKimberly Clark alsoprovidedetailedmappingsoftheir
stakeholders,includinganexplanationofmaterialissuesand
examplesofengagementuniquetoeachgroup.
Companiesthatdisclosetheirresponsetostakeholderinput
greatlyincreasethecredibilityofthestakeholderengagement
process.Citigroup andBest Buy includespecificdetailsof
stakeholderinputintheirsustainabilityreportsandprovidean
explanationofhowthecompanyisaddressingthisfeedbackin
theirdisclosure,strategiesandprograms.Companiescanadd
furthercandortotheirsustainabilityreportingbyproviding
uneditedstakeholderperspectives.Theseperspectives,foundin
thesustainabilityreportsofGap, GE andothers,addressmaterial
issuesandprovideadiversearrayofopinions.Theinclusionof
candidstakeholderperspectivesdemonstratestransparencyand
providesthebasisforongoingengagementonkeyissues.
Ofthecompaniesassessed,morethan70percent(429
companies)providenodisclosureonstakeholderengagement
basedonthecriteriaidentifiedabove.Withthesignificant
insightsthatcanbegainedthroughstakeholderdialogue,more
companiesshouldbeleveragingsuchopportunities.
The most effective multi-stakeholder engagement strategies

R will
solicit a diversity of perspectives including those of
investors, local communities, indigenous groups, customers,
employees, contractors and suppliers and civil society
(unions, NGOs, etc.).
19
stAkeholder
engAgement
substAntive stAkeholder diAlogue
Companies will engage stakeholders in a manner that is ongoing, in-depth, timely and involves all
appropriate parts of the business. Companies will disclose how they are incorporating stakeholder
input into corporate strategy and business decision-making.
Substantive Stakeholder dialogue

600
435
number of Companies
Only five percent of companies (27)

are in Tiers 1 and 2 for substantive
engagement, defined by ongoing
engagement with diverse stakeholder
groups, executive-level engagement
with key stakeholders, participation
in industry-relevant multi-stakeholder
initiatives and inclusion of stakeholder
feedback in the shaping of
sustainability strategy and targets.
400
200
138
15
tier 4
Starting Out
Oncecompanieshaveidentifiedkeystakeholders,aframework
forregularandproactiveengagementisrequired.Engagement
strategiescanvarydependinguponthestakeholdergroup
involved,asmaythefrequencyofengagement,butthe
overridingobjectiveshouldbetheincorporationofstakeholder
feedbackintocorporatestrategyandbusinessdecision-making.
Tomeasureprogressagainstthisexpectation,weevaluatedthe
extentofacompanysstakeholderengagementefforts.Ofthe
companiesevaluated,28percent(165companies)disclosethe
detailsofstakeholderoutreach.Ofthose,only5percent(27
companies)areincludedinTiers1and2demonstrating
leadershipforactivitiesincludingongoingengagementwith
diversestakeholdergroups,executive-levelengagementwithkey
stakeholders,participationinindustry-relevantmulti-stakeholder
initiativesandinclusionofstakeholderfeedbackintheshaping
ofsustainabilitystrategyandtargets.
Communicationbetweencompaniesandstakeholdersshouldflow
inbothdirections.Itisbecomingincreasinglycommonfor
companiestoestablishanongoingstakeholderprocessthat
involvesaseriesofdialogues.Thesediscussionsevolveovertime
andallowcompaniestogatherstakeholderfeedbackonstrategic
decisionsincludinggoalsandtargetsandpolicysetting,aswellas
insightsonkeyperformancechallengesoremergingissuesforthe
sector.Companies,includingFord Motor Company andState
Street,conductyearoveryearengagementswithaconsistent
20
12
tier 3:
tier 1
tier 2
Performance tier
multi-stakeholdergroupanddisclosedetailsofhowthese
engagementsimpactprioritysettingforthebusiness.
Engagementcantakemanyforms.Employees,suppliersand
distributorscanbeengagedthroughquarterlysurveysandtownhallstylemeetings.CommunityActionPanelsareaneffective
meansofengaginglocalcommunitymembers,whileInvestor
Perceptionsurveysenablecompaniestoobtaininvestor
feedbackonspecificissues.CompanieslikeIngersoll Rand
havedevelopedmulti-stakeholderAdvisoryPanelscomprising
prominentexternalleadersonmaterialissues,tohelpguideand
integratesustainabilityintodailyoperations.
Oftencompanieswilllimittheirengagementwithstakeholdersto
adiscussionoftheirannualsustainabilityreport.Thisisagoodfirst
step,butnotenoughwhenyouconsiderthatfailuretoregularlyand
proactivelyengagestakeholderscanincreasetheriskoflitigation,
reputationaldamageandsubsequentlossofshareholdervalue.
Highprofileissuessuchasoilspills,allegationsoffraudorhuman
rightsviolationsdemandimmediateproactiveengagement,rather
thanadelayeddiscussionatthenextquarterlyorannualmeeting.
Companies,suchasDow Chemical,havestartedprovidingbiannualupdatesontheirsustainabilityprogresswithqualitative
andquantitativeinformationonvariousmaterialperformance
metrics.Theseupdatesshowstakeholdersthatthecompanyis
notonlylistening,butalsoproactivelyworkingtomitigaterisks.
stAkeholder
engAgement
investor engAgement
Companies will address specific sustainability risks and opportunities during annual meetings,
analyst calls and other investor communications.
The high bar set for this expectation resulted

in no companies making it into Tier 1, but the
nearly eight percent of companies (45) included
in Tier 2 are making progress to enhance
sustainability communications with investors.
Investorsarecriticalstakeholdersandcanwieldconsiderable
influenceonthesustainabilitystrategy,goalsandperformance
ofthecompaniestheyown.Leadingpracticeforthisexpectation
requirescompaniestocommunicatebothsustainabilityrisksand
opportunitiestoinvestorsattheirannualgeneralmeetings,during
analystcalls,intheirfinancialfilingsandthroughoutother
mainstreaminvestorcommunications.Despiteaconsiderable
increaseinreportinganddisclosure,however,sustainability
remainsabsentfrommostcompaniescommunicationswith
investors.Bothcompaniesandinvestorshavearoletoplay
forcompaniesitistoprovidequalitydataandanalysis,aswellas
directinginvestorstothisinformation;forinvestorsitistorequest
informationregardingsustainabilityriskswhenengagingwith
companiesandtorewardcompaniesforimprovedsustainability
performance.InthisassessmentnocompaniesmadeitintoTier1,
butthe45companiesincludedinTier2aremakingstridesto
increasesustainability-relatedcommunicationanddirect
engagementwiththeinvestmentcommunity.
Thefailureofcompaniestoadequatelydisclosesustainability
informationwithinmainstreaminvestorcommunicationshas
promptedindependentfinancialresearchproviderstofillthe
gapbyincludingsustainabilityinformationaspartoftheirdata
services.Bloomberg,forexample,hasaddedESGdatatoits
equityplatform,allowinganalysts,portfoliomanagersand
investorstoaccesscentralizedsustainabilitydatareportedby
companiesjustastheyaccessfinancialdata.
Forthisdatatobemeaningful,however,companiesmust
providehighqualityinformationthatcoversthefullrangeof
materialsustainabilityissues.Thoughprivatelyheld,Bloomberg
releaseditsownsustainabilityreporttoillustratetoother
companiesthequalityofsustainabilitydatathatshouldbe
providedtoanalysts,portfoliomanagersandinvestorsina
consistentandcomparableformat.Forexample,Bloomberg
producedafinancialenvironmentalsummarystatingthatfor
every$1investedinenvironmentalmanagementitsaved$2in
operatingcosts,anddetailshowitachievedtheseresults.
AsESGcriteriabecomeincreasinglyintegratedinmainstream
investmentdecisions,investorsarelookingforclearerarticulation
fromcompaniesonthematerialrisksofenvironmentalandsocial
exposure.EMC andIntel arestartingtoshareinformation
regardingsustainabilitygoalsandperformancewithinvestors
throughavarietyofforumsincludingshareholdermeetings,proxy
letters,investorpacketsandinvestorconferences.However,these
companiesaretheexceptionnottherule.
INTEGRATED REPORTING
A small but growing number of global companies, including
Novo Nordisk and Puma, are using their Sustainability Reports
to make the business case for their environmental investments
and efforts. These attempts to integrate sustainability
investments and business impacts are especially important
given the growth of integrated reporting. A handful of U.S.
companies evaluated in this report have started experimenting
with this type of communication. While not fully integrated,
companies including American Electric Power, Baxter
International, Eaton Corporation, Pfizer, Clorox and United
Technologies have published reports that combine some degree
of financial and sustainability information into one report.
Although this trend is growing, without a common structure
these reports continue to take many different forms. The
International Integrated Reporting Committee (IRRC) has
taken on the task of engaging companies, investors, advocacy
groups and the accounting community to develop a global and
internationally accepted framework for integrated reporting.
In September 2011, the group released a discussion paper
for public comment, and is currently running a pilot project
with 61 companies.
Companies considering integrated reporting as a method to
better engage investors should ensure that they maintain ongoing
communications with the non-financial communityincluding
consumers, community organizations and employees in a robust
and credible manner. Integrated reporting should not merely
be considered a communication vehicle, but a strategy for
integrating sustainability into traditional business decisionmaking that translates into tangible, performance improvements.
21
disClosure
VISION: COMPANIES WILL REPORT REGULARLY ON THEIR SUSTAINABILITY STRATEGY
AND PERFORMANCE. DISCLOSURE WILL INCLUDE CREDIBLE, STANDARDIZED,
INDEPENDENTLY VERIFIED METRICS ENCOMPASSING ALL MATERIAL
STAKEHOLDER CONCERNS, AND DETAIL GOALS AND PLANS FOR FUTURE ACTION.
disclosure
380
400
number of Companies
Of the companies assessed,

9 percent (52 companies)
are included in Tiers 1 and 2
for overall disclosure efforts,
including alignment with the
Global Reporting Initiative
(GRI) guidelines, disclosure
of sustainability risks and
opportunities in financial f
ilings and external verification
of sustainability reporting.
200
168
44
tier 4
Starting Out
Inorderforinvestorsandotherstakeholderstounderstandand
evaluateacompanyssustainabilityperformance,detailedand
comprehensivesustainabilitydatamustbedisclosedinatimelyand
consistentmannerthroughvariouschannels.Leadingcompanies
areadaptinganddiversifyingtheirsustainabilitycommunication
strategies.Sustainabilityinformationisnowbeingdeliveredthrough
avarietyofvehiclescorporatesocialresponsibility(CSR)websites,
sustainabilityreports,financialfilings,andsocialmediaensuring
thatawide-rangeofstakeholdersarereached.
The600companieswereassessedacrosskeyareasof
disclosure,includingstandardsfordisclosure,disclosurein
financialfilings,vehiclesfordisclosure,aswellasverification
andassurance.Additionalanalysiswasprovidedforcompanies
inthenineprioritysectorsandtheanalysiscanbefoundinthe
webreportatwww.ceres.org/roadto2020.
22
tier 1
tier 3:
tier 2
Performance tier
Ofthecompaniesassessed,9percent(52companies)are
includedinTiers1and2fortheDisclosurechapterexpectations,
withtheFood&BeverageandUtilitiessectorsdemonstrating
leadership,followedbyMaterialsandAutos&Transportation.
Morethan60percentofthecompanies(380)assessedwere
includedinTier4basedontheirlackofalignmentwiththe
GlobalReportingInitiative(GRI)guidelines,lackofdisclosurein
financialfilingsandnegligibleexternalverification.
Whilecorporatedisclosureonenvironmentalfactorscontinuesto
improve,othernotableareasofreportinghavereceivedconsiderably
lessattention.Companiesshouldalsobedemonstratingaconsistent
leveloftransparencyonkeyareasofsocialimpactsuchassupply
chainmanagement,laborissues,diversity,healthandsafetyand
communityrelations,tonameafew.Companiesmustalsoconsider
theinterconnectednessofsocialandenvironmentalimpactareas
anddisclosehowthebusinessistakingaholisticapproachtothe
designofitssustainabilitystrategyandprograms.
disClosure
stAndArds for disClosure
Companies will disclose all relevant sustainability information using global reporting initiative
(gri) guidelines, as well as additional sector-relevant indicators.
Standards for disclosure
20%
29%
Ofthecompaniesevaluated,49percent(293companies)are
publishingsustainabilityreportsand29percent(176companies)
areusingtheGRIguidelinesinthedevelopmentofthosereports,
insomecasesusingoneoftheSectorSupplements.TheGRI
SectorSupplementsprovideadditionalguidanceforthedisclosure
ofspecificissuesrelevanttoaparticularsector.Thosecompanies
includedinTier1andTier2arepublishingreportsinaccordance
withtheGRIguidelines,withthe23companiesinTier1achieving
alevelAGRIreport.AccordingtotheGRI,U.S.companies
arelaggingbehindtheirEuropeancounterpartsinGRIreporting;
however,thereisanupwardtrend.Accordingtorecentestimates,
therewasanincreaseofapproximately35percentinGRI
reportersintheU.S.from2010to2011alone.5
51%
29% Publish reports using the GRI guidelines

20% Publish reports, but do not use the
GRI guidelines
51% Do not publish sustainability reports
Companiescraftingfinancialfilingshavelongreliedupon
acommonstandard,whetheritbetheGenerallyAccepted
AccountingPrinciples(GAAP)ortheInternationalFinancial
ReportingStandards(IFRS).Sharedstandardsanddefinitions
facilitateperformancecomparisonsandremovemuchofthe
confusionthatcomeswithalargeassortmentofdata.Thesame
holdstrueforsustainabilitydisclosure,withtheGlobalReporting
Initiative(GRI)Guidelinesconsideredtobetheinternationally
acceptedstandardforsustainabilityreporting.
DECIDING WHAT IS MATERIAL

A substantial part of the International Integrated Reporting
Committees (IIRC) deliberations revolves around the concept
of materiality, or identifying the most relevant/significant issues
that influence the decisions, actions and performance of an
organization or its stakeholders. To date, most companies
follow separate processes to identify materiality from a business
perspective, versus materiality from a sustainability perspective.
The trend toward integrated reporting, which brings sustainability
and financial reporting under a single umbrella, requires a
reconciliation of these varying approaches to materiality. The
Sustainability Accounting Standards Board (SASB) has taken
on this challenge in the U.S. context, and is working to develop
industry based sustainability standards to guide corporations and
investors on material issues for disclosure in financial filing such
as the 10-K. A key task for the SASB will involve identifying
an approach to materiality that is not purely linked to financial
thresholds, given that many environmental and social issues
cannot be easily reduced to dollars and cents. SASB will also
take on the task of obtaining industry buy-in, so that corporate
disclosure of material issues is consistent and comparable.
5 Wallace,Mike.WhatGRILearnedinItsFirstYearinAmerica.GreenBiz.comFebruary28,2012.Retrievedfromhttp://www.greenbiz.com/blog/2012/02/28/what-gri-learned-its-first-year-america.
23
disClosure
disClosure in finAnCiAl filings
Companies will disclose material sustainability issues in financial filings.
Thirty-nine percent of companies (232)

are at least minimally addressing ESG risks
within their financial filings. Of those, 118 are
providing a more comprehensive assessment
of ESG risks, including water scarcity or the
potential impacts that climate change could
have on material sourcing and the stability
of supply chains.
In2010,theInvestorNetworkonClimateRisk(INCR),acoalition
of100institutionalinvestorswith$10trillioninassetsunder
management,successfullyworkedwiththeU.S.Securitiesand
ExchangeCommission(SEC)toissueguidancerequiringthe
disclosureofclimate-relatedriskinfinancialfilingswhereclimate
changeposedmaterialriskstothebusiness.Thissentasignalthat
companiesshouldtakealookatallpotentialmaterialsustainability
risksanddeterminewhatshouldbedisclosed.Ofthe600
companiesassessed,39percent(232)areatleastminimally
addressingESGriskswithintheirfinancialfilings,thoughfor
mostthistranslatestobrieflyaddressingtherisksthatemissions
regulationormorecomprehensiveclimatelegislationcouldpresent.
ThosecompaniesincludedinTiers1and2,representingnearly
20percent(118)ofthecompaniesevaluated,arebeginningto
provideamorecomprehensiveassessmentofESGrisks
includingwaterscarcityorthepotentialimpactsthatclimate
changecouldhaveonmaterialsourcingandthestabilityof
supplychains,aswellasthedemandformoresustainable
productsandservices.Forexample,PepsiCos FY201010-K
filinglooksbeyondthepotentialcostsofclimate-change
legislationandexaminestheriskofclimate-changeitself.The
companyidentifiespossiblesupplychaindisruptions,including
decreasedsupplyandincreasedpricesconcerningwaterand
agriculturaloutput,whichmayoccurfollowingrisesin
temperatureandtheincreasedfrequencyofextremeweather
conditions.PepsiCoalsoidentifiesthereputationalrisk,and
subsequentnegativeimpactonsales,offailingtomaintainhigh
ethical,socialandenvironmentalstandards.Thisincludesfailing
tomeetgoalsconcerningenergyuse,wastemanagement,as
wellassodium,saturatedfatandsugarreductioninitsproducts.
PepsiCosproactiveidentificationofthesematerialrisksbetter
24
positionsthecompanytoaddressthem,whilepromptingits
investorstodemandcontinuedimprovementandputting
pressuresonpeercompaniestofollowsuit.
Somecompaniesalsoidentifyopportunitiesforcapturingnew
marketsthroughthedevelopmentofproductsandservicesthat
aremoresustainablymanufacturedorprovidesolutionsto
sustainabilitychallenges.Initsannualfinancialfilings,
Weyerhaeuser disclosestoinvestorsitslonger-termbusiness
strategyfortakingadvantageofnewmarketopportunitiesand
thedemandforsustainableforestryproducts.InGeneral Motors
financialfilings,thecompanydetailsitsresearchanddevelopment
strategyfocusedonfuelefficiencyandalternativefuelvehicles
highlightingthisworkasitstopresearchpriorityandstatingits
objectivetobearecognizedindustryleaderinfuelefficiency.
PHYSICAL RISK DISCLOSURE

IN THE 10-K
Increasingly, climate-related severe weather events are having
negative impacts on businesses. Last year alone saw a record
14 natural disasters in the U.S. that each caused more than
$1 billion in damage. Extreme heat waves, hurricanes, tornadoes,
floods and droughts have affected the bottom lines of businesses
in a range of sectors from apparel companies to insurers.
Investors have been concerned about the physical risks from
climate change for a number of years and following the SECs
interpretive guidance on climate change disclosure, there is a
growing expectation that companies will discuss these material
risks in their financial filings. To help companies and investors
navigate these evolving disclosure expectations, in 2012 Ceres,
Calvert and Oxfam released Physical Risks from Climate Change:
A Guide for Companies and Investors on Disclosure and
Management of Climate Impacts. The report provides real world
examples of business impacts, as well as key questions and
steps to consider in disclosing the assessment and management
of the physical impacts of climate change.
disClosure
vehiCles for disClosure
Companies will release sustainability information through a range of disclosure vehicles,

including stand-alone reports, annual reports, financial filings, websites and social media.
Thirty percent of companies (177) are included

in Tiers 1 and 2 for the release of sustainability
information through a range of disclosure
vehicles, demonstrating that there is significant
room for improvement from companies across
all sectors.
Theincredibleuptakeofsocialmediaandsocialnetworking
overthepastseveralyearshasforcedcompaniestore-evaluate
whatitmeanstobetransparentinaworldofradical
transparency.Ashifttoweb-basedreportinghasalsobrought
withitnewtechnologiesfocusedonengagingtheuserin
innovativewaysandcreatingacustomizedreportexperience.
Companiesshoulddisclosesustainabilityperformancedata
througharangeofchannelstoensuretheyarereachingawide
varietyofkeystakeholders.
Manycompaniesarealsodistributingsustainabilityinformation
throughFacebook,Twitterandcompanyblogs.American
Electric Power,forexample,compilesthesocialmediachatter
receivedaboutthecompanyanddistributesittoitsmanagers
onadailybasis,providingstakeholderconcernsandopinionsin
real-time.AMDs CorporateResponsibilityblogfeaturesauthors
fromacrossthecompanyontopicsofinterest,includingwhat
sustainabilityleadershipmeanstoAMDexecutivesorhowthe
companyisengagingemployeestodriveproductinnovation.
Theblogalsolookstoeducateemployeesonkeysustainability
challengesforthecompanyanditssector,suchasthesourcing
ofconflictmineralstin,tantalumandtungstenfromthe
DemocraticRepublicofCongo.
Theassessmentalsofoundthatcompaniesaretakingadvantage
ofsurveysissuedbyorganizationssuchastheCarbonDisclosure
Project(CDP);yetthelimitedaudiencethesedatabasesserve
shouldbenoted.Ofthecompaniesevaluatedwithinthisreport,
513wereapproachedbyCDP.Ofthosecompanies,approximately
70percent(359companies)providedsomeresponseto
thesurveysrequestforclimateemissionsdataversusonly
49percent(293companies)publishingfullsustainabilityreports.
Whatmaybeaneffectivecommunicationstrategyforone
stakeholdergroupmaybepoorlysuitedforanother.Forexample,
theinclusionofsustainabilityinformationwithinfinancialfilings
isakeymechanismforreachinginvestors,whileastand-alone
reportmaybemoreaccessibletocommunitystakeholders.The
indicatorsforthisexpectationfocusedonseveraldisclosure
vehiclesincludingsustainabilityreports,annualreports,financial
filings,mainstreaminvestorcommunicationsandissue-focused
surveys.Ofthe600companies,30percentofcompanies(177)
areincludedinTiers1and2,demonstratingthatthereisroom
forimprovementbycompaniesacrosssectors.
Sustainabilityreportingisbecomingthenorm,with49percent
ofcompanies(293)evaluatedproducingstand-alonereports.
Withonlinereportingontherise,companiesarealso
communicatingperformancetrendstostakeholdersthrough
interactivewebplatforms.Forexample,Hewlett-Packards
interactivedatadashboardpresentsuptofiveyearsoftrend
dataforenergy,GHGemissions,waste,waterandproductreuse
andrecycling,andalsosupportsinteractivelinksdriving
stakeholderstorelevantgraphsandtargets.
25
disClosure
verifiCAtion And AssurAnCe
Companies will verify key sustainability performance data to ensure valid results and will have
their disclosures reviewed by an independent, credible third party.
Of the companies assessed, seven percent

(37 companies) are included in Tiers 1 and 2
for verifying their disclosure.
AllpubliclytradedU.S.companiesarerequiredtohavetheir
financialstatementsindependentlyauditedtotheinternationally
respectedGAAPstandard.Thepurposeoftheindependent
auditistoassureshareholdersthatthecompanyhasaccurately
communicateditspositionandperformanceforthereporting
period.ESGperformancedataisvulnerabletothesame(ifnot
greater)misrepresentationasfinancialperformancedata;thus,
itshouldbesimilarlyverifiedbyanindependentthird-partyand
toaninternationallyrespectedstandard.
Theindicatorsweusedtoevaluatethisexpectationassessed
whetheracompanysdisclosurewasexternallyverifiedandifthe
companyverifieditsreporttoaninternallyrecognizedstandard.
Onlysixpercent(37)ofthe600companiesfallintoTiers1or2,
andonly1.5percent(ninecompanies)wereincludedinTier1
forverifyingtheirdisclosuretoaninternationallyrespected
standard,suchasInternationalStandardonAssurance
Engagements(ISAE)3000orAccountAbility(AA)1000
AssuranceStandard6.Forexample,Kraft Foods 2010
sustainabilityreportisexternallyverifiedbyEnvironmental
ResourcesManagement,accordingtoAA1000.
Ascompaniesmovetowardintegratingsustainabilitydatawithin
theirfinancialfilings,manywilllikelyusethesameauditorfor
boththeirfinancialfilingsandsustainabilityreporting.Thisnot
onlycapitalizesonnaturalsynergiesandcreatescostefficiencies,
butalsoformalizestheimportanceofsustainabilityreporting
internallybygivingitsimilarweightingasfinancialdata.UPS uses
Deloittetoauditbothitsfinancialandsustainabilityreporting. The
companyreportsthatthisalignmentallowsitsCSRteamtobuild
theinternalbusinesscaseforsustainability.Similarly,Alcoa uses
PriceWaterhouseCooperstoauditbothCSRreportingand
financialfilings.
Theaccountability-focusedaspectsoftheRoadmap
governance,stakeholderengagementanddisclosureprovide
thesystemsandstructureforintegratingsustainabilityintothe
DNAofthecompany.Theyare,however,ameanstoanend
performanceisthetruemeasureofwhereacompanyison
theroadtosustainability.Businessesneedtomeetboththe
accountabilityandtheperformanceexpectationsofthe
Roadmap tohaveacomprehensiveandeffectivesustainable
businessstrategy.
6 TheAA1000AssuranceStandardisasustainabilityassurancestandarddevelopedbyAccountAbility,anindependentmulti-stakeholdernon-profit.TheInternationalStandardonAssuranceEngagements
(ISAE)3000isanassurancestandarddevelopedbytheInternationalFederationofAccountants(IFAC)InternationalAuditingandAssuranceStandardsBoard(IAASB)forallassuranceengagements
otherthanauditsorreviewsofhistoricalfinancialinformationcoveredbyInternationalStandardsonAuditing(ISA)sandInternationalStandardonReviewEngagements(ISRE)s.
26
performAnCe
Performance is about achieving on-the-ground results, such as reductions in carbon emission and water use,
procurement of renewable energy, improved energy efciency, a supply chain that meets high environmental
and social standards and products designed to not only minimize environmental and social impacts throughout
their life cycle, but serve as solutions to key sustainability challenges.
TheRoadmap addressesfivespecificperformanceareasforthe
21st centurysustainablecorporation:operations; supply chains;
transportation and logistics; products and services; and
employees.Foreachoftheseareas,theRoadmapalsoidentifies
specificexpectationswherecompaniesshouldfocustheir
sustainabilityefforts.Forexample,throughtheiroperations
companiesshouldbeworkingtoreduceGHGemissions,improve
watermanagementandprotecthumanrights.Withinglobal
supplychains,companiesshoulddemandthesamestandards
theysetforthemselvesbyaligningsupplychainpoliciesand
codeswithinternationalstandards,integratingsustainability
criteriaintoprocurementdecisionsandengagingwithsuppliers
toimprovetheirsustainabilityperformanceanddisclosure.
Whiletheexpectationscoveredinthefirstthreechapters
whicharefocusedonaccountabilitymeasuresforsustainability
areequallyappliedtoeachofthe600companiesevaluated,in
thePerformancechapteramorenuancedapproachwastaken.
Werecognizethatdifferentsectorshavedifferenttypesof
environmentalandsocialimpactsandexposure,andthat
leadershipinsustainabilityperformancewillnotnecessarily
requirethesametypesofactionacrosssectors.Forexample,
theFood&BeverageandFootwear&Apparelsectorsarewaterintensivewithhigh-riskexposure.TheOil&Gas,Utilitiesand
Transportationsectorsarecarbon-intensiveindustrieswith
extraordinaryopportunitiestodemonstrateleadershipinGHG
reductions.Meanwhile,theRetailandTechnologyHardware
sectorsrelyheavilyoncomplexglobalsupplychainsandare
thuspositionedtodemonstratesustainabilityleadershipin
supplychainmanagement.
Forthisreason,theanalysisinthischapterismorecustomized
thaninthepreviousthree.ForsomePerformanceexpectations,
suchasGHGemissionsandhumanrights,theprogressofeach
ofthe600companieswasassessed.Forothersthefindings
aremoresector-specific.Nineprioritysectors,covering251
companies,werestudiedindepth:Autos & Transportation,
Financial Services, Food & Beverage, Footwear & Apparel,
Retail, Technology Hardware, Technology Software & Services,
Oil & Gas Producers andElectric Utilities.Insomecases,where
Roadmap expectationswereespeciallyrelevanttoparticular
sectors,thedataanalysismaybelimitedtoasubsetofthenine
prioritysectors(See the methodology for a detailed explanation).
Thisreportisourfirstattempttomeasureprogressonthe
Roadmap.Foreachoftheexpectations,indicatorsprovidedby
Sustainalyticswereusedtoevaluatecompanyprogress.Insome
cases,indicatorswithadequatedatawerenotavailableforeach
oftheexpectations,andinothers,theindicatorsmaynotbe
broadenoughtofullyevaluatealloftheRoadmap expectations.
Accordingly,thisreportassessescompanyprogressacrossall
fiveperformanceareasoperations, supply chain, transportation,
products and services andemployees butonlycoverseleven
ofthetwentydetailedperformance-specificexpectations.Inthe
future,asmoredatabecomesavailableandthelistofindicators
isexpanded,progressreportswillcoveradditionalperformance
expectations.
This report is designed to be an online experience. We invite

you to visit the website to interact with the online charts,
which are useful tools for understanding the results,
comparing performance of peers within sectors and identifying
key opportunities for taking action. The web platform also
features details on the methodology and additional analyses
for each of the nine priority sectors.
27
performAnCe
operAtions
VISION: COMPANIES WILL INVEST THE NECESSARY RESOURCES TO ACHIEVE
ENVIRONMENTAL NEUTRALITY AND TO DEMONSTRATE RESPECT FOR HUMAN
RIGHTS IN THEIR OPERATIONS. COMPANIES WILL MEASURE AND IMPROVE
PERFORMANCE RELATED TO GHG EMISSIONS, ENERGY EFFICIENCY, FACILITIES
AND BUILDINGS, WATER, WASTE, AND HUMAN RIGHTS.
Directbusinessoperationsoftenrepresentthefirstopportunityfor
companiestoaddressandimprovesustainabilityperformance.
Overthepastdecade,leadingcompanieshavedeveloped
innovativestrategiestoenhancesustainabilityperformance
throughGHGemissionandwaterusereductions,greenbuilding
initiativesandhumanrightsprograms.Theseinitiativesarenot
simplygoodforemployeesandtheenvironment,theyarealso
goodforthebottomline.McKesson,forexample,savedmore
than$5millionin2010througheffortsfocusedonwaste
reduction,energyefficiencyandimprovingthefuelefficiencyof
itsfleet.AT&T achieved$44millioninannualizedenergysavings
fromitsenergyefficiencyprogramsin2010.
Althoughsomewhathardertoquantify,programsthataddress
thesocialimpactsofbusinessoperationsaregainingmomentum,
especiallyinsectorswithcomplexglobalsupplychains.Companies
arebeginningtoimplementstrongerpolicies,programsandtargets
relatedtohumanrights,workingconditions,safetyandemployee
training.Theyrealsodoingmoretosupportlocalcommunities.
Thatsaid,socialperformanceimpactshavenotreceivedthesame
levelofattentionandresourcesfromcompaniesasenvironmental
initiativesandalackofconsistentdisclosureonsocialissuesmakes
itchallengingtoevaluateperformancewithinandacrosssectors.
Inthissection,usingdatagatheredbySustainalytics,company
performancewasevaluatedforoperationsintheareasofGHG
emissionandenergyefficiency,facilitiesandbuildings,water
managementandhumanrights.Someexpectationsmaybemore
relevanttocertainsectorsthanothers,andinsomecases,data
availabilitymayhavelimitedthesectorswewereabletoevaluate.
Ifanexpectationisfocusedonasub-setofthesectors,thisis
stated.Additionalanalysiswasconductedforthe251companies
includedwithinthenineprioritysectorsandthesesector-specific
assessmentscanbefoundatwww.ceres.org/roadto2020.
28
the Roadmap focuses on areas where Ceres

sees enormous opportunities for impact;
however, it does not cover every aspect of
sustainability. the Roadmap is about going
beyond compliance to leadership; issues such
as health and safety, regulatory compliance,
diversity, and community philanthropy, are
important for sustainability, but are not
covered in this report.
performAnCe
ghg emissions & energy effiCienCy
Companies will reduce ghg emissions by 25% from their 2005 baseline7 by 2020 by improving
energy efficiency of operations by at least 50%, by reducing electricity demand by at least 15%
and by obtaining at least 30% of energy from renewable sources.
targets to reduce GhG emissions
33%
33% Have in place time-bound targets for reducing GHG emissions
29%
38% Have in place reduction programs, but no time-bound targets
38%
29% No formal programs in place to reduce GHG emissions
Theurgencyofmitigatingandaddressingtheimpactsofglobal
climatechangeisgreaterthaneverbefore.TheRoadmap
expectationsarealignedwiththescientifictargetsrecommended
bytheIntergovernmentalPanelonClimateChange(IPCC)that
callfortheU.S.toachievereductionsof80percentbelow1990
baselinelevelsby2050.Tohitthattarget,companiesshouldbe
movingnowtoimplementcomprehensiveclimatechange
strategiesthattangiblyreduceemissionsbyimprovingenergy
efficiencyandsourcingrenewableenergy.
All600companieswereevaluatedforthisexpectation.Acrosssectionofindicatorswasusedtoassessnotonlyifcompanies
haveprogramsandtargetsinplacetoreduceGHGemissionsand
increaserenewableenergyprocurement,butalsotodetermine
whetherthoseprogramsarehavinganimpact.Nearlyhalfofthe
companies(284companies)aremakingsomeprogresstoreduce
Scope1,2and38 GHGemissionsbyreducingelectricitydemand,
rampingupenergyefficiencyandprocuringrenewableenergy.
Athird(193)ofthe600companiesevaluatedhaveinplacetimeboundtargetsforreducingGHGemissionsfordirectoperations.
ThoughsomecompaniesaresettingGHGemissionreduction
targets,theyarenotnecessarilyaggressiveenoughtomeetthe
targetssetforthintheRoadmap.Forexample,onlyninepercent
(51companies)aredemonstratingyearoveryearcarbonintensity
reductionsandonlysevenpercent(45companies)aresourcing
morethanfivepercentoftheirprimarypowerforoperationsfrom
renewablesources.
Amongelectricutilities,Exelon hasbeenespeciallyaggressivein
settingandmeetingenergyefficiencyandGHGemissionsreduction
goals.Thecompanys2020LowCarbonRoadmapincludesa
commitmenttoreduceGHGemissionsfromitsoperationsand
throughcustomercleanenergyandenergyefficiencyeffortsby
morethan15millionmetrictonsofGHGemissionsperyearby
2020.Thecompanyisalreadywellonitswaytomeetingitsgoal,
inpartthroughenergyefficiencycommitmentstotalingmorethan
$100million.The2020programalsoextendstothecompanys
customersbyofferingin-homeenergyefficiencytools,educational
programsandrenewableenergycreditsforretailcustomers.
GE isseizingenergyefficiencygainsthroughitstreasurehunt
initiative,whichidentifiesopportunitiesforenergysavingsatits
facilities.Todate,thecompanyhasconductedmorethan300
treasurehuntswiththeaveragefacilityreducingenergyuseby
20percent.Savingshavetotaledmorethan$150million.
In2011,globalinvestmentincleanenergyreachedarecordhigh
of$260billion.9 Assuchinvestmentsincrease,andthepriceper
kilowatt-hourfromrenewablesgoesdown,theprocurementof
7 CerespositionisalignedwithscientifictargetsthatcallfortheU.S.toachieveGHGemissionreductionsof80%below1990baselinelevelsby2050andatleast25%reductionbelow1990by2020.
Thisexpectationuses2005asthebaselineasthiswasconsistentwiththependingU.S.climatepolicylegislationthatwasbeingputforwardin2010whentheRoadmap wasreleased.Asa
secondarypoint,inthe1990smanyU.S.companieshadnotyetstartedtocollectGHGemissiondata.Therefore,determininganddisclosingdataonGHGemissionspriorto2005iscomplicated
andpronetoinaccuracies.
8 TheWorldResourcesInstitute(WRI)GHGProtocoldefinesScope1,2and3emissionsasfollows:Scope1emissionsaredirectemissionsfromsourcesthatthecompanyownsorcontrols;Scope2
emissionsareallindirectemissionsthatareaconsequenceoftheactivitiesofthecompany,butoccuratsourcesownedorcontrolledbyanotherentity;andScope3emissionsareotherindirect
emissions,suchastheextractionandproductionofpurchasedmaterialsandfuels,transport-relatedactivitiesinvehiclesnotownedorcontrolledbythereportingentity,etc.Visit
http://www.ghgprotocol.org/calculation-tools/faq formoreinformation.
9 BloombergNewEnergyFinance.SolarSurgeDrivesRecordCleanEnergyInvestmentin2011.Bloomberg.12January2012.Retrievedfromhttp://www.bnef.com/PressReleases/view/180.
29
performAnCe
GreenPowerPartnershiplistofrenewablepowerpurchasers,for
sourcing100percentgreenpowerforitsU.S.operations.Other
toppurchasersofrenewableenergyintheU.S.includeIntel,
Johnson & Johnson, Whole Foods, Staples andStarbucks.
solar,windandotherrenewableenergywillcontinuetobeone
ofthemosteffectivewaystoreachemissionreductiongoals.
Justoversevenpercentofthe600companiesevaluated(45
companies)aresourcingmorethanfivepercentoftheirprimary
energyfromrenewablesources.Baxter International currently
sources18percentofitsenergyfromrenewablesources,with
a goaltoincreasethatto20percentby2015.
Insomelocations,companiesarefindingitadvantageousto
investinonsiterenewableenergygenerationprojects.For
example,Darden Restaurants recentlyunveileda1.1megawatt
solarpanelinstallationontherooftopofitsRestaurantSupport
CenterinOrlando.ThelargestprivatesolararrayinFlorida,the
systemwillgenerateenoughpowertosubsidize15to20percent
ofthebuildingsannualusage.
Kohls DepartmentStoresachievednetzeroemissionsin2010
throughitscomprehensiveGHGemissionsreductionstrategy.
Over500ofitsstoresareENERGYSTAR-labeledindicatingthat
thesestoresuse,onaverage,35percentlessenergythansimilar
buildingsandgenerateone-thirdthecarbonemissions.Kohls
alsotopstheU.S.EnvironmentalProtectionAgencys(EPA)
SCOPE 3 EMISSIONS
Formanycompanies,thelargestcontributortothecarbon
footprintfallsoutsideofdirectoperations.In2011,theWorld
ResourcesInstitute(WRI)andWorldBusinessCouncilfor
SustainableDevelopment(WBCSD)releasedtheCorporate
Value Chain (Scope 3) and Product Lifecycle Standards.
Thenewstandardswerecreatedtohelpbusinessesbetter
measure,understandandcomparablydisclosetheGHG
emissionsrelatedtoproductsandthesupplychain.
Increasinglycompaniesareusingtheguidancetogaina
morecomprehensiveunderstandingoftheirGHGemission
impactsandarefindingwaystoreduceimpactsthroughout
thevaluechain.Roadtestersofthenewprotocolinclude
Autodesk, IBM andPfizer,amongothers.
30
Forthisevaluation,weexaminedthedisclosureofScope3
emissionsacross145companies,representingsixofthe
nineprioritysectorsAutos&Transportation,Financial
Services,Food&Beverage,Footwear&Apparel,Retailers
andTechnologyHardware.Amongthisgroupofcompanies
only17percent(25companies)disclosedsomelevelof
Scope3emissionsbeyondbusinesstravelandonlyseven
companieswentfurtheranddisclosedproductand/orsupply
chainemissions.
performAnCe
fACilities & buildings
Companies will ensure that at least 50% of their owned or leased facilities, and all new
construction, will meet rigorous green buildings standards. when siting facilities, companies will
follow best practices that incorporate sustainable land-use and smart growth considerations.
Globally,buildingsconsumeroughly40percentoftheworlds
totalenergy.IntheU.S.aloneeachyear,buildingsareresponsible
forapproximately38percentofcarbondioxideemissions,
68percentofelectricityconsumptionand12percentofwater
consumption.10 Greenbuildingsknownforenhancing
efficiencyandreducingmaterials,energy,andspaceused
presentacompellingopportunityforcompaniesseeking
financialandsustainabilityperformancegains.
serviceversusrelyingonprivatein-housedatacenters,istouted
asacriticalsolutionforsavingenergyandemissions.However,
thedegreeofimpactdependsonthetypeofenergyusedto
powerthedatacenterandhowefficientlyitisdesignedand
managed.Giventhevastamountofinformationbeingaccessed
andcreatedonadailybasisforexample,thereareonebillion
Googlesearches13 and200millionTweets14 perdayenergyuse
andGHGemissionsarelikelytoincrease.
Theindicatorusedtomeasurethisexpectationassessesthe
performanceofcompaniesfromfoursectorsonprogramsand
targetsforinvestmentsinsustainablebuildings.Asweprogress
towards2020,itisexpectedthatanincreasingnumberof
companiesacrosssectorswillimplementgreenbuilding
requirementsforownedandleasedfacilities.Infuturereports,
wewilladapttheindicatorstocapturethisdatamoreexplicitly
andacrossawiderrangeofsectors.
Withinthiscontext,itisnotsurprisingtofindthat70percent
oftheTechnologyHardwarecompaniesaremakingsome
investmentsinsustainablebuildingsbutwithonly11percent
(3of27companies)inTier1thereisstillmuchroomfor
improvement.Tier1company,EMC,iscurrentlybuildinganew
energy-efficientvirtualdatacenterthatwillmovedatafrom
physicalstoragetoanentirelyvirtualizedITinfrastructure.This
technologyusessoftwaresolutionstosupportITsystemsrun
fromcentralizedservers.Thecompanysshifttovirtualstorage
hasalreadyproduceda75percentgaininstorageutilization
alongwithsavingsofroughly$23millioninoperatingexpenses.
Thefoursectorsevaluatedagainstthisexpectationinclude
Financial Services, Footwear & Apparel, Retail andTechnology
Hardware.Sixtypercentofcompanies(61of102companies)
evaluatedhavemadesomeinvestmentinsustainablebuildings,
butonlythe10percent(11companies)inTier1havedetailed
programsinplaceforincreasinginvestmentsinsustainable
buildings,includingspecifictargetsanddeadlines.Mostofthese
companiesareintheRetailsectorwhereenergycostsareaclear
driverforimprovingresourceefficiency.
Best Buy currentlyhas22storesthatareLEEDcertified,with
morethan50othersintheprocessofbeingcertified.The
companyisretrofittingitsexistingstoreswithskylightsand
dimmablefluorescentlightingallowingthemtotakeadvantage
ofdaylightharvesting.BestBuysgreenbuildingprogram
helpedtoreduceGHGemissionsatU.S.storeoperationsby
15percentinfiscal2010(comparedto2005).Ithasalsosaved
nearly$3millionthroughHVACandlightingadjustments.
Inadditiontotraditionalbuildings,datacenters,thefacilitiesthat
houselargevolumesofInternetinfrastructure,aresignificant
usersofenergy.AccordingtotheElectricPowerResearch
Institute,datacentersuse10to20timesmoreenergypersquare
footthanatypicalcommercialbuilding.11 Despiteanincreasing
focusondatacenterenergyefficiency,thegrowthofdatacenter
energyuseisfastanditnowaccountsforroughly2percentofthe
nationsannualelectricityconsumption.12 Thetransitiontocloud
computing,whereacompanysdataismanagedasanoverall
SOURCING RENEWABLE
ENERGY FOR DATA CENTERS
Recognizing that the most effective way to reduce absolute
emissions over time is to power a facility with renewable energy,
eBay sought to power its LEED Gold-certified data center in
Utah with renewable energy. However, Utah law prohibited nonutility energy consumers from buying power directly from
renewable energy developers. Leveraging its influence and
resources, eBay partnered with a coalition of stakeholders,
including other data center operators, to win passage of
legislation allowing renewable energy purchases from third-party
providers. The new law goes into effect in the summer of 2012.
eBay is a prime example of a company that has aligned its
sustainability objectives with its public policies. The company
will now be able to cut its absolute emissions significantly,
while also hedging against potential price increases for fossil
fuel-based power.
10 UnitedStatesEnvironmentalProtectionAgency.WhyBuildGreen?EPA.gov.Retrievedfromhttp://www.epa.gov/greenbuilding/pubs/whybuild.htmonApril16,2012.
11 Fahey,Jonathan.GoogleEnergyUse:CompanyRevealsInformationToShowThatSearchIsGreen.HuffingtonPost.9August2011.Retrievedfrom
http://www.huffingtonpost.com/2011/09/08/google-energy-use_n_954097.html.
12 ibid
13 Lohr,Steve.GoogleSchoolsItsAlgorithm.NewYorkTimes.5March2011.Retrievedfromhttp://www.nytimes.com/2011/03/06/weekinreview/06lohr.html?_r=3&pagewanted=1&hpw.
14 TwitterBlog.YourWorldMoreConnected.Twitter.1August2011.Retrievedfromhttp://blog.twitter.com/2011/08/your-world-more-connected.html.
31
performAnCe
wAter mAnAgement
Companies will assess water-related impacts and risks and will set targets to improve water use
and wastewater discharge, with priority given to operations in water-stressed regions
assessing Water risk
20%
25%
55%
55% Disclose some level of water-related risk

25% Disclose more comprehensive assessments
that identify specific water-related risks,
such as geographic-specific exposure,
20% Disclose no water-related risks
Formostcompanies,waterisakeyrequirementfordoing
business.Agriculturalirrigationaccountsforapproximately70
percentofallglobalfreshwateruse15 andtheU.S.electricpower
industryalonerequiresanestimated136billiongallonsofwater
perdayforgeneratingandthencoolingthesteamthatdrives
electricturbines.16 Populationgrowth,rapidindustrializationinthe
developingworldandtheimpactsofclimatechangeareplacing
thiscriticalresourceunderincreasingpressureintermsofboth
availabilityandquality.Thesetrendsarecreatingunprecedented
challengesforwater-reliantcompanies,especiallythosewith
operationsandsupplychainsinvulnerableregions.
Ouranalysisfocusedonfoursectorsthatareespeciallywatersensitiveandwater-intensiveFood & Beverage, Footwear &

Apparel, Oil & Gas Producers andUtilities.Ofthe105companies
assessed,28percent(30companies)areinTiers1and2for
effortstotrackwateruse,disclosewateraccountingmetrics,
assesswaterriskexposureandimplementprogramsandtargets
forimprovingwatermanagement.Themajorityoftopperformers
areFood&Beveragefirms,with62percentofcompaniesinthe
sector(16of26companies)includedinTiers1and2.Water
managementremains,however,akeyareawhereimprovement
isneededforboththeFootwear&ApparelandOil&Gas
Producingsectors,whichtogetherrepresent32ofthe53
companiesfallinginTier4.
Astrongwatermanagementstrategybeginswithacomprehensive
audittoidentifywaterwithdrawal,dischargesandrecycling/reuse
acrossalloperations.AmongFood&Beveragecompanies,
roughlythree-quartersarereportingonatleastoneofthethree
metricslistedabove;in2010,approximately60percentof
companiesintheFood&Beveragesectorrespondedtothefirst
annualwaterdisclosuresurveybytheCarbonDisclosureProject.
Thisrelativelyhighresponserateshowsthatcompaniesrecognize
thestrategicnatureofwaterresourcestotheirsociallicenseto
operate,businesscontinuityandoperatingcosts.
Forsomefoodandbeveragecompanies,communityconcerns
aboutthewaterimpactsoftheiroperationshavebeenasignificant
driverforaction.Intheearly2000s,forinstance,The Coca-Cola
Company sawitssociallicensetooperateinIndiathreateneddue
toconcernsthatitslocalbottlersweredepletingandpolluting
drinkingwater.Theseconcernsdrewsignificantmediaattention
andaspotlightonthecompanyswatermanagementpractices,
whichhavesincepromptedasignificantcommitmentbythe
companytowaterstewardship.The Coca-Cola Company isnow
includedinTier1forthisexpectationandhasdevelopedambitious
waterstewardshipgoals,suchasimprovingwaterefficiencyby
20percentby2012;returningallwaterusedinmanufacturing
processestotheenvironmentatalevelthatsupportsaquaticlife
bytheendof2012;andreplenishingallofthewaterusedinits
beveragesby2020.Thesegoalsareencouraging,andmanywill
bewatchingcloselytoseeiftheyaremet.
15 WorldWaterAssessmentProgramme(WWAP).Statistics:Graphs&Maps.UNwater.org.Retrievedfromhttp://www.unwater.org/statistics_use.html onApril16,2012.
16 Barton,Brooke.Murky Waters? Corporate Reporting on Water Risk: A Benchmarking Study of 100 Companies.Ceres.February2010.Retrievedfrom
http://www.ceres.org/resources/reports/corporate-reporting-on-water-risk-2010/view.
32
performAnCe
A RESOURCE FOR
21ST CENTURY WATER
MANAGEMENT:
THE CERES AQUA GAUGE
Ofthe105companiesevaluatedforthisexpectation,morethan
80percent(88companies)disclosesomelevelofwaterrisk
exposure.However,only25percenthaveundertakenassessments
toidentifyspecificwater-relatedrisks,suchasgeographicspecificexposure,orciteuseofinternalorrecognizedthird-party
waterriskevaluationtools(i.e. theWorldBusinessCouncilfor
SustainableDevelopment[WBCSD]WaterTool).Justover40
percentofFoodandBeveragecompanies(11)conductmorein
depthassessmentsofwater-relatedrisks,whileonly25percent
(nine)ofUtility,18percent(two)ofFootwear&Apparel,and
15percent(five)ofOilandGascompanieshaveinvested
acomparablelevelofriskassessmentanddisclosure.
MostElectricUtilitycompanies(75percent)fallintoTiers3and
4forwatermanagement.Thisisespeciallyconcerninggiventhe
waterneedsofnuclearandfossilfuelpowerplants.Amongthefew
standoutsisArizona-basedPinnacle West, whichusesrecycled
urbanwastewatertocoolthereactorsatitsPaloVerdenuclear
generatingstation.Thecompanyestimatesitisreusingabout
20billiongallonsofwastewatereachyear,therebypreserving
enoughpotablewaterforapproximately75,000homes.17
AmongFootwear&Apparelcompanies,morethan80percent
(9of11companies)areincludedinTier4forwatermanagement.
Nike,however,isworkingtonotonlyimprovethewater
managementpracticesofitssuppliersbutisalsolookingtoits
productdesignandmanufacturingprocessestominimizewater
impacts.Inearly2012thecompanyannouncedapartnership
withNetherlands-based,DyeCooTextileSystems,toimplement
awater-freefabricdyeingprocessthatusesrecycledcarbon
dioxidetocolorathleticfabrics.Thisnewprocessisexpectedto
eliminatetheneedforwaterandenergyusedinconventional
textiledyeing.Traditionaldyeingtechniquescanuseupto40
gallonsofwatertodyejusttwopoundsoftextilematerials.With
projectionsof39milliontonsofpolyestertobedyedannually
tby2015,thepotentialwaterandenergysavingsthistechnology
couldenableissignificant.18
The Ceres Aqua Gauge is a free, first-of-its-kind tool and

methodology that enables companies and investors to
assess enterprise-wide management of water risks and
opportunities. Reflecting the experience of leading
companies,the Aqua Gauge provides a comprehensive
roadmap for developing robust, 21st century water
strategies. The tool, which is backed by investors managing
over $2 trillion in assets, provides a benchmark for leading
practice and enables companies and investors to assess,
score and compare water management performance. The
tool and associated report provide:
An Excel-based workbook that produces a scorecard
of company performance;
Detailed definitions of leading practice across a range
of water management areasfrom risk assessment and
measurement to governance, business planning and
product development; and
Case studies and detailed company examples
The Aqua Gauge was developed by Ceres, WBSCD, Irbaris
and the IRRC Institute through extensive engagement with
more than 50 investors, companies and NGOs. Download
the Aqua Gauge at www.ceres.org/aquagauge.
17 Barton,Brooke.Murky Waters? Corporate Reporting on Water Risk: A Benchmarking Study of 100 Companies.Ceres.February2010.Retrievedfrom
http://www.ceres.org/resources/reports/corporate-reporting-on-water-risk-2010/view.
18 Nike,Inc.AnnouncesStrategicPartnershiptoScaleWaterlessDyeingTechnology.Nike,Inc.7February2012.Retrievedfromhttp://nikeinc.com/news/nike-inc-announces-strategic-partnership-toscale-waterless-dyeing-technology onApril16,2012.
33
performAnCe
humAn rights
Companies will regularly assess key risks related to human rights throughout their entire
operations, and will employ management systems that are aligned with internal policies and
support the implementation of universal standards.
Thirteen percent of the 600 companies (80)

are included in Tier 1 and 2 for human rights
management. The top-performing sector was
Technology Hardware with 41 percent (11 of 27
companies) in Tiers 1 and 2. Only 19 percent of
Oil & Gas Producers (6 of 32 companies) were
included in the top two tiers, a disappointment
given the sectors presence in many sensitive
global regions.
Ataminimum,allcompanies,regardlessofindustry,should
implementformalpoliciesaddressinghumanrights,freedom
ofassociation,theeliminationofdiscrimination,andworking
conditions.Thesepoliciesshouldbeclearlycommunicatedto
allrelevantstakeholdersandmadeaccessibleinlocallanguages.
Thoseimpactedshouldalsohaveaccesstoconfidentialthirdpartygrievancemechanisms.Theseinitiativesshouldbe
integratedsystematicallyacrosstheenterprise,including
contractorsandsuppliers.
Forthisexpectation,all600companieswereassessedandindepthanalysiswasperformedforcompaniesintheninepriority
sectors.Only13percent(80)ofthe600companiesareincluded
inthetop2tiersforthisexpectation.Thetop-performingsector
wasTechnologyHardware,with41percent(11of27companies)
includedinTiers1and2.Stakeholderexpectationsfor
companieswithinthissector,however,continuetorise.A
provisionintheDodd-FrankAct,forexample,nowrequiresall
U.S.publiccompaniesusinganyofthefourconflictminerals
(tin,tantalum,tungstenandgold)totracethosemineralsback
totheirsourceanddisclosetheuseofanythatoriginateinthe
DemocraticRepublicofCongo.Conflictmineralspresenta
uniqueandcomplexchallengeforcompaniesintheTechnology
Hardwaresectorandthefullimpactofthisnewrequirementon
theimprovementofhumanrightshasyettobeseen.
Protectionofhumanrightsisalsoparticularlyrelevantforoil
andgasproducerswhoseoperationsarelocatedinmany
environmentallyandsociallysensitiveglobalregionsandimpact
vastnetworksofemployeesandlocalcommunities.These
companiesshouldundertakesocialimpactassessmentsforall
projects,includingareviewofimpactsonindigenouscommunities.
Yet,only19percentofcompanies(sixof32)intheOil&Gassector
areincludedinthetop2tiersforoverallhumanrightsmanagement.
34
Communityconsultationinitiativesarealsoanimportant
componentofameaningfulhumanrightsprogramfortheOil&
Gassector.Suchprogramsshouldincludeactivedialoguewith
localstakeholdersregardingthenegativeimpactstheirbusiness
activitiesmayhaveonthecommunityandshouldalsoassign
managerialresponsibilityforaddressinggrievancesthroughout
aprojectslifecycle.ThethreeOil&Gascompaniesincluded
inTier1ExxonMobil, Hess andOccidental Petroleumhave
robustcommunityconsultationprogramsinplace.
Hess Corporations communityconsultationprogramincludes
benchmarksandobjectives,andmechanismstocollect,record
andaddresscommunitygrievancesresultingfromitsoperations.
Thecompanyalsohascommunitydevelopmentprograms
focusingoneducationandhealthworldwide.Hessspecifically
addressesindigenouspeopleinitshumanrightspolicy.This
levelofengagementstandsoutintheindustryasonlyaquarter
ofcompaniesintheOil&Gassector(eightof32)disclosed
communitydevelopmentprogramsandevenfewer(three
companies)havepoliciesonindigenouspeopleandlandrights.
Forthemajorityofcompaniesfallinginthelowest2tiers,
astrongercommitmenttohumanrightscanbeinstrumentalin
supportingacompanyseffortstoobtainandmaintainitssocial
licensetooperate.
THE RUGGIE MANDATE

In 2005 John Ruggie was appointed UN Secretary Generals
Special Representative on Human Rights and Transnational
Corporations and Other Businesses. Following this appointment,
a multi-stakeholder consultation process ensued resulting in the
June 2011 release of the Guiding Principles on Business and
Human Rights: Implementing the United Nations Protect,
Respect and Remedy Framework. This framework clarifies the
role and responsibility of business for respecting the rights of
not only their direct employees, but also their suppliers and the
communities where they operate.
performAnCe
supply ChAin
VISION: COMPANIES WILL ENSURE THAT SUPPLIERS MEET
THE SAME ENVIRONMENTAL AND SOCIAL STANDARDS
INCLUDING DISCLOSURE OF GOALS AND PERFORMANCE METRICS
AS THE COMPANY HAS SET FOR ITS INTERNAL OPERATIONS.
Fromrawmaterialstomanufacturingandpackaging,a
companyssupplychaincanhavesignificantenvironmentaland
socialimpacts;andwithvaryinglevelsofinfluenceonsuppliers,
managingtheseimpactscanbechallenging.However,the
extensionofsocialandenvironmentalstandards,goalsand
programsacrossglobalsupplychainscanalsohelpimprovethe
bottomline.Addressingenvironmentalandsocialconcerns
withinsupplierfactoriescanimproveworkermorale,retention
andproductivity,whichinturncancontributetoimprovements
insupplychainefficiency,reliabilityandresiliency.
Inthissection,companyperformancewasevaluatedfor
strengthofsupplychainpoliciesandcodes,alignmentof
sourcingpracticestosustainabilitystandards,supplier
engagementandthemeasurementanddisclosureofsupplier
performance.WhiletheSupplyChainexpectationswerebroadly
evaluatedforeachofthe600companies,foursectorswith
particularlycomplexsupplychainsFood & Beverage,
Footwear & Apparel, Retail, andTechnology Hardware
receiveddeeperscrutiny.Detailedsectoranalysiscanbefound
atwww.ceres.org/roadto2020.
35
performAnCe
poliCies & Codes
Companies will set supply chain policies and codes aligned with overall social and
environmental standards.
Forty-three percent of the 600 companies

(259) have a supplier code in place.
Astrongsupplychainmanagementsystembeginswithpolicies
andcodesofconductdefiningexpectationsforworking
conditionsamongcontractorsandsuppliers.Suchstatements
shouldaddressbothenvironmentalandsocialcriteria,and
incorporateenvironmentalstandards,pertinentenvironmental
regulations,healthandsafetyrequirements,minimumliving
wages,workinghours,freedomofassociationandcollective
bargaining,discrimination,childlaborandforcedlabor.Such
policiesshouldalsoreferencetheUniversalDeclarationof
HumanRightsand/ortheInternationalLaborOrganization(ILO)
Conventions.Supplychaincodesandstandardsshouldbe
accessibleinlocallanguagesforallsuppliersandcontractors.
Forthisexpectation,theevaluationwaslimitedtoassessing
socialpoliciesandcodes(environmentalcriteriaforsuppliers
isassessedinthefollowingexpectationfocusedonsourcing
practices).Forty-threepercentofthe600companies(259
companies)haveasuppliercodeinplace.Amongthepriority
sectorsfocusedonforthisexpectationFood & Beverage,
Footwear & Apparel, Retail andTechnology Hardware
38percent(37of97companies)disclosesupplychaincodes
ofconductthatreferencetheILOconventions.
36
Itisnotuncommonforcompaniestosharecommonsuppliers
withintheirrespectivesupplychains.Thiscanresultinasingle
supplierdedicatingsignificanttimeandresourcestocomply
withthecompetingrequestsofitbusinesscustomers.Inan
efforttofindsolutionstothischallenge,companiesandkey
stakeholderorganizationsarecollaboratingtocreatecommon
supplierrequirementsinsectorssuchasApparel&Footwear,
TechnologyHardwareandElectricUtilities.Forexample,the
SustainableApparelCoalition(SAC)wasfoundedin2009by
acoalitionofenvironmentalorganizationsandcompanies
includingGap, H&M, Kohls Department Stores, Nike, VF
Corporation andWalmart.Thegroupisdevelopinganindustrywide,open-sourced,supplychainindexthatmeasureswater
andenergyuse,GHGemissions,wasteandthesociallabor
practicesofsuppliers.Thiseffortallowscompaniestopresent
acommonstandardtosuppliersandstreamlinethecollection
ofsustainabilityperformancedata.TheSACplanstoexpand
membershipin2012toallfootwearandapparelcompaniesand
eventuallytootherconsumerindustries.
Standardizationofsupplierexpectationsacrossagroupof
companiescaneffectivelyraisethebarfortheentiresector.
Theseinitiativescanalsoprovidecompaniesthatarejust
startingoutwithresourcesforaddressingsustainability
challengeswithintheirownsupplychains.Withacommitment
tocollaborationandopensourcing,theseindustryinitiativescan
contributetofurtheruptakeandimplementationofsupplier
codesandpolicies.
performAnCe
Align proCurement prACtiCes
Companies will address sustainability performance in procurement criteria and contracting.
Nearly half of the 600 companies have

environmentally-focused procurement programs
in place, with 113 companies referencing formal
policies. Yet, only six percent (35 companies)
set targets for supplier improvements and give
preference to those suppliers demonstrating
sustainable business practice.
Companiescanuseprocurementandpurchasingtoimplement
strongsustainabilitystrategiesacrosstheirsupplychains.As
withsuppliercodes,procurementpoliciesshouldbealigned
withacompanyscorporatesustainabilityobjectivesand
standards.Themanagershandlingprocurementshouldalsobe
trainedtoassessthesustainabilityperformanceofvendors.The
indicatorusedtoassessthisexpectationevaluatescompanies
forformalpoliciesandprogramsrelatedtogreenprocurement.
Thoughasomewhatnarrowassessmentoftheexpectation,it
doesprovidesomeinterestinginsights.
Forthisexpectation,all600companieswereevaluated.The
companiesincludedinTiers1and2,representingnearly20
percent(113)ofthe600companies,haveformalenvironmental
procurementprogramsandpoliciesinplace,yetonlysixpercent
ofcompanies(35)areinTier1andhavepoliciesthatrequire
supplierstoadheretoenvironmentalstandardssetbythecompany
andgivepreferencetosupplierswithstrongerenvironmental
performance.CompanieswithintheFootwear&ApparelandFood
&Beveragesectorshavesignificantopportunitiestoimprovethe
sustainabilityofprocurementdecision-making;onlythree(of11)
Footwear&Apparelandthree(of26)Food&Beveragecompanies
citeenvironmentalprocurementpoliciesthatmeettheexpectations
describedaboveforcompaniesinTiers1and2.
Walmart isamongthosecompaniesconsideringenvironmental
criteriainpurchasingdecisionswithitsprocurementpolicycalling
fortheeliminationof20millionmetrictonsofGHGemissionsfrom
itsglobalsupplychainbytheendof2015.Walmartisworking
withsuppliersacrossmorethan20productcategoriestoidentify
GHGreductionopportunitiesandlaunchnewpackagingprojects.
Bytheendof2012,Walmartwillrequireallofitsdirectimport
supplierstosource95percentoftheirproductionfromfactories
thatreceiveoneofWalmartstwohighestratingsinauditsfor
environmentalandsocialpractices.Thequestioniswhetherthese
policieswillresultinonthegroundperformanceimprovementsin
Walmartsvastsupplychainofmorethan100,000suppliers.
Despitetheseaggressivetargets,thecompanycontinuestobe
implicatedincontroversiesrelatedtoviolationsofworking
conditionsandlaborrightsinitssupplychain.Questionsremain
aboutWalmartspurchasingpractices,whichfocusonlowering
pricesandaggressiveproductiontimelines,whetherthey
exacerbatepoorworkingconditionsamongsuppliersandifthe
companysauditingprocessisabletoadequatelycaptureviolations.
Walmartdoesdiscloseitsscorecardaddressingtheoutcomesof
theauditprograms,howeveritisdifficulttoassessthespecific
detailsuponwhichtheauditratingsarebased.Thereareconcerns
thatthecompanyisfocusedonenvironmentalimpactsandthat
keysocialimpactsarenotreceivingneededattention.Atthesame
time,however,Walmarthascommittedtoprovidingsupplierswith
necessarytraining.Thisisanimportantcommitment;withoutthe
relevanteducationandresourcesforimplementingthesechanges,
suppliersoftenbelievetheyarelefttochoosebetweenmeeting
environmentalsustainabilitygoalsormakingaprofit.
Starbucks coffeeprocurementprogramisanothernoteworthy
exampleofcompanyaction.ThroughStarbucksCoffeeandFarmer
Equity(C.A.F.E.)Practices,developedinpartnershipwith
ConservationInternational,thecompanyisworkingtoensure
thatitscoffeesuppliersaremeetingcleareconomic,socialand
environmentalstandards.Starbuckshassetatargetthatby2015all
ofitscoffeewillbethird-partyverifiedorcertifiedthrougheitherthe
C.A.F.E.Practices,Fairtradeoranotherexternallyauditedsystem.
In2011,86percentofthecompanyscoffeemetthesestandards.
Agrowingnumberofcompaniesarealsocouplingprocurement
policieswithcommitmentstoimprovesourcingpracticesfor
environmentallysensitiveresources.Onesuchexampleisthe
harvestingofpalmoilaproductusedinproductsrangingfrom
chocolatebarstodishsoapwhichhasbeenassociatedwith
significantlossofrainforests,aswellasotherrelated
environmentalimpactsincludingdecreasedbiodiversityandthe
contaminationofgroundwaterandsoil.Inresponsetothese
ecologicalimpacts,General Mills hascommittedtosource100%
ofitspalmoilfromresponsibleandsustainablesourcesby2015.
IntheTechnologyHardwaresector,55percentofcompanies
(15of27)areincludedinTiers1and2.Fivecompanies
Apple, Hewlett-Packard, Xerox, Motorola Mobility andWestern
Digitalleadthissectorwithpoliciesinplacerequiringsuppliers
adheretoenvironmentalstandardsandalsogivingpreference
tosupplierswithstrongerenvironmentalperformance.
ElectronicIndustryCitizenshipCouncil(EICC)andtheGlobal
e-SustainabilityInitiative(GeSI)membercompaniesincluding
Apple, Motorola Mobility, Sprint andDell, amongothers
arealsodevelopingmulti-stakeholderapproachestosourcing
materials.Forexample,inApril2012,EICCandGeSIannounced
anewprogramfocusedoncreatingsolutionsforcompanies
strivingtoeliminateconflictmineralsfromtheirsupplychains.
Thenew program willprovideincentivestosmeltersthatare
sourcingconflict-freemineralsandmakeiteasierforcompanies
toidentifypreferredsuppliers.
37
performAnCe
engAging suppliers
Companies will ensure that at least 75% of the companys tier 1 and tier 2 suppliers and 50%
of tier 3 suppliers meet the companys standards for sustainability performance.
Within the priority sectors focused upon for this

expectationFood & Beverage, Footwear &
Apparel, Retailing and Technology Hardware
nearly 50 percent of companies (48 out of 97)
have supply chain monitoring systems in place.
Integratingsustainabilityacrossentiresupplychainsrequiresnot
onlypolicesandstandards,butalsoongoingmonitoring,auditing
andcapacity-building.Companiesthatpursuethesestepsare
betterpositionedtoimprovetheiroverallsustainability
performanceandstrengthentheirlong-termsupplierrelationships.
All600companieswereevaluatedforthisexpectation,and
additionalanalysiswasfocusedonthosesectorswithclear
exposuretosupplychainriskFood & Beverage, Footwear &
Apparel, Retail andTechnology Hardware.Theindicatorsfor
thisexpectationwereusedtoassesscompanyeffortstoengage
suppliersonbothenvironmentalandsocialsustainabilityissues
andspecificallyexamined,supplychainmonitoringsystems,
programsandtargetstoimprovetheenvironmentalperformance
ofsuppliersandtheuseofexternalsocialsuppliercertifications.
Akeyfirststepforcompaniesaddressingsustainabilityissueswithin
thesupplychainistoensurethatsupplier-monitoringprograms,
whichshouldbeongoingandconsistentacrossthesupplychain,
havemechanismsforhandlingnon-complianceandsupporting
remediationandcapacitybuilding.Morethan70percentofthe600
companiesevaluatedfallinTier4foroverallsupplierengagement
efforts.Yetwithintheprioritysectorsfocuseduponforthis
expectationFood & Beverage, Footwear & Apparel, Retail and
Technology Hardwarenearly50percentofcompanies(48out
of97)havesupplychainmonitoringsystemsinplace.Companies
withintheFood&Beveragesectordominate,withnearly40%of
companiesinthesector(10outof26)includedinTier1.
CompaniessuchasGap arealsoseekingexternalcertificationof
suppliersagainstrigorousstandards,suchasSA8000athirdpartycertificationforsupplierlaborpractices.Othersare
pursuingindustry-specificcertificationschemes.Forexample,
Hasbros facilitiesarecertifiedbytheInternationalCouncilofToy
Industries(ICTI),whichaimstoensureafair,safeandhealthy
workenvironmentforthoseemployedintoymanufacturing.
Ofthe97prioritysectorcompaniesevaluated,only16have
programsinplacetoimprovetheenvironmentalperformanceof
suppliers;andjustthreeHewlett-Packard, Walmart, andXerox
haveestablishedsupplierperformancetargets.Inits2011
sustainabilityreport,Hewlett-Packard discloseditseffortstogather
GHGemissiondatafrommorethan90%ofitsfirst-tiersuppliersby
spend.Thecompanyalsoreportsthatmorethanthree-quartersof
itssuppliers(byspend)havesetsustainabilityperformancegoals.
WiththemajorityofcompaniesevaluatedfallinginTier4forthis
expectation,thereareclearopportunitiesforincreasedsupplier
engagementfromcompaniesacrosssectors.Toensurethat
sustainabilityisintegratedthroughoutglobalsupplychains,
companiesmustalsofindwaysofaccessingnotonlydirect
suppliers,butalsothosethataremoreremovedfromtheirdirect
influence.Onekeystrategyistodemonstratetosuppliersthe
potentialbusinessbenefitsthatsustainabilityprogramscanhave
whethertheyberelatedtofindingefficiencieswithinmanufacturing
processesormaintainingahealthyandrespectedworkforce.
Beyondeducation,leadingcompaniesarealsofindingwaysto
createbusinessbenefitsthroughsupplierincentives.Proctor
& Gambles supplierenvironmentalsustainabilityscorecard,
createdinconcertwiththecompanysSupplierSustainability
Boardwhichcomprisesmorethan20supplierrepresentatives
fromacrossP&Gsglobalsupplychain,isanexample.Results
ofthemandatoryscorecardfactorintoasuppliersoverallrating
andaffectthesuppliersabilitytodoongoingbusinesswith
P&G.Thisprovidesaclearincentiveforimprovedsustainability
performance.P&Galsousesthescorecardtopositionsuppliers
asinnovatorsbyaskingthemtosubmitideasforsustainable
innovation.In2011,thescorecardgeneratednewideasfrom
38percentofP&Gsuppliersthatparticipatedintheprogram.
HELPING SUPPLIERS TO
PROCURE RENEWABLE ENERGY
For many companies, much of the carbon footprint is within the
supply chain; on average 50 percent for most companies19 and
can be even higher for manufacturing and retail companies. Yet
for many suppliers located in developing countries, procuring
renewable energy is often not an option.
In September 2011, the United Nations launched the formation
of a high-level collaboration with the private sector focused on
clean energy. The program, Sustainable Energy for All,
recognizes that the inability to access clean energy sources will
jeopardize global efforts to combat poverty and disease. The
goal of the initiative is to achieve universal access to modern
energy services by 2030. Partnering with suppliers and local
governments to support the development of renewable energy
is a key opportunity for companies to significantly reduce their
environmental and social impact.
19 A.T.Kearney.Carbon Disclosure Project Supply Chain Report 2011.A.T.Kearneycommissionedby:CarbonDisclosureProject.2011.Retrievedathttps://www.cdproject.net/CDPResults/CDP-2011Supply-Chain-Report.pdf.
38
performAnCe
meAsurement & disClosure
Companies will disclose a list of their tier 1 and 2 suppliers and measure and disclose suppliers
sustainability performance.
Supply Chain measurement & disclosure

600
451
number of Companies
Overall, only 25 percent

of the 600 companies
(149 companies) have
some level of disclosure
for supply chain monitoring
and performance.
400
200
73
20
56
tier 4
Starting Out
Supplierperformanceisinfluencednotonlythroughmanagement
systemsbutalsothroughrelevantmonitoring,auditingand
disclosure.Thisshouldincludethird-partyverification,notjust
internalauditingdonebycompanyemployees.Ultimately,topperformingcompaniesshouldassignthesamedegreeof
scrutinytowardssupplierssustainabilityperformanceastheir
owndirectoperations.
Forthisexpectation,all600companieswereevaluatedand
additionalanalysiswasfocusedonthosesectorswithclear
exposuretosupplychainriskFood & Beverage, Footwear &
Apparel, Retail andTechnology Hardware.Thisexpectation
assessedtransparencyonthescopeandfrequencyofaudits,
keyauditfindings,anddisclosureofmeasuresforaddressing
non-compliance,remediationprogramsandon-goingtraining
andengagementinitiatives.
Overall,only25percentofthe600companies(149companies)
havesomelevelofdisclosureforsupplychainmonitoringand
performance.Notsurprisingly,leadingcompaniesforthis
expectationwereprimarilyrepresentedamongthefourpriority
sectorsfocusedonforthisexpectation.Athirdofthese
companies(33outof97)areincludedinTiers1and2.
tier 3:
tier 1
tier 2
Performance tier
TheTechnologyHardwaresectorhasthestrongestperformance
forsupplychaintransparency,withnearly40percentof
companiesincludedinTiers1and2.Puttingtorestthefearthat
transparencyinthesupplychaintranslatestoacompetitiverisk,
Tier1and2companiesintheTechnologyHardwaresectorsuch
asHewlett-Packard andDell disclosealistoftheirkeysuppliers.
Inearly2012,Apple releasedalistofitssuppliers,aswellasa
progressreportonthecompanysauditingprocessandresults.It
alsohiredthird-partyauditor,theFairLaborAssociation(FLA),to
undertakeacomprehensiveassessmentofworkingconditionsat
keysupplierfactoriesinChina.Thesenoteworthyactionsfollow
significantallegationsthatApplesheavyproductiondemands
haveresultedinhighstresslevels,includingsuicidesamong
theirsuppliersemployees.InMarch2012,theFLAdisclosed
itsfindingsandfollowingtheirreleaseamajorsuppliertoApple,
megatechnologymanufacturerFoxconnTechnologyGroup
knownforitspoorworkingconditionsandhigh-stressproduction
schedulesmadecommitmentstolimitworkerhoursand
increasewagesforitsmorethan1.2millionemployees.20
20 Duhigg,Charles,andStevenGreenhouse.ElectronicGiantVowingReformsinChinaPlants.NewYorkTimes.29March2012.Retrievedfromhttp://www.nytimes.com/2012/03/30/business/applesupplier-in-china-pledges-changes-in-working-conditions.html?pagewanted=all.
39
performAnCe
ThecompanysSupplierContinuousQualityImprovement
(SCQI)Programincludessuppliertraining,assessmentsand
continuousimprovementplans.
Thedisclosureofdetailedsupplychaindataallowsstakeholders
toassessacompanyssustainabilityperformanceand,for
investors,tomoreaccuratelypredicttheimpactofpotentialsocial
andenvironmentaldisruptions.Nikes sustainabilitywebsite
featuresaninteractivesupplychainmaphighlightingallcountries
wherethecompanysourcesgoodsandservicesandprovidesan
individualcountryandfactorybreakdownofthetypesofproducts
sourced,thenumberoffactoriesandworkers,thepercentageof
contract,migrant,andfemaleworkers,theaverageageofworkers,
andthecountryscontributiontoquarterlysales.
Inresponsetoinvestorrequestsformoretransparencywithinthe
supplychain,asmallnumberofcompaniesarealsobeginning
toasksupplierstoproducetheirown sustainabilityreports.
In2011,Microsoft announcedthatitwasrequiringaselection
ofitssupplierstoreleasetheirownreportsonadherencetothe
requirementsofMicrosoftsVendorCodeofConduct.Microsoft
suppliershaveexperiencedlaborandenvironmentalproblemsin
thepast,agrowingconcernforinvestorsandotherstakeholders.
ThisparticularcommitmentbyMicrosoftwasspurredbya
shareholderresolutiononbehalfofNewYorkCityPublic
PensionFunds,andbeginningin2013,thecompanywillaska
dozenofitssupplierstofileGRI-compliantsustainabilityreports.
Intels regularinternalsupplierauditsaredoneinconcertwith
external,third-partyaudits,andcovereachofthecriteriainthe
ElectronicsIndustryCitizenshipCoalition(EICC)code.Based
inpartonthedatacollected,thecompanydoessupplierrisk
assessmentsthatclassifysuppliersaslow,mediumorhighrisk.
THE CALIFORNIA TRANSPARENCY IN SUPPLY CHAINS ACT
Originally passed in 2010, the Transparency in Supply

Chains Act aims to combat human trafficking and forced
labor by requiring companies to publicly report on their
efforts to ensure their direct supply chains are free from
slavery. The bill, which went into full effect in January 2012,
applies to all retailers and manufacturers doing business in
California that have global gross receipts exceeding $100
million. Similar legislation has been introduced at the
federal level. By requiring companies to scrutinizeand
disclose actions being taken to preventhuman rights
abuses, the law allows investors, consumers and other
interested stakeholders to make better and more informed

decisions. The reach of this Act is considerablean
estimated 3,200 global companies will be affected.21
This Act has increased awareness across a broad range of
stakeholders, including investors, about the importance of
company accountability and transparency on the social
impacts of their suppliers. A group of 32 investors expressed
support for the legislation and also released investor guidance
for companies seeking to comply with the Act.
21 Verite.ComplianceisNotEnough:BestPracticesinRespondingtoTheCaliforniaTransparencyinSupplyChainsAct.Verite.November2011.Retrievedfrom
http://www.verite.org/sites/default/files/VTE_WhitePaper_California_Bill657FINAL5.pdf.
40
performAnCe
trAnsportAtion & logistiCs

VISION: COMPANIES WILL SYSTEMATICALLY MINIMIZE THEIR SUSTAINABILITY
IMPACT BY ENHANCING THE RESILIENCY OF THEIR LOGISTICS. COMPANIES
WILL PRIORITIZE LOW IMPACT TRANSPORTATION SYSTEMS AND MODES,
AND ADDRESS BUSINESS TRAVEL AND COMMUTING.
WithU.S.emissionsrelatedtotransportationhoveringaround
30percent22,boostingefficienciesacrosstransportationand
logisticsisacriticalopportunityformeetingemissionreduction
targets,butalsoforreducingoperatingcosts.Whethera
companymaintainsitsownvehiclefleetoroutsourceslogistics
toathird-party,thereshouldbemanagementsystemsinplace
tomonitortheenvironmentalperformanceoftheentire
transportationnetwork.
Inthissection,fivesectorswithtransportationandlogistics
systemswereevaluated:Automotive & Transportation,
Food & Beverage, Footwear & Apparel, Retail andTechnology
Hardware.Duetodatalimitations,twooftheRoadmap
expectationsfortransportationhavebeencombinedintoone
focusedonbothtransportationmanagementandmodes.
Theindicatorsusedfortheexpectationinthissectionevaluate
ownedlogisticsandfleets,aswellasoutsourcedlogistics.
Additionalanalysisofthesesectors,representing113
companies,canbefoundatwww.ceres.org/roadto2020.
22 U.S.EnvironmentalProtectionAgency.TrendsinGreenhouseGasEmissions.EPA.gov.2011.Retrievedfromhttp://epa.gov/climatechange/emissions/downloads12/2.%20Trends.pdf onApril16,2012.
41
performAnCe
trAnsportAtion mAnAgement & modes
Companies will develop transportation criteria that incorporate distance requirements from site
to market and establish decentralized and localized distribution networks. Companies will review
logistics to prioritize low-impact transportation modes.
transportation management & modes

100
number of Companies
Just over 50 percent of the 114

companies evaluated are taking
steps to lower the environmental
impact of their owned and/or
outsourced logistics, but only the
18 companies included in Tiers 1
and 2 have formal programs that
include specific reduction targets.
56
40
50
10
tier 4
Starting Out
Creatingasustainabletransportationnetworkrequiresthata
companyfocusonthearchitectureofthenetwork,including
trackingandminimizingdistancestravelled,adoptinglow-carbon
transportationmodesandfuelsourcesandsettinglong-term,
quantitativereductiontargets.Ofthe114companiesassessed
forthisexpectation,intheAutomotive & Transportation, Food &
Beverage, Footwear & Apparel, Retail andTechnology Hardware
sectors,justover50percentaretakingstepstoreducethe
environmentalimpactoftheirownfleetand/oroutsourced
logistics.Ofthosecompanies,16percent(18companies)are
includedinTiers1and2indicatingthattheyhaveimplemented
formalprogramsthatincludereductiontargets.Tier1companies
forthisexpectation,includingPepsiCo, Kroger, UPS and FedEx,
aresettingandmeetingspecifictargetsthatareloweringboth
theirenergycostsandenvironmentalfootprints.
Food&BeverageandRetailcompaniesrepresentmorethan
60percentofthoseincludedinTiers1and2.PepsiCo hasset
acorporate-widegoalofreducingitsfuelconsumption25percent
perunitofproductionby2015(from2006levels).Thecompanys
Frito-Laydivisionisrollingoutfullyelectricdeliverytruckswhile
PepsiCoUK&Irelandhavestartedusinglow-emissionvehicles
withagoalofreducingnitrogenoxideemissions60percentby
2018.Astandoutamongtheretailers,Kroger aimstoachieve
a25percentimprovementinitsfleetefficiencyby2014inpart
byincreasingcubeefficiency,ameasurementofhowefficiently
thecompanyutilizestruckloadcapacity.Thecompanyisalso
42
tier 3:
tier 1
tier 2
Performance tier
partneringwiththeU.S.EnvironmentalProtectionAgency
toensureitsnewtrailerscomplywiththeSmartWayprogram
carbonreductionstrategies.
Transportationcompaniesemissionsimpactsareprimarily
throughtheuseoftheirownfleetsofvehicles,planes,shipsand
trainsoraccesstosuchmodesoftransportationfortheirbusiness.
Asthesuppliersoftransportationservicestoawiderangeof
companies,theyareincreasinglybeingaskedbytheircustomers
toprovidedataontheirGHGemissionsandothersustainability
impacts.UPS leadsthetransportationcompanieswitha
commitmenttoreduceitsairlineemissionsafurther20percent
perton-mileby2020(from2005levels),buildingupona
reductionof10percentsince2005.Ontheground,theUPS
fleetisnow20percentalternative-fuelvehiclesandthecompany
utilizestelematicstoimprovevehicle,routeanddriverefficiency.
FedExs fleetofelectricandhybridvehiclesisalsonowat20
percentandthecompanyhasestablishedagoalofimprovingfuel
efficiencyofitsFedEx expressvehiclesby20percentby2020.
Morethan25percentofthe114companiesevaluatedare
undertakingactivitiestoimprovetheenvironmentalperformance
ofthirdpartyproviders.Target,forexample,hastakenmeasures
toensurethatitscontractedlogisticsprovidersdonottravelempty
fromstorestodistributioncenters.By2016,Targetaimsto
improvetheefficiencyofitsinboundlogisticsby15percentand
outboundlogisticsby20percent(comparedtoa2008baseline).
performAnCe
produCts & serviCes

VISION: COMPANIES WILL DESIGN AND DELIVER PRODUCTS AND SERVICES THAT
ARE ALIGNED WITH SUSTAINABILITY GOALS BY INNOVATING BUSINESS MODELS,
ALLOCATING R&D SPENDING, DESIGNING FOR SUSTAINABILITY,
COMMUNICATING THE IMPACTS OF PRODUCTS AND SERVICES, REVIEWING
MARKETING PRACTICES AND ADVANCING STRATEGIC COLLABORATIONS.
Increasingmomentumtoinnovateproductsandserviceswith
reducedenvironmentalandsocialimpactsistransforming
businessmodels.Thisadvancementisbeingdriveninpartby
growingconsumerdemandforsustainableproductofferings,
butalsobytheincreasingsocietalneedforparadigm-changing
productsandsolutionstokeysustainabilitychallenges.
Forthisexpectationall600U.S.companieswereassessedonat
leastoneindicatormeasuringperformanceonsustainability
design.Someadditionalsector-specificindicatorswereusedto
analyzethe251companieswithinthenineprioritysectors
Autos & Transportation, Financial Services, Food & Beverage,
Footwear & Apparel, Oil & Gas Producers, Retail, Technology
Hardware, Technology Software & Services andUtilities.
Eachindustrygroupwasevaluatedbasedonauniquesetof
sector-specificmetrics.Forexample,Food&Beverage
companiesandsomeRetailcompanieswereevaluatedon
programsandtargetstoincreasesustainablefoodproducts,
whileFinancialServicescompanieswereevaluatedon
sustainability-relatedfinancialserviceofferings,suchasgreen
financingormortgages.Footwear&ApparelandTechnology
Hardwarefirms,whichgeneratesignificantproductend-of-life
waste,wereevaluatedontheirsustainabledesigninitiativesand
relatedR&Defforts.Moredetailsonspecificindicatorsused,
andadditionalanalysisofthenineprioritysectors,canbefound
inthewebreportatwww.ceres.org/roadto2020.
AUTO SECTOR PRODUCT IMPROVEMENTS

The U.S. Corporate Average Fuel Economy (CAFE) and GHG
vehicle emissions standards are continuing to drive product
innovation for auto companies and their suppliers. Citi
Investment Research in collaboration with Ceres and other
experts has been analyzing the economic impacts of the
development of fuel economy/GHG emission standards on
the industry for several years. The latest analysis examines
the impacts the second phase of the program might have on
the industry in 2020. The Administration has proposed
standards for 2017-2025, which would require a fleet
average of 49.6 miles per gallon and 163 grams of CO2 per
mile by 2025 (equivalent to 54.5 mpg). The standards
would reduce the amount of GHG emissions by half for 2025
vehicles (compared to 2010 vehicles), and would save
approximately 4 billion barrels of oil.
The new standards could largely be met by using existing
technologies that improve the performance of cars powered
by traditional internal combustion engines. Some of these

technology improvements include turbocharged direct
injection, advanced transmissions, electric power steering,
low-rolling-resistance tires, turbo charging and variable valve
lift. Many of these are available now and are cost-effective.
Overall, the Citi report found that automakers would likely
see increased sales and profits (4 and 5 percent increases
respectively) under the proposed standards in 2020.
Suppliers of key fuel saving technologies would also stand to
benefit. The report found that the technology required to
meet the 2020 standard would be cost-effective for
consumers when gas costs $1.50/gallon. This is a clear
example of the business case for developing more
sustainable products. Producing more fuel-efficient cars
benefits not only consumers and the environment, but also
the auto industrys bottom line.
43
performAnCe
design for sustAinAbility
Companies will approach all product development and product management decisions with full
consideration of the social and environmental impacts of the product throughout its life cycle.
Designingaproductorserviceforsustainabilitycanmeanvastly
differentthingsfromcompanytocompany.Forsome,itmeans
ashiftinsourcingpracticestomoresustainablerawmaterials
ortheuseofalifecycleassessmenttoexaminethesocialand
environmentalimpactsofanexistingproductfromcradle
tograve.Forothers,itmaytranslatetothetotalredesignof
aproductortheintroductionofaservicethathelpstoshift
consumerbehavior.Basedonthesector-specificnatureof
thisexpectation,theindicatorswerecorrelatedtotherelevant
sector(s).Datawassomewhatlimited(see the methodology
for more detail on the indicators used).Therefore,weareonly
abletogiveageneralsenseofthedirectionthatcompanies
areheadingintermsofdesignforsustainability.Ofthe600
companies,nearly50percent(280)areleveragingopportunities
tooffersometypeofsustainableproductorservice.
ForFood&Beveragecompanies,productsustainabilitypartly
requiresanexaminationofhowproductsaregrown.Whilemore
than60percentofcompanies(16of26)intheFood&Beverage
sectorareofferingcustomersorganicandfairtradeproducts,for
mostcompaniestheseoptionscontinuetobeasmallpercentage
ofproductofferings.Companiesshoulddisclosethepercentage
ofrevenuesattributedtosustainableproductssothatinvestors
andotherstakeholderscanbetterunderstandthecontribution
theseproductsmaketotheoverallsuccessofthebusiness.
AgrowingnumberofRetailcompaniesaretakingstridestoput
sustainableproductsontheirshelves.Whole Foods isleading
anincreasingnumberofgrocersofferingconsumersmore
sustainablefoodchoices.Tier2companies,Kroger andSafeway,
arestrengtheningtheircommitmentwithtargetsforincreased
sourcingofsustainableseafoodcertifiedbytheMarine
StewardshipCouncil(MSC)andothersimilarcertifications.
Safeway isalsoimplementingspecializedtrainingforretail
employeestohelpcustomersidentifymoresustainableoptions.
Formanufacturingcompaniesacrosssectors,understanding
thefullimpactsofaproductoveritslifecyclefromextraction
ofmaterialstomanufacturingtouseanddisposalprovidesan
understandingofwhatdesignorproductionchangesmayrender
thegreatestsustainabilityimprovements.Althoughthereare
industryinitiativesemerging,suchastheSustainableApparel
CoalitionandtheEcoIndex,amongtheFootwear&Apparel
companiesthereissignificantroomforimprovementwithmore
than80percentofcompanies(9outof11)demonstratingno
formallinkbetweensustainabilityandproductdesign.
Bycontrast,74percent(20of27companies)oftheTechnology
Hardwarecompanieshavepoliciesorguidelinestoensurethat
environmentalissuesareconsideredattheR&Dstageof
productdevelopment.ThisismainlyinresponsetoEuropean
chemicallegislationandelectronic-wastedirectives,whichhave
madesustainabledesigntheindustrynormandcontinueto
drivedesignstandards.
44
Beyondsustainabledesigncriteria,companiesintheTechnology
HardwareandSoftwaresectorsarealsoincreasingeffortstobring
innovativeproductsolutionstomarket.Thesecompaniesarefinding
waystomodifyexistingproductsordevelopnewtechnologiesthat
arehelpingotherbusinessesandconsumerstosaveenergy,water
andmoney.Hewlett-Packard andCiscos telepresencetechnologies
areallowingbusinessestoradicallyreducebusinesstravel,while
maintainingtheexperienceofaface-to-facemeeting.Thisnot
onlyofferscustomersmoreresourceefficientoptions,butactually
changesthewaythatmanycompaniesdobusiness.Cisco has
rolledtheseproductsoutacrossitsownbusinessandin2011saw
a40percentdropinairtravelemissionscomparedto2007.
Sustainableinnovationisnotlimitedtoamanufacturedproduct,
butcanalsoextendtoservicesthatshiftthewaybusinesses
operate,aswellasconsumerbehavior.TechnologySoftware
companyCA Technologies providesbusinesscustomerswith
solutionstomeasure,manageandultimatelyreduceenergy
use,water,wasteandGHGemissionsacrosstheenterprise.
ThecompanyhasemployeditsownecoSoftwareandhasseen
a30percentreductioninGHGemissionsfrom2008to2010.
AlthoughallcompaniesintheFinancialServicessectorareincluded
inTiers3or4forthisexpectation,theanalysisshowsthatsome
arestartingtoexperimentwithproductsthatcanshiftconsumer
purchasing.Examplesincludeloansforhomeenergyefficiency
improvementsandcarbonoffsetcreditcards.OneexampleisBank
of Americas EnergyCreditMortgage,whichoffershomebuyers
acreditupto$1,000towardclosingcostsfornewlyconstructed
propertiesthatmeetEnergyStar requirements.Asignificant
opportunityexistsforcompaniesinthissectortoeducateconsumers
andbuildthemarketforthesetypesofproductsandservices.
DETOX ROADMAP
Chemicals used to make footwear and apparel products can have
a significant impact on workers and the environment through
their use in manufacturing and their ultimate release into the
air or waterways. In response to a Greenpeace campaign, Nike,
Puma, H&M, Adidas and others launched an effort in 2011 to
achieve zero discharge of hazardous chemicals by 2020. The
group issued a joint roadmap outlining its strategy, as well as a
call for other companies to join them and for NGOs, academics,
policy makers and issue experts to provide input to the process.
performAnCe
employees
VISION: COMPANIES WILL MAKE SUSTAINABILITY CONSIDERATIONS
A CORE PART OF RECRUITMENT, COMPENSATION, AND TRAINING,
AND WILL ENCOURAGE SUSTAINABLE LIFESTYLE CHOICES.
Employeescanbeanunder-utilizedresourceinacompanys
developmentandimplementationofsustainabilityprograms
andstrategies.Employeesshouldbeawareofacompanys
sustainabilitypositionandgoalsandshouldbeseenaspartners
andinnovators,proactivelynurturedforideasandfeedback.To
encourageemployeeengagement,sustainabilitymustbecome
partofthecompanysculture,withaclearcommitmentembraced
acrosstheenterprisefromtheboardroomtothecopyroomand
throughthesupplychain.
Forthisexpectationall600companieswereevaluatedfor
employeesustainabilitytraining,supportandengagement.
AlthoughtheRoadmap hasthreespecificexpectationsfor
employees,inthisreportwewereonlyabletoaccessdataforone:
trainingandsupport.Additionalanalysisofthenineprioritysectors,
canbefoundinthewebreportatwww.ceres.org/roadto2020.
45
performAnCe
trAining And support
Companies will develop and implement formal training on key sustainability issues for all executives
and employees, and facilitate coaching, mentoring and networks for sustainability knowledge sharing.
employee training & Support

419
number of Companies
The eight percent of companies

(47) are included in Tiers 1
and 2 for maintaining specific
programs that integrate
sustainability into the overall
company culture, such as
formal sustainability training
for employees and mechanisms
for the collaborative solicitation
of feedback and ideas.
400
200
134
31
tier 4
Starting Out
Robustemployeeengagementandbuy-incanacceleratea
sustainabilitystrategywhileimprovingmorale,recruitment,
retentionandproductivity.Forthisexpectationweevaluatedhow
companiesintegratedsustainabilityintocompanycultureand
assessedinitiativestoengageandeducateemployeeson
relevanttopics.Specificprogramsmayincludeformaltraining,
integrationintoorientationandprofessionaldevelopment,
strategicemployeeengagementandfeedbackmechanisms,
internalemployeecommunication,andtheformationof
employee-ledcommittees,workinggroupsandgreenteams.
Thirtypercentofthe600companieshavesomesustainability
orientedemployeeengagementactivitiesinplace,withtheeight
percent(47)ofcompaniesincludedinTiers1and2maintaining
specificprogramsthatintegratesustainabilityintotheoverall
companyculture,suchasformalsustainabilitytrainingfor
employeesandmechanismsforthecollaborativesolicitation
offeedbackandideas.
Whilemanycompanieshaveinternalnewslettersorintranetsthat
conveysustainabilityinformation,othersgofurtherbyoffering
regulartrainingandeducationprograms,workinggroupsand
formalemployeecommittees.Wells Fargo has40GreenTeams
acrossitsU.S.operationsandthecompanyhasextendedits
employeeengagementprogramstoincluderetailemployees.
SustainabilityAgentsarelocallydesignatedtosupportthe
educationofotheremployeesonWellsFargossustainability
initiativesandtoaddressrelatedcustomerquestions.
tier 3:
tier 1
tier 2
Performance tier
Toencourageemployeestoembedcitizenshipintotheirdaily
actions,The Walt Disney Company hostsanannualtwo-day
EnvironmentalSummitforglobalemployees,bringingtogether
leadersfromacrossthecompanytoshareleadingpracticesfor
environmentalprojects,networkandcreateopportunitiesfor
innovativethinking.Campbell Soup ispushingtoachieve100
percentemployeeengagementinCSRandsustainabilityissuesby
2020.ThecompanyrequiresthateveryemployeehaveaCSRorientedgoalintheirannualperformanceobjectives.Campbell
measuresprogressannuallyandin2010thecompanyhadan
employeeengagementratioof23:1(engagedtodisengaged
employees).Thislevelofcompany-wideengagementencourages
employeestotakesustainabilitygoalsseriously,fosteringinnovation.
Acompanyssustainabilityagendaalsoinfluencesrecruitment.
SomesectorsincludingAutos&Transportation,Oil&Gasand
Utilitiesarebeingchallengedtoadapttoachangingenergy
economywithanincreasinglyinsufficientsupplyofskilledworkers.
Targetedrecruitmentprogramsthatcommunicateacompanys
sustainabilityagendacanbeveryhelpfulinrecruitingthebestand
thebrightest,includingthosewithhighlyspecializedskillsinclean
technology,sustainabledesignorenvironmentalengineering.Over
thepastfiveyearsFord Motor Company hasdoubledthenumber
ofemployeesworkingonitsfuelsavingtechnologies.The
companynowhasmorethan1000engineersworkingonhybrid
andelectrificationprogramsandannouncedthatin2012it
wouldbetriplingproductioncapacityofitshybrid,plug-inhybrid
andelectricvehiclesintheU.S.comparedwith2011.23
23 Szczesny,Joseph.Fordhiringmoreengineerstofocusonbetterfueleconomy.TheOaklandPress.28March2012.Retrievedfrom
http://www.theoaklandpress.com/articles/2012/03/28/news/local_news/doc4f7339250fefc960990154.txt?viewmode=fullstory onApril16,2012.
46
16
ConClusion
tAke ACtion
it has been two years since the release of the roadmap and this report provides a sense of where we are now,
highlighting what needs to be done to accelerate progress as we move towards 2020.
Thefindingsofthisreportshouldinspirecompaniestoexamine
theirownprogressandidentifywheretheystandonthepathto
sustainability.
if theyve taken steps towards sustainability, are their efforts

translating into results?
if they are well on the road to sustainability, what else can
they do to drive their sustainability leadership?
and if they are still at the starting line, what are they waiting for?
Investorscanusethereportfindingstogainadeeper
understandingofhowcompaniesareaddressingenvironmental,
socialandgovernancerisksandopportunities.Thefindings
makeiteasyforinvestorstoseewherecompaniesstandand
examinewherethereisleadershipandwherethereare
opportunitiesforengagement.
Mostimportantly,TheRoadto2020reaffirmsthecompelling
casefordeeper,morecomprehensivebusinessactionon
sustainability.Thetimetogetstartedisnow.
We invite both companies and investors to explore the interactive

data and online resources found in the web report at
www.ceres.org/roadto2020.
47
Ceres
99 Chauncy Street
Boston, MA 02111
T: 617-247-0700
F: 617-267-5400
www.ceres.org
Sustainalytics
24 School St., Suite 803
Boston, MA 02108
T: 617-248-0899
www.sustainalytics.com
www.ceres.org/roadto2020
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the roAd to 2020:

A joint report by Ceres And sustAinAlytiCs

Ceres and Sustainalytics would like to acknowledge the following

From Ceres: AndreaMoffat,KristenLang,PeytonFleming,

for more informAtion, ContACt:

Full report: www.ceres.org/roadto2020

GOVERNANCE FOR SUSTAINABILITY

roAd to 2020: foreword

letter from Ceres & sustAinAlytiCs

VIEW THE FULL REPORT ONLINE

the Ceres roAdmAp for sustAinAbility

In2010,CeresreleasedThe 21st Century Corporation: The

summAry of key findings

Nearly half of the companies

Among four particularly

Only 13 percent (80

Nearly half43 percent or

indicators & Weights

Controversy assessment Process

data Collection frequency and Process

Quality Control Process

food & beverage

footwear & Apparel

oil & gas producers

Policy on Bribery and Corruption

Whistle Blower Programs

Signatory to UN Global Compact

Signatory to the UN Principles

Financial Services; Banks & Insurers;

Equator Principles and Related Reporting

Financial Services; Banks & Insurers

Formal Environmental Policy

Environmental Management System

Formal Policy on Freedom of Association

Formal Policy on Elimination

Formal Policy on Working Conditions

Autos & Transportation; Footwear & Apparel;

Formal Policy on Human Rights

Oil & Gas Producers; Energy Services &

External Certification of EMS

sustainalytics indicator name

Board oversight of ESG Issues

Executive management oversight

Corporate policies &

vehicles for disclosure

verification & Assurance External Verification of CSR Reporting

summary of priority sector Coverage

whAt we meAsured: indiCAtor mApping

summary of indicator Coverage

footwear & Apparel

oil & gas producers

facilities & buildings

food & beverage

Autos & transportation

summary of priority sector Coverage

Scope of Corporate Reporting

Carbon Intensity Trend

% Primary Energy Use from Renewables

Carbon Intensity of Energy Mix

Programs & Targets to Increase

Programs & Targets to Reduce Water Use

Financial Services; Food & Beverage; Footwear

Formal Policy on Freedom of Association

From Ceres: AndreaMoffat,KristenLang,PeytonFleming,

In2010,CeresreleasedThe 21st Century Corporation: The

products and services, andemployee engagement.The