John Mizroch President & CEO World Environment Center The WEC Greening the Supply Chain Initiative John Mizroch President & CEO World Environment Center Madrid, Spain Madrid, Spain March 17, 2004

World Environment Center Programs The WEC Strategic Planning Committee report has identified 3 core programs through which the Center should support its Mission:  International Environment Forum (IEF)  WEC Gold Medal Award (GMA)  Capacity Building for the Environment (CBE)

Capacity Building for the Environment (CBE) Program  CBE Programs must incorporate IEF member companies  The Greening the Supply Chain Initiative is the first major capacity building program that the Center has chosen to undertake

Greening the Supply Chain Initiative What Is the Project? To promote the adoption of Cleaner Production practices among Small and Medium Sized Enterprises (SMEs) that supply major multinationals in developing countries

What Does Cleaner Production Encompass?  Energy Efficiency  Water Conservation  Reduction in Materials Usage  Toxic Materials Substitution  Reduction in Waste Generation and Disposal

Evolution of CSR Cleaner Production (CP) > Environmental Management Systems (EMS) > Corporate Social Responsibility (CSR)

CP Investment in Developing Countries  The 1992 Rio Summit provided impetus for the use of Cleaner Production as a strategy for implementing sustainable development objectives.  In the 1990s, public institutions, including USAID, UNIDO, and the Swiss Government, spent hundred of millions of dollars to establish Cleaner Production Centers (CPCs) in developing countries.  These CPCs represent existing, albeit underutilized, resources that can assist with project implementation.

Some Key Statistics  It is estimated that the 100 largest multinational corporations in Mexico, together with their first, second, and third tier suppliers account for more than 70% of all industrial production for export.  13 countries in the developing world account for 90% of all developing country exports.

Value of the Project Participating companies can have a major impact on the environment in terms of reduced energy and water consumption, toxic materials usage, waste generation, and waste disposal. This can be accomplished by undertaking this initiative in 13 key developing countries in which IEF member companies have a major presence.

Greening the Supply Chain Initiative Purpose Create 4 – 6 Successful Pilots in order to:  Get companies to adopt the program  Get companies to implement similar measures throughout their global operations  Get participating companies to assume a global leadership role

The Partnership World Environment Center Governments and International Organizations Multinational Corporations Technical and Academic Institutes

Pilot Programs Mexico  Johnson & Johnson  Alcoa Brazil  Dow Chemical  Johnson & Johnson China  General Motors  Other companies have expressed interest

The WEC Greening the Supply Chain Process Step 1: Gain commitment from corporate EH&S director Step 2: Gain commitment from management at local subsidiary Step 3: Work with local EH&S manager to establish program objectives, process, and activities Step 4: Develop local plant’s environmental policy and requirements for suppliers Step 5: Hold initial planning meetings with plant managers and prospective suppliers Step 6: Suppliers return signed agreements to local plant Step 7: Hold two-day Cleaner Production training workshop for participating suppliers Step 8: One-day follow up visits to participating suppliers by Cleaner Production experts Step 9: Participating suppliers assess their businesses for key Cleaner Production opportunities Step 10: Participating suppliers set goals and targets, and prepare action plans Step 11: Hold meeting for participating suppliers to present results to date Step 12: Ongoing implementation of action plans by suppliers, with monitoring and documentation by WEC and corporate partners

Examples of Supplier Projects Currently Underway An aluminum container manufacturer is working to reduce levels of enamel and varnish needed to coat the interior surface of its aluminum containers. A manufacturer of printed folding boxes is working to reduce waste by establishing optimal workflow processes in each stage of production.

Examples of Supplier Projects Currently Underway - 2 A printer of pharmaceutical product information booklets is studying ways to reduce its consumption of electricity. A packaging material supplier is working to develop an internal process for treating wastewater from copper and chrome electrolytic baths in its metal coating area.

Key Findings Expediency: Pilot projects can demonstrate quick results. Flexibility: Participating multinationals work with the project partners to design a program tailored to their corporate culture and operational requirements. Replicability: Once success is demonstrated, participating companies can adopt these programs and incorporate them into existing supplier relationships and business requirements.