Measuring ROIThe New Metrics of Sustainable Business Conference

9.27.2012

OVERVIEW OF BECKER UNDERWOOD

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OVERVIEW AND KEY FACTS

o Privately-held multinational agricultural company

o Manufacturer and marketer of biologicals and specialty products

o Majority of revenue derived from niche markets

o Acquired by Norwest Equity Partners in August of 2004

o Grew every year since its founding in 1982

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GEOGRAPHIC FOOTPRINT

12 locations in eight countries

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• Ames, IA, US (2)• St. Joseph, MO, US• Caldwell, ID, US • Saskatoon, Canada

• Toulouse, France• Somersby, Australia• Curitiba, Brazil• Littlehampton, UK

• Buenos Aires, Argentina• Santo Tomé, Argentina• Durban, South Africa

Product Families

Inoculants

Seed Coatings

Landscape Colorants and Coatings

ORGANIZATION AND BUSINESS UNITS

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Turf and Specialties

Biological Crop Protection

Livestock Management Products

OUR APPROACH TO SUSTAINABLE DEVELOPMENT

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o NET positive™

o All businesses have positive and negative impacts on the environment and society through their policies, products and processes.

OUR APPROACH TO SUSTAINABLE DEVELOPMENT

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Leaving a positive legacy now and in the future through our products, people and practices.

WHY NET POSITIVE?o A strategic approach that pays as much attention to

enhancing the positive impacts of an organization’s contribution to society as it does to reducing the negative impacts of its activity

o How we account for and measure these positive and negative impacts is a key question that the NET positive initiative aims to address

o 7 prioritieso Energy

o Water

o Waste

o Transport

o Supply Chain

o Employment, Education, Health & Safety

o Sustainable Product Design

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o Commissioned study with Trucost to analyze carbon and water footprint of our supply chain and facilities within the remit of our NET positive framework

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ENVIRONMENTAL PROFIT & LOSS ACCOUNT

TOTAL GHGS AND WATER ANALYZED

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Only 13% of the total GHGs analyzed are directly associated with our operations.

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TOTAL GHGS AND WATER ANALYZED

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WATER ABSTRACTION

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WATER ABSTRACTION

The top 10 suppliers contribute to 47% of the total footprint.

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CARBON HOT SPOT FOOTPRINT

Identifies suppliers and sectors that are carbon intensive relative to a benchmark.

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KEY FINDINGS

The single sector that contributes the most carbon to the supply chain is:

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COMPARATIVE ANALYSIS - GHGS

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COMPARATIVE ANALYSIS - WATER

Integration of Environmental Impact Risk

1,000

500

250

100

50Unlikely Likely Very likely

Expe

cted

impa

ct (

Billi

on U

SD)

Likelihood over next 10 years

Climate change

Flooding

Storms and cyclones

Air pollution

Water security

Biodiversity loss

Source: World Economic Forum Global Risks Report (2009 – 2011)

Natural capital risks are a growing concern amongst global experts

2011Natural capital risks2009

EP&L Approach

• Engaged strategic suppliers

• Collected supplier specific data

• Established locations of raw material flows

Quantification of E KPIs

Engagement and data collection

Refine E KPIs Valuation E P&L

• Calculated supply chain impacts back to raw materials

• Over €1bn expenditure analysed

• Refined calculations of supply chain impacts

•Operational E KPI data added

• GHG and water consumption valuation coefficients derived

• GHG emissions and water use valued in economic terms

(E KPIs) x (GHG & Water Valuation) = E P&L

Ecosystem Valuation Considerations

Air Pollution

Approach: Calculating Externalities

Water Use: Calculating valueExtensive literature review to obtain estimates from 40 studies of the direct and indirect use values of water under the total economic value (TEV) framework.

Water-use externality is represented as the reduction in the indirect use values (e.g. via hydrological functions, ecosystem maintenance, water nutrient cycling) of water accruing to third parties as result of water use in a company’s own operations and supply chain.

Baseline mean estimate of the indirect use marginal value across studies

Water Use: Transferring valueIndirect use values from available studies were plotted against scarcity in different areas to derive a value function based off the relationship between scarcity and value.

The relationship derived is calibrated to the valuation obtained from the literature to transfer values across locations in the company’s own operations and supply chain.

Approach: Scarcity and Value

Iran

Pakistan

Taiwan

United Arab Emirates

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

0% 20% 40% 60% 80% 100%

Valu

e (€

/m3 )

Scarcity – Withdrawal as a % of actual renewable water resources

EP&L Example

Materiality Analysis

Natural Capital Assessment

Key Benefits:

A management tool to identify and minimise where the greatest negative environmental impact is occurring and maximise the positive environmental benefit on an on-going basis.

To demonstrate in a robust and scientific way the environmental benefits of products both now and in the dynamics of a more resource constrained world.

To accurately understand the environmental performance of products in financial terms.

To understand risk to supply chain operations from natural resource dependency (including water dependency in relation to scarcity).

To project the likely benefits of different business model configurations/ sustainability strategies.

To inform future sourcing and business strategy.

To understand your impact on ecosystem services and provide a single environmental performance indicator that can be tracked and reported against.

THANK YOU. QUESTIONS?

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