The power of working together

Sector projectsWBCSD

issues

stakeholders

impact

performance

sustainable development

practices

perception

innovation

accountability

environment

social

global

change*

grow

trust

4, chemin de Conches Tel: (41 22) 839 31 00 E-mail: info@wbcsd.orgCH-1231 Conches-Geneva Fax: (41 22) 839 31 31 Web: www.wbcsd.orgSwitzerland

Contents

2 Foreword

4 What are sector projects?

5 The process

6 Forest Products

10 Mining and Minerals

14 Cement Sustainability Initiative

18 Sustainable Mobility

22 Electricity Utilities

26 Tires

27 The Future

2

Sector projects are a unique feature of the work of theWBCSD. They are voluntary initiatives demonstrating thepower of partnership and the commitment of companiesto work with others to manage some of the most difficultdilemmas in their industries. They are practical initiatives,rooted in independent research, to work out how criticalindustries can meet sustainability challenges.

The aim of each of the projects is to confront the keyglobal sustainable development issues facing the industry,adopting a participatory approach to developing solutionsbroadly supported by stakeholders. Several of these projectshave successfully tackled fundamental issues that havedivided stakeholders for years. This is essential, becausestakeholder acceptance is fundamental to industrymaintaining its license to operate, innovate and grow andachieving a stable environment for long-term investment.

It is clear from the outset of each of the projects that thepurpose is not merely to identify issues and challengesfaced by a particular sector, but to change industrypractices and policies to make them more sustainable. It is what business does in response to the independentresearch and stakeholder consultations that has thebiggest impact on trust and reputation.

For example, the Sustainable Cement Initiative haschanged the ways in which a large segment of the

industry measures, manages and reports on carbondioxide and other emissions, fuels and raw materials use,employee health and safety, and the local impacts ofoperations. The initiation of the cement project was drivenby the recognition that the cement industry did not have adefined position on sustainable development. This industryhad received little public attention; however, it would onlybe a matter of time before people started taking notice of itsactivities. The project was an opportunity to preemptcriticism, and has since focused on helping the cementindustry play a full role in a more sustainable future andproviding the industry with tools to make this happen.

The Sustainable Forest Products Industry project was thefirst sector project adopted by the WBCSD, in 1994. Withlarge-scale, global operations, and heavy reliance onnatural resources, the paper industry was heavily criticizedprior to the establishment of the project. Many in theindustry responded by defending standard practices.Organized by the then CEO of Aracruz, Erling Lorentzen,leading companies decided to distinguish themselves fromthe rest of the industry by identifying and implementingbest practices. The project has since moved on from itsoriginal focus on paper to define how commercial forestsand forest products can continuously improvesustainability performance, and to build partnerships thathelp protect the vast areas of forests not used forcommercial purposes.

Foreword

3

The driving force behind the initiation of the miningproject was the realization by a small group of CEOs fromthe largest mining companies that there was a growingtrust deficit between the companies and society. Despitesignificant efforts by individual companies and parts of theindustry to cope with this, the gap was growing. Theyrealized that a more organized, collective approach wasneeded to address perceptions, to create the rightframeworks for further contribution, and in general tostrengthen the business license to operate.

Each of the projects goes well beyond the normal confinesof industry initiatives in addressing the three pillars ofsustainable development in an integrated way. Thecompanies involved represent a broad spectrum of thevalue chain rather than a particular interest group. And wehave deliberately sought external inputs to ensure thatproposals developed by these projects are not seen as“industry solutions” only.

For each project, the industries face difficult challenges inmeeting economic, social and environmental demands.Our members believe that the credible platform offered bythe WBCSD can help to examine how these intractableissues can be dealt with while maintaining viableindustries. We have a reputation for high-quality,unimpeachable work and a broad membership base forthe projects to work with and communicate to. Members

see us as the right organization for such projects,discounting sectoral organizations as being too narrow.

The importance of openness and engagement is the mainlesson we have learned from these projects. We have alsolearned that business leaders are prepared to investsubstantial amounts of resources, both financial andhuman, including their own time, when presented with abusiness case for addressing even the toughest issues in asector-wide approach.

While individual businesses can do much in pursuit ofsustainability, these groundbreaking projects demonstratethe power of joint endeavors and the immensecommitment of businesses to work in partnership towardsustainable development. They demonstrate thatsustainable development is too big for individualcompanies to tackle on their own.

Björn StigsonPresidentWorld Business Council forSustainable Development

4

Sector Projects cover specific industry sectors under the WBCSD brand. They aremanaged and funded by the participating members and other parties. TheWBCSD supports them in various ways and connects the projects to otherWBCSD activities.

They are voluntary initiatives, but they can support governmental obligations inaddressing sustainable development issues. All the projects are established withspecific outcomes in a given timeframe, and with committed funds fromindustry and other sources.

The sector projects harness independent research and stakeholder consultationsto see how a particular industry can better align its practices and policies withthe requirements of sustainability. The purpose is not merely to identify issuesand challenges, but to change industry practices and policies to make themmore sustainable. Stakeholder-related activities aim to enhance the legitimacy ofthe respective sector’s actions to promote sustainable development.

The paper industry was the first sector to adopt this approach, in 1994. Miningand minerals, cement and mobility followed in 1999 and 2000. Electricityutilities launched a project in 2001 and tires followed in late 2005.

In undertaking these projects, the sectors are trying to understand whatsustainable development means for the industry all over the world and frommany different viewpoints. The process therefore includes extensive stakeholderdialogue so that many different voices are heard. It relies on research fromrespected, independent organizations and involves a group of eminentauthorities to validate the research process and conclusions.

The WBCSD’s approach to sector projects is flexible enough to be adapted tothe needs and circumstances of the members and the position of the industryconcerned.

Demonstrating the business case is central to the project’s work. It is the anchorthat keeps the project focused on linking business and sustainable development.By demonstrating their case, companies active in a sector project can gain buy-in from the sector at large, increase public trust and enhance their licenseto operate, innovate and grow.

Partnership is also essential to the process. The challenges posed by sustainabledevelopment are often too big for a single company to handle on its own. Bybringing together competitors and other companies in an industry, as well asother stakeholders, such as government and other institutions, it is easier toidentify ways to move toward sustainability.

Accountability is also intrinsic to the approach, demonstrated by the presence ofindependent, expert assurance groups and public access to their work onproject websites.

All these projects operate on a global scale, developing targets and indicatorsthat can be used to measure each sector’s progress toward sustainability. Theworking groups include companies from many continents and from bothdeveloped and developing economies. The findings are relevant to sustainabledevelopment in all regions and all stages of economic development.

What are sector projects?

5

The processThe working group

The working group, consisting ofseveral WBCSD member companies,provides core finance for theproject, drives the process andensures objectives are achieved. It isresponsible for recruiting additionalcorporate support, if necessary, forhiring a research organization toprovide external input, and forappointing an independentassurance group.

Stakeholder dialogues

Dialogues are common to allprojects, but each project developsits own specific approach andprogram. The objective is to listento and learn more aboutstakeholder views and to sharemembers’ thinking in a forumexploring complex issues andaddressing conflicts and priorities.

Stakeholders include governments,NGOs, business representatives,local civil society organizations,academics and other researchers, as well as individuals who do notbelong to or represent any formalorganization. Facilitated dialogueshave been held on all continents,involving hundreds of people.

Research

The analytical work supporting theproject is contracted out to anindependent organization, assistedby substantial funds fromparticipants in the working groupand other sources. The researchbody has full responsibility for theanalysis and for stakeholderconsultation. The researchorganization holds the right topublish the results of its work inwhatever form it wishes, althoughcopyright is held jointly by theWBCSD and the researchers.

Sponsor group

To widen the circle on which theproject can draw, funding and otherresources may be brought in fromdifferent sources. A sponsor groupcould include other companies fromthe sector and its suppliers orcustomers, who may or may not beWBCSD members. Organizationssuch as governments, the WorldBank, universities, and NGOs havealso been involved.

Assurance group

Most projects have an assurancegroup to guarantee the neutrality andvalidity of the findings. The membersof this group are eminent peoplefrom around the world who havebuilt a reputation in the field ofsustainable development. They maybe academics, former politicians, orheads of NGOs or other organizations.

There may be just half a dozenmembers or as many as 25. Thegroup acts as a kind of referee andmeets often, including with the CEOsof working group companies. It maybrandish a “yellow card” if it feels theproject is heading in the wrongdirection or missing important issuesor angles. The assurance group canask the working group to change anyaspect of the project, from the designof the initial research to the framingof the conclusions.

The WBCSD

The WBCSD provides the process,quality control and outreachcompetency for these projects. Itoffers a credible, neutral platformfor companies in an industry sectorto jointly investigate sustainabilitychallenges. It coordinates the workprogram, ensuring quality controlthroughout. The WBCSD alsomarkets and disseminates theoutput of these projects, generatingmomentum for change in policyand behavior across whole industrysectors.

ResearchSponsorgroup

Assurancegroup

Stakeholderdialogues

Report

Industryactionplan

WBCSD

6

Forest Products Industry

Forests cover 30% of the world’s total land area and are powerful symbols ofnature and biodiversity, providing a range of goods and services that meeteveryday and essential needs. The annual global harvest stands at around 3.35billion cubic meters, split evenly between fuel wood for cooking and heatingand industrial fiber for wood and paper production. Annual production isworth about US$ 750 billion.

A pulp and paper sector project began the tradition of sectoral initiatives in theWBCSD when, in 1994, a group of forest companies commissioned a study onhow to make the paper cycle more sustainable by assessing the role of the pulpand paper industry worldwide.

In 1996 the group published Towards a Sustainable Paper Cycle. Following itsrelease, an ongoing Sustainable Forest Products Industry (SFPI) working groupwas established to look at the forest industry in a more holistic way.

The main goal is to earn, retain and expand the forest industry’s license tooperate, innovate, develop and market forest products by addressing criticalissues associated with sustainable forest management, wood sourcing, energy,carbon emissions and sequestration.

Through participation in multi-stakeholder engagement processes, thisproject aims to:

• Build stakeholder consensus on the application of intensely managedplanted forests as a sustainability strategy, and on criteria and indicators offorests for conservation;

• Encourage the credible use of multiple forest certification systems to verifysustainability and expand the market for third party certified forest products;

• Work to improve forest law enforcement and governance to combat illegal

sourcing, harvesting and trade offorest products;

• Improve understanding betweenindustry and environment NGOson key sustainable forestmanagement issues and catalyzejoint action when practical;

• Provide guidance for majorbusiness-to-business customerson tools to assist in theresponsible procurement of forestproducts;

• Enhance the industry’s role inreducing greenhouse gasemissions via carbonsequestration, carbon storage inproducts and the supply ofrenewable, carbon neutralbiomass energy.

Sustainable

7

ChallengesLeading sustainable development challenges facing the sector and stakeholdersinclude:

• Demand for its goods and services is expanding due to population growth,industrial development and rising living standards;

• Global forest processes and policies are fragmented, problematic and notfocused on the primary causes of deforestation, which are poverty (i.e.,wood fuel needs), agricultural development (food needs) and urbanization;

• Industry sources much of its wood fiber from small private landowners orstate-owned forests, which means it has only indirect influence on forestmanagement regimes;

• Stakeholder relations have historically been weak, and while there has beenimprovement, relationships remain variable;

• No fully functional markets exist for forest ecosystems – such as watershedand biodiversity – which influences forest management options;

• The industry faces intense competition from non-wood substitute products,which often exploit the industry’s perceived weak sustainability performance.

The business caseThe SFPI group believes that sustainable economic growth requires sustainableforest management and eco-efficient industrial performance based oninnovation and technological development. Further benefits of pursuingsustainability in the forest products sector include:

• Giving business an opportunity to demonstrate the long-term sustainabilityof a sector based on renewable natural resources;

cycle

• Reversing the substitution of forestproducts by non-renewable,energy-intensive, non-woodalternatives that erode theachievement of sustainabledevelopment outcomes in theforestry sector;

• Enhancing company marketingand communications – as well asindustry positioning – based onthird-party forest certification andsustainability reporting againstappropriate targets and standardsdeveloped through a multi-stakeholder dialogue processes;

• The wider adoption of sustainableforest management approachesresulting in more productiveforests, creating multipleopportunities for a wide variety ofusers and stakeholders;

• Enhancing product innovationand market development, such asthe sector’s expanding role in therenewable energy sector.

Vision: To lead business innovation insustainable forest management andsustainable production, use and reuse offorest products to meet the needs oftoday’s world population for wood andpaper products, renewable energy,ecosystem services and livelihoods, andthose of an expected nine billon peoplein 2050.

1994

Forest companies ledby Aracruz Celuloseand UPM-Kymmeneinitiate a studyexamining the papercycle, from fellingtrees to final disposal

1996

Publication ofTowards a SustainablePaper Cycle

1997

An on-going workinggroup wasestablished in theWBCSD to deal with arange of globalforestry issues,including mutualrecognition ofcertification systemsand conservation offorest resources

2000

The World ResourcesInstitute, the WorldWide Fund for Natureand the SFPI groupconvene The ForestsDialogue (TFD)

2002

Sustainable ForestProducts Industry(SFPI) working groupexpanded to 14members, up from 5original

OutcomesSince its establishment in 2000, The Forests Dialogue (TFD) has provided arobust platform for business and NGO stakeholders to build consensus oncritical sustainability challenges. Dialogue processes have been launched onillegal logging, forest certification, intensively managed planted forests, forestsand biodiversity and commercial forestry and poverty alleviation.

Over the past 10 years the forest industry has become an active participant inenhancing environmental performance. In addition companies have greatlyimproved stakeholder engagement, energy efficiency and the creation anddevelopment of recycling programs.

Significant expansion in the independent certification of forests for sustainablemanagement is also evident with around 5% of the world’s forests (over 200million hectares) now certified, accounting for an estimated 18% of industrialproduction (nearly 600 million cubic meters p.a.) – with both trends increasingrapidly, especially in developed countries with good forest managementpractices.

Moving forwardThe project continues to seek ways to sustainably manage forests to meet theneeds of consumers and communities. As individual global companies,collectively and in partnership with other groups, we will:

• Continue to support The Forests Dialogue multi-stakeholder process;

• Encourage the use of credibleforest certification systems;

• Help develop appropriatesustainability report parametersand investment guidelines for theindustry;

• Proactively turn climate changeand carbon challenges from abusiness constraint to anopportunity;

• Enhance the developmentcontribution of the industry’sfuture investments in developingcountries;

• Develop and communicate avision for the Sustainable ForestProducts Industry.

Key publications

8

Towards a Sustainable PaperCycle

1996

Following up on Towards aSustainable Paper Cycle

2004

The Sustainable ForestProducts Industry, Carbonand Climate Change – KeyMessages for Policy-Makers2005

9

2003

TFD fully operation withdialogue priorities set fornext 3 years and business &NGO funding mechanism inplace.The WBCSD signs acollaborative frameworkagreement with WWFInternational to undertakejoints efforts to improvesustainable forestmanagement outcomes

2004

Towards a Sustainable PaperCycle progress report byIIED issued

Joint statement with WWFInternational on ForestCertification released

2005

WBCSD signs MOU with theWorld Conservation Union(IUCN) to enhance collaborationon sustainable forestry issues

Joint statement with WWFInternational on combatingillegal logging & trade released

Key messages for Policy-Makers and Negotiatorspublication with NCASIreleased at COP 11 ofUNFCCC

2006

Joint publication with theWorld Resources Institute onthe responsibleprocurement of forestproducts underdevelopment (for Decemberrelease)

SFPI Membership Principles& Responsibilitiesdeveloped

More informationwww.wbcsd.org/web/forestryProject members

Project co-chairs

MeadWestvaco, Stora Enso

Working group members

Aracruz Celulose, Grupo Portucel Soporcel, International Paper, Metsäliitto,Mondi International, Nippon Paper, Norske Skog, Oji Paper, SAPPI, Siam Pulp,UPM, Weyerhaeuser

(SFPI members account for about 40% of total global sales in the forest andpaper industry.)

Associate members

Caterpillar, Global Forest Partners, Kimberly-Clark, Procter & Gamble, Time, Inc.

Observers

The Forests Dialogue (TFD) at Yale University, International Council of Forest &Paper Associations (ICFPA), National Council of Air and Stream Improvement(NCASI)

MiningMinerals and Sustainable Development

The mining and minerals sector is global, but has intense local impacts. It isalso diverse - ranging across 90 mined substances later transformed intomillions of products - and it is vital for many developing economies. Today,over 30 million people are directly employed by the mining sector, and 34countries rely on minerals for at least one-quarter of all their exports.

In recent years, the industry has faced a wide range of serious sustainabilityissues, from concerns over labor practices and human rights to theenvironmental impacts of extraction, processing and waste. Due to the intenselocal impacts of mines and related operations, nine leading mining companiescreated Mining, Minerals and Sustainable Development (MMSD) as a WBCSDproject to better understand the sustainability challenges facing their sector.MMSD contracted the International Institute for Environment and Development(IIED) to undertake a process of independent research and consultation.

The final MMSD report, Breaking New Ground: Mining, Minerals, and SustainableDevelopment, includes an agenda for change and outlines nine key sustainabledevelopment opportunities for the sector:

1. Ensuring the long-term viability of the minerals industry;

2. Land control, use and management;

3. Using minerals to assist with economic development;

4. Making a positive impact on local communities;

5. Managing the environmental impact of mines;

6. Integrating the approach to using minerals so as to reduce waste andinefficiency;

7. Giving stakeholders access to information to build trust and cooperation;

8. Managing the relationshipbetween large companies andsmall-scale mining;

9. Sector governance: clearlydefining the roles, responsibilities,and instruments for changeexpected of all stakeholders.

The report recommends the creationof clear spheres of responsibility forcompanies, NGOs, indigenouspeople, labor and commercialplayers. It also advises firms todevelop consistent reportingguidelines to ensure that key aspectsof company practices andperformance are publicly reportedand verified.

10

11

Vision: To understand how the mining andminerals sector can contribute to the globaltransition to sustainable development.

harmony

ChallengesThe key sustainability challenge is to develop the sector in ways that helpemerging economies without harming their people, and contribute to globaldevelopment while minimizing environmental degradation. To address thischallenge, companies must consider:

• Embedding sustainable development in the thinking of the companies bylinking best practice to financial success;

• Avoiding conflict with other land uses by obtaining prior informed consentfrom local communities, particularly where there is conflict between thestate, indigenous groups and the company;

• Facing the expensive legacy of abandoned mines and sites that have to berehabilitated with no obvious way to pay the bill as prices are in continuousdecline;

• Finding better ways to manage the wealth generated from miningoperations, including the allocation of wealth between the investor, thehost government and the local community;

• Creating and enforcing the governmental frameworks needed to reduce theopportunities for free riders and stimulate a “race to the top”.

The Business caseBreaking New Ground, the report that culminated two years of extensiveresearch, argues that one of the nine key challenges faced by the mining andminerals industry is to link sustainable development to financial success. Someof the advantages of the sustainable development approach in the miningsector include:

• When companies demonstrate a commitment to sustainable development,their employees tend to have higher morale and be more productive andinnovative;

• Reducing local poverty increasesoverall worker morale andproductivity;

• Cleaner production methodsoften lead to cost savings;

• Lower operational risks improveaccess to lenders and insurers;

• Life-cycle planning means less by-product and therefore lower post-closure costs;

• A sustainable developmentapproach increases reputationand market advantage by giving acompany the legitimacy tooperate in new and existingmarkets.

12

1999

Mining companies approach the WBCSD to create Mining,minerals & sustainable development (MMSD). The Councilcontracts the International Institute for Environment andDevelopment (IIED) to undertake a process of independentresearch and consultation

2000

The United Nations Environment Programme (UNEP)creates the Minerals Resources Forum, an online platformfor dialogue, research and news about sustainable miningefforts

OutcomesBecause of its extremely diverse scope and enormous size, the mining sectorhas only recently begun concerted group efforts to deal with sustainabilityissues. The MMSD report Breaking New Ground was one of the first efforts bythe mining industry to produce a unified view of these issues. The membercompanies created the International Council on Mining and Metals (ICMM) toimplement the findings of this report.

Moving forwardThe ICMM is following up on a number of recommendations and is leadingefforts to improve the global sustainable development performance of themining, minerals and metals industry. It now has the lead in implementing theproject recommendations for the industry, and its work plan includes apartnership with the World Conservation Union on biodiversity issues, theWorld Bank on community concerns, and ongoing research support from IIED.

In 2006 it looked at the effects of mining in four developing countries oneconomic growth and poverty rates. In 2007, the WBCSD and ICMM will assessthe implementation of the project’s recommendations, five years after thelaunch.

Key publications

Breaking New Ground:Mining, Minerals &Sustainable Development2002

MMSD Regional Reports

Australia

North America

South America

Southern Africa

2002

Finding the Way Forward -How Could Voluntary ActionMove Mining TowardsSustainable Development?2003

13

2001

The International Council on Mining and Metals (ICMM) isformed to provide leadership for improving the globalsustainable development performance of the industry

2004

Release of the MMSD final report Breaking New Ground:Mining, minerals & sustainable development

More informationwww.iied.org/mmsdProject members

Anglo American, BHP Billiton, Codelco, Newmont Mining, Noranda, PhelpsDodge, Placer Dome, Rio Tinto, WMC

14

CementSustainability Initiative

Cement is the glue that literally holds society’s infrastructure together, whetherit is an individual home in Mexico, or a 5th runway at Heathrow. Concrete isthe most widely used material on earth apart from water, with nearly threemetric tons used annually for each man, woman and child on the planet. Themost rapid market growth for cement today is in developing markets.

Making cement creates a range of sustainability issues. Dust and noise fromcement plants and quarries are specific local issues. More broadly, the fuels andraw materials used in the manufacturing process generate greenhouse gasesand sometimes controversy. Land used for quarries must be restored to helpretain landscape and local biodiversity. However, cement manufacturing canalso help recover by-products from other industries; some by-products andrenewable fuels may be used to fuel kilns, thus helping to improve theenvironment and making the industry more eco-efficient. Finally, in well-controlled circumstances, cement kilns provide an environmentally soundoption for co-processing some waste materials.

The industry employs about 850,000 workers in facilities in 150 countries,producing about 1.5 billion metric tons of cement a year. It has an estimatedannual turnover of US$ 87 billion and has grown by nearly 4% a year over thepast decade.

Cement production is energy-intensive, accounting for 5% of globalcarbon dioxide emissions, and it touches on a wide range of sustainabilityissues including:

• Climate change

• Pollution

• Resource depletion

• Worker health and safety.

The Cement Sustainability Initiative(CSI) was formed to help the cementindustry to address the challenges ofsustainable development. Thebusiness leaders of a group of majorcement companies lead the initiative.Its purpose is to:

• Explore what sustainabledevelopment means for thecement industry;

• Identify and facilitate actions thatcompanies can take as a groupand individually to accelerate themove towards sustainabledevelopment;

• Provide a framework throughwhich other cement companiescan participate;

• Provide a framework for workingwith external stakeholders.

vision: To help the cement industry to play afull role in a more sustainable future and toprovide the industry with tools to make this happen.

value

15

Challenges1. Resource productivity - Improving eco-efficiency through improved

practices in quarrying, energy use and waste recovery;

2. Climate protection - Understanding and managing CO2 emissions;

3. Emissions reduction - Reducing dust from quarrying, NOx, SOx, and otherairborne pollutants from cement manufacture;

4. Ecological stewardship - Improving land use and landscape managementpractices;

5. Employee well-being - Managing and improving employee health and safety;

6. Community well-being - Working more effectively with local communities;

7. Regional development;

8. Delivering shareholder value.

The business caseThe business case for sustainable development in the cement industry revolvesaround shifting its traditional business approach from a resource-intensive andprofit-maximizing business model to a more eco-efficient, socially responsible,and value-maximizing model.

There are several business advantages to a sustainable approach in the cementindustry:

• Cost reductions due to increased operational efficiency and effectiveness;

• Revenue increases due to product differentiation and enhanced marketacceptance;

• Reduction in capital employed due to process simplification and improved use;

• Reduction in risk weighting dueto improved managementpractices and reduced liability;

• Faster time to market, fromimproved stakeholdercommunications and trust.

In short, sustainable cementcompanies can compete effectivelyby raising profits while reducing thecost of capital – doing more with less.

By addressing these key sustainabilityissues cement companies can:

• Manage their CO2 emissions (andtheir corresponding climateimpacts), which can havesignificant financial impacts in acarbon-limited world;

• Improve employee health & safety;

• Understand and manage theimpacts of quarry projectsthroughout the life-cycle, from agreenfield site through startup,operation and eventual closure;

• Help society better manage wastematerials by cooperation withother industries on novel uses ofby-product and waste materials incement production.

16

1999

Project starts research by identifying and examining all thesustainability issues facing the industry over the next 20years. In parallel, 13 sub-studies, ranging from carbondioxide emissions to socio-economic development, areorganized

2002

Publication of the Battelle report, Toward a SustainableCement Industry, along with the sub-studies

OutcomesUnder the auspices of the WBCSD, the working group commissioned theBattelle Memorial Institute, a US-based not-for-profit consulting firm, toconduct independent research into how the cement industry can meet thesesustainability challenges. Battelle’s report, Toward a Sustainable CementIndustry, was released in April 2002.

An industry Agenda for Action containing measurable targets and setting outjoint and individual company commitments was released in July 2002. A TaskForce was established for each of the six issues to complete joint activities. TaskForce members include cement company participants in the Initiative as well asother organizations that can contribute substantively to the work program.Individual companies are committed to the individual activities laid out in theAgenda:

1. Climate protection and CO2 management

2. Responsible use of fuels and raw materials

3. Employee health and safety

4. Emissions monitoring and reporting

5. Local impacts on land and communities

6. Reporting and communications.

The project produced two other important results during the research stage:

1. A guide for cement plant managers on managing and improving localstakeholder communications;

2. A standard protocol for measuring and reporting CO2 emissions, which isnow endorsed by the United Nations Framework Convention on ClimateChange and the World Resources Institute, among others.

Individually, each member company is now implementing the guidelines intheir operating facilities and reports publicly on progress.

Moving forwardThe initiative has raised interestamong different bodies, such asCEMBUREAU (the European CementAssociation) and the AustralianCement Industry Federation. Talks arealso underway with several othercement companies, associations andnon-governmental organizations onhow they could play an effective rolein the implementation phase.

An interim public progress report wasreleased in June 2005 and will befollowed by a full update andassessment of future actions in 2007.An external advisory group has beenestablished for this phase to help thecompanies make further progress.

Members have also agreed to pursueexternal assurance of reported values,beginning with CO2 emissions. Anew task force was created to look atissues around sustainability ofconcrete construction.

The program is part of a long-termchange management effort, movingfrom research to understanding, tocommitments for action toimplementation at individualcompanies and facilities. Materialsdeveloped are being widely distributedvia the Web and communicationpartners to allow other cementcompanies to learn from this experience.Key publications

The Cement SustainabilityInitiative: Our Agenda forAction 2002

The Cement SustainabilityInitiative: Progress Report 2005

Environmental and socialimpact assessment (ESIA)guidelines 2005

Guidelines for EmissionsMonitoring and Reporting inthe Cement Industry 2005

17

2002

Publication of the Agenda for Action, with its five-yeartimeframe

2005

Release of the CSI Progress Report

Completion of Task Force reports and guidelines

More informationwww.wbcsdcement.orgProject members

Co-chairs 2006

CEMEX, Uniland

Core Members

Cimpor, CRH, HeidelbergCement, Holcim, Italcementi, Lafarge, Taiheiyo, Titan

Participating Members

Ash Grove, Cementos Molins, Cementos Portland Valderrivas, Gujarat Ambuja,SECIL, Shree Cement, Siam Cement, Votorantim

Partners

Project Partners include other organizations (not cement producers) that wishto participate in the CSI Task Forces and bring special knowledge to the workprogram. Project Partners are by invitation of the CSI Core Members. PastPartners include CEMBUREAU (Belgium), Japan Cement Association (Japan),Verein Deutscher Zementwerke E.V. (Germany), British Cement Association(United Kingdom), Cement Industry Federation (Australia), WWF International(Switzerland) and the Natural Step International (Sweden). CommunicationPartners include many cement federations (associations) who work with the CSIto help communicate about the Initiative with their membership.

The Cement CO2 Protocol:CO2 Accounting andReporting Standard for theCement Industry

2005

Safety in the cement sector:Guidelines for measuring andreporting

2005

Strengthening the CDM: ACement Industry Perspective2005

Guidelines for the Selectionand Use of Fuels and RawMaterials in the CementManufacturing Process

2006

Formation and Release ofPOPs in the Cement Industry(Second Edition) 2006

18

MobilitySustainable

Mobility is an essential part of modern society, and is almost universallyacknowledged to be one of the most important prerequisites to achievingimproved standards of living. However, modern mobility has come at a price.The way we are carrying out transportation is not sustainable if the presenttrend continues. Transportation is creating economic growth, and economicgrowth is creating transportation, but it is crucial that transport activitiesbecome more efficient, more equitable and less disruptive – both socially andenvironmentally. Given the amount of greenhouse gasses released bytransport, it is one of the main concerns of the work of our Energy and ClimateFocus Area.

Transport activities are predicted to grow rapidly, driven by many factors:

• Economic Growth and a higher standard of living

• Globalization – opening up of markets

• Population growth and increasing urbanization.

There are about 800 million vehicles on the roads today, a number that isexpected to grow to 2 billion by 2050. The transport sector accounts for aquarter of the CO2 emissions in the world today and is growing fast. It isanticipated that oil demand will increase by 60% over the next 25 years, andthat three-quarters of this growth will come from the transport sector. Mobilityfootprints are considerable as to land use, stress on ecosystems, deaths andinjuries, air quality and noise.

Against this backdrop, a dozen of the world’s largest energy and automotiveenterprises joined with the WBCSD in 2000 to develop a vision of moresustainable mobility in the future, and established the Sustainable MobilityProject (SMP).

The SMP, limited to roadtransportation, defined “sustainablemobility” as the ability to meet theneeds of society to move freely, gainaccess, communicate, trade andestablish relationships withoutsacrificing other essential human orecological values today or in thefuture.

19

movement

vision: To meet the needs of societyto move freely, gain access,communicate, trade and establishrelationships without sacrificingother essential human or ecologicalvalues today or in the future.

The business caseThe Project provided indicators that are central to any vision of sustainablemobility and the route to get there. These indicators also constitute a yardstickagainst which the effectiveness of various approaches can be measured. However,different stakeholders have different approaches to the challenge of mobility. Theindicators reflect balance and harmony between the perspectives of the mobilityusers, of society at large and of the mobility providers:

• Mobility users are concerned about how mobility meets their needs, accessand costs, as well as comfort and safety;

• Society focuses on the social costs, government revenues and fairdistribution of access to mobility;

• Mobility providers, mainly private businesses, depend on enough profit tostay in business and the ability to provide solutions required by society.

The companies participating in the SMP believe that sustainability and theirown success will increasingly become synonymous.

• The mobility sector relies heavily on a limited source of non-renewableenergy. Newer forms of more sustainable sources will maintain the mobilityindustry and ensure its long-term future.

• Innovation in sustainable technologies can help provide solutions to severalproblems and reduce overall costs for the production and maintenance ofvehicles.

• Mobility is a high-profile topic that directly impacts many people.Companies that take the lead in sustainability will significantly improve theirreputations.

• Improvements in design and safety can mean fewer accidents and thus lessliability for manufacturers and producers.

• Measuring the progress and status of the industry’s current sustainability

efforts lends insight into thebusiness environment of thefuture and so offers companies away to plan their businessstrategy.

2001

Launch of Mobility 2001

2002

10 workstreams set up to address sustainability issuescreated by the dominant role of road vehicles and todevelop visions of future global systems of mobility

OutcomesResearch and stakeholder dialogues were carried out throughout 2001,culminating in Mobility 2001, a holistic study that deals with theinterdependencies among transport modes, technologies, systems andinstitutions crucial to sustainable mobility.

The project launched two reports at the World Summit on SustainableDevelopment in Johannesburg in 2002: Move. Sustain, which concisely depictsthe background and evolution of the program, and Sustainable Mobility Project:Progress Report, which recapped the work done from 2001-04 and the path theproject took.

In July 2004, the project released a comprehensive report on the topic, Mobility2030, which proposes seven goals that, if achieved, would improve theprospects for sustainable mobility:1. Reduce conventional emissions from transport so that they do not

constitute a significant public health concern anywhere in the world;

2. Limit greenhouse gas emissions from transport to sustainable levels;

3. Reduce significantly the number of transport-related deaths and injuriesworldwide;

4. Reduce transport-related noise;

5. Mitigate traffic congestion;

6. Narrow “mobility divides” that exist within all countries and between therichest and poorest countries;

7. Improve mobility opportunities for the general population in developed anddeveloping societies.

Launch events for media and stakeholders for Mobility 2030 were arranged inBrussels, Detroit and Tokyo in July and August 2004. The participatingcompanies and the WBCSD considered these meetings as the start of a dialogue

with a wide range of stakeholdersand have been participating in agreat number of events throughoutthe world.

Moving forwardEven though the Sustainable MobilityProject has been completed, theWBCSD will continue to addressissues related to mobility. Transportof people and goods is crucial to allbusinesses regardless of sector. If thecurrent transportation trends areunsustainable, as the Mobility 2030report suggests, then business mustconsider the strategic consequences.Some of the topics discussed in thereport will be pursued through otherWBCSD work programs, such as thetransport sector’s impact on climatechange, or access to mobility in thedeveloping world.

Key publications

Mobility 2001

2001

Mobility 2001 Overview

2001

Move.Sustain.

2002

20

2002

Launch of two reports at the World Summit inJohannesburg: Move. Sustain and Sustainable MobilityProject: Progress Report

2004

Release of Mobility 2030

More informationwww.wbcsd.org/web/mobility

Mobility 2030

2004

Mobility 2030 Overview

2004

Mobility 2030 ExecutiveSummary

2004

21

Project members

BP, DaimlerChrysler, Ford, General Motors, Honda, Michelin, Nissan, NorskHydro, Renault, Shell. Toyota, Volkswagen

22

ElectricityUtilities

Electricity is more than energy. It is a vital component of infrastructure and anessential part of modern day life. It plays a critical role in the economies of mostcountries and in the development of all.

As a vital component of infrastructure, its use is growing more quickly than thatof any other energy carrier, and it will play an even greater transformationalrole in the future. Electricity-based innovation is supporting increasinglysophisticated global, real-time networks for communication, finance, trade andtechnology development. It is driving new technologies, ranging from lasers tomicroprocessors, which will make continuous improvements in industrialproductivity and efficiency possible in the century ahead.

Electricity will act as a catalyst for business development in several sectors, andis critical for social development. Yet moving forward holds significantchallenges for the electricity utility sector as it is confronted by a number ofuncertainties associated with evolving government regulations, marketrestructuring, customer preferences and technological innovation.

The WBCSD’s Electricity Utilities project brings together leading utilities fromaround the world to develop a deeper and more concrete understanding of thefundamental sustainability challenges faced by the sector and to explore thebusiness contribution to solutions.

ChallengesSignificant challenges for the sector in implementing sustainable developmentpractices come at a time when the business environment is undergoingunprecedented change because of government deregulation, marketrestructuring, customer preferences and technological innovation. Thechallenges include:

• Building and maintaining securityof supply – deliver the hugeamounts of electricity required fordevelopment and growth, whilemaking adequate returns toattract the necessary investmentand keeping prices affordable forcustomers;

• Managing and reducingenvironmental impacts – curb theexpected growth in the powersector’s global carbon emissions(representing almost 40% of theworld’s total, and projected bysome to double by 2030), whilekeeping other impacts and costsat acceptable levels;

• Providing access to electricity forthose that do not have it – increaseaccess to electricity that far toomany people in developingcountries lack and therebyremove one of the mostsignificant stumbling stones onthe way to making povertyhistory.

23

vision: A power sector that makes wise use oftechnology, operational excellence and governancestructures to meet the multiple challenges inherentin providing secure and affordable electricity suppliesto all, while managing environmental impacts,including climate change.

power of nature

Gaining support from stakeholders on future generation and transmissionoptions will be another challenge for the sector. While each country will haveits own priorities for future energy options, some of the challenges ahead are:

• Balancing the economies of scale of large, centralized plants against theinherent flexibility of smaller, decentralized investments;

• Resolving with government and other stakeholders the issues related toinvestment in renewable energy and new technologies with lowerenvironmental impacts than existing generation methods;

• Continuing to invest in research into new technologies that will help tomove the sector significantly further down the sustainable developmentpath;

• Finding ways to make economic demand-side management investmentsmore attractive.

The business caseIncreased competition in electricity markets inevitably makes companies focuson short-term results. But communicating with policy-makers to make sure thatinvestment conditions are right to attract the required capital has never beenmore important. Investment barriers have been causes of brownouts andblackouts not only in developing countries.

Contributing to more than a third of the world’s CO2 emissions, the electricitysector will undoubtedly be confronted with future carbon constraints. Pressurefrom shareholders and stakeholders to manage carbon exposure is on the rise,as climate policies are taking hold, even in non-Kyoto countries such as the US.

Consequently, it pays to be able to evaluate stakeholder expectations and to beinvolved in the early stages of policy development, including the internationalframework post-2012.

The electrification targets that can bederived from the UN MillenniumDevelopment Goals represent a hugechallenge. The political will ofgovernments will be crucial, butbusiness can also make itscontribution. Not only canelectrification projects in developingregions be an effective way ofdemonstrating corporatecommitment to sustainabledevelopment, they might also yieldnew business opportunities.

24

2000

Project begins with companies taking a critical look at theiroperations

2002

Publication of Sustainability in the Electricity Utility Sector,detailing sustainability principles and strategies and acollection of best practices

OutcomesThe first phase of the project yielded an assessment of sector-specific principlesand objectives. It provided concrete examples of industry practices throughcase studies and established clear strategies for the industry to meet futurechallenges and progress on its path to sustainability. It stressed that:

• Electricity companies are leveraging investment in research, developmentand marketing of new sustainable energy technologies and consumerofferings;

• Many companies are conducting long-term strategic planning initiativesand ensuring that sustainable development issues are integrated into theirfuture investment decisions;

• Many electric utilities are taking early action by implementing greenhousegas emission strategies, in the absence of any legislative requirements.

The 2002 report, Sustainability in the Electricity Utility Sector, examines majorforeseeable challenges, including the liberalization of electricity markets, futuregeneration requirements, and next-generation options.

The second phase of the project was launched at the beginning of 2005 andtakes a closer look at the challenges identified in the first phase. Projectmembers have set up a plan through 2006 in order to:

• Improve the understanding of the fundamental trade-offs that decision-makers and society at large will have to face;

• Develop common communication tools for dialogue with stakeholders andpolicy-makers, defining the role of utilities and that of other players;

• Identify approaches to integrating sustainable development into long-termdecision-making.

Moving forwardBased on a clear common view of thechallenges at hand, the powercompanies in the project are nowengaging their stakeholdersworldwide to help define an agendafor concerted action. This is focusedaround six key objectives:

1. Continuously improving energyefficiency (including end-use);

2. Investing adequately ininfrastructure and securing areliable grid;

3. Diversifying and decarbonizingthe fuel mix;

4. Bringing to market promisingbreakthrough technologies overthe longer term;

5. Providing wider access toelectricity;

6. Developing partnerships and asystematic dialogue with decision-makers and civil society.

Key publications

Sustainability in the ElectricityUtilities Sector – ExecutiveSummary

2002

Sustainability in the ElectricityUtilities Sector 2002

25

2005

Project moves into its second phase, exploring keychallenges and looking at technology options in moredetail

2006

Launch of the stakeholder engagement phase

More informationwww.wbcsd.org/web/electricity This agenda is underpinned by

factual issue briefs on thesustainability performance of alldifferent resource options forelectricity generation such as coal,gas, nuclear and renewables, helpingto define a common and holistic viewon facts, key technologydevelopments and policy needs.Additional themes includetransmission and distributionsystems, the role of utilities inpromoting energy efficiency, and theaccess challenge.

The project’s stakeholderengagement phase includes a globalonline consultation and events inIndia, China, and at majorinternational conferences such as theUN climate negotiations or the UNCommission on SustainableDevelopment. The final report fromthe second phase is to be publishedtowards the end of 2006.

In addition, the working group willcontribute to developingsustainability indicators for a pilotversion of a Global ReportingInitiative supplement for the energyutilities sector.

Project members

Co-chairs

ABB, EDF, Eskom

Working group

CLP, Entergy, Kansai, Suez, Tepco

Associate members

Caterpillar, Global Forest Partners,Kimberly-Clark, Procter & Gamble,Time, Inc.

26

Tires

technology

Tires are essential to road and surface mobility, providing the moving surface ofour many transport vehicles and the only contact point with the ground.

Simple in appearance, tires are quite sophisticated products. Tire makinginvolves a complex blend of materials and assembly processes to produce thethousands of different products used on equipment ranging from bicycles tohuge earthmovers. A typical tire includes dozens of different components,using more than 100 primary raw materials, which must be preciselyassembled and processed to achieve the right balance between manycompeting factors: grip, energy efficiency, handling, comfort, noise and cost, toname a few.

Tire industry leaders have begun to examine several sustainability issues facingthis sector, gather data and identify potential concerns and address them.Following a global CEO meeting in March 2005, 11 companies have organizeda series of initial studies.

Initially this project will address two issues:

1. Evaluation of materials commonly used in tire making for any potentialhealth and/or environmental impacts;

2. The fate and impacts of particulate matter generated during normal tire useand wear.

Over the next year, the group will examine the availability and quality ofexisting data dealing with these two issues, identify knowledge gaps, anddevelop a comprehensive plan to fill those gaps in succeeding years. ChemRisk,a US-based consultancy specializing in risk analysis, has been retained for theseinitial studies. They will work with DIK, the German Institute of RubberTechnology. The company CEOs will review the scoping work in early 2007and consider further studies at that time.

Project members

Co-chairs Bridgestone, Goodyear and Michelin

Working groupContinental, Cooper Tire & RubberCompany, Hankook Tire Co., KumhoTire Co., Pirelli, Sumitomo RubberIndustries, The Yokohama RubberCo., Toyo Tire & Rubber Co.

More informationwww.wbcsd.org/web/tires

By taking an early look at theseissues, these industry leaders want tounderstand more about thesustainability challenges they face ina constantly evolving regulatoryenvironment and formulate anapproach to making the industrymore sustainable by better assessingand managing impacts from itsproducts and processes.

27

The Future

The WBCSD is in the scoping phase of other Sector Projects, including oneinvolving the chemicals sector.

The Council and our members have found that such projects are excellent waysfor entire sectors to manage the challenge and opportunities inherent insustainability issues. Our first Sector Project, on how to make the production ofpaper more sustainable, began when a leader in the Latin American pulp andpaper industry asked the basic question of whether he should be replantingtrees, given society’s demands for recycled fibers. The resulting study, Towardsa Sustainable Paper Cycle (1996) found that sustainably managed plantationswould be the basis of meeting the world’s supply of paper into the future.

WBCSD Sector Projects allow business sectors to present a united front, notagainst the rest of society, but with society, in that all of them work towardstheir conclusions in partnership with stakeholders from civil society andgovernments.

We look forward to helping other sectors organize their approaches totomorrow’s business and to sustaining human progress.

28

Copyright © WBCSD, August 2006

ISBN 2-940240-94-9

Printer Atar Roto Presse SA, Switzerland

Paper Containing 50% recycled content and 50% from mainly certified forests (FSC and PEFC). 100% chlorine-free. ISO 14001 certified mill.

About the WBCSD The World Business Council for Sustainable Development (WBCSD) brings together

some 180 international companies in a shared commitment to sustainable

development through economic growth, ecological balance and social progress. Our

members are drawn from more than 30 countries and 20 major industrial sectors. We

also benefit from a global network of 50+ national and regional business councils and

partner organizations.

Our mission is to provide business leadership as a catalyst for change toward

sustainable development, and to support the business license to operate, innovate

and grow in a world increasingly shaped by sustainable development issues.

Our objectives include:• Business Leadership – to be a leading business advocate on sustainable

development;

• Policy Development - to help develop policies that create frameworkconditions for the business contribution to sustainable development;

• The Business Case - to develop and promote the business case for sustainabledevelopment;

• Best Practice - to demonstrate the business contribution to sustainabledevelopment and share best practices among members;

• Global Outreach – to contribute to a sustainable future for developing nationsand nations in transition.