New Metrics 2012 9/27 12.15 - 12.45 Daniel Krohn

1. Measuring ROI
The New Metrics of Sustainable Business Conference
9.27.2012

2. OVERVIEW OF
BECKER UNDERWOOD
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3. 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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4. GEOGRAPHIC
FOOTPRINT
12 locations in eight countries
• Ames, IA, US (2) • Toulouse, France • Buenos Aires, Argentina
• St. Joseph, MO, US • Somersby, Australia • Santo Tomé, Argentina
• Caldwell, ID, US • Curitiba, Brazil • Durban, South Africa
• Saskatoon, Canada • Littlehampton, UK
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5. ORGANIZATION AND
BUSINESS UNITS
Product Families
Inoculants Turf and Specialties
Seed Coatings Biological Crop Protection
Landscape Colorants Livestock Management
and Coatings Products
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6. OUR APPROACH TO
SUSTAINABLE DEVELOPMENT
o NET positive™
o All businesses have positive and
negative impacts on the environment
and society through their
policies, products and processes.
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7. OUR APPROACH TO
SUSTAINABLE DEVELOPMENT
Leaving a positive legacy now and in the future through our
products, people and practices.
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8. 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 priorities
o Energy
o Water
o Waste
o Transport
o Supply Chain
o Employment, Education, Health & Safety
o Sustainable Product Design
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9. ENVIRONMENTAL
PROFIT & LOSS ACCOUNT
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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10. TOTAL GHGS AND
WATER ANALYZED
Only 13% of the total GHGs analyzed are directly
associated with our operations.
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11. TOTAL GHGS AND
WATER ANALYZED
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12. WATER
ABSTRACTION
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13. WATER
ABSTRACTION
The top 10 suppliers contribute to 47% of the total footprint.
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14. CARBON HOT SPOT
FOOTPRINT
Identifies suppliers and sectors that are carbon intensive
relative to a benchmark.
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15. KEY
FINDINGS
The single sector that contributes the most carbon to the supply chain is:
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16. COMPARATIVE
ANALYSIS - GHGS
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17. COMPARATIVE
ANALYSIS - WATER
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18. Integration of Environmental Impact Risk
Natural capital risks are a growing concern amongst global experts
1,000
Expected impact (Billion USD)
500
Natural capital risks
250 2009 2011
Storms and Climate
cyclones change
Flooding
Water
security
100
Biodiversity
Air pollution loss
50
Unlikely Likely Very likely
Likelihood over next 10 years
Source: World Economic Forum Global Risks Report (2009 – 2011)

19. EP&L Approach
• Calculated • Engaged strategic • Refined • GHG and water • GHG emissions
supply chain suppliers calculations of consumption and water use
impacts back to supply chain valuation valued in
• Collected supplier
raw materials impacts coefficients economic terms
specific data
derived
• Over €1bn •Operational
• Established
expenditure E KPI data added
locations of raw
analysed
material flows
(E KPIs) x (GHG & Water Valuation) = E P&L

20. Ecosystem Valuation Considerations

21. Air Pollution

22. Approach: Calculating Externalities
Water Use: Calculating value
Extensive 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 value
Indirect 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.

23. Approach: Scarcity and Value
18.0
16.0
14.0
United Arab Emirates
12.0
Value (€/m3)
10.0 Pakistan
Taiwan
8.0
6.0 Iran
4.0
2.0
0.0
0% 20% 40% 60% 80% 100%
Scarcity – Withdrawal as a % of actual renewable water resources

24. EP&L Example

25. Materiality Analysis

26. 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.

27. THANK YOU.
QUESTIONS?
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