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Ecologic Designs, Inc. 2007 Sustainability Report Global Reporting Initiative G3 Standards TM Ecologic Designs, Inc. 2007 Corporate Sustainability Report ECOLOGIC DESIGNS, INC. 2007 SUSTAINABILITY REPORT GLOBAL REPORTING INITIATIVE - G3 ASSESSMENT STANDARDS PREPARED BY: ROBERT BOGATIN, VP BUSINESS OPERATIONS ABIGAIL CLARKE, SUSTAINABILITY ENGINEER TABLE OF CONTENTS Section1: Pages 1 – 10 Strategies and Analysis, Company Profile Section 2: Pages 11 – 18 Economic Management Approach and Indicators Section 3: Pages 19 – 31 Environmental Management Approach and Indicators Section 4: Pages 32 – 41 Social Management Approach and Indicators Section 5: Pages 42 – 45 Product Responsibility Approach and Indicators 1. Strategies and Analysis Section 1.1 - 1.2 Sustainability is becoming increasingly important worldwide and has roots in now almost every industry. For many consumer products, green is the new black. While many new ‘green products’ are available, how many companies are really operating sustainably? One of the most important challenges facing Ecologic Designs and consumers is deciding how to shift our buying behavior. Will we support the growth of green products, or more importantly, the growth of green companies that make products that we need? In the short-term, Ecologic Designs is committed to serving communities as the most sustainable and innovative reclaimed material processor in the U.S. As a manufacturer of outdoor gear and lifestyle products, we hope to establish a loyal consumer market base and continue to develop municipal and B2B relationships for reclamation and merchandising. As we grow, our goal is to invest in sustainable technologies and efficient processes to increase the overall positive impact we have on local and global communities. There are several companies already working with reclaimed materials like billboards and inner tubes, and there is a tremendous surge of P.E.T. fabrics in the outdoor products industry. What is unique about Ecologic Designs is that we have a localized production model, and make everything domestically. This is not the case for many of our competitors. Also, many companies using these materials are not experts in products design, and most cannot offer the variety of consumer and business products that Ecologic Designs has available. Our ability to service B2B clients and cities, will largely be decided by our capacity to process and fabricate more products with the same sustainable value we currently provide. In addition, our quick response time for custom design features and consolidating a library of custom features, fabrics and other options will determine our service advantage. We hope to streamline a B2B products catalog this summer. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 1 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Many factors will influence our level of sustainability. The types of materials we use will change over time. Current sources will be made differently in the future and resources we haven’t identified yet will be plentiful. We are always seeking new and replacement resources for conventional textiles. We are now developing uses for neoprene from reclaimed wetsuits, tyvek static suits from computer chip manufacturers, vinyl from swimming pool product waste, etc. We have opportunities in the same places there are risks. Where there may be a material that is no longer suitable for repurposing, we will identify something else to take its place. When we come across a new material, we will identify the best use for it within our product line. 2. Organizational Profile Section 2.1 Ecologic Designs Incorporated Section 2.2 Brands: o Green Guru Gear o Green Goddess Gear Products: o Outdoor & Lifestyle Gear made with 98% Reclaimed/Recycled Content o Messenger bags, tote bags, wallets, bike accessories, organizers, climbing gear, convention and trade show products, bracelets, key chains, & t-shirts, custom Services: o Reclamation & Recycling Programs for vinyl, inner tubes, fabrics, foams, hardware components and cross-industry textiles o Sustainable & Domestically Produced Product Design and Fabrication o Custom Labeling & OEM Manufacturing Section 2.3 We employ several tools to develop Ecologic Designs as a systems-based, sustainable manufacturer. We are a learning organization that values human and material resources, and we are structured to be a leader in products designed using reclaimed and recycled materials. Ecologic Designs grew substantially in 2007, and is now managed by a team of 3 full- time managers and several department heads. Our President is our chief designer, our Vice President runs our business operations and sales departments, and our Production Manager oversees the flow of materials and labor in all of our processes. These three individuals make up our full-time employees. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 2 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Other departments with part-time leaders in 2007 were Transportation/Road Crew, Construction, and Web Development. One department has been added in 2008 - Sustainability. We have plans to add Material Acquisition and Community Giving before the end of the year. While all staff is directed under the leadership of our managers, every position is necessary to our success and has the opportunity to develop not only their own position but also the manner in which the company operates or a product is made. Section 2.4 Ecologic Designs operates from its headquarters in Boulder, Colorado. Our address is 2500 N. 47th #12 Street, Boulder, CO 80301 Section 2.5 In 2007, we operated entirely within 15 miles of our headquarters in Boulder. We did procure reclaimed, recycled and raw materials from outside of this region. Our customers and downstream partners are also located outside of our 15-mile production radius and include several international locations. Section 2.6 We are organized legally as a privately owned S-Corporation. In August of 2005 Ecologic Designs was incorporated in the State of Colorado. Through 2007 our founder and president owned Ecologic Designs, but plans were drawn to approve the company’s first minority owner and business manager to join the executive team. This ownership took effect on the 1st of January 2008. Section 2.7 In 2007, our goal was to appeal to outdoor enthusiasts and consumers involved in action and recreational sports, sustainable products and our reclamation programs. We have experienced an equally powerful partnership with businesses, in very different industries, to repurpose their waste into valuable products. Market Sectors served in 2007: o Retail o GreenGuru.com o Our 2007 Road Tour to Green Festivals, Cultural events and eco-shows o In-house walk-ins o Wholesale to independents o Eco-boutiques, green products stores, bike shops, climbing gyms, Green Festivals and Eco-Gift Shows, etailers o B2B Clients o Regional Retailers, Green Products and Services Providers, Consumer- based Renewable Energy Technology Manufacturers, Municipal Offices and Agencies, Neighborhood Associations o International o Distributors o Custom Labeling Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 3 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report We serviced more consumer and commercial markets than we expected in our first year projections. While we identify with outdoor and action sports consumers, we also have created a solid presence within the larger LOHAS market and several niche markets that represent a movement of consumers toward a more value-based buying behavior. Also, the recent green surge within businesses, promotional product companies, conventions, arenas and city departments has opened the door to an exploding industry. Section 2.8 Ecologic Designs is still a small-scale, manufacturing startup company. While our capacity is much larger than our current volume of production, 2007 was our first year producing Green Guru Gear in consumer markets. After several years of material and products design, we were ready to launch officially in July 2007. Last year was an opportunity to refine our line and increase the efficiencies associated with material selection and fabrication. In 2007 we produced 6,546 products in 44 SKU’s under its Green Guru Gear label and several custom and co-branded labels. In 2007, our employees numbered 8-10 people, not including the contracted sewers we employ to make our gear. Last year we employed approximately 16 sewers on some level, 13 of them live in our Local Level Boundary. Our 2007 Net Sales included 5,242 products sold for a gross profit of $29,327.08. Section 2.9 As our first year in public business, we saw significant changes in our organization’s size and structure. Our staff increased from 1 to 12 at the peak of this reporting period. Our production facilities increased from 2 to 4 in the same time. We’ve also expanded the scope of our influence both upstream and downstream in our supply and distribution channels. Our reclaimed/recycled material acquisition partners grew exponentially in 2007, while we became increasingly selective concerning vendors for purchased raw materials. Section 2.10 Ecologic Designs received no official awards for its operational success or products in 2007. We did receive numerous accolades by product reviewers, in articles published in four countries and we’re listed in several green product guides including National Geographic, Backpacker, and Outside. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 4 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report 3. Report Parameters Section 3.1 Our reporting period is from January 1st, 2007 to December 31st, 2007. Section 3.2 This is our first year producing product under the Green Guru Gear brand. There are no previous reports, as this one includes our launch to market. Section 3.3 We have elected to report annually so that we can continue to publish the real impacts our company has on the many facets of sustainability that can be measured. We plan to submit this level of report annually with optional addendums or quarterly reports submitted as they are completed. It is our hope to become a founding and contributing member to the organizations that are working to form a standardized basis for firms to publish and compare their environmental, social and economic impacts. Section 3.4 If you have any questions or comments about this report, please submit them via post to Robert Bogatin, VP Business Operations, or email him at firstname.lastname@example.org Section 3.5 Ecologic Designs strives to be an innovator for sustainable, U.S. based manufacturing in the outdoor industry and beyond. We tried to gather opinions from a wide swath of stakeholders from a survey sent by email including Business Clients, Employees, Industry Associations, Industry Peers, Managers, Employees, For-Social-Profits, Press/Media Representatives, Researchers, Wholesale and Retail Customers, and Supply Vendors. Many of those asked to give feedback did not participate; however, many valuable comments came from people that did respond. Opinions on the importance of different indicators for Ecologic Designs varied but Ecologic Designs’ environmental responsibility emerged as a common theme among many respondents. Since our stakeholders expect us to meet the highest environmental standards, we knew the importance of reporting on all of the core environmental indicators. Since we are creating a financially successful company that is responsive to community concerns, all the core economic and social indicators also met materiality criteria. Some priority was given to environmental indicators including materials cycling because of Ecologic Designs’ commitment and mission to reclaim materials as well as our stakeholders’ interest in our environmental responsibility. Section 3.6 Ecologic Designs does all manufacturing in Colorado within an 15-mile radius. A few material inputs come from overseas but most materials, especially reclaimed inputs, come from within Local Level 3. Ecologic Designs has control over many of these operations and influence over fabricators that assemble our products. Figure 1 presents a simple diagram of a typical Ecologic Designs product life cycle made with reclaimed Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 5 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report billboard vinyl. The boundary of this report only includes parts of the product life cycle that Ecologic Designs controls. This means that only the energy and water use from Ecologic Designs’ main facility is included since we only can influence decisions about the facilities where assembly or retail takes place. Ecologic Designs is working to increase the degree and sphere of our influence on the supply chain. Eventually, we would like to green the entire supply chain from material reclamation to product end of life. Section 3.7 The scope of our report is limited by the amount of data that we collected during the reporting period. We have been collecting data for most of our processes, material flows, products and operational wastes since we moved into our first commercial space. This did not happen until the summer of 2007, so for several months of data we are estimating. The boundary of our report is limited by the relationships and influence we have with new vendors and downstream partners. We are a new company and don’t have as much influence as larger brands. This is our first year collecting and reporting data. Several indicators require or make more sense if current data is compared with previous performance. Our boundary is therefore set to this reporting period without previous data. Section 3.8 In 2007, Ecologic Designs acquired climbing rope products company CRAGEAR, also based in Boulder, Colorado. This sale resulted in the transfer of stocks and proprietary processes in the manufacture of accessories made from decommissioned climbing ropes. There is a small amount of raw materials in this line of products that was not procured and processed within the same system that Ecologic Designs uses. Given the amount of material acquired this way, we are not including it in the comparable scope of business during our reporting period. It’s also true that some of the processing of this material occurred before this reporting period began. Section 3.9 Data was measured when possible and estimated using reputable national and international sources and standards. Explanations of sources of information and methods for indicator evaluation are explained with the indicator results for clarity. Any deviations from GRI protocols are also included in the explanations of how indicators were calculated. Section 3.10 - Not applicable Section 3.11 - Not applicable Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 6 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Section 3.13 Ecologic Designs currently has no formal policy in place regarding its reporting requirements. This is due to the financial costs associated with reporting practices of this depth, which is typically not feasible for a small company like ours. This is the main objective of our arranged triad between Symbiotic Engineering and Valparaiso University; to discover the methods and tools that will allow smaller companies to participate in G3 level sustainability assessments in a cost effective and valuable manner. We are beta testing a new assessment model that will be shared with the public as a means to encourage the widespread inclusion of businesses that represent a variety of industries and economies of scale. We would like to continue to conduct annual assessments and allow at least one objective verifier every year we submit our reports to the Global Reporting Initiative and the Climate Registry, as well as when posting our Annual CSR Report. This reporting period is special. Our 2007 reports are significantly marked by a unique and unprecedented arrangement between 3 parties: Ecologic Designs (the reporting agency), Symbiotic Engineering (the professional 3rd party verifier), and Valparaiso University (the academic 2nd Level verifier of both reviews). 4. Governance, Commitments, and Engagement Governance Section 4.1 Ecologic Designs is governed by its’ private owners from a legal and financial standpoint. In 2007, we had one owner. In 2008 we have five owners. Since January 1st, 2008 there are five owners, so governance is split to the proportion of ownership held. This pertains to financial and legal responsibility. Considering issues like capital funding, strategic alliances and marketing opportunities, our two managing owners share a joint interest and call on staff and other advisors to make such decisions. Regarding operational governance and strategy, our Executive Team is responsible for creating a systemic view of any important situation. This is achieved by using a consensus system of dialogue to determine our most important choices, until the solution evolves into itself. Then it is made clear to the entire team why a particular decision is being carried out. Even if the choice is not unanimous, there is always a majority. We have created several committees to advise on several aspects of our business. During this reporting period, we were advised in Product Design, Accounting, Website Development, and we have a Road Tour and Arts Committee. In these teams, organizational objectives are carried out, but integrated with open brainstorming and space for creative flexibility. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 7 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Section 4.2 During 2007, our President acted as owner operator of Ecologic Designs. In 2008, our President is the majority owner and acts as Chief Designer & Product Developer. Our VP is a now a minority owner and acts as Business Operations & Sales Manager. Section 4.3 We had only one owner during this reporting period. No Board was present. Section 4.4 We conduct a company-wide meeting once a week to open the floor to comments, suggestions and concerns. Occasionally managers present educational sessions to improve business skills and knowledge of sustainable manufacturing processes. Section 4.5 Currently there is no compensation given for the company or a specific departments performance in any indicator section of this report. Since every process of the company’s systems are aligned to maximize our sustainability on every level, we view compensation more as a trade for committed contributions to our shared vision. Section 4.6 In 2008 our Articles of Incorporation will be updated to include Processes in place for the highest governance to ensure conflicts of interest are avoided Section 4.7 Process for determining the qualifications of highest members for guiding through economic, environmental, and social topics Section 4.8 At Ecologic Designs, our Mission, Vision, and Employee Handbook all contain direct references to our commitment to economic, environmental and social policies and directives. Every member of our organization is responsible for adhering to our sustainability code of conduct and for providing feedback regularly to ensure implementation strategies are carried out effectively. Section 4.9 On a daily operations scale, we assess our sustainability every single day. Our materials, products and processes are extremely dynamic. When compared to conventional manufacturing methods, the stability and consistency in our supply is much more variable. Our ability to streamline production processes and reach purchasing power through material volume is more complex. These factors require us to evaluate and adapt to changing conditions so that our sustainability objectives are reached despite changes to our systems. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 8 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Daily topics include transportation of reclaimed and recycled materials, efficient carrier methods for domestic and international shipments, customer service situations that require the movement and handling of product, extending the life expectancy of our products and increasing their capacity for up-cycling when product life is over. Section 4.10 On a larger scale that encompasses our infrastructure and strategies for operational sustainability, the Executive Team meets twice a week to discuss any conditions that need to be addressed regarding our own ability to reach higher levels of efficiency and profitable return. One meeting is exclusive to the Team, the other is our company-wide meeting that is open to all staff members to highlight opportunities for improved sustainability performance. Our participation in this reporting initiative and opening our company to a level of complete transparency is our greatest new tool that allows us to objectively see the impacts our Executive Team has managed. Commitments to external initiatives Section 4.11 Explanation of risk management and new products is addressed by the precautionary approach Section 4.12 External E3 charters we subscribe to Co-Op America, The Hemp Industries Association & Test Pledge, The Outdoor Industries adopted GreenSteps Program, The Earth Charter, CORE Section 4.13 Ecologic Designs subscribes to several external organizations that advocate and educate different sectors of the public about sustainable materials and business practices, ethical sport practices and youth education. In 2007, our most notable organizational subscriptions were held with GreenSteps, Surfrider Foundation, Leave No Trace, and Co-Op America’s Green Business Network. In 2007 and 2008, we’ve developed strategic advocacy partnerships with Bikes Belong, Access Fund, Green Steps, Sterling Ropes, Empowerment Works, The EarthSeeds Project, SkiCarpool, Trek Travel, Earth First Solutions, GenGreen Market, Zipcar and eConsciousMarket. We have also joined the Denver Metro Convention and Visitor’s Bureau as a preferred green vendor, are listed with the Denver Convention Center’s Sustainability Office as a preferred green vendor and we are examining a relationship with Union factories in the U.S. to expand the sustainability of Union Made products and our capacity to facilitate material reclamation through increased product demand. We are not considering unionizing our company at this time, but discussing contractual agreements between our domestic factories and manufacturing processes and the Union’s. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 9 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Stakeholder Engagement Section 4.14 Our Stakeholder Groups consist of: Business Clients, Employees, Industry Associations, Industry Peers, Managers, Employees, For-Social-Profits, Press/Media Representatives, Researchers, Wholesale and Retail Customers, and Supply Vendors. Section 4.15 Our systems approach to organizing Ecologic Designs leads to a broad understanding of who our stakeholders really are, and how to best engage them to participate in our development and to forge partnerships for increased sustainability throughout supply and distribution channels. We signify three major groups of stakeholders: internal people that work directly with the company, those who directly participate in our business operations either in supply or distribution channels, and our clients and customers. Each of these three groups has several sub-groups, and together describe the multiple boundaries we have created to define our scope of influence. Essentially, we depict all of the stakeholders and processes we have direct control over and consider that our internal boundary of influence. The second boundary of influence begins to include the stakeholders that we have high influence over, but little to no control over their operations. The third boundary moves into the areas that we have little or no influence over, and absolutely no control. There are grey areas between the second and third boundaries, and we are working to better clarify these relationships or secure other partnerships that will increase our ability to influence supply and distribution decisions both in out industry and others. Section 4.16 Our Stakeholder Assessment Survey for this report is our first engagement of stakeholders in a unified, consistent approach. We sent out an email with our 30 questions, multiple-choice survey to 145 stakeholders. We gave them the option to be anonymous or not, and whether or not we could publish their comments. They had 2 weeks to complete the email and submit it. In 2007, we engaged stakeholders during the same period of time we were creating our relationships with them. This is true for our suppliers, acquisition partners, business clients, and the tens of thousands of customers we’ve met while launching Green Guru Gear. We’ve developed so many new networks; we introduced our business model and operational objectives from the beginning of each relationship and hoped for continued progress as we gained momentum. We encouraged dialogue, welcomed feedback and pushed for collaboration as much as possible. Our efforts resulted in many solutions to our design and quality standards, material processing and production efficiencies and we tackled an advanced customer service system to deliver one-of-a-kind products that would sell in a variety of markets. Not all of our relationships have been as fruitful as these, but we are fluid enough to adjust to rising opportunities for better ones. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 10 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Our new website will enable customers and affiliates to login to their account and update their information, submit requests, RFP’s, orders and participate in all appropriate surveys we post. This is also part of our paperless system of communicating with our upstream and downstream stakeholders. We encourage the electronic viewing of our Catalog and processing orders through our spreadsheets. For speed and accuracy, our invoicing and PO systems also are conducted electronically. We will employ a monthly communication campaign for all stakeholders who opt-in for an eNews subscription starting this season. We will also send communications out to specific groups within our boundary of influence to update them on relevant business, new products, innovations in material use and processing, and we are issuing marketing updates and RSS feeds linked to our press coverage and upcoming public events and show appearances. Section 4.17 Most of Stakeholders stressed the same concerns and praises. All are pleased with our first year’s performance and ability to produce marketable products from our sustainable processes. Most reiterated the same concerns that we have, which is why we created this company. Among the repeated concerns were: increasing the amount of educational and transparent information we can include with our products and on the website. Everyone had concerns for labor and human rights issues, but none spoke of them in a way that pointed to us needing to do a better job. There were many health and safety issues mentioned, but again, not specific to what we are doing. There was an overwhelming majority that sees us as a pioneer in many ways, but look to us to create more advocacy and lobbying efforts to protect the values that we promote. All realized the low impact we have on the environment already, but stressed the importance that we should strive to address our natural resource consumption and approach a plan for a sustainable factory instead of our rented space. Management Approach to Economic Indicators Economic Performance In today’s marketplace, no one can afford not to be profitable. Over 95% of new businesses still fail within 3 years, and Ecologic Designs is in its 2nd year of doing business with a national and international audience. We are very focused on creating a business model that returns positively on all levels of sustainability. Being economically efficient in process and profitable on the books is the only way we will survive and grow. Our goal, through consumer support and market longevity, is to show other companies how to profit from better practices in whatever they do. We will have had the advantage, but also the challenges, of starting our business on such a remarkable model of localized, sustainable manufacturing. Having paved the way, we hope to inspire more and more companies to operate in systemic and responsible ways. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 11 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Our economic success is measured just like everyone else’s, and to stay competitive, we strive to connect sustainable practices to increased profits. Our processes are very labor intensive, especially acquiring, cleaning and prepping materials for repurposing. Processing labor and sewing time is extremely costly when you pay your team livable wages in the Boulder area. In every sense of the word, you are paying real world prices when you purchase our products. While the value of our products substantiates a higher market price than cheap gear lines, we are attempting to make a profit within a cost structure that most companies don’t dare to try. This provides us with a timely and unique competitive advantage. Yet it also poses a great risk, as we must sell more products to realize the same gains as companies that manufacture products with cheaper fabrics and disproportionate labor costs. In the end, we approach economic security through the core belief that profit should be the result of conducting good business, providing valuable products at reasonable prices, and caring more about people and the planet than anything else. Enriching your life and getting rich are not the same things. Will we support companies that happen to make green products, or green companies that happen to make all the things that we need? Market Presence If enough people like you who read this and feel supportive of who we are and what we’re trying to do, then creating market presence shouldn’t be a problem. In our circles, we talk a lot about our gear and the adventures they make possible. We love what we do, and we live using our products every single day. From a technical standpoint, our market presence is concentrated on several niche segments of the LOHAS industry. This is a pretty huge group now, and probably represents the largest swing segment of our national consumer base. By swing, we mean that it includes largely baby boomers that are increasingly buying goods and services for personal health and to support the environment. They are the largest consumer group with the most amount of money. When buying behavior changes among these consumers, they affect product trends tremendously. We see a paradigm shift in the consumer consciousness. We see people spending their money where products and services are supporting their quality of life and, at the same time, are aligned with a greater cause. We are seeing a rebirth of the value-based purchase. There are so many other value-based buyers, and actually, baby boomers are not our best demographic. We cater first to others who share our adventure lifestyle, which is rooted in action sports, a love for the outdoors and an. Direct Economic Impacts Ecologic Designs is creating a new business model and a new market of products. We think that’s a pretty good way to stimulate the economy. In our spring 2008 Catalog you’ll find that we have included a Glossary of Symbols that denote what materials and Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 12 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report processes were used to make our products. We found ourselves wanting when it came to reclaimed and up-cycled materials. We use a lot of them, and the recycle symbol does not accurately define what we do. Our new symbol for reclaimed material content is pretty powerful in our opinion, and we hope that it can be a tool to create a new level of green product. There are many risks associated with our business. We are a small, private manufacturer, that’s funded by personal investment, but that has the potential to be a leader in vinyl and rubber reclamation and well as a pioneer in the domestic, green production of soft, durable goods. Larger companies could replicate our products and compete on price and/or distribution outlets. Ecologic Designs is experiencing growth and potentially very fast growth in the coming years. There are always risks associated with growing too quickly, but we are also concentrating on how our growth can best serve our customers and business clients. ECONOMIC INDICATORS EC1 We are organized legally as a privately owned S-Corporation. In August of 2005 Ecologic Designs was incorporated in the State of Colorado. Ecologic Designs recorded Net Sales of $56,992.89 in 2007. We also can report that we generated $7,659.10 in Net Sales from our investment in purchasing Cragear’s Climbing Rope series of products. This was 16.2% of our total sales in 2007. We reported no Retained Earnings in 2007. Our Manufacturing Costs in 2007 were $26,029.26, and were paid among all of our factory, home and in-house sewers. The cost of materials is included in this number. Employee wages for Ecologic Designs this reporting period are $15,199.76. No capital payments were made to repay startup capital investments and loans. The only government payments we made in 2007 were for payroll taxes and sales tax. The total amount of taxes we paid is $4,530.59 In 2007, Ecologic Designs gave charitable contributions in the amount of $569.93. EC2 2.1 We consider climate change one of the most important reasons for our business to operate the way it does. There are many risks associated with climate change and the impact it has on business operations and particularly the cost of doing business. While our operations do not directly contribute any major source of change to our climate, we do recognize that our natural resource consumption is one the areas of our business that we can increase our sustainability more. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 13 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Our business model and products do have a competitive advantage that is created by the associated risks of climate change on the marketplace as a whole. Consumers are beginning to change their buying habits and lifestyle choices. All of the awareness about climate change is ‘good’ for our organization, but there will be cost and operational factors that are affected as well. These have not been accurately measured at this time. 2.3 Management has identified the need and base value for the energy offsets we will purchase to solve our energy use in the short-term. Carbon credits are only a band-aid step towards a more sustainable solution, to build our own factory that we control. EC3 2.1 At this time, Ecologic Designs has no retirement plan in place. We will be offering some voluntary programs through our new human resources agency. We’ve contracted a local company to umbrella any employee that wishes to initiate any or all of the benefits they provide. There are several options for 401K’s and investment portfolios in which our employees can participate, including progressive SRI’s. In 2007, the oldest full or part-time employee directly paid by Ecologic Designs is 32. Even though many of our contracted employees and sewers are considerably older than our regular staff, there is no concern at this time to offer more benefit than is available through our human resources agency. The profitability of the company is much more important to our staff so that we can continue to grow, not so we can retire from our current efforts. Most of the benefits offered by our agency are reduced individual policies, and several longer-term benefits that we would like to invest in, require payment by the company. Currently, we have not addressed a formal plan to budget this expense. When we do, it is assumed that it will be a general operating budget item and no external fund will be created to secure it’s capital funding. We are open to change in this issue. While we have no formal policy for employee ownership programs, the owners and managers of Ecologic Designs have discussed the possibility of such a benefit. At this time, we are concentrating more on the overall plan of ownership for the company. Specifically, what is the most value driven percentage of ownership aggregated over several groups: the original and new capital investors, management and employees. We are not considering public ownership of any form at this time. 2.2 - 2.4 As stated in EC3 2.1, there is no defined benefit plan that requires funding liabilities, pension payments, asset or cost analysis at this time. 2.5 We have no goal for a pension plan, but assume we would adopt a policy regarding long-term internal benefits once the company and its staff agree we should visit this issue. 2.6 Employees may contribute as little or as much as they want into their elected benefit plan. Since their investment doesn’t create a tax liability for our company, we can Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 14 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report concentrate on building profits to a level that enable us to implement pay raises and performance incentive programs that directly effect all of our employees, not just the ones that elect to participate in retirement plans. 2.7 In 2007, we were not offering any packages for retirement or pension. In April 2008, we will be offering all of the services mentioned in this section. Currently, no one has expressed an interest in participating immediately in retirement or investment related benefit activities. Several employees have investments outside of the company and have expressed an interest in opportunities Ecologic Designs can offer. 2.8 Not applicable. EC4 2.1 Ecologic Designs receives no financial assets in the form of tax relief/credits, subsidies, investment grants, research and development grants, awards, royalty holidays, financial assistance from Export Credit Agencies (ECAs), or other financial benefits received or receivable from any government for any operation. 2.2 No government is present in the shareholding structure of Ecologic Designs. Market Presence EC5 2.1 – 2.2 No portion of our workforce is subject to minimum wage rules. The lowest pay tier we have is currently 14% above the minimum wage in Colorado. This pay tier is given to employees that still live with their parents, have no children and are not dependent on this wage. 2.3 In 2007, other than a few materials we sourced from outside the U.S., there was no location of operation that wasn’t within 15 miles of Boulder headquarters. We know the working conditions related to our hemp, bamboo, organic cotton and up-cycled fabrics, and can verify the workforce environment associated with these resources. We are proud to support indigenous villages and farmer co-ops of renewable fiber plants and the facilities that are used to produce the fabrics we buy. While we can’t report on the specific wages of these workers, and there is no seal identifying the work environment, we have seen evidence of fair trade practices and objective reports that verify the environmental, economic and social conditions surrounding these workers. We are confident our vendors have the same commitments to human and resource value as we do, and we hope to provide more understanding into this issue next year. One material we source partially from Taiwan because they offer the most fabric and component variety and performance quality. We have not yet verified the workforce conditions where this resource is milled, dyed or distributed. We know of their reputation in the industry and they are leaders among recycled fabric and component suppliers. We hope to understand and participate on this level of international material supply standards more in the future. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 15 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Even though we hope more to acquire all of our materials in the regions where the products are being made, distributed and used, our role to influence the health of production environments in other countries is still important to us. 2.4 In 2007, an average of 20% of our internal staff was paid at our lowest pay tier; this is primarily due to the large amount of reclaimed material we clean and process. Less than 6% of our total workforce was paid this tier. 2.5 A significant location is any one that we operate in with paid or contracted employees. This includes our main Boulder offices and warehouse, and our three local production facilities. There are several places where our employees conduct business activities, but we are not connected to the operations or management. While we may influence the sustainability of a partnering regional recycling facility, they are outside our boundary of control. 2.6 There are no salaried employees of Ecologic Designs in 2007. Every employee is paid every portion of hour worked, except in the case of owner operators, who are compensated in case-by-case structures. Our sole owner in 2007 was not paid as a staff employee, but drew owner distributions. One minority owner in 2008, our VP Business Operations, is paid for full-time employment in hourly wages, but is compensated for overtime in the form of owner equity. 2.7 Minimum wage is not absent in any domestic location in which we operate. Our operations are mainly within the Boulder/Denver Metro area. Colorado State minimum wage is $7.02 in 2008 as compared to the Federal $5.85, and Colorado has an inflation model in place each year. Our lowest pay rate is 14% above our state minimum wage. EC6 2.1 – 2.2 Ecologic Designs defines “local” in several increments of mileage away from our main geographic location: 2500 N. 47th Street #12, Boulder, Colorado. We average mile distances to determine which radii represent the most accurate boundaries of transport required to conduct our business. We are sensitive to the distance it requires us to go places, whether at home or on the road. See page 27 for a partial diagram map. Local Level 1 – 3.5 Miles o All shipping carriers are within 1 mile of our main location. We can drop off and are close in delivery distance to USPS, UPS, FEDEX and DHL. o About 85% of our staff employees live within this radius, including student workers who attend CU Boulder and several interns. This is a huge reward opportunity for our workforce to use human power and public transportation. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 16 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report o Over 24 miles of available, signed bike paths and access to every major bus route in Boulder and the State. o Over 90% of our office products, food, reused warehouse and construction materials come within this radius o Both of our sustainably conscious, commercial printers are located within this radius. Both of our printers are registered green businesses and provide our Hang Tags and Business Cards, Postcards, etc. Of course we have a Paperless When Possible policy and do not mass-produce our catalog, web pages or flyers of any kind. o We have two banking locations within this radius. o Three regional collection facilities and over a dozen municipal collection locations are found within this radius. Collection locations are for bike inner tubes, climbing ropes, vinyl, reused boxes, up-cycled fabrics and foams, random industrial waste that offers resource value to our products. o All of overnight guest accommodations are within this radius. Local Level 2 – 3.6 to 8 Miles o Our four production facilities that made 100% of our products in 2007 were within this radius. o This radius includes material acquisition originating in Boulder County and neighboring towns. Local Level 3 – 8.1 to 15 miles o This Level includes much of the Denver Metro area and neighboring towns around Boulder County. o There are several more suppliers within this radius and their proximity to our collection routes makes is possible to make pickups of supplies with our own bio- fueled transport instead of shipping them. o Nearly 80% by weight of the reclaimed and recycled materials we collected was acquired within this radius. It should be noted that billboards and tubes can be collected from this Level, but their lifetime may have included extensive travel beyond this boundary. 2.3 & 2.5 Ecologic Designs does have a localization policy and commonly acquires as much material and supplies as possible from our various local vendors. We won’t, however, compromise quality or performance for local products, but we will search for exceptional vendors as close to Boulder as possible. We are confident that our region offers us parts and services necessary for the maximum value of our entire operation. Factors that influence our supplier choices are weighed first upon their ability to supply us with a part or service that is consistent with our operational and product goals for sustainability and performance. Then they are weighed by costs, including transportation, and proximity to our Local Levels. A third selection factor is customer service and their ability to meet our dynamic needs. 2.4 Indicating by sum of money spent on local materials and supplies for our organization is a misleading indicator since most of the reclaimed and up-cycled Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 17 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report materials are technically free. Vinyl, inner tubes and climbing ropes are resources that we don’t have to purchase, but we do pay transportation costs both in labor and fuel. Labor-intensive processes necessary to ready these materials for production are also considered material expenses financially. EC7 2.1 We do prefer to hire residents that are in our Local Levels 1, 2 and 3, in that order. We do not discriminate based on geographic location of our applicants. When deciding between equally qualified candidates, close proximity to the workplace has obvious value to an employer, for us, even more so. 2.2 All members of senior management are from the local community of Boulder, whether or not they reside within Boulder city limits. 2.3 The definition of ‘senior management’ is any owner or department head that is responsible for the operations of our core business. We have three full-time senior managers, two of whom are owners, two non-staff managers and two part-time department heads. Indirect Economic Impacts EC8 2.1 – 2.2 We have identified a need for and are in the middle of a formal community needs assessment. There is an implicit connection between our core business and a very clear community need. There are no municipal service programs in the U.S., to our knowledge, for the reclamation of PVC vinyl, truck, tractor and bike inner tube rubber, factory textile waste, etc. Our cities and towns are responsible for the creation of millions of tons of natural and synthetic rubber and vinyl plastics every year. They are not recyclable or biodegradable. We specialize in the collection, processing and fabrication using these exact materials. Our impact on the ecological footprint of any community is immediately affected. An entire division of our company is designed to directly increase the sustainability of the larger systems of which we are a part. Economically, our programs create a system that decreases commercial and residential waste, up-cycles it to a maximum value resource, generates income, pays taxes and essentially develops a brand new consumer market. Our business requires individuals to invest in our material supply channel by giving their trash to us, and guiding us to produce the most relevant and stylish products we can imagine. Our suppliers are also our customers. A soft, durable goods company of this nature is really so fresh that we’re not sure what the true depth of our impacts will be. But, we’re excited, and trying to measure every step of the way. The extent of our support for increased community infrastructure is financially undetermined as of this Report. We have placed and sponsored collection locations around Boulder and the Denver Metro area, in multiple cities in Colorado and around the country. We open our warehouse to recyclers as a drop-off location and to see what we do, and we’ve spent thousands shipping these materials to us. We’re documenting how we operate and assessing how other industries and companies can benefit from what we are accomplishing, and especially what our mistakes have taught us. We’re Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 18 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report developing charitable relationships connected to every line we manufacture. We want to increase opportunities for adults and children to live active, healthier lives, to expand our reclamation efforts and donate financially to national and local advocacy and educational groups. We also donated dozens of products to be auctioned or sold for charitable purposes, and even museum exhibits. EC9 2.1 We are currently conducting face-to-face interviews with bike shops and climbing gyms to assess what the best program structure is to create local, community reclamation locations. Integrating our collection system with various types of businesses is challenging and requires real communication and returned value for all members. Our Road Tour provides us with important regional differences about recycling and reclamation efforts, what’s in place, where do people go. We discuss with retail customers and outdoor enthusiasts about the best ways to involve them in our process. 2.2 Even the most conscious company or city can increase its sustainability, and therefore its profitability, by reclaiming its waste. Ecologic Designs is creating demand for industrial sewers that live all around the country. Certain manufacturing crafts are highly skilled, artistic trades. For many decades, these crafts have been lost from our culture. We certainly hope to grow to a level where we can impact in a measurable way, the impact we’ve had on the increased supply of green manufacturing textiles and hardware components. What will be our impact as we launch our Localized, Regional Manufacturing Model; where the materials are collected, and the products are manufactured and sold in the same geographic area? ENVIRONMENTAL SECTION Management Approach to Environmental Indicators Materials Our mission is to maximize the value of material resources, especially ones that are reclaimed, up-cycled or recycled. As reclamation engineers, our job is to create valuable products that will serve consumer and business markets from other peoples’ waste. We thoroughly test available, alternative textiles and match them with product designs that will increase material performance, functionality and style. Our main concern is how reused materials interact with customer items like food, clothing, and personal care products, particularly vinyl. Most of our billboard products are used to carry other personal items that could transfer toxins and off-gasses to people more directly if their food is not covered. We are looking into the impact of Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 19 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report carrying food in a bag made from highway billboards. What are the properties of these vinyls and recycled plastic fabrics? How safe it is to carry these items in our billboard bags is something we take seriously. We have not been able to determine what the answer is, but in the meantime, we urge all consumers to wrap or contain whole and prepared foods while carrying them in our bags and totes. We don’t believe there is any danger about clothing or containers or personal care products. We will be reporting more about this in the future. Energy Our operations are mostly powered by conventional grid electricity. We rent our current warehouse and headquarters, and our three production facilities also pay conventional electricity bills. In 2007, we concentrated more on material and human resource efficiency, as well as product design and our Department of Transportation. In 2008, we have begun the process of purchasing energy offsets, since we will be operating from the same facilities indefinitely and really want to make every effort to compensate for the fact that we don’t control our utilities. Our first phase will be to offset the amount of energy we consume to operate our main facility at 2500 N. 47th Street, Boulder, CO 80301. The second phase will be to offset our contracted production facilities and home sewers. The third phase involves Ecologic Designs investing in a new location that will be built green or purchased and refurbished to operate at an extremely high efficiency. This category is our largest challenge to improve. Water Ecologic Designs as a whole, doesn’t consume much water at all. The heaviest use of water is the cleaning and processing of reclaimed and up-cycled materials. The billboards require minimal water usage with our powerful, plant-base cleaning solutions. Inner tubes require the most amount of water for cleaning and we feel its resource value far out ways the amount of water needed to process it, which itself is not that high. We are finding ways to clean more material at once with the same amount of water and may install a gray-water system to irrigate a small garden. Drinking and cooking is our next largest use of water, and after that, there’s washing the vehicles, flushing the toilet, mopping floors and watering plants. Biodiversity Our entire company is aligned to enjoy and preserve natural habitats in a safe and effective manner. Areas that are high in biodiversity are extremely important to us. Being located in Colorado is also a learning experience as we watch municipal and wilderness areas become developed beyond recognition. Our main facility is located in East Boulder and well within the city limits. We are in a small consolidated industrial business park that primarily houses automotive services and other sport related repair shops. We are conveniently located beside the Goose Creek Bike Path and the Creek system parallel to it. This is our main concern with immediate impacts. The Creek is protected from our parking lot and work area, but there is a runoff ditch immediately behind our property. This area does not support wildlife or any significant flora. It is a small tributary but unfortunately carries the burden from many neighboring cars parked on our buildings’ property. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 20 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report The other locations that we conduct business in are either in cities or along major roadways that don’t pass through any area with a high biodiversity. It is fairly developed along most of our major routes for material acquisition and to production facilities. The three shipping carriers we use are within 1 mile of our location. Emissions Climbing rope emissions are contained in a closed room with outside ventilation and cutters wear rated filter masks to breathe clean air. Cutting materials that contain plastic and other noxious fumes happens occasionally. At this time, we have no specialized air filtration system or emissions plan, but we are aware of our impact and are looking to improve the situation. Our facilities use different ventilation systems, but they are all updated and rated for industrial use, and all facilities have large access doors to outdoor air. We keep windows and doors open as outside temperature permits, but if they can be, they’re always open. Products and Services We feel our products are an extension of our beliefs, our passions and result from creating a systemic company that values environmental impacts and social equity more that anything else. We hope to manage a company that continues to give more to the planet and people than it takes away. We will show that our products, through efforts to create sustainable manufacturing systems, actually have a positive net impact on the environment. If we cannot create demand for genuinely green products that carry real world prices, there is no market. Our pricing strategy is one of real world pricing. In most cases, you would pay a sticker price for something, say $30. And if you calculated the actual environmental and social costs of producing that item, your price would actually be around $45. There are movements today that will begin to price goods and services this way. We think it is a brilliant idea. This doesn’t work for us though. In fact, the price you pay for Ecologic Designs and Green Guru Gear are real world prices, and a comparison to big box prices would show you that there is a mountain of unsustainable gear in the world, and because it’s cheaper - it’s just getting bigger. Compliance At the end of 2007, Ecologic Designs, Inc. was in good standing with all city, state, and federal agencies. Corporate compliance is a mark of professionalism and a facet of doing good business. While we have missed a few due dates in the course of our two years putting this company together, we have maintained rapport with our vendors, tax agencies and all legal filings. We are grateful to our suppliers and contracted vendors who extended us credit when we needed it most. We are not grateful to all of the cities that send us quarterly tax paperwork when we only sell products in your jurisdiction for 1-4 days out of the year. This is the point for temporary sales tax permits and a waste of our time. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 21 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Transport At Ecologic Designs, we have our own Department of Transportation, that’s how committed we are to controlling the fossil fuels we consume and the emissions we give off. While we are challenged by our facility energy sources, we have taken every step possible to minimize the use of fossil fuels in our acquisition, production and delivery processes. We have three company vehicles. The Eco-Ambulance – our main Road Tour vehicle and large material hauler. It is a 1981 Ford E350 that we bought in Baltimore and we converted to biofuels onsite. Its maiden voyage was crossing the country returning it home back home. It came with a 7.3L diesel engine and soon was converted to biodiesel and WVO. We run this baby on veggie oil about 70% of the time she is in motion. This includes trips around town, regional pickups and cross-country Road Tours. We haul a 55-gallon tank that filters oil into the tank as we drive. An educational video will be available on our website. The Jetta – Our biodiesel Jetta is great around town and helps get us to the store and deliver small packages without all of the smog. The Jetta is also used to haul and process an afternoon’s worth of billboard. The Mercedes – a third addition to our fleet, but still on the upswing to full operational value. Every single employee has biked to work and taken public transportation to get here. We don’t forbid driving cars to work, but we do encourage and reward those who use alternative forms of transportation or get here by human power. We have a bike to work incentive program where we donate $1 for every employee per day that they bike to work. 50% of it goes to Bikes Belong for their national outreach and 50% to our local Community Cycles for-social-profit. We offer a bike rack outside and inside cover when necessary, repair station with tools and air. We allow flexible start and end times due to public trans schedules. We now take a picture of ever billboard piece we make and post it online, so that retail and wholesale customers can choose their unique bags, one by one. This customer service program is time and labor intensive, but serves to minimize the amount of products that need to be exchanged or returned because it’s color or style didn’t go over well in a particular location. We want our customers to be ecstatic, and we are doing everything possible to deliver our products sustainably. There is no excessive noise related to any of our fuel and transportation activities. Filter pumps and engines make noise, but we work near shops that house nearly 100 vehicles. We don’t stand out with our fleet of three and cars from employees. ENVIRONMENTAL INDICATORS Materials EN1 2.1 -2.3 & EN2 2.1 -2.3 Direct Materials are those present in final product. The weights of materials are Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 22 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report estimated from known numbers of products produced, known amounts of materials required for the manufacture of products, known amount of packaging acquired, and measured values of material weights. All recycled, fair trade, and organic certifications for materials come from the material suppliers and producers. Air-filled packaging materials used for packaging were neglected because of their negligible weight. Additionally, certain office supplies were neglected because of negligible use and difficulty of tracking the quantities and weights. Ecologic Designs set up and managed collection programs for all reclaimed materials listed in the tables below. All reclaimed materials were reused as either material inputs for products or packaging. Direct Materials Renewables (Kg) Bamboo 2.76 Hemp 131.39 Renewables (Kg) Fair Trade Hemp 6.90 Organic Cotton 17.41 Non Renewables (Kg) Brass 2.17 Nickel 0.87 Nylon 98.11 Other Plastics 11.42 PET 9.71 Polypropylene 45.63 Polyester 32.98 Non Renewables (Kg) Reclaimed Butyl rubber 123.90 Reclaimed Vinyl 161.23 Non Renewables (Kg) Recycled PET 15.65 Recycled Polypropylene 11.27 Recycled Nylon 0.54 Total 672 Direct Materials Percentages Non-Renewable 76.4% Renewable 23.6% Direct Materials Percentages Fair Trade 1.0% Organic 2.6% Reclaimed 42.4% Recycled 4.1% Packaging Materials Renewables (Kg) Cardboard 424.56 Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 23 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Reclaimed Cardboard 662.81 Recycled Paper 32.66 Total 1120 Other Materials Renewables (Kg) Paper 80.80 Recycled Paper 80.80 Non-Renewables (Kg) Reclaimed Vinyl 3303.61 Total 3465 So far, Ecologic has reclaimed 3.46 metric tonnes (3464.84 kilograms) of billboard vinyl that will become products. Energy EN3 2.1-2.6 All of Ecologic Designs’ direct emissions come from using its fleet vehicles for collection of reclaimed materials and for travel to trade shows. Ecologic Designs’ fleet vehicles are mainly powered by biodiesel and waste vegetable oil. Diesel is used to power the fleet when the other fuel choices are not available. Table: Direct Energy Consumption Direct Emissions GigaJoules Metric tonnes CO2 equivalents Waste Vegetable Oil (WVO) 91.792 70.5% 7.408 Biodiesel 25.326 19.4% 2.044 Diesel 14.394 10.1% 1.162 Total 131.511 10.613 Table: Direct Energy Consumption Direct Emissions Renewable 117.118 89.1% 9.451 Non-renewable 14.394 10.9% 1.162 Total 131.511 10.613 Waste vegetable oil (WVO) is assumed to have the same heat content (energy content) as biodiesel due to lack of information. The heat content of energy sources comes from the U.S. Department of Energy’s Biomass Energy Data Book: Appendix A instead of the values provided in the G3 guidelines (since biodiesel is not included in the G3 guidelines) (U.S. Department of Energy 2006). EN4 2.1-2.3 Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 24 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Annual energy costs were available from the property management organization of Ecologic Designs’ facility and office. However, energy use was not provided from property management. Hence energy use was estimated using average annual costs for industrial heating (from natural gas) (Energy Information Administration 2008b) from 2006 and electricity from 2007 in Colorado from the U.S. Department of Energy’s Energy Information Administration (EIA) (Energy Information Administration 2007a). Primary energy for natural gas came from assigning proportionate amounts of energy to the annual Colorado natural gas consumption due to production (fuel plant, lease plant, and production and distribution use) to the use of industrial customers as compared to other customers. These assumptions assign 14.3% more energy to industrial consumer end use for primary energy due to production of natural gas. The natural gas energy production and consumption information is based on EIA information (Energy Information Administration 2008a). Primary energy for electricity came from assigning proportionate amounts of electricity used in production or lost through distribution industrial customers as compared to other customers. The primary electricity information came from the International Energy Agency statistics on annual 2005 United States electricity consumption and production (International Energy Agency 2008). These assumptions assign 15.88% more electricity to industrial consumers’ end use for primary energy production of electricity. The assumptions about energy sources used to generate electricity is based on proportional comparison of power produced by different energy sources from 2006 data for Colorado (Energy Information Administration 2008d). Table: Indirect Energy Indirect Emissions Intermediate Energy Primary Energy Global Warming Potential GigaJoules GigaJoules Metric tonnes CO2 equivalents Natural Gas 61.47 70.22 0.46 Electricity 56.97 66.01 15.14 Totals 118.44 136.24 15.60 Table: Primary Energy by Energy Source GigaJoules Coal 47.23 Petroleum 0.03 Natural Gas 85.68 Other Gases 0.00 Hydroelectric Conventional 2.33 All Other Renewables 1.17 Pumped Storage -0.26 Other 0.06 Total 136.24 Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 25 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Water EN8 All 1,797 gallons of water in 2007 was drawn from the City of Boulder municipal water supply. Only water costs were available so estimates of water use was made by using the Block 1 rate for cost per gallon of water from the city of Boulder rate information (City of Boulder 2007). Biodiversity EN11 Ecologic Designs is always interested in reducing our impacts on protected areas and geographic areas of high biodiversity. More importantly, we are trying to increase opportunities for all of our stakeholders to increase the balance of any ecosystem affected by landfill and manufacturing wastes, and toxics involved with the products of goods. Boulder, CO 80301 is the geographic center of our Local Level Boundary of operations. The star in the middle represents the location of our warehouse and main offices. The areas with dark green borders are protected or preserved areas in and around Boulder, CO. You can see two small areas to the Southeast of our location at ! mile and 1-" miles away. There is also the tip of a Front Range protected area to the West about 3 " miles away. We have no direct impact on any of these areas. There are no emissions from our central location or any effluent or waste that could enter or disturb even the closest area. Local Level 2 has more protected space than Level 1, but the only activities we conduct that could affect these areas is traveling through to get somewhere else. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 26 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report EN12 There are no direct impacts of our operations on any protected area or one of high biodiversity. There are also no significant indirect impacts on these areas. We contain all of the recyclables and trash we process. Our facility to dispose or process these items is " mile away form our location and closer than the nearest protected area. Our parking lot is adjacent to a creek that feeds into larger waterways in Boulder County and beyond. We designed our use plan of this area to buffer the edge of the creek with a steel container and storage of raw materials. All materials are off the ground, are covered and can’t seep or contaminate the water in any way. EN16 2.1-2.3 Direct Greenhouse Gas Emissions Direct greenhouse gas emissions all come from Ecologic Designs’ fleet vehicles. Direct greenhouse gas emissions were calculated using the Eco-Indicator 95 method (Pré Consultants 2007). The Eco-Indicator 95 method uses the Intergovernmental Panel on Climate Change’s method for calculating the global warming potential (GWP) and its estimates for carbon dioxide equivalents (Houghton et al. 2001). Estimates for greenhouse gas emissions were found using European data from the SimaPro 7.1 Multi User database (Pré Consultants 2006). The global warming potential (GWP) factor for diesel use were made assuming transportation by a delivery van under 3.5 metric tonnes. Additionally for the emissions estimate calculation, biodiesel and waste vegetable oil are assumed to have nearly the same carbon dioxide emissions as conventional diesel (U.S. Environmental Protection Agency 2002). Indirect Greenhouse Gas Emissions: Electricity All indirect greenhouse gas emissions come from electricity and heating of Ecologic Designs’ facility. The GWP factors for electricity were calculated using Colorado wide emissions data from electricity generation for 2006 from the Energy Information Administration (Energy Information Administration 2007b). Indirect Greenhouse Gas Emissions: Heating The GWP factor for natural gas use for heating was derived from U.S. wide emissions data for natural gas systems (including emissions from production, distribution, and use) from the U.S. Environmental Protection Agency (U.S. Environmental Protection Agency 2008). The emissions for natural gas systems was compared to U.S. wide data for natural gas consumption of natural gas produced in the U.S from the Energy Information Administration (Energy Information Administration 2008c). Imports and exports for natural gas use were excluded in the natural gas consumption figures. U.S. natural gas consumption of natural gas produced in the U.S. is based off of dry production values for 2006 minus natural gas used for pipeline and distribution use for U.S. produced natural gas. Pipeline and distribution use for U.S. produced natural gas was estimated by multiplying the dry production value for 2006 by the ration of natural Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 27 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report gas delivered to customers by pipeline and distribution use. This percentage of dry production was used to estimate pipeline and distribution use for U.S. natural gas production because the figure presented for pipeline & distribution use included natural gas imported into the U.S. for use. Also natural gas production in the U.S. was assumed consumption is use for electricity generation is already included in the electricity GWP factor. Table: Global Warming Potential Metric tonnes CO2 equivalents Direct Emissions 10.613 Indirect Emissions 15.602 Total 26.215 Global Warming Potential Factors Metric tonnes CO2 equivalents per GigaJoule Diesel 0.0807 Electricity 0.2293 Natural Gas 0.0066 EN17 2.1-2.3 Indirect emissions sources were not found to be of sufficient quantity to have relevance at this time. Business travel is already considered in the direct emissions through Ecologic Designs’ vehicle fleet mileage. The vehicle fleet mileage includes both the energy required to collect reclaimed materials and as well as business travel to trade shows. Employee commuting to Ecologic Designs is a source of indirect emissions. Because of the small number of employees and low average commuting distances these emissions are small relative to Ecologic Designs’ vehicle fleet mileage. Hence emissions from employee commuting were neglected at this time due to lack of relevance and difficulty in gathering accurate information for estimating employee commuting miles and emissions. EN19 2.1-2.4 Ecologic Designs’ production processes do not release any ozone-depleting substances. Additionally Ecologic Designs’ does not buy (import) or sell (export) any ozone-depleting substances. Still, emissions from Ecologic Designs’ vehicle fleet from diesel combustion include ozone-depleting substances. Similar to direct greenhouse gas estimations, the ozone depletion potential (ODP) was calculated using the Eco- Indicator 95 method (Pré Consultants 2007). The Eco-Indicator 95 method calculates the ODP in kilograms of CFC 11 equivalents. 2006 values for CFC 11 equivalents were used for the calculation (Scientific Assessment Panel of the Montreal Protocol on Substances that Deplete the Ozone Layer 2006). Ozone Depletion Potential Metric tonnes CFC 11 equivalents Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 28 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Direct Emissions 1.2097E-05 Total 1.2097E-05 EN20 2.1-2.3 No significant air emissions result from Ecologic Designs' operations or production - since washing of materials, material handling, and sewing are the main functions of Ecologic. Only air emissions result from the vehicle fleet and from using electricity and the emissions associated with power generation from the power supplier. It is likely that the totals for the emissions below are lower than what would be expected due to lack of information. Relevant emissions information was found for both diesel and electricity but not for heating from natural gas. The emissions values for diesel come from the emissions inventory in the SimaPro 7.1 Multi User database a delivery van under 3.5 metric tonnes (Pré Consultants 2006). The emissions values of nitrogen oxides (NOx) and sulfur oxides (SOx) for electricity come from Colorado wide emissions data for electricity generation for 2006 from the Energy Information Administration (Energy Information Administration 2007b). Values for other emissions from electricity production were not found. Values for nitrogen oxide (NOx) releases for oil and natural gas production combined was found (U.S. Environmental Protection Agency 2008). This value was neglected because of the lack of information on how to assign NOx releases to natural gas production separately from oil production. Values for other emissions from natural gas production were not found. Other Emissions Metric tonnes Nitrogen Oxides (NOx) Diesel 0.1867 Electricity 0.0241 Total 0.2109 Sulfur Oxides (SOx) Diesel 0.1473 Electricity 0.0208 Total 0.1681 Particulate Matter (PM) Diesel 0.0043 Total 0.0043 Persistent Organic Pollutants (POP) lack of information Volatile Organic Compounds (VOC) lack of information Hazardous Air Pollutants (HAP) lack of information EN21 Ecologic Designs has no discharged water from collected rainwater or domestic sewage. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 29 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report EN22 We only can report on the data collected since our warehouse and office has been operational. Here are the numbers associated with our efforts to recycle our trash. We are not posting items in the reuse and recovery columns at this time. We are unsure how to record these methods, as they are integral in our current operational processes. Waste Treatment Method Kilograms per year (2007) Compost 0 Reuse 0 Recycling 471 -Paper 216 -Co-mingled Glass, Plastic, and Metal 255 Landfill 671 Recovery 0 Deep well injection; 0 On-site storage 0 EN 23 Ecologic Designs has no significant spills recorded in 2007. EN 26 We do not have data to report on the impacts our products have during their use phase or at the end of their life. Our products have only been in the market for 11 months. We are planning to initiate a Take Back program to repurpose and recycle the components from our products when the usefulness is depleted. EN27 2.1-2.3 Since Ecologic Designs is such a new company no program for reclaiming products at end-of-life has been established. Percentage Reclaimed Products 0% Packaging 0% **References can be found at the end of this document. EN28 2.1 - 2.3 Ecologic Designs has not been fined or sanctioned for non-compliance with any environmental law or regulation. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 30 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report SOCIAL SECTION MANAGEMENT APPROACH TO LABOR PRACTICES Labor/Management Relations Our belief is that focused attention creates the vision we seek. We are an organization of hard-working individuals and we value every employees experience within the company. Each employee’s own sense of our mission is valuable and his or her contributions are gratefully accepted. Even when they are not implemented, they will still impact the company we become. Occupational Health and Safety We do not have an official health and safety policy. We do, of course, comply with all local and federal laws and regulations. We have posted all of the necessary signage for employees in plain site. We conduct safety lessons when training employees on new equipment and we create a safe working environment with which they can perform their tasks. We provide safety equipment like gloves, goggles, masks and breathing filters. We ensure proper ventilation and clean air flow through our facilities. Were bringing in more plants. We passed our annual fire inspection. We build everything to code and we choose materials and lighting that is energy efficient and comfortable. We offer a full kitchen for all employees so they prepare foods that are nutritious and cheaper than eating out. Most months, we can prepare materials outside so our employees can benefit from our healthy climate. Training and Education This is taken from our Employee Handbook, “Your responsibility is to give us your best and respect the fact that everyone else is giving the same thing you are. We will do our best to mentor you in applied skills development, business systems, manufacturing and marketing processes.” Diversity and Equal Opportunity We publish our Equal Opportunity Employer tag with every posted open position. We understand the importance and value of creating a diverse workforce and executive management. We are open to hiring any capable candidate, and we reserve the right only to select the candidates that most fully represent our lifestyle and commitment to sustainable living and recreation. Our lifestyle and commitment to sustainability are not affected by someone’s race, religion, sexual orientation or politics. Like every employer, we are limited to a specific geographic applicant pool that may or may not represent a diverse population. GOALS AND PERFORMANCE As a new company, every day we concentrate on improving our processes for material Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 31 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report acquisition and pre-production flow, timeliness of B2B custom designs and sampling, order fulfillment and shipping. These activities are all directly related to employ investment and morale. We measure the effectiveness of these processes on a regular basis, and all customer and client feedback is shared appropriately. The happiness and growth of our employees is our immediate goal when we consider our impact on local community and proving to be a company with a commitment to social justice and human equity. LABOR PRACTICES INDICATORS 2007 Employment Statistics LA1 Executive Department Employee Type Labor Sewers Team Heads Total # of Employees 3 3 7 16 Full Time 3 Part Time 3 7 Contracted 16 Paid Hourly 2 3 7 10 Paid Piece Rate 6 Supervised 2 3 7 10 Permanent 3 3 3 10 Local Level (2)L1, (2)L1, (1)L3 (4)L1, (3)L2 (2)l1, (9)L2 See Pg 16-17 (1)L3 (5)L3 LA2 2.1 – 2.2 We had no regular employees leave the company in 2007. We did switch 3 project-based laborers to on-call status, and four sewers were let go. LA3 (simplify answers - table) 2.1 - 2.3 In 2007, Ecologic Designs did not offer health, retirement or any type of typical benefits to its employees. Non-typical benefits included flexible scheduling, free and discounted products, access to special events, and start-up experience. In the second quarter of 2008, we will be offering voluntary health, dental, and retirement benefits through a human resources services agency. In 2008, we will also draft policy for maternity/paternity leave, stock options, and disability. Labor/Management Relations LA4 2.1 - 2.4 There were no employees covered by collective bargaining agreements at Ecologic Designs in 2007. This is also true for any contracted sewer or company that we used in 2007. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 32 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report LA5 2.1 As a start-up company, our production load is still not completely full and consistent. Due to the project based demand for certain types of labor and employees, there are times when significant change is reported with little notice. Often, we are able to give employees a week to two weeks notice if we believe demand for their position will decline. We have several employees on call for this reason. In addition, we accept a certain loss of productivity due to the flexibility we provide for our employees to conduct their personal and family affairs within their normal scheduled hours. Occupational Health and Safety LA7 2.1 All of our employees reside and work within the Local Level Boundaries as set on Pages 16-17, or within 15 miles of our central location in Boulder. There are no independent contractors on-site at Ecologic Designs, except for service trade people who conduct repairs and maintenance on our property. They are covered under our liability insurance policy and also by the building management company. In addition, most contractors cover their own liability insurance. 2.2 Minor injuries are not included in this data, although we can account for about a dozen small first aid incidents in 2007. Mainly consisting of minor cuts, bruises and soreness. There were no food, water or air quality related incidents. There are no chemical or material related illnesses or injuries, but we have recorded verbal concerns for air quality issues with cutting and heat welding materials. 2.3 In calculating ‘lost days,’ we measure scheduled workdays, as most of our employees are part-time and have changing schedules depending on their needs and company labor demands. We have had no lost days for illness or injury related to work activity. 100% of our lost days were due to personal issues, student obligations, family bereavement, un-work related illness and holidays. Lost days are measured from the moment a scheduled worker is not clocked in. 2.4 Injury, occupational diseases, lost days, and absentee rates are reported within our one region of operation. Lost Day Rate and Absentee Rate for Executives are based on 5 months (August through December 2007), and Absentee Rate for PT Employees. is based on 4 months (September through December 2007). Our President and other invested, non-paid employees were working from the beginning of the year through June, but we have elected to report only within the time period where there was substantially more structure and business activity and more than one paid employee. • Injury rate (IR) ZERO • Occupational diseases rate (ODR) ZERO • Lost day rate (LDR) 15 Full Days or • Absentee rate (AR) Among 3 FT Executives 2,400 scheduled hrs / 40 lost hrs 1.7% Absentee Rate Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 33 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Among 5-7 PT Employees 2,304 scheduled hrs / 90 lost hrs 3.9% Absentee Rate 2.5 There were no fatalities at Ecologic Designs. 2.6 We would report our workforce injury and accident statistics according to the ‘ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases’ should the need arise. LA8 2.1 We do not employ any registered programs to assist workforce members, their families, or community members regarding serious diseases. We do provide orientation and ongoing education regarding the use of materials and cleaners and other safety measures. We can offer non-certified advice on general health and toxicity issues due to the training and experience of several staff members. For air quality controls, our most concerned area of workforce health and safety, we train and maintain factory cleanliness, proper material cleaning methods, the use of breathing masks and proper ventilation and working in enclosed areas where toxic fumes and particles are present. All programs and support are directed at employees and do not include family or community. 2.2 We are not aware of any workers who are involved in occupational activities who have a high incidence or high risk of specific diseases. There are no members of our company that require special circumstances or needs that we are aware of. We are registered with a disabled workers placement agency to match appropriate candidates to available work demands. To date, we have not been given a match. Training and Education LA10 Senior Dept. Factory Operational Home Training Type Mngrs Heads Leaders Labor Sewers # of Employees 3 3 4 7 10 Orientation 40 23 3 28 6 Health & Safety 2 8 0 3 0 Job Specific .5 0 4 9 3 Ongoing 4 4 10 18 2 Business Performance 3 2 0 3.5 5 Reviews Total Hours: 52.5 40 21 61.5 26 Hrs/Emp Ratio: 17.5 13.33 5.25 8.8 2.6 *Training and Education are listed in Completed Hours Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 34 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Diversity and Equal Opportunity LA13 Employee Type Senior Mngrs Dept. Heads Admin. Production # of Employees 3 3 23 % Male 66.6% 100% Same 48% % Female 33.3% 0% As 52% % Minority 0% 33.3% Senior 70% Under 30 years 33.3% 66.6% Mngrs. 35% 30-50 years old 66.6% 33.3% 66% Over 50 years 0% 0% 9% LA14 2.1 Ecologic Designs has more men in direct employment with the company than women. Our internal employees consist of management, materials processing, shipping and fulfillment. More women are contracted as production sewers and are involved with design. Everyone is paid on the same wage formulas used to grade a certain position. Two of our production facilities are owned and operated by women, and there are six women on our product and graphic design teams that are not paid or are contracted on a project basis. 2.2 Gender has no effect on the pay rate of a position in our company. A gender to position rate ratio is 1:1. The base wage for material and warehouse labor is $8/hr and scales up to $12. Production sewers are paid from $9-15/hr based on experience and performance. Managers are paid $15/hr at this time. 2.3 Ecologic Designs pays on the 1st and 15th of every month. We utilize a computer based software time clock that manages our employee and executive timecards. We allow 15-minute breaks for every four hours worked and either !-hour or 1-hour lunch breaks depending on schedules. Currently, no employee receives overtime pay. Employees don’t work more than 40 hours per week and executives have their overtime tracked and will be offered equity ownership or fair value compensation for their time. Both parties agree upon all arrangements before employment begins. FUTURE GOALS We hope to increase skills development and advanced training we can offer our employees. We feel that maintaining our performance evaluations on a regular basis gives us an opportunity to determine the best training strategies for each employee individually. We group train whenever possible, but often we have to train employees separately. It would be more efficient if we could streamline the topics and timing of these educational sessions. We continue to learn from every job we service, and there Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 35 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report is an expectation that solutions we discover as we go, will be applied to more and more jobs over our lifetime. We would love to show more diversity in our workplace, but we will hire the best candidates that are available to us. We are limited by our localization goals, but mostly by the demographics or our region. With the planned implementation of benefits packages and pay increases, we hope to build more commitment and long-term investment by our employees and offer a lucrative work environment for all of our stakeholders. We identify that we have Lost Days that are a bit higher than we expected. This is largely due to our flexibility and understanding of other life duties. Many of our laborers are high school and college students, and we accommodate their academic needs and encourage their education is first priority. MANAGEMENT APPROACH TO HUMAN RIGHTS We don’t have formal policy statements regarding the following Human Rights issues at this time. We absolutely abstain from participating in and denounce injustices regarding discrimination, child labor, forced labor and compulsory labor. We offer all of our employees the daily opportunity to speak to managers privately and in front of the whole company once a week. There is no expressed interest in our workforce to associate together as a group or to bargain collectively. While we have not directly supported any agencies that advocate or lobby for human rights in 2007, we’ve demonstrated our values publicly at every trade show and green festival we’ve attended and have had numerous conversations with vendors and customers about these impacts. We have partnered with two for-social profits that have outreach aimed at children and adults around the world regarding human rights, peace, non-violent communication, conflict resolution, and environmental stewardship. These groups are The EarthSeeds Project and Empowerment Works. We support indigenous rights in all markets where these people are involved. Only when we maximize the value of human and natural resources will we create sustainable businesses and economies that operate to increase localized quality of living and global equity. In our operations, we are connected to villages in China and Pakistan where our distributors source renewable fibers and fabrics. We recognize the risk associated with our level of substantiation and hope to improve this issue in 2008. Based on our gathered intelligence, we are confident distributor claims are accurate and in alignment Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 36 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report with our objectives, eradicate violations of human and material value. HUMAN RIGHTS INDICATORS Investment and Procurement Practices HR1 2.1 Ecologic Designs defines a significant investment as one that requires a majority vote by the Executive Team or by the owners and is recorded by a direct financial transaction and written agreement. Ecologic Designs has no ownership or interest in any other company. The owners and employees may hold ownership or interest in other companies. Should we transact a significant investment in the future, we will surely include human rights criteria in our selection process. 2.2 In 2007 there was one significant investment agreement, the acquisition of a local company’s intellectual and physical property. Cragear, in Boulder, CO specializes in reclamation programs for climbing ropes and repurposing decommissioned ropes into accessory products. We developed our agreement over months of time and many collaborative days marketing and selling goods under a transitional co-brand. In the beginning of 2008, our final agreement was drafted and signed. We purchased this line of Cragear’s products, his existing inventory and all intellectual property regarding the acquisition, cleaning and processing of materials and production methods. We received training in-house and receive ongoing support and sales assistance from Cragear to this day. We own the rights to this line, but we have entered into a partnership more than a buyout. We have an affinity to work together and strive to create a stronger brand, one that returns to community in educational and monetary ways. HR2 2.1 – 2.2 The total number of significant suppliers we used in 2007 is sixteen. We also have several vendors who donate materials to us, these total about 12 significant suppliers and don’t include small bike shops or climbing gyms. We are unsure about how many have been screened for human rights, but we’ve been told none have any violations on record. 2.3 There were zero contracts with significant suppliers and contractors that were either declined, imposed performance conditions, or were subject to other actions as a result of human rights screening. Non-discrimination HR4 2.1 – 2.3 There are no incidents of discrimination on record at Ecologic Designs. ‘Incidents’ refer to legal actions or complaints registered with the organization or appropriate authorities through a formal process, or instances of non-compliance identified by the organization through established procedures such as management system audits or formal monitoring programs in the workplace. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 37 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Freedom of Association and Collective Bargaining HR5 2.1 – 2.3 We cannot identify any operations in which employee rights to exercise freedom of association or collective bargaining are at risk. There is not a strong presence of union labor in Colorado, and virtually no manufacturing facilities or co-ops of industrial sewers that are unionized. While we don’t encourage collective bargaining in our operations, we encompass all the human value guidelines that unions are designed to maintain. Since we are still a new company, having more than one employee for less than a year, we feel the services we provided employees was beyond reasonable and on the right track to provide a healthy, simulating environment. We are in conversation with U.S. union factories and their unionized sub-contractors to explore the benefits of collaboration. We pay our employees livable wages and offer the most benefits we can, and we produced everything in 2007 within 15 miles of our warehouse in Boulder. A relationship between a private company and a union network is an intriguing one, and we will explore it more in this year. Abolition of Child Labor HR6 2.1 – 2.3 Ecologic Designs has a strict policy regarding labor and social justice. We do not support child labor in any way and document how our company is free of child labor. Internally and at all of our U.S. facilities, there is absolutely no child labor. Regarding the production of our renewable fibers that come from China, Pakistan and we have documentation and have verbally confirmed that none of our resources include child labor. There is a slight risk that one of our suppliers in Taiwan may include child labor, but there are no incidents on record and the company has a very high reputation in manufacturing standards and work environment. We just haven’t been able to document with a high level of substantiation that their processes are 100% just. We have taken moderate steps to ensure all claims. Receiving certified documents from foreign countries and operations can be time consuming and challenging. Based on the research and verbal and written notices from our suppliers, we feel confident that nowhere in our supply chain are their unfair, unsafe, or unjust labor practices. We have not lobbied or made any other measures at this time to address our concerns for child labor around the globe. We have no formal plans to campaign against it, but we do have a voice and we will share our values with everyone we do business with. Prevention of Forced and Compulsory Labor HR7 2.1 There are no incidents of forced or compulsory labor at Ecologic Designs, either internally or in our supply chain. We do not stand for this type of treatment and are in Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 38 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report business to only maximize the value of human effort. Security Practices HR8 2.1 Ecologic Designs employs no security personnel at this time. 100% of the time an owner is the last person to leave our warehouse, over 95% of the time a manager is on the premise and we have had zero incidents regarding any human rights violation or even warnings. Indigenous Rights HR9 2.1 – 2.3 To the best of our knowledge, there are no incidents involving indigenous rights among Ecologic Designs’ suppliers, vendors or clients in or outside the U.S. We directly operate all business within our Local Level Boundaries. We do have materials that are grown and processed in other countries, but we have little influence at this time to impact these supply channels. With regards to indigenous rights, we have no reason to believe there are violations or incidents that need to be addressed. MANAGEMENT APPROACH TO SOCIETY Ecologic Designs is strictly against any actions or attempts to corrupt our business model or human resources. We are trying to present our company as transparent as possible. We have several goals to increase public education opportunities as well as identifying the best political and regulatory issues with which to get involved. We do plan on affecting the laws and regulations with govern consumer and business product manufacturing standards. We feel that products should be designed and fabricated with the best practices that support people, planet and profit. SOCIETY INDICATORS Community SO1 2.1 – 2.2 Ecologic Designs has an organized program for interacting with our local communities and locations that serve as material collection spots. Since the majority of our acquisition and all of our production processes occur within our 15 mile Local Level Boundary, we have only developed systems to analyze this region. We are working on location specific programs to manage isolated, national material collection points. Our goal is to maximize reclamation and recycling efforts while minimizing unnecessary transportation, expended human energy and the processing of material resources. Ecologic Designs has an incredible business model for national and international expansion. We call it a Localized, Regional Production Model. It means that when we have enough demand for our products and services in a given geographic region, we will select through sustainable indicators the best locations for satellite facilities. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 39 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report For example, when our West Coast market can support the expansion, we will create various local collection points for vinyl, inner tubes and climbing rope, and local factory waste materials. These materials will be processed at an owned or contracted location to be cleaned and processed for production. We will bring these materials and ship purchased resources to local production facilities. We will select the best factory partners to contract our sewing and we will operate a regional office and distribution center to deliver locally produced products. This model will be substantiated internally through the creation of growth indicators that will encompass aspects of the GRI G3 Assessment and other indicators that we will create specifically for our own operations. 2.3 100% of our operations include some aspect of our community assessment programs. More than 90% of these programs directly affect communities within our 15 mile Local Level Boundary. The other 10% is scattered around the U.S. 2.4 – 2.5 We feel our negative impacts on local and national communities have been mitigated mainly in the areas of human outputs necessary to acquire and process reclaimed and recycled materials. Human resource value is important to this system. If we can make it easier to funnel these materials into our supply channel, there is increased participation and success. We’ve had to tailor our programs to accommodate various participants, so that logistically the system runs smoothly and requires the least amount of energy to complete. Feedback and participant interviews have been instrumental in designing programs that work for all stakeholders involved. Corruption SO2 & SO4 2.1 – 2.2 Ecologic Designs has no incidents or evidence of corruption within our internal operations or with our contracted vendors. We are not aware of any in our entire supply chain or through distribution channels. Only a handful of companies that we deal with that are not clients are large enough to have any real potential for corruption. SO3 2.1 Executive Department Employee Type Labor Sewers Team Heads Total # of Employees 3 3 7 16 2.2 No employees have been given anti-corruption training. We do instruct about integrity and honesty in our work and communications. We train about the importance of living with values that we expect from members of a learning organization. Public Policy SO5 2.1 – 2.3 Ecologic Designs is a member of many organizations that advocate, educate and organize the development of new sustainable programs in many areas. We are not Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 40 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report only interested in being active in commercial and industrial programs, like the outdoor and action sports products industry, but we’ve directly engaged in a plethora of community policies as well. The policy actions we participate in and directly support include: o Sustainable manufacturing within outdoor gear and lifestyle products markets o Domestic material sourcing, labor and production in any industry o Environmental education regarding sports and recreation, materials, and toxics o Bicycle service outreach to local, underprivileged children and for safe cycling to work and school, municipal programs for bike lanes and trails, public transportation. o Conservation and Preservation of natural habitats and recreational areas. SO8 2.1 – 2.4 Ecologic Designs has zero administrative or judicial sanctions levied against it for failure to comply with any laws or regulations. We have incurred no fines or warnings. MANAGEMENT APPROACH TO PRODUCT RESPONSIBILITY Product and Service Labeling The required standards are far below the information we believe should be included on all consumer and business products. Please refer to our product Hang Tags and our 2008 Catalog for a reference to our commitment to transparency and education. Marketing Communications Ecologic Designs realizes the importance of marketing the company and our products in accordance with the highest standards; so to be sustainable and build genuine trust among our clients and customers, we use transparency as a tool. We adhere to generally accepted ethical and cultural standards, including privacy intrusion or the misuse of information, dual standards, or wrongly influencing vulnerable audiences such as children. We have invested all of our marketing dollars into creating a more informative website, our new 2008 Catalog, educational videos and exceptional Hang Tags. We are publishing our story, what we learn, and why we believe our products are the best choices in the markets that we participate. Educating clients and customers drives our growth model, giving them options to invest in domestically produced, sustainable outdoor gear and lifestyle products. Customer Privacy Ecologic Designs protects customer and client information with every reasonable measure of security. We apply security checks on our website, on our financial and business software and we care for physical receipts with the same care. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 41 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report We do not share or sell our mailing lists or any lists that contain customer or client personal information. Compliance Ecologic Designs would be serving no one if we conduct our business in an unlawful or unethical manner. PRODUCT REPONSIBILITY INDICATORS Customer Health and Safety PR1 2.1 We have only been testing health and safety issues on our products for about a year. This is how long our products have been in the market. Due to the nature of our products, there is minimal risk that customers can misuse them or be impacted by them in a negative way. We have not conducted material studies that require a laboratory or chemical analysis. And we haven’t had the opportunity yet to test our products after one year of use. PR2 2.1 -2.2 We do assess he health and safety of our products through different stages of its life cycle. We are in the process of developing more accurate and thorough systems to monitor and evaluate our product impacts. We are a new company, and can only gather feedback from products we’ve sold to customers in less than one year. There have been zero incidents reported to date that reflect poor health and safety issues. We are investigating the health impacts of vinyl and rubber materials used to transport food and personal care products. We have made several design changes to increase our expected product lifetime, and we are starting to create a Take Back Program which will offer product reclamation when the usefulness of our products decline. 2.3 - 2.6 There are no incidents of non-compliance with regard to laws and regulations for product responsibility. Product and Service Labeling PR3 Ecologic Designs labels and tags all of our bags, accessories and apparel according to Federal trade regulations and applicable laws to our product categories. Textile Fiber Products Identification Act covers which products need to be labeled, which don’t and how. Here are the information pieces that are required by textile identification laws: o Fiber Content – states percentages and name guidelines of content o Clothing Care Label – how to properly care for your product o Country of Origin – where the product was processed and made o Manufacturer’s Identity – the name of the company who made it Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 42 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report o Made in the U.S.A. – only applies to products that are 100% domestic and when materials are imported, you must state that country of origin. We have been declaring everything truthfully about our materials and finished products, both in print and verbally. Most of our customers know that our renewable fabrics and a portion of our P.E.T. come from Asia. We’ve always disclosed this fact, along with our reasons why. We are investigating whether or not we should disclose the country of origin of our P.E.T. fabric on labels that now say Made in the U.S.A. only. Every product we make comes with a product Hang Tag that discloses information that is required and also added by our own standards for transparency and education. Our Hang Tags include an Ingredient Profile that gives information about each major material that goes into that product. There are symbols and definitions of each material. Our current Catalog and Website show in detail, the components and engineering that goes into each product. Our materials are so unique and our products are constructed so creatively, that we’ve had to design a new symbol to represent products that are constructed of reclaimed materials. Recycled content has been on the market for decades and is standardized simply by the inclusion of the recycle triangle, a percentage and possibly an ID number to identify the material specifically. There is no established standard for products made from reclaimed materials, and we hope to provide the world with a new symbol that can be used to mark every product making this claim. PR5 Ecologic Designs is a systems-based learning organization. We’re interested in developing stronger relationships with all of our stakeholders, but it is no surprise that business clients and consumers are very high up on our list. Keep in mind, we developed our line of products for over one year before we launched Green Guru Gear to retail consumer and B2B markets. We’ve only been selling products to the public since April 2007, most of the consumer feedback we receive is face-to-face, over the phone, and via email. At this time, we have no formal customer service department, but we accommodate all consumer inquiries Marketing Communications PR6 2.1 We have not been reported for violation of any communication codes or federal standards. In fact, we haven’t spent any money on advertising in this report period. Our marketing efforts have been grassroots in the sense that we’ve supported many environmental and cultural events to build our brand identity and street value. We’ve built enough interest with companies that our B2B Division is developing at a successful rate. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 43 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report 2.2 We review our organizational compliance to lawful and internal codes every time we produce a new piece of marketing collateral or publish anything in the company’s name. 2.3 – 2.4 We don’t sell any products that are banned or questionable in any market in the world. PR7 2.1 Ecologic Designs has not received any warnings or violations referring to incidents of non-compliance of marketing or any communication codes or laws, whether mandated or internal. Customer Privacy PR8 2.1-2.5 Ecologic Designs has not heard or recorded any complaints for any customer or client privacy violation or concern. While we may not have many icons posted on our website, we do employ several tools for securing personal information transacted on our site. Our shopping cart is secure and we are developing more layers of security in our new website and cart coming out this spring. Compliance PR9 2.1 – 2.3 We have not been fined or notified of any non-compliance of any law or regulation. Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 44 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report References City of Boulder, 2007, The Basics of Your Water Budget, http://www.ci.boulder.co.us/index.php?option=com_content&task=view&id=6243&Itemid=2039 Energy Information Administration, 2007a, "Electric Sales, Revenue, and Average Price 2006," Energy Information Administration. http://www.eia.doe.gov/cneaf/electricity/esr/esr_sum.html Energy Information Administration, 2007b, "Table 1. 2006 Summary Statistics (Colorado)," Colorado Electricity Profile: 2006 Edition, Energy Information Administration, Washington, D.C., U.S. Department of Energy, Vol. DOE/EIA-0348. http://www.eia.doe.gov/cneaf/electricity/st_profiles/colorado.html Energy Information Administration, 2008a, Natural Gas Consumption by End Use: Colorado, http://tonto.eia.doe.gov/dnav/ng/ng_cons_sum_dcu_SCO_a.htm Energy Information Administration, 2008b, Natural Gas Prices: Colorado, http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_sco_a.htm Energy Information Administration, 2008c, Natural Gas Su mmary, http://tonto.eia.doe.gov/dnav/ng/ng_sum_lsum_dcu_nus_a.htm Energy Information Administration, 2008d, Net Generation by State by Type of Producer by Energy Source, 1990-2006, www.eia.doe.gov/cneaf/electricity/epa/generation_state.xls Houghton, J. T., Ding, Y., Griggs, D. J., Noguer, M., van der Linden, P. J., Dai, X., Maskell, K., Johnson, C. A. and Trenberth, K., ed., 2001, Climate Change 2001: The Scientific Basis, IPCC Third Assessment Report, Intergovernmental Panel on Climate Change, Geneva, Switzerland. http://www.grida.no/climate/ipcc_tar/wg1/001.htm (see Appendix VIII, Table 3) International Energy Agency, 2008, Electricity/Heat in United States in 2005, http://www.iea.org/Textbase/stats/electricitydata.asp?COUNTRY_CODE=US Pré Consultants, 2006, "Simapro 7.1 Multi User," Pré Consultants. http://www.pre.nl/simapro/simapro_lca_software.htm Pré Consultants, 2007, Eco-Indicator 95, http://www.pre.nl/eco-indicator95/eco-indicator95.htm Scientific Assessment Panel of the Montreal Protocol on Substances that Deplete the Ozone Layer, 2006, "Scientific Assessment of Ozone Depletion: 2006," World Meteorological Organization and the United Nations Environment Programme, Paris. http://ozone.unep.org/Publications/Assessment_Reports/ U.S. Department of Energy, 2006, Biomass Energy Data Book: Appendix A, U.S. Department of Energy, https://cta.ornl.gov/bedb/appendix_a.shtml. U.S. Environmental Protection Agency, 2002, "A Comprehensive Analysis of Biodiesel Impacts on Exhaust Emissions," U.S. Environmental Protection Agency, Washington, D.C., U.S. Environmental Protection Agency, 2008, "U.S. Greenhouse Gas Inventory Reports: Energy," U.S. Environmental Protection Agency, Washington, D.C., http://www.epa.gov/climatechange/emissions/usinventoryreport.html Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 45 of 46 4/10/08 Ecologic Designs, Inc. 2007 Corporate Sustainability Report Created by: Robert Bogatin, VP Business Operations & Abigail Clarke, Sustainability Engineer Page 46 of 46 4/10/08 Ecologic Designs, Inc. 2500 47th Street Unit 12 Boulder, CO 80301 phone 1.303.258.1611 fax 1.303.258.3076 www.ecologicdesigns.com Robert Bogatin April 11, 2008 Ecologic Designs, Inc VP of Business Operations 2500 47th Street, Unit 12 Boulder, CO 80301 Re: Assurance Statement for Ecologic Design, Inc. GRI – G3 Sustainability Report Prepared by Symbiotic Engineering, LLC Dear Mr. Bogatin: Symbiotic Engineering (SE) believes that corporate sustainability reporting (CSR) is important for a business to create a beneficial presence in all aspects of community. However, preparing a CSR report per internationally accepted protocols is often limited by the lack of resources for small & medium enterprises (SMEs). SMEs comprise a significant sector and perform a central role in a nation’s employment and a community’s viability. For example: • In the United States, nearly half of the private workforce is employed in SMEs, of which three-fifth have less than five employees. • In Japan, 78% of jobs are generated by SMEs. CSR reports should be viewed in two ways: 1) reporting transparently on all indicators for an application level; and 2) reporting for stakeholders to view input and how the reporting organization is addressing these. This provides the baseline and the goal. Likewise, an assurance report comments on the methodologies and transparency of the CSR to provide an unbiased approval. Ecologic Designs (ED) has reported on all GRI G3 indicators and provided all materials for SE to verify the completeness and accuracy of their findings. As such, the CSR can apply the A+ Application Level to the cover. However, SE declares a moderate level of assurance on this report primarily because ED has not developed a methodology for defining stakeholders and identifying the importance of stakeholder issues into the CSR. SE believes that ED will correct this in future CSR reports and that ED has provided every effort to be transparent and forthcoming. ED will undoubtedly grow as a company. This will also result in many of the indicators reported in this year’s CSR will require more rigorous attention in order to maintain the level of reporting achieved this year. Likewise, SE’s goal as an assurance provider is to continue to develop levels of sophistication to provide reporters with constructive advice while on the sustainability path. 4845 Pearl East Circle, Ste 101 “How do you Define Green?” Office: 303-596-1401 Boulder, CO 80301 Fax: 303-417-6301 www.symbiotic-engineering.com email@example.com The assurance report, attached to this assurance statement, addresses the Ecologic Designs: Sustainability Report, dated April 1st, 2008. The report includes general and specific comments on the CSR report and a more thorough assurance discussion for future reports. The specific immediate actions should be considered by ED for preparing future CSR reports. Recommendations • ED’s Sustainability Committee should begin addressing the comments made in this assurance report immediately, perhaps even one or two comment each week, is all that is required for ED to make significant gains in future CSR reports. • As this is the first year of reporting, the indicators in the CSR can be normalized and compared to ED’s products and procedures in coming years, i.e. this year’s CSR is a baseline for future reporting. • This is a working document and ED should strive to make this visually attractive to read and understand. Figures, graphs, schematics are a part of this for next year. • ED provides an invaluable service to produce useful apparel from solid waste, thus, living the “cradle-to-cradle” or C2C business plan. However, much of the CSR report answered GRI sections with solely economic jargon such as “efficiency” and “production.” • Begin to think and advertise as a C2C company. The briefly mentioned “Take Back” program completes this. How will ED market this and quantify the reductions in GHG due to your products and end-of-life services? SE was not compensated for this Assurance Report and maintains that this report presents a thoroughly unbiased review of ED’s CSR report. We believe that ED has made, and will continue to make, progress towards sustainability. I would be happy to discuss the following comments in the attached assurance report with you if you have any questions or comments. Sincerely, Mark Reiner, PhD, PE, PG. Principal | LEED AP Reiner@symbiotic-engineering.com 4845 Pearl East Circle, Ste 101 “How do you Define Green?” Office: 303-596-1401 Boulder, CO 80301 Fax: 303-417-6301 www.symbiotic-engineering.com firstname.lastname@example.org Symbiotic Engineering, LLC Assurance Report Ecologic Designs – GRI G3 2007 CSR Report MBReiner 4/11/2008 Table of Contents Introduction .................................................................................................................................................. 4 General Comments ....................................................................................................................................... 4 Section Specific Comments ........................................................................................................................... 4 Management Approach and Performance Indicators .................................................................................. 7 . Disclosure on Management Approach to Economic Performance .......................................................... 7 Economic Indicators .................................................................................................................................. 8 Environmental Indicators ........................................................................................................................ 10 Social Indicators – Labor Practices .......................................................................................................... 15 Social Indicators – Human Rights ............................................................................................................ 16 Social Indicators – Society Indicators ...................................................................................................... 18 Social Indicators – Product Responsibility .............................................................................................. 20 AA1000AS – 2008 Statement Principles for Conducting Sustainability Assurance .................................... 22 Stakeholder Engagement .................................................................................................................... 22 Content Principles ................................................................................................................................... 22 Materiality ........................................................................................................................................... 22 . Completeness ..................................................................................................................................... 23 Responsiveness ................................................................................................................................... 24 The Interrelationship of the principles ............................................................................................... 24 Quality of information principles ............................................................................................................ 24 . Reliability ............................................................................................................................................ 24 Clarity .................................................................................................................................................. 25 Balance ................................................................................................................................................ 25 Comparability ...................................................................................................................................... 26 Accuracy .............................................................................................................................................. 26 Timeliness ........................................................................................................................................... 27 Methodology for Conducting Sustainability Assurance .............................................................................. 27 Defining the scope of the engagement................................................................................................... 27 Process for identifying Intended audience / user ............................................................................... 27 2 Process for identifying the material issues for the report .................................................................. 27 Process for determining the report boundary .................................................................................... 28 Limitations........................................................................................................................................... 28 Disclosures covered ............................................................................................................................ 28 Level of assurance ............................................................................................................................... 28 Limitations........................................................................................................................................... 29 Engagement acceptance ......................................................................................................................... 29 Independence and impartiality ........................................................................................................... 29 Competence ........................................................................................................................................ 29 Duty of care ......................................................................................................................................... 29 Reporting criteria and evidence .......................................................................................................... 29 3 Introduction The comments in this assurance report are intended to be in-depth and cover general comments, section specific and provide discussion on AA1000AS – 2008 standard to provide constructive goals for future ED CSR reports. General Comments • Title all sections in the report, e.g. Section 2.2: Primary Brands/Products and Services • Please explain all acronyms such as B2B, LOHAS, SKUs…etc. • Although this is a working document and not a marketing brochure, it would be a much more useful document to integrate figures and tables. Section Specific Comments • Section 1.1: The sustainability statement had a couple significant missed opportunities to qualify ED as a sustainable company. o The emphasis should not be that ED is one of several companies using the solid waste stream to provide products, but an emphasis of the cradle-to-cradle (C2C) concept and that your products represent a GHG sink (could even quantify total GHG reductions!) due to avoided landfilling and extraction of natural resources. o There was not a concise development of the short, medium and long-term challenges facing this industry. Will supply chain or labor pool change? What are the specific goals for each goal. o Your stakeholders are not really addressed in terms of overall sustainability. This is a critical element to consider. • Section 1.2: This section was incorporated into Section 1.1 and should be considered separately. Identifying the key impacts, risks and opportunities is the primary reason for generating a CSR and seeking external assurance. • Section 2.3: ED is a new company, but for next year, a hierarchical chart of management and employees, even suppliers, would be appropriate here. • Section 2.5: Although it’s stated that all operations are within 15 miles of headquarters, the statement “we did procure reclaimed, recycled and raw materials from outside this region” should be discussed, quantified, and qualified why it was not included in scope boundary. I would recommend a figure in this section identifying the operational boundaries. • Section 2.8: ED provides a good summary chart of employees in the economic indicator section by category that could be used in this section as well. 4 • Section 3.3: Please add sentence regarding the anticipated publication of the CSR, i.e. it is anticipated that the CSR report will be updated by February 15thof every year. Also, would be good to bullet which organizations that you are members of in this section, e.g. GRI, Climate Registry…etc. • Section 3.5: This is a significant section and there are a few omissions of note: o Characterize stakeholders as internal (e.g., employees), external (e.g., media, government), upstream (e.g., supply chain), and downstream (e.g. customers). o Present questionnaire, or a hyperlink, that was used for stakeholder input. Identify why/why not the methodology was successful and what will be done for next year. o Present results and how the threshold of materiality was defined. o Was “environmental responsibility” the only significant issue? Do all employees feel this way? If so, why report for an A Application Level and address all the issues that you did? o How were they prioritized? This section really needs to be expanded for next year’s report. • Section 3.6: The boundary figure used in the economic indicators would be useful here. The report should make it easy to find the data for stakeholders. Also, please clarify a couple of statements in this section: “…few material inputs comes from overseas.” How much? Should this be identified on the boundary? Transport emissions can be very significant, even more than the product itself. This is important if ED is qualifying itself as a GHG sink. Another statement in this section, “…come from within Local Level 3.” Although this is defined in the economic indicator section, it is new here. • Section 3.7: Another very important section for future reporting. What data are you collecting? What are the procedures for obtaining data? And, what procedures are being put in place to have full reporting for the 2008 CSR? • Section 3.8: This section requires two things; 1) state the operational and organizational boundary of your facility(ies) to illustrate what control you have in energy usage, for example; and 2) consider how to evaluate progress as ED grows. For example, can you state a kWh/product, $/product or a GHG emissions/product? This is an important goal for 2008 as this will allow ED to see how growth makes a more environmentally/ economically efficient product and normalize operations during expansion. • Section 3.9: Although the protocols are mentioned later with the indicators, this section is not adequately explained. All protocols used to evaluate and report for the indicators in this report should be listed here. I would recommend a table with indicator ID in one column and the protocol used to evaluate in the next column. • Section 3.12: I think ED may consider having a separate table of contents for the indicators and disclosures. • Section 3.13: External assurance from Symbiotic Engineering and Valparaiso University is certainly allowing for a transparent critique of ED’s sustainable practices and reporting. 5 • Section 4.1: ED has a good deal of input from employees. Perhaps consider a sustainability committee to address the comments in this assurance report. One critical area is how stakeholder input can be gathered, sorted, and prioritized for materiality. A schematic showing the relationship of all committees to the management decision- making would be valuable here. This comment is made several times in this report to emphasize it as priority one. • Section 4.7: This only states the section intent, and does not provide an answer. • Section 4.8: Consider appendices for further reports. These could include some calculations, e.g. LCA of products, and also your mission, vision statements if too long to concisely place in this report. • Section 4.9: This section does not address anything but the production process. How are the factors of sustainability addressed? How are you reacting to stakeholders on an economic and equity level? How is your business impacting the community by reducing solid waste flows, or by generating income…etc? • Section 4.10: It appears that discussing “reach higher levels of efficiency and profitable return” is assumed to be “sustainability”. This is in several sections. The executive team of ED needs to address how the economic, environmental, and equity of ED is constantly being monitored, improved and addressed. Otherwise, from this section, ED could easily be confused with a Fortune 500 only addressing profit and “sustainability washing”. • Section 4.11: States the section title but does not address the question. This is risk management for ED. How are you looking forward to addressing ED’s economic, environmental, and equity risks? Understandably, as ED is a new company, this answer is not fully developed at this point, but, this section should be addressed with more rigor in this coming and future years. • Section 4.12: It would be useful to state the basic elements of these charters that you subscribe to. Simply stating other groups gives the impression that ED is going through the motions of being sustainable and not actually trying to live it. • Section 4.14: This section should be developed into a framework of your stakeholders. I would suggest putting them, by name, into the categories shown on the figure below in order to understand the different expectations of each group and what their concerns may be. 6 Simply stating types of stakeholders does not help identify why they are stakeholders. • Section 4.15: This section is a significant consideration for ED. Using the figure above, describe the process as to why they are stakeholders. The current description in Section 4.15 discusses influence over the stakeholders. This section should dwell on the stakeholder influence over ED. What are the expectations of each category and how is ED gathering this information and putting into practice the effort to address these? • Section 4.16: ED should consider the above categories and what method of stakeholder engagement would be best for each. Perhaps a table here that also includes intended frequency of seeking feedback. Understood that ED’s website is intended to enable customers to login and participate in surveys…etc. However, will ED post negative responses? How is ED seeking this type of feedback in order to really be pushing the sustainability envelope? • Section 4.17: ED should consider posting some of the stakeholder feedback online and address how ED is responding. Also, ED employees are stakeholders. How is ED allowing them a voice in product design, living wages, movement toward social equity principles? Management Approach and Performance Indicators Disclosure on Management Approach to Economic Performance • Economic Performance: Perhaps more concisely state your goals (which ED did), but also, add how ED is an important industry for the region. ED is taking solid waste away from landfills, providing a reduction to the need of significantly expensive municipal landfills. 7 • Market Presence: This is where ED should try to stand out as a market force that does not currently exist. Emphasizing the need for the C2C approach for the goods you sell and then offer a return/upgrade would be unique and ED could state that this will identify them as a market presence in this regard. • Indirect Economic Impacts: ED’s CSR report currently states “Direct Economic Impacts” and therefore needs to consider this for next year. How has ED affected the indirect impacts? For example, reduced landfill expenses for a municipality or contractor…etc. Economic Indicators It is commendable that ED addressed all economic indicators (core and additional) in the GRI G3 protocols. As the application level of the CSR report is based on addressing these indicators, Symbiotic Engineering has placed an “accept/reject” box next to each to confirm the application level for this GRI report as shown below. ACCEPT REJECT EC1 Direct Economic Value Generated √ ED needs to report its retained earnings per the EC1 requirement. SE verified the following on a site visit to ED on April 11th, 2008. Presentation Accept Revenues Accepted Operating Costs Accepted Employee Wages and Benefits Accepted Payments to Providers of Funds Accepted Payments to Government Accepted Community Investments Accepted Voluntary donations Accepted 8 ACCEPT REJECT EC2 Financial Implications/Risks Associated with Climate Change √ As ED provides an environmental benefit to the region, there are few risks and fewer financial risks to ED in this regard. However, the intent of EC2 is to also identify opportunities. Can the reduction of solid waste be used in the carbon market, e.g. the future Colorado Carbon Fund sponsored by the Colorado Governor’s Office? If so, what protocols and accounting (financial and economic) have to be put into place. How will ED expand this from a 15 mile boundary into new markets using these unique opportunities? ACCEPT REJECT EC3 Coverage of Benefit Plan √ ED has adequately disclosed the coverage of the organization’s defined benefit plan obligations as well as plans for future possibilities. ED is only in the second year of operation and has relatively small revenues. As the company grows this element may be re-evaluated considering employee benefits and retention incentives. However, ED may continue with its philosophy as stated in section 2.6. ACCEPT REJECT EC4 Financial Assistance received from Government √ Since ED receives no financial assistance from the Government, this reporting component has been adequately addressed. ACCEPT REJECT EC5 Range of ratios of standard entry level wage compared to local √ minimum wage at significant locations of operation. ED has satisfactorily addressed EC5, but should be careful to avoid discrimination in wages under the FLSA (Fair Labor Standards Act). Understandably, ED was trying to address whether they are paying a livable wage, but should be fair in entry level wages and not base those wages on pay based on personal criteria such as “this pay tier is given to employees that still live with their parents, have no children and are not dependent on this wage.” Hopefully, this statement has nothing to do with the determination of wages paid to employees by ED. If so, it would be sufficient to state in the report that the lowest pay is 14% above Colorado’s minimum wage and omitting this sentence. 9 ACCEPT REJECT EC6 Policies for Spending on Local Suppliers √ ED has adequately disclosed its procedures for local hiring. ACCEPT REJECT EC7 Local Hiring √ ED has adequately disclosed its procedures for local hiring. ACCEPT REJECT EC8 Development of Infrastructure and Services Pro-bono √ ED has adequately disclosed its service to the region by providing a necessary recycling service. Hence, the business itself is infrastructure. The in-kind is from services provided to other recyclers. ACCEPT REJECT EC9 Significant Indirect Economic Impacts √ ED has adequately disclosed its procedures for this indicator. Environmental Indicators ED should comment on the “plant-base cleaning solutions” and the amount of solid waste that is disposed of from production processes to complete the material flows. This includes quantifying the waste and water used to process the materials. Water has an embodied energy and, therefore, this is an opportunity to develop a baseline of energy and GHG units per product to provide goals for further reductions. Although the workers are wearing “rated masks” (specify the rating), what components are still being discharged into the environment? Can this be a significant risk for ED, either on a human health issue or a climate risk? ED should comment on a short-term (or long-term) goal of becoming carbon neutral for example. 10 ED’s “Department of Transportation” is another positive element that should be showcased. Can ED provide a quantifiable reduction in emissions for the vehicles? Is a 7.3L engine, even though running on biodiesel, necessary? ACCEPT REJECT EN1 Material Used by Weight or Volume √ ED reports all material flows by the appropriate category. However, zero waste is shown and should either be commented on that zero waste is leaving ED, or identified in future tables. ACCEPT REJECT EN2 Percentage of Recycled Input Materials √ ED reports all material flows by the appropriate category. Again, the total use of recycled materials is a significant strength of ED that should be quantified in terms of GHG reductions in the future. ACCEPT REJECT EN3 Direct Energy by Primary Source √ In general, the tables should be labeled with a clear title. Also, the units should be listed in the second category. ED clearly identifies that transportation fuel consumption is the only source of direct energy use and categorizes that fuel use by renewable / non-renewable and discusses sources for energy content data. Addition of GHG emission data to the tables is a nice extra that is not required. For clarity, the emission factors used to convert from fuel use to GHG emissions should either be listed in the tables or footnoted. To verify these values, fuel purchases records or equivalent would need to be viewed. Also need to verify that ED does not have any onsite boilers that combust natural gas that should be included in this indicator. • Direct energy sources purchased • Direct energy sources produced • Direct energy sources sold • Total direct energy consumption o Renewable primary o Non-renewable primary 11 ACCEPT REJECT EN4 Indirect Energy Consumption by Primary Source √ Need to verify, is the natural gas purchased/consumed used in a boiler owned by ED or by the property owner. Also, “primary energy values” appear to be too close to “intermediate energy values”. Need to see the methodology/data/rationale before accepting. ACCEPT REJECT EN8 Water Withdrawal by Source √ ED has complied with this indicator. ACCEPT REJECT EN11 Headquarters Adjacent to Biodiversity √ ED headquarters are adjacent to a riparian corridor that leads to the larger Boulder Creek. ED should report on the wetlands per Ramsar convention definition and IUCN endangered species within a 5 mile radius for awareness purposes. ACCEPT REJECT EN12 Significant Impacts to Biodiversity √ ED has addressed this indicator, but should identify the possibility of any contaminants that could be carried into the adjacent riparian corridor by rainwater and potential for mitigation. ACCEPT REJECT EN16 Total Direct and Indirect GHG Emissions by Weight √ Clearly title the tables. Also, include the activity data (i.e. amount of energy used in gigajoules) and the emissions factor (mtCO2e/GJ) in the same table for clarity. Verified on April 11, 2008 with documentation of activity data (as in EN 3 and 4) and emission factors / GWPs used. 12 ACCEPT REJECT EN17 Other Relevant Indirect GHG Emissions by Weight √ Good discussion of relevant indicators and magnitudes. Could potentially look to take credit for the avoided landfilling impacts of the recycled materials the company uses in the future. ACCEPT REJECT EN19 Other Relevant Indirect GHG Emissions by Weight √ ED could report by vehicle, but has fulfilled the intent of EN19. ACCEPT REJECT EN20 SOx / NOx and Criteria by Weight √ ED could report by vehicle, but has fulfilled the intent of EN20. ACCEPT REJECT EN21 Total Water Discharge by Quality √ ED only discharges to the Boulder Waste Water Treatment plant. However, this indicator should be considered in future reporting to understand the quality of water that is consumed in EN8 and then discharged back to Boulder WWTP and documented here. ACCEPT REJECT EN22 Total Weight of Waste by Type √ ED has addressed this indicator, but should identify the possibility of reducing the materials sent to the landfill as a sustainability goal. 13 ACCEPT REJECT EN23 Total Significant Spills √ ED has addressed this indicator. ACCEPT REJECT EN26 Initiatives to Mitigate Environmental Impacts √ This indicator allows for all risks identified in previous indicators to be considered as potential opportunities, such as mentioned in EN22. ED also mentions the “Take Back” program consideration for the first time here. This could be a major marketing element of sustainability by closing the ends on C2C and should be highlighted in the report. ACCEPT REJECT EN27 Products and Packaging by Category √ Although ED is correct that their products have not met end-of-life yet, this will happen soon and ED should really develop the Take Back program or face losing this indicator in the future. Thus, moving backwards on application levels. ACCEPT REJECT EN28 Significant Fines and Non-Compliance X This core indicator was not addressed by ED. 14 Social Indicators – Labor Practices ACCEPT REJECT LA1 Total Workforce by Employment Type Contract √ ED has addressed this indicator. ACCEPT REJECT LA2 Total Turnover Rate by Gender and Age Group √ ED reported no turnover in 2007. Employees identified by age and gender are reported in LA13. ACCEPT REJECT LA4 Percentage of Employees Covered by Collective Bargaining √ ED has addressed this indicator. There are no employees covered under collective bargaining which is standard in Colorado at this time. ACCEPT REJECT LA5 Minimum Notice Period for Significant Operational Changes √ ED has addressed this indicator. It is understood that ED is a new company, this should be considered as policy regarding notifying employees of significant operational changes. ACCEPT REJECT LA7 Rate of Employee Injury/Disease/Fatalities √ ED has addressed this indicator. 15 ACCEPT REJECT LA8 Serious Disease Education, Training and Counseling √ ED has addressed this indicator. However, ED should consider reporting potentially serious occupational, or non-occupational, diseases that may impact the labor force of ED. ACCEPT REJECT LA10 Average Hours of Employee Training per Year by Category √ ED has addressed this indicator. ED now has a baseline of hrs/employee training ratio by which to compare against in future CSRs. In addition, perhaps additional training needs from this CSR exercise will become evident. ACCEPT REJECT LA13 Composition of Governance Bodies by Employee Type √ ED has addressed this indicator. However, ED should consider the diversity indicators to establish goals as an organization. ACCEPT REJECT LA14 Ratio of Male/Female Salary by Employment Category √ ED has addressed this indicator. Social Indicators – Human Rights ED could also mention the MoU signed between Valparaiso University and Symbiotic Engineering for this year’s CSR/Matchmaker report where the only financial exchange is to a 501c3 Birambye International to support the education and sanitation of orphans in Rwanda. 16 ACCEPT REJECT HR1 Significant Investments that Seek Human Rights Screening √ ED has addressed this indicator. ACCEPT REJECT HR2 Suppliers that have Undergone Screening for Human Rights √ ED has addressed this indicator. However, ED should consider defining what they would like to see their suppliers uphold in this regard and develop a policy for ensuring that suppliers are themselves addressing human rights and sound labor practices. ACCEPT REJECT HR4 Discrimination and Actions Taken to Address √ ED has addressed this indicator. ED should also consider this indicator for incorporating into company-wide policy. ACCEPT REJECT HR5 Freedom of Association and Collective Bargaining √ ED has addressed this indicator. ACCEPT REJECT HR6 Abolition of Child Labor √ ED has addressed this indicator. ED should also consider how this indicator can be identified for the Taiwan supplier for example and incorporated into company-wide policy. 17 ACCEPT REJECT HR7 Prevention of Forced and Compulsory Labor √ ED has addressed this indicator. ACCEPT REJECT HR8 Security Practices √ ED has addressed this indicator. ACCEPT REJECT HR9 Indigenous Rights √ ED has addressed this indicator. Social Indicators – Society Indicators As ED is a SME, many of these corruption indicators do not apply. However, ED answered them to the best of their knowledge. ACCEPT REJECT SO1 Community Programs and Impacts on Community √ ED has addressed this indicator. ED has the opportunity to combine marketing with community programs in this case. Your services are a community benefit by themselves as the products reduce landfilling, and therefore, ecological damage. ED should seek opportunities to present this reduced life-cycle impact at local gatherings to educate and develop new customers – win/win. 18 ACCEPT REJECT SO2 Business Units at Risk of Corruption √ ED has addressed this indicator. ACCEPT REJECT SO3 Employees Trained in Anti-Corruption Policies √ ED has addressed this indicator. ACCEPT REJECT SO4 Actions Taken in Response to Corruption √ ED has addressed this indicator. ACCEPT REJECT SO5 Public Policy Lobbying √ ED has addressed this indicator. An opportunity exists for ED to form partnerships with larger groups in the field. Although not an apparel manufacturer, EcoCycle supports recycling and reuse and may be a supplier, but also, may support similar policy initiatives as ED. ACCEPT REJECT SO8 Monetary Value of Fines and Non-Compliance Penalties √ ED has addressed this indicator. 19 Social Indicators – Product Responsibility ED answered all core indicators as well as PR2, 5, 7 and 8 as additional. ACCEPT REJECT PR1 Customer Health and Safety √ Although ED has addressed this indicator due to the new presence in the market, earlier in the CSR report, it is noted that ED is looking into the effects of vinyl for carrying food (PR2). This indicator should be set up according to the table supplied in the GRI G3 Product Responsibility Supplement for this indicator. ACCEPT REJECT PR2 Safety and Health Incidents Regarding Products √ Although ED has addressed this indicator due to the new presence in the market, ED should define what “life-cycle” means to their products and show what level of responsibility they intend to assert. ACCEPT REJECT PR3 Product and Service Labeling √ ED has addressed this indicator. Again, this is an opportunity to address this indicator that your products create a positive impact and display this on the tags for ED products. ACCEPT REJECT PR5 Determining Customer Satisfaction √ ED has addressed this indicator. This indicator can be incorporated into ED’s planning for next year’s search for stakeholder feedback. 20 ACCEPT REJECT PR6 Marketing Communications √ ED has addressed this indicator. ACCEPT REJECT PR7 Non-Compliance Incidents √ ED has addressed this indicator. ACCEPT REJECT PR8 Substantiated Complaints √ ED has addressed this indicator. ACCEPT REJECT PR9 Monetary Value of Fines and Non-Compliance √ ED has addressed this indicator. 21 AA1000AS – 2008 Statement Principles for Conducting Sustainability Assurance Symbiotic Engineering has reviewed Ecologic Design’s Sustainability report for adherence and transparency and completeness of reporting per GRI G3 protocols. The following sections describe our review of ED’s report. Stakeholder Engagement Ecologic Designs, Inc. has developed the following methodology for identifying their stakeholders, determining materiality and responding to this feedback. The following steps comment on Ecologic Designs approach: 1. Identify stakeholders: See Section 3.5. Although stakeholders were identified by groups, each group has a different relationship to ED that should be identified (e.g., upstream, internal, external, and downstream) and what are the specific needs of each. 2. Initial identification of material issues: ED did not list the methodology of reporting stakeholders responses. Including all responses and prioritizing by category is critical for next year’s CSR. 3. Determine and define engagement strategy, objective and scope: The engagement strategy was via email and on short notice. This is something that should be discussed immediately by the stakeholder committee and implemented with sufficient time for reporting schedules. 4. Engage with stakeholders in ways that facilitate understanding, learning and improvement: Different methods of engagement should be identified by category (e.g., upstream, downstream…). The idea of combining education with information seeking on issues for materiality is strongly suggested. Content Principles The following evaluation of content principles applies to Ecologic Design’s approach to sustainability reporting. Materiality Material sustainability issues are those social, environmental and economic issues that affect an organization's ability to create and maintain value while addressing stakeholder needs and concerns. 1. Operationalize, internalize and communicate learning: Results of the stakeholder feedback is one of the most important exercises of the CSR for identifying risks and opportunities. In this regard, ED did not capitalize on these data. By understanding the 22 needs of stakeholders from each category, ED would be able to set business goals to address these. 2. Prioritizing: Having the stakeholders rank each issue allows for a prioritization list for each group to develop. This is a critical component of this process for next year. 3. Threshold: ED needs to consider the methodology for developing threshold criteria of what is or is not addressed in the CSR. 4. Process for resolving conflicts between different materiality expectations: ED should anticipate that some stakeholder groups will select opposing issues. How will these be weighted and either addressed or dismissed in future CSR reports? 5. Evaluation of relevance: ED did not provide commentary on the relevance of the stakeholder feedback. It is suggested that ED develop a ranking of each issue/indicator that can by common metrics. 6. Fair representation of the views and importance of stakeholders: ED should comment on how feedback is perceived by different stakeholder groups. For example, will costumers outweigh the concerns of suppliers? 7. Systematically applied survey: All stakeholders received the email survey and, therefore, equally had access to input. This will have to be considered when different formats are used and for different groups. 8. Material omissions or misrepresentations? Although ED reported on all core indicators, this does not address importance by stakeholder group. 9. Does the report address all material performance issues? Again, ED needs to report on all material issues raised by stakeholders in order to answer this. Completeness The Assurance Provider shall evaluate the manner and extent to which the Reporting Organization ensures that the identification of material aspects, and their relation to the stakeholders for whom they are material, is fair and balanced and that the understanding and communication of the material aspects and the organization’s performance in response to them is fair and balanced. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Process for determining boundaries: ED has established their operational boundaries fairly well with the exception of a few supply sources, especially from overseas. For assurance providing, ED/SE and Valparaiso University have signed a MoU regarding responsibilities and unbiased reporting. 2. Process for deciding what is fair and balanced: Not this year, but recommended for stakeholder input and responses for next year. 3. Stakeholders reporting as fair and balanced: ED did not report specific stakeholder input. Rather general conclusions. 23 Responsiveness The Assurance Provider shall evaluate the manner and extent to which the Reporting Organization has responding to the relevant and important issues, concerns and impacts (material issues), and communicated these responses to stakeholders without material misstatement. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Process to respond to issues: ED should seek stakeholder feedback by end of third- quarter in order to identify issues and responses to be incorporated for next year’s CSR. 2. Process to integrate responses into management decisions: ED needs to report on this process for next year’s CSR. 3. Organization’s response available and accessible to stakeholders: Displaying the results of the materiality process and response should be displayed on website as well as in the CSR. 4. Organization’s response to shortfalls and implement corrective action: ED does report some shortfalls, but not in a distinct section with corrective actions. This can be addressed in next year’s CSR management disclosures. The Interrelationship of the principles The assurance provider shall evaluate the report and underlying systems and information to assess whether information and processes used in the preparation of a report have been gathered, recorded, compiled, analyzed, and disclosed in a way that, when examined, establishes the quality and materiality of the information. Quality of information principles These principles are based on those in GRI G3 and enable the assurance provider to evaluate the quality of information. Reliability The assurance provider shall evaluate the report and underlying systems and information to assess whether information and processes used in the preparation of a report have been gathered, recorded, compiled, analyzed, and disclosed in a way that, when examined, establishes the quality and materiality of the information. These criteria were met and required evidence procured: 1. Scope and extent of external assurance: This was covered on the attached Memorandum of Understanding (MoU) between ED, SI, and Valparaiso University. 24 2. Original source of the information verified by reporting organization: SE visited ED’s headquarters on April 11th, 2008 to verify EC1, EC5, EC, 6 and EN8 data. 3. Reliable evidence to support assumptions identified: ED provided very transparent tables of calculations. 4. Representation is available from the original data or information owners, attesting to its accuracy within acceptable margins of error: Utility data was not provided, or asked for, to verify. However, SE believes that the usage is well within the typical usage for a business of this size. Clarity The assurance provider shall evaluate the report and underlying systems and information to assess whether information is made available in a manner that is understandable and accessible to the intended users of the report. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Report contains information required by stakeholders and avoids excessive detail: This is a major requirement for ED’s continued CSR reporting. The CSR has to be viewed from the stakeholders point of view, rather than a report for filing. Much effort in obtaining, and defining, stakeholders and how their information and concerns will be address is the top priority for ED. 2. Stakeholders can find the specific information without unreasonable effort: Not in this year’s report. 3. The report avoids terms and acronyms likely to be unfamiliar to stakeholders: This is one of the general comments that there were many undefined acronyms included in the CSR. A glossary, or definition prior to the acronym, would be good to include for next year’s CSR. 4. Information available to stakeholders, including those with particular accessibility needs (e.g., differing abilities, language, or technology): Very good idea to perhaps also publish in Spanish. Also, may provide technical components in appendices while leaving the CSR document full of graphs and easy to read for the non-technical. Balance The assurance provider shall evaluate the report and underlying systems and information to assess whether it reflects both positive and negative aspects of the organization’s performance to enable a reasoned assessment of overall performance. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Report discloses both favorable and unfavorable results: ED did not really dive into the stakeholder’s perception of ED and, therefore, did not find much to report for unfavorable. Again, ED is in an industry that benefits the environment, so perhaps the 25 most unfavorable comments may come from the economic indicators from employees in the future. 2. Information in the report is presented in a format that allows users to see positive and negative trends in performance on a year-to-year basis: As this is ED’s first year of business, ED now has a baseline by which to compare future data. This is important for ED to observe trends, both positive and negative. 3. Emphasis on topics is proportionate to their relative materiality: Again, materiality was not developed by ED in this year’s CSR. Once a prioritization of issues develops, ED should address in complexity weighed by priority. Comparability Stakeholders using the report should be able to compare information reported on economic, environmental, and social performance against the organization’s past performance, its objectives, and, to the degree possible, against the performance of other organizations. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Report can be compared on a year-to-year basis: This is ED’s first year of CSR reporting. This should be considered as to how the previous CSR data will be included in future CSR reports. 2. Organization’s performance compared with appropriate benchmarks: In this regard, ED does not have many, or any, competitors that have completed CSR reports. However, ED should be aware of registering with organizations such as the Climate Registry as their environmental impact increases with a growing business. 3. Significant variation between reporting periods in the boundary, scope, length of reporting period, or information covered in the report can be identified: This is ED’s first year of CSR reporting, and existence. 4. Report utilizes generally accepted protocols for compiling, measuring, and presenting information, including the GRI Technical Protocols for Indicators contained in the Guidelines: Again, the environmental protocols were met, but not verified. 5. GRI Sector Supplements: Not applicable. Accuracy The assurance provider shall evaluate the report and underlying systems and information to assess whether the reported information is sufficiently accurate and detailed for stakeholders to assess the reporting organization’s performance. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Report indicates the data that has been measured: ED represented all required data. 26 2. Data measurement techniques and bases for calculations are adequately described: They are adequately described for the technical person, not the majority of stakeholders. 3. Margin of error for quantitative data is not sufficient to influence the ability of stakeholders to reach appropriate and informed conclusions on performance: At this time, ED’s relative impact and reported impact were consistent. 4. Report indicates which data has been estimated and the underlying assumptions: ED did a very thorough job reporting all data to meet indicator protocol. 5. Qualitative statements in the report are valid on the basis of reported information: ED provided all information needed to qualify all statements in the CSR. Timeliness The assurance provider shall evaluate the report and underlying systems and information to assess whether reporting occurs on a regular schedule and information is available in time for stakeholders to make informed decisions. The following criteria provide a benchmark for evaluating adherence to the principle. 1. Information in the report has been disclosed while it is recent relative to the reporting period: ED will correct the reporting to coincide with reporting period in future CSR reports. 2. Collection and publication of key performance information is aligned with the sustainability reporting schedule: This again, will have to be considered by ED for the future CSR reports. 3. Information in the report (including web-based reports) clearly indicates the time period to which it relates and when it will be updated: This is part of ED’s future plans. Methodology for Conducting Sustainability Assurance Defining the scope of the engagement The MoU agreement between ED/SE and Valparaiso University on the scope considered the AA1000 Assurance Standard requirements and that VU would review both reports to provide an additional level of unbiased commentary on the CSR process. The MoU is attached to this assurance report. Process for identifying Intended audience / user ED must define the process for stakeholder inclusion, materiality, prioritization, and process for inclusion in future CSR reports. Process for identifying the material issues for the report Same as above. 27 Process for determining the report boundary The reporting boundaries for ED were well defined. However, as ED grows, the following flow chart should be included in deciding operational or organizational boundaries for ED. Limitations As the full list of material issues was not completed by stakeholders, limitations is not an issue in this year’s CSR. Disclosures covered ED’s management disclosures were well constructed and presented in the CSR. Level of assurance The AA1000AS defines level of assurance as the level of confidence the assurance provider obtains concerning the reliability of information and the scope of the subject matter, and does not define specific levels of assurance. AccountAbility defines ‘level of assurance’ as the level of confidence the Assurance Provider obtains concerning: 28 1. The scope of the subject matter (i.e. have you identified and addressing the right issues?) 2. The reliability of the information (i.e. is information accurate and consistent). Symbiotic Engineering has a moderate level of assurance on this report for the following reasons: 1. Although Ecologic Designs reported on all core GRI indicators, the materiality and importance of these was not assessed by a thorough stakeholder survey. 2. SE believes that this will be corrected in future CSR reports and that ED has provided every effort to be transparent and forthcoming. Limitations The only limitation was the lack of methodology for defining and prioritizing stakeholder issues for materiality. SE believes that ED will be addressing these issues promptly. Engagement acceptance Independence and impartiality The attached MoU demonstrates the impartiality and unbiased reporting herein. Although this does not follow the AA1000AS engagement exactly, SE believes that the critical components are included. SE believes that helping small to medium enterprises towards sustainable reporting is a critical component not addressed currently. We are providing our services free to critique and develop ED into a leading example of sustainability reporting. Competence Symbiotic Engineering has performed sustainable development in countries around the world and uses our engineering background for greenhouse gas accounting and management for companies attempting to establish environmental baselines. We fully adhere to AA1000AS – 2008 protocol and have thoroughly reviewed GRI’s G3 guidelines prior to completing this report. We anticipate achieving CSAP qualification, but have not as yet. Duty of care Symbiotic Engineering assumes full duty of care in preparing this assurance report. Reporting criteria and evidence Before accepting an engagement, the Assurance Provider shall satisfy himself that it is reasonable to assume that the reporting criteria used by the reporting organization are suitable (fit for purpose) and that sufficient evidence is available. 29 www.Corporateregister.com 28/05/2008
"Ecologic Designs_ Inc"