November 17, 2010 Environmental Strategy Update: Creating an environmental plan with a focus on people Dear Office Depot Environmental Stakeholder, Welcome to our Environmental Strategy Update -- a letter in which we share lessons on driving environmental initiatives in our own and other organizations. Firstly, I wanted to share some positive news: recently Office Depot was recognized in Newsweek's 2010 Ratings of the Greenest Large Companies as the Greenest Retailer in the US. We were also the only retailer in Newsweek's Top 20. We're very proud of this result and think our success is a direct result of the approach we have taken - one that focuses on people first. People matter most because if you are trying to get your organization to go greener, it means you want people to do something different. In this letter, we will demonstrate how focusing on people instead of environmental concepts will help increase the adoption rate of green ideas within an organization. We'll also share lessons from our Corporate Citizenship Report and Environmental Dashboard to help our readers as they encourage their organizations to go greener. Let's start with the current norm: if you look at many green plans as they are communicated in Citizenship or Sustainability reports, they tend to start with environmental concepts like climate change, biodiversity, water, toxicity or recycling. The value in this approach is that it aligns to our understanding of environmental subject areas and, in some ways, it simplifies the definition of initiatives. The problem with this approach, however, is that it ignores the fact that organizational structures do not align to environmental concepts. It is rare to find a company that has, say, a Director of Climate Change, a Vice President of Recycling, and/or a Manager of Water. Most organizational designs are based on functional areas: finance, procurement, operations, sales & marketing, etc. Understandably, many employees define themselves by referring to their function: I'm in finance; I'm in procurement; I'm in logistics; I'm a marketer. This is the narrative used to explain what they do. So perhaps it's understandable that when green initiatives are proposed to these functions, they question why they need to be involved. Surely, many functions argue, green initiatives should be owned by the environmental team, right? The issue is that environmental teams, whether formal or informal, rarely have control of the actions that drive environmental impacts. Energy use is often controlled by the facilities department; fuel use by transportation; purchasing by sourcing; direct mail by marketing; and selling by sales. So how can we engage functions to bring environmental considerations into the areas they control? The key is to shift thinking towards "whom" and away from "what." This is the approach we take at Office Depot -- we start by asking: "Who is in the function with control of an environmental impact area?" We then try to understand their goals and then engage them to be greener. The procurement team buys, so we engage them to buy greener. The operations team operates, so we encourage them to operate greener. Sales and marketing sell, so we encourage them to sell greener. All of this is done in ways that serve the individual function's goals. By starting with the function, we are better able to inspire ownership. In fact, our environmental vision encapsulates this as a commitment to "increasingly buy green, be green and sell green." Furthermore, we embed functional ownership into how we communicate, as the third column in our Environmental Dashboard shows. (Click here for detailed version.) To show how positive trends in this dashboard are driven by people, I have called out three functional leaders at Office Depot who have taken accountability for driving the data within it: Peggy Regan, Director of Print Production; Ed Costa, Vice President of Construction; and Kari Taylor, Director of Global Accounts. Peggy Regan has been responsible for buying paper for the Office Depot marketing department for nearly 10 years. In 2004, the environmental team partnered with her to encourage adoption of environmental criteria into her buying decisions. She collaborated on a paper purchasing policy and hosted meetings with paper vendors. Her contributions helped Office Depot reach its current state in which 99% of our marketing paper is third party certified, and 60% is from Forest Stewardship Council sources (the "gold standard" of responsible forestry). Peggy and her team exemplify how Office Depot "increasingly buys green," by integrating green thinking into print production. Ed Costa is responsible for Construction at Office Depot. In 2003 he implemented a series of energy efficiency measures to save on utility bills. A conversation and presentation from the green team in 2006 triggered his interest in exploring Leadership in Energy and Environmental Design (LEED) certification and, since then, Ed has made LEED certified construction a priority. He has also helped Office Depot reduce its carbon footprint in North America by 11% in 2009, saving over $7 Million. Ed and his team exemplify how we "increasingly be green," by integrating environmental thinking into building design and construction. Kari Taylor is one of Office Depot's most successful sales leaders. In 2007, the green team began collaborating with Kari on various ways to incorporate environmental thinking into her sales approach. She took our ideas and leveraged them to differentiate Office Depot. In one example, after she won a major account partly based on selling green, she then partnered with the same account to launch a joint green solution for other Office Depot customers. This type of thinking helped Office Depot sell nearly $2.3 Billion worth of products with green attributes in 2009. Kari exemplifies how Office Depot "increasingly sells green" by integrating green thinking into the sales approach. Peggy, Ed and Kari are three examples among hundreds of leaders at Office Depot who have adopted environmental interests as their own. While not every functional area shows the same level of green thinking, our environmental performance data proves that our integration approach is working: our identified number of products with green attributes is up 51%; waste is down 27%; and end-of-life materials recovered from customers are up 37%. We will continue to work on each of these areas with a continued focus on empowering those people with control of Office Depot's various environmental impacts. It is also very important to show the merit of environmental progress in ways that resonate with functional areas. At Office Depot, every year since 2007 we have utilized an Environmental Dashboard to quantify environmental performance. Recently we started to show the economic impact of environmental trends. For example, in 2010 we disclosed both our waste and electricity costs. By announcing these numbers, we have garnered the attention of more company leaders. It took us many years to create our Environmental Dashboard with such a clean linkage between our environmental vision, functional owners, and powerful performance indicators. We believe that the best way to get to a sustainable future is by moving green from niche to normal. And that means engaging all people -- especially those in functions with control and decision-making authority. Yalmaz Siddiqui Director, Environmental Strategy, Office Depot