Interface

Perspectives on Decision Making

March 30, 2006Wendy Porter, Director Environmental Management

Interface Inc.

• World leader in carpet tile manufacturing• Eighteen manufacturing facilities on four

continents; sales in over 100 countries• Markets include commercial interiors,

automotive, healthcare, hospitality, and residential

Interface, Inc. - Then

• Founded in 1975 by Ray Anderson– Traditional Southern Businessman

• Manufacturer of Textiles– Carpet Tile – World Leader– Fabrics– Broadloom Carpet

• Modeled the “First Industrial Revolution”– Take – Make – Waste

• Commitment to Compliance – others make the value judgments for what is acceptable

Interface Inc. - Now

• World Leader In Modular Carpet Tile Manufacturing– $850 Million in Sales– 18 manufacturing facilities in seven countries

• Broadloom Carpet and Fabrics

Interface Inc. - Now

• Recognized leader in Sustainable Manufacturing– We are on a journey – we have not yet arrived

• Sustainability is a dynamic process which enables ALL people to realize their potential and to improve their quality of life in ways that simultaneously protect and enhance the Earth’s support systems.

Ray Anderson• Founded the company by borrowing $50,000 from

family and friends • Traditional Southern Businessman of his time

– Profit driven– Volume driven– Commitment to Compliance

• Asked to provide the company’s environmental vision to compliance staff– Did not know what to say other than – comply with

existing laws and regulations – bothered him

Ray Anderson• Received Paul Hawken’s book – “The Ecology of

Commerce” – read the book during a family vacation

• Epiphany – “Spear in the Chest”• Chartered the course to become the first

sustainable enterprise by the year 2020– Openly and publicly committed to the journey– Affects all aspects of how we do business and at all levels in

the organization– Integrated into all positions and responsibilities, not a task

group.

Our Compass

• Eliminate waste• Benign emissions• Renewable energy• Closing the loop• Resource efficient transportation• Sensitivity hook-up• Redesigning commerce

Guiding Coalition- Eco Dream Team

• Paul Hawkins

• Amory Lovins

• Hunter Lovins

• Janine Benyus

• Bill Browning

• Robert Fox

• John Picard

• Jonathon Porritt

• Daniel Quinn

• Dr. Karl Henrik Robert

• Walter Stahel

Interface’s Guiding Coalition

• Internal Global Sustainability Council

• Reviews definition, metrics, progress

• Wrestles with complex and evolving issues

• Ensures consistency across the organization

• Advises Senior Management

Making the Case for Change

• Made the business case for sustainable manufacturing

• Introduced the concept of “Natural Capital”• Identified the cost of “waste” to the

business and the environment• Utilized compelling global measures of

environmental degradation dating to the start of the industrial revolution

Making the Case for Change

• Tied the measures to Interface’s environmental footprint

• Identified the opportunity to “Do Well by Doing Good”

• Capitalized on the ability to differentiate the product in the market place

• Engaged each employee on a personal, emotional level

Global Achievements

• Waste avoidance of an aggregate of $299 Million since 1995

• Renewable energy (thermal and electrical) climbed to 13%– 3 photovoltaic sites– 6 facilities with certified green electricity

• Introduction of first carpet tile made from 100% post consumer carpet tiles

Global Metric Achievements

• 52% reduction in green house gas emissions• Water use reductions of 81% in modular

carpet, 41% in broadloom carpet• Terratex Brand development – fastest

growing fabric brand in commercial interiors• Introduction of Cool Carpet™-climate neutral

carpeting

Global Metric Achievements

• Bio-based fiber development and market introduction

• Re-entry program for recovered and recycled carpet tiles

• ReSKU program development for recovered and reused fabric

• Non-directional carpet tile

• Guaranteed carpet tile match so you can replace just the tiles worn or damaged

Guilford Solid Waste Reduction

0

50

100

150

200

250

300

350

1997 1998 1999 2000 2001 2002 2003 2004 2005YTD

Guilford

• Understanding and adopting sustainable business practices requires a new awareness of the world; the whole world, its natural systems and all of its species. It requires a deeper understanding of how the Earth works, and how man's processes affect nature's delicate balance.

Culture Change at Interface

• The changes that have occurred at Interface are monumental – they challenged the very nature of who we are, what we do, how we do it, and how it is valued in our marketplace

• Our changes are not done – if we are to reach our vision

Culture Change at Interface

• Understanding and adopting sustainable business practices requires a new awareness of the world; the whole world, its natural systems and all of its species. It requires a deeper understanding of how the Earth works, and how man's processes affect nature's delicate balance.

Culture Change at Interface

• Each choice we make has a "cost." True cost is a combination of the economic, social and environmental costs set against the offsetting benefits associated with each choice that we make.

Historical Decision Making

• Must Do’s, Required, Legal Obligations

• Profitability– ROA, ROI, Free Cash Flow, etc

• Strategic Investment/Expansion– Market potential

Current Decision Making• Sustainability – three legged stool

– Financial– Environmental– Social

• Without all three legs, the stool falls• Foundation in the “Natural Step”:

– Nature is not subjected to increasing concentration of substances extracted from the earth’s crust

– Nature is not subjected to increasing concentration of substances created by society

– Nature is not subjected to degradation by physical means

– Basic human needs are met worldwide

Sustainable Decision Making

• Definition for Financial has been expanded to include: – Cost of “waste” (labor, rework, off quality,

materialization, scrap, inspection, packaging, transportation, etc)

– Cost of non-renewable energy– Cost of non-renewable and/or recyclable

materials

• Added component associated with Risk– Environmental risk– Social risk

Sustainable Decision Making

• Found the nexus where environmental and financial sustainability intersect

• Created value in the marketplace for environmental and social sustainability– Wall street– Customers– Consumers– Public– Communities

Examples

• Cool Carpet (Climate Neutral)

• Green-e Certified Fabric

• 100% Recycled Polyester Fabric

• Compostable biobased Fabrics

• Landfill Gas

• Entropy Carpet

• Weave II HVAC

• Dye and Chemical Protocol

What Does This Mean to You?

• You need to decide– How has your role been influenced by the first

industrial revolution?– How could that role be changed in a

sustainability focused world? How can you better support a sustainability focused world?

• Change is significant– Our managers, accountants, maintenance

personnel, janitorial, etc will all tell you how significant a change it is……..

• How can you take the information you have and find the nexus with societal practices and values? How can you help make the case for change?

Why Change?

You’re all right, the world is wrong?

Right?

Management Challenges in the Next Decade

• We are not moving fast enough to ward off the consequences of our continued assault on nature– we need to make more progress faster if we are to reverse the trends– What is keeping you from acting faster?– How can you support the actions of

others?

Management Challenges in the Next Decade

• Goods-to-Market time is shortening – can the existing regulatory structure keep up with the speed of market innovation? – What is slowing down the availability and

use of the information that you have or provide?

• Market forces can and will shape change– How can you take advantage of market

forces

Management Challenges in the Next Decade

• Traditional “Command and Control” approaches are a disincentive for innovation – de-motivates employees; de-motivates companies

• Need to capitalize on the 1% that is leading the pack to spur continued innovation and improvement– What can you do to reward, encourage,

support that 1% while pulling up the laggards by the boot straps?

Management Challenges in the Next Decade

• Need to think “outside of the box” to accomplish meaningful change - question everything about the way it has always been – how is your information used? How could it be used? What limits are placed on the work that you do?

• Information is essential to progress on sustainability – there is a vacuum for credible information and resources to help the “consumer” and small and large businesses succeed– How can you help?

We are on a Journey

• We started our Journey twelve years ago……..

• We are proud of our accomplishments, but humbled by the challenges yet ahead

• Learn about our progress, priorities, and challenges at www.interfacesustainability.com

We Welcome You to the Journey