AHC Group Workshop

13th Annual Corporate Affiliate Workshop

"Advancing the Case for Sustainable Value Creation"

June 29 and 30
Gideon Putnam Hotel, Saratoga Springs, NY

518-584-3000 for reservations

Confirmed Speakers and General Agenda for
June 29 and 30, 2004

Tuesday, June 29
Day One: Managing Your Risk Premium, and Making Your Numbers
 

8:00am - 12:00pm:
Site Remediation Workshop

Chaired by Dwight Bedsole of Dupont

For the last two years, Dwight Bedsole has chaired this ongoing AHCGroup workshop on site remediation programs and policies, emerging issues, and new risk management tools.

At this June session, we will hand out a new Lexis Nexis monograph based on this workshop, featuring cases by workshop leads from DuPont, FMC, Marsh, and Piper Rudnick.

The workshop now involves over 62 of the leading multinationals in the world. This June session involves detailed case presentations from BP, El Paso, DuPont, and NEU. The key speakers for our June 29 workshop include:
 

• Sheryl Telford, Remediation Business Team Manager at DuPont, will give a talk on how contaminated sediments are an expanding area of national debate.
   

  Public awareness and concern has grown as reports to Congress highlight impaired waterways, fish advisories increase, the Hudson finds its way to the headlines and, with increasing success, the environmental community portrays contaminated sediments as the source of major continuing degradation of the nations waterways.

  While technology is in early stages of development and the subject of much debate the regulatory community pushes for remedial actions that remove the contaminated sediments even though the end result falls short of meeting cleanup goals.

  This in combination with the development of overly conservative cleanup levels, NRD claims and the potential for significant transaction costs bodes for costly remediation for industry with a history of operations situated along waterways.

  This is the second time Sheryl Telford is reporting and interacting with our workshop members.
   

• Introduction to Northeast Utilities by Chuck Mowbray, Manager of Environmental Affairs at FirstEnergy.

• William Hoynack, Manager of Remediation at Northeast Utilities, will speak on "Incorporating Wetland and Watercourse Restoration into MGP Site Remediation: A Comprehensive Approach to Sediment Cleanup."
   

  The presentation will discuss the site characterization, risk evaluation, selected remedial approach and all aspects needed to complete the project. By focusing on the details of one successful and complex MGP site, Hoynack will expand the topics of the workshop on looking at the elements of this comprehensive approach.

  It will also talk about the wetland design and restoration, costs, and lessons learned. Finally, the presenter has agreed to go around the table to compare his results with other participating firms.
   

• Donna Sandidge, National Practice Leader at Marsh, will give a brief discussion of the products and tools offered by the industry that address the uncertainties that surround the issue of sediment clean up.
   

  As most of us will follow up this morning session with the four-hour June 29 session in the afternoon that follows on Risk Management tools, Donna Sandidge has agreed to speak in both workshops to establish the links, and to outline what she has learned from looking at many companies on sediments thru the eyes of Marsh.

  Marsh joined the AHCGroup Corporate Affiliates program over three years back, and has been an active member in this 160-leader exchange ever since. Marsh is featured in the Lexis Nexis monograph.
   

• Marc Ferries, Director, Environmental Remediation at El Paso, will speak on "Remediation Strategy as a Business Perspective." The presentation on El Paso will discuss applying business principles to more accurately value and manage remediation responsibilities.
   

  With more regulatory scrutiny being applied to a company's reporting requirements it has become increasingly more important to provide transparent financial statements. In addition to accurately and meaningful reporting, it is essential for business decision makers and remediation professionals to understand broader implications of contamination liability that may drive strategic decisions.

  Remediation liabilities can be valued based on how regulations can be applied to technical site data but to be more proactive a company should consider including non-technical risks to accurately value the total exposure posed by a site.

  This total risk assessment will allow a company to better manage and plan for potential non-technical project contingencies. El Paso has developed several tools and systems to help improve the company's ability to prudently value liabilities, which will be evaluated and shared during this case presentation. wetland design and restoration, costs, and lessons learned. Finally, the presenter has agreed to go around the table to compare his results with other participating firms.
   

• Introduction to BP by Steve Wolff, President, Power Production at Dayton Power and Light Company

• Joe Naccache, Segment Director, Remediation Management at BP America, to speak on: "Prevention is Better than The Cure!" With an introduction by Steve Wolff, President, Power Production at Dayton Power and Light Company.
   

  We are all quite familiar with the high costs of cleanups and environmental liabilities. You might consider integrating Liability Prevention into the lifecycle management of your assets while you deal time with your historical liabilities. This is a central concern of this ongoing workshop series.

  At BP, we think that such an approach is good business and the right thing to do. Prevention can be defined as those actions that reduce, transfer, and avoid environmental liabilities over the lifecycle of an asset. Defined as such, it will support a company's sustainability goal of ensuring that its business development meets the needs of the present without compromising the ability of future generations to meet their own needs.

  In the last two years there has been an increasing awareness by regulatory agencies, communities, and non-governmental organizations over the importance of Prevention for the protection of the air, water, and the environment. How you prevent future liabilities might be in the best interest of your company's brand, shareholders, and the communities in which you operate.

1:00pm - 5:00pm:
Emerging Issues Workshop: Managing Emerging Risk: New Risk Profiling Tools and Approaches

Chaired by Dennis Minano, former head of Energy and Environment at GM and now AHC Group Senior Associate. Denny joined the AHCGroup in early 2003, and this is the fifth set of his Emerging Issues workshop, now involving over 62 multinationals from our 160-leader network.

• Comments from the Chair on the AHC Group's ongoing "Risk, Value, and Trends" workshop.
   

  AHC Group affiliates gathered in Washington at the end of April to discuss the role of rating agencies in influencing investors' and stakeholders' view of how well companies are managing their governance and CSR issues. Presenters included:

  • Alan Banks, AHC Senior Associate and expert in the investment valuation of risk;
  • Linda Crompton, President and CEO of IRRC, the leading voting and proxy agency;
  • George Dallas, Managing Director and Global Governance Practice Leader at Standard & Poors; and
  • Alois Flatz, Head of Research and Member of the Board of DJSI/SAM, the leading sustainable investment index.

  Distilled findings include:

  • The standard investment valuation models require investors to put a number on how well a company is managing those risks that are material to investors' interests
  • This number — usually rolled up in the discount rate used to discount estimated future earnings/cash flows — is highly material to valuations, accounting for between 25% to 40% of market capitalisation or 15% of the cost of debt
  • In many cases market-leading companies are managing their risks better than their peers but this is not being reflected in lower discount rates and superior investment valuations
  • Companies can increase shareholder value by actively managing the investment market's perception of risk in their stock
  • Companies often need expert advice on communicating with the different agencies, including:
  • What does each agency do and which part of the investor/regulator/stakeholder community do they primarily report to?
  • Who really has influence and who can be safely de-prioritised?
  • What are they looking for and how do you do well in their assessment?
  • Since all the agencies are looking at essentially similar data how can a company standardise its data collection to meet as many agency needs as possible? How does this tie into a company's enterprise risk management system and the company's own view of risk? Given that a company understands and manages its risks well, how does it capture extra shareholder value from investors for these efforts?
     

• Introduction to Marsh by Bob Forbes, Director of Site Remediation at FMC.

• Donna Sandidge, National Practice Leader at Marsh, will develop an interactive workshop on total environmental cost at risk methods.
   

  While all established multinationals use total cost at risk models increasingly, this discussion will focus on how best to frame, measure, and explain to leadership councils the key elements of environmental risk today.

  Distinct from the tradition of enterprise risk management, this "at risk" tool is open to refinement and debate among workshop members. Donna will speak from over 25 years experience in the field, where she has served many of our member companies in the AHCGroup Corporate Affiliates programs.
   

• Introduction to PNM by AHC Group Senior Associate Alan Banks.

• John Loyack, the Chief Financial Officer and Senior Vice President of Power New Mexico, will speak on "PNM's Enterprize Risk Managment Strategy," with an emphasis on how they have implemented the strategy in the last 36 months, and why you are now turning outward to communicate the improvements in the risk profile with the current and potential investors.
   
• Phil Hillman, Chief Environmental Officer at Polaroid, will speak on "Emerging Issues Workshop Moving Forward," with attention to European developments on delisting certain products based on chemical content.
   

• Introduction to Sarkady by AHC Group Senior Associate Dennis Minano.

• Marc Sarkady, President of Sarkady, will speak on "Building Support for Change Inside Your Company."
   

  Environmental and sustainability practitioners often experience tremendous challenge inside their own companies in building the political will and internal support necessary to lead change in the behavior of their own organizations. Though the direction for improvement may seem evident and apparent, it is often resistance — unconscious and conscious — that keep the company from evolving in the ways we think it must.

  Marc Sarkady has worked in tough situations to build internal coalitions and teams to lead environmental and sustainability oriented change. His talk will focus on techniques for building a vision for change, linking to managers' internal values, linking company core strategy to change strategies, aligning internal and external forces for change, and overcoming resistance. Marc will equip you with new ways to move your own company forward.
   

• Introduction to Alan Banks by Steve Myers, CEP, CPEA, Vice President, Environmental Practice at Marsh.

• Alan Banks, former CEO of Fitch Core Ratings and now AHC Group Senior Associate, to speak on: managing your risk premium.
   

  Companies are extrememly poor at managing the investment market's perception of how well they are managing risk, yet this is vital to the price and attractiveness of their stock. Alan specializes for the AHC Group in corporate finance, governance ratings, and the environmental reputation of a firm before the investment community. As a former investment banker for UBS and others (where he initiated and closed over fifty Initial Public Offerings at many organizations), this fourth appearance of Alan Banks is designed to advance the positions of a number of our clients and Corporate Affiliates.

  In this interactive workshop, Alan will build from prior corporate affiliate presentations.

  The goal of his presentation is to explain emerging trends that converge a multi-national's financial, operational, and strategic risks.

5:30pm - 6:30pm:
AHC Group Reception

Wednesday, June 30
Day Two: Improving your Management Systems and Aligning Business Needs with Your Energy and Environmental Strategy.

8:00am - 12:00pm:
Governance and Innovation

Chaired by Nicholas Eisenberger, Chairman and Chief Executive Officer of Ecos Technologies, and
Steve Percy, the former CEO and Chairman of BP America.

This Governance and Innovation workshop has now met 9 times in the last two years, with Nicholas agreeing to chair our sessions thru 2006. Percy will rejoin this workshop in the January 2005 sessions in January noted on the cover page of this document. The core speakers offering detailed case presentations for our June 30 sessions include:
 

• Opening comments by Chair, Nicholas Eisenberger.
   

• Introduction to Genentech by Walt Rosenberg, VP, Corporate Social & Environmental Responsibility at Hewlett Packard.

• Tim Bishop, Senior Manager of Corporate EHS, and Jim Messelbeck, Director of EH&S at Genentech, with an introduction by Walt Rosenberg of Hewlett Packard, will speak on "Environmental Management and Innovation at Genentech: A New Development Path."
   

  Tim will first introduce biotechnology and the sustainability challenges in Biotech. He will also discuss the sustainability challenges in a high growth environment and what they have done so far along with their plans to meet sustainability challenges. The emphasis is on how Genetech receives its environmental information, how it determines its positions involving energy and environmental needs, and finally how this is integrated into their growth strategy as a firm.

  Biotech Industry Fact Sheet

  • $100 billion invested by stock-market investors over last 25 years
  • Cumulative net losses of more than $40 billion
  • Amgen — $2.3 billion in net profit for 2003
    Amgen is the world's largest biotechnology company. For nearly 25 years, the company has used scientific discovery and innovation to dramatically improve people's lives. Harnessing the powerful tools of cellular and molecular biology and medicinal chemistry, we seek to discover, develop, and commercialize proteins, antibodies, and small molecules that can extend the reach of medicine. http://www.amgen.com/corporate/AboutAmgen/backgrounder.html
  • Genentech Inc. — $563 million in net profit for 2003
    Since 1976- Genentech, the founder of the biotechnology industry, is a company with a quarter-century track record of delivering on the promise of biotechnology. Today, Genentech is among the world's leading biotech companies, with 13 protein-based products on the market for serious or life-threatening medical conditions and over 30 projects in the pipeline. With its strength in all areas of the drug development process — from research and development to manufacturing and commercialization — Genentech continues to transform the possibilities of biotechnology into improved realities for patients. http://www.gene.com/gene/about/
  • Publicly traded biotech companies in U.S. overall posted a net loss of $3.2 billion in 2003
  • $1 invested in 1981 would be worth by end of 2003:
    » Amgen: $164.77
    » Dow Jones Industrial Average: $20.78
    » 20-year treasury bonds: $11.94
    » Biotechnology sector: $7.92

  — The Wall Street Journal, May 20, 2004, Vol. CCXLIII, No. 99, "Biotech's Dismal Bottom Line: More Than $40 Billion in Losses" by David P. Hamilton

  (Assembled by Celeste Richie of the AHC Group)

• Introduction to CTC by Joseph Vallone, Director of Technology at the Office of Assistant Secretary of the Army Installation and Environment.

• Jerry Hudson, Vice President, Global Systems Group at Concurrent Technologies Corporation (CTC), co-presenting with Joseph Vallone, Director of Technology at the Office of Assistant Secretary of the Army Installation and Environment, to speak on "The Department of Defense's (DOD's) Sustainability Imperative and the Role of Technology."
   

  Introduction by HP's Walt Rosenberg.

  The DOD is embracing sustainable development practices in order to ensure the viability of their training installations and maintenance facilities. The DOD operates major facilities covering large expanses of land on which they conduct activities which use and impact natural resources. In addition, these activities have great potential to impose on the surrounding community. Because training soldiers under combat-like conditions is so essential to the success of the DOD, sustaining these capabilities has become a top priority.

  The DOD is relying heavily on technical innovation to play a major role in the change required to reach their sustainability goals. A pipeline of new technologies and practices with associated performance and cost data is desired. Similarly, a process for accelerating the development and transition of these technologies is needed.

  CTC operates the National Defense Center for Environmental Excellence (NDCEE) for the DOD, under the auspices of the Deputy Assistant Secretary of the Army for Environment. One of the NDCEE's missions is to develop, demonstrate and transition technologies to the DOD. This presentation will discuss the DOD's Sustainable Development activities. Through the use of specific cases (such as Ft. Bragg), DOD problems and innovative solutions will be described.
   

• Introduction to the Commissioner by Bruce Piasecki.

• Erin Crotty, Commissioner of the Department of Environmental Conservation to speak on "Governance and Innovation: An New York State Perspective."
   

• Introduction to DuPont by David Wickersham, the Director Remediation at Honeywell International, one of the AHC Group's newest Corporate Affiliates.

• Paul Tebo, former Corporate Vice President for Safety, Health and Environment at DuPont and now Group Executive for The TeboGroup will describe DuPont's journey over the past decade to transform a 200-year industrial company into a sustainable growth enterprise for the 21st century.
   
• Connie Sasala, Senior Vice President of Strategic Services at Cameron Cole, to speak on: the ripple effects of Sections 302 and 404 of Sarbanes-Oxley and Kasky v. Nike, including greater scrutiny of non-financial information disclosure via corporate reporting.
   

  Connie will also discuss the growing need for an effective governance structure over such disclosure, the pressure for companies to "walk the talk," and an emerging risk management tool — independent assurance.

1:00pm - 5:00pm:
Shareholder Value Workshop

Chaired by Hewson Baltzel, CEO of Innovest

• Opening comments from Chair. Please contact us for information on the AHC Group's alliance with Innovest.
   

• Introduction to Suncor by Jean-Yves Perez, a Senior Manager at URS Corp.

• Gord Lambert, Vice President of Sustainable Value at Suncor, "Growing A Sustainable Energy Company" in the last 3 years to accomplish three usually competing goals:
  1. increased profit margin by a factor of 5 as the largest developer of oil shale,
  2. improved reputation before the investment community by winning high ratings at Dow Jones SAM and other sustainability rating groups,
  3. earned the reputation and respect of the NGO community in their development efforts.

  This presentation answers the questions, What sustainable development is, Why it is important, and How Suncor has incorporated it into its business plan.

  As we scan other leading benchmarking organizations, we are delighted to bring the leadership lessons of Gordon Lambert into our mix of 160 leaders this June.
   

• Julie Gorte of Calvert Group representing Wayne Silby, the co-founder and current Chairman of Calvert, discussing new trends in proxy developments, shareholder resolutions and investor trends.
   

• Introduction to Dr. Heller by Celeste Richie of the AHC Group.

• Trudy Heller, President of Executive Education for the Environment, to explore two case studies of companies who revised products that were criticized by environmentalists and regulators for their negative environmental impacts.
   

  One case concerns Kodak and its single-use-camera, the other concerns a manufacturer, called "Giftco," of ceramic keepsakes and gifts. Both companies redesigned their products to address environmental concerns. Both companies then faced decisions concerning how to present their new, more environmentally friendly products.

  Each company handled the balance of disclosure and secrecy differently. Lessons are drawn about what makes for successful presentation of eco-product features.
   

• Report out from AHC Group workshop on Rating Agencies and Risk Management.

  This April 30 session involved officers and VPs from HP, Merck, TXU, ConocoPhillips, Celanese, and other AHCGroup Corporate affiliates like NEU, DTE, PPL, and NiSource. We heard from three of the leading rating groups and shareholder resolution groups in the world: IRRC, Dow Jones SAM, and Standard and Poor's.

  Rick Ramirez of Celanese AG and Art Smith of NiSource were in attendance.

  As long term AHCGroup Corporate Affiliates, Ramirez and Smith will itemize the key findings from the workshop in DC involving the heads of Standard and Poor's, Dow Jones SAM, and the CEO of IRRC. The goal is to provide the core findings from our prior sessions, and to ask the group if another set of small Member based sessions should occur in mid September in Washington.

  This April 30 Washington, DC, AHC Group session on emerging trends in risk premiums and rating agencies was organized by AHC Group Senior Associates Denny Minano and Alan Banks.

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