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Reporting Section
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Sustainability Report, 2012
Reporting Section

Reporting

We value transparency and corporate responsibility. Drafting our annual Corporate Consciousness Report is an important way for us to honor the central role that sustainability plays in our everyday work. This report provides a critical way for us to convey who we are as a company and to provide context for our work. Since 2004, we have followed the Global Reporting Initiative (GRI) guidelines, which establish consistent reporting standards and allow comparability among companies.

This report has been designed specifically for our website with interactive content that will invite readers to view small sections at a time and to comment or ask questions. We hope this platform will promote an exchange of ideas on our sustainability efforts among a variety of audiences. More in-depth information is contained in the GRI Report Index.

Stakeholder Consultation

Our annual reporting process benefited greatly from a stakeholder review convened by Ceres on June 29, 2013. Ceres is a national network of diverse groups dedicated to integrating sustainability into capital markets. We are indebted to them for facilitating stakeholder dialogues to support sustainability reporting. In addition to panel members from Ceres and the consulting community, there were eight business and environmental participants and six interested employees from within Seventh Generation. The feedback was invaluable and we deeply appreciate the review team’s willingness to share their time and insights. We have been able to incorporate many of the team’s comments, are deferring some to future years due to budget and time constraints, and will bring other ideas into our own program evaluations as we set our future priorities.

Reviewer Comments

Overall: Reviewers appreciated the report’s transparency, engaging tone and the inclusion of stories featuring the voices of several Seventh Generation team members. Reviewers also commented that several sections of the report needed more context to give a better sense of the previous work that laid the groundwork for some of the company’s more recent accomplishments. Interactive links have been added and a timeline featuring the evolution of some of the company’s product responsibility initiatives has been added to Vision.

Goals: Reviewers liked the company’s aspirations but questioned several of the individual goals as being overly broad (“All industry creates…”), too narrow (“free of chronic toxicants”) and sometimes unclear. We changed the wording of some of the goals and continue to work internally to refine these objectives.

Safer Chemicals: Reviewers suggested the use of a third-party standard that would allow the company to show quantitative progress toward its safer chemicals goals. This is something we have considered before and will revisit.

Radical Transparency: Several reviewers pushed the company to demonstrate leadership by revealing more about its supply chain. We are working on this.

Employee Benefits: It was noted that employee benefits have changed in the past few years and commenters urged the company to be transparent about this. Information about employee benefits and recent changes was added to the GRI Content Index.

Greenhouse Gas Emission Reduction Goals: Commenters noted the lack of a corporate GHG reduction goal and a renewable energy goal. An explanation was added to the report to clarify that Seventh Generation is focusing on increasing the numbers of consumers who wash their laundry in cold water as a way of addressing the company’s carbon footprint.

Materiality

Reports aren’t valuable if they don’t hit the relevant issues. While we did not conduct a quantitative materiality assessment, we have a qualitative process that guides the development of our reporting scope.

Our stakeholders are a diverse group and include our consumers, our retail partners, our manufacturing partners, the earth itself, the members of our own company, and our shareholders. Additional stakeholders include the many organizations that speak to the issues we care about, our industry, members of our local community, and our suppliers – even those who are far back in our supply chain.

We believe the following issues are important to our business: toxins in household products, our supply chain and its impact; employee well-being; reducing greenhouse gas emissions and climate change issues; efforts to decrease our company’s environmental footprint; and our commitment to corporate responsibility. Thus we consider our product design and packaging work, our varied environmental initiatives and our work to increase the renewable and recycled content of our ingredients to be material to our company. Our efforts to make Seventh Generation a great place to work and our efforts to create positive change in the larger community are material as well. Finally, as a privately held business that believes strongly in corporate accountability, our economic performance, donations, and governance are also necessary components of this report.

International Reporting Standards

The Global Reporting Initiative (GRI) develops globally applicable Sustainability Reporting Guidelines for voluntary use by organizations worldwide. As a member of GRI, we support this effort to foster corporate accountability, comparability, and transparency.

In 2006, GRI revised their standards to develop a “C” applicability level that is appropriate for smaller companies, which we followed this year. The information in the GRI Content Index indicates how we have met the required Profile Disclosure elements and topic-related performance indicators for the C level.

GRI Content Index

Profile Disclosures

Standard Disclosures

1.1 CEO Letter

Organizational Profile

2.1 and 2.4 Organization name and location of headquarters Seventh Generation, 60 Lake Street, Burlington, VT 05401

2.2 Brands, products, services Our Company, in Vision

2.3 Operational structure Our Company, in Vision

2.5 Countries where company operates Our Company, in Vision

2.6 Ownership and legal form Our Company, in Vision

2.7 Markets served Our Company, in Vision

2.8 Scale of reporting organization:

Number of employees: Building A Great Workplace, in Building Communities

Net sales, total capitalization, quantity of products provided: We are a privately held corporation and choose not to reveal this financial and strategic data.

2.9 Significant changes We initiated relationships with five new manufacturing partners.

2.10 Awards received Awards, in Vision

Report Profile, Scope, Boundary, and Global Reporting Initiative Index

3.1 Reporting Period

Calendar year 2012, with occasional mention of relevant achievements in early 2013.

3.2 Date of previous report

Gen2 was published in 2012 on our website and covers the year 2011.

3.3 Reporting cycle

Annual. This report covers 2012.

3.4 Contact point for questions Ashley Orgain, Mission Advocacy and Outreach Manager, 60 Lake Street, Burlington, VT 05401 tel: 802.540.3484 email: Ashley@seventhgeneration.com

3.5 Process for defining report content; 3.6 Report boundary; 3.7 Report boundary limitations

In determining report content, we were guided by our own corporate priorities, achievements, goals, and shortcomings; by considerations of stakeholder interest; and by GRI guidelines. We hope the report will be read by our employees; our manufacturing and retail partners and other businesses; our customers and members of the Seventh Generation Nation (our on-line community); and anyone else interested in issues pertaining to consumer products and corporate responsibility.

This is not just a report about our Burlington office operations. We have also been conscious of the sustainability practices back in our supply chain as well as the impact and use of our products. Where we have not addressed particular GRI guidelines, it has generally been because they were not relevant to our business, they dealt with proprietary information (such as some of the financial parameters), or they involved a larger data-gathering effort than we are capable of at this time.

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities.

We lease our Burlington office and we use third party logistics providers and contract manufacturing partners. As noted in Manufacturing, in Transforming Commerce, we engaged in five new supplier partnerships in 2012.

3.10 Explanation of restatements of earlier information

As this report is online, we have links to information from previous years to facilitate stakeholder understanding of our business.

3.11 Significant changes from previous reporting periods

See Nurturing Nature for a discussion of our newest product lines.

3.12 GRI table

Governance, Commitments, Engagement

4.1, 4.3, 4.4 Governance structure, Independent members, employee input to board

Seventh Generation is a privately held corporation, governed by a board of elected directors, all of whom share a strong commitment to the health and well-being of our planet and the people on it. The board supports our B Corp principles and aspiration to be a profitable, independent, and well-managed business that stays true to our founding mission. Our directors bring a broad range of experience in entrepreneurship, sustainability, finance, building businesses, consumer packaged goods, and leadership of innovative growth companies. Board members serve as representatives of our entire shareholder base and are elected annually based on a few core values:

  • Deeply held belief in the company’s mission, vision and values;
  • Demonstrated commitment to the development of the company and the people within it;
  • Broad and complementary experience relevant to our business; and
  • A willingness to accept fiduciary, sustainability, and strategic responsibilities.

Board Responsibilities

Our board ensures that Seventh Generation is managed professionally and operates in a manner that is consistent with our B Corp charter serving all stakeholders. The board’s responsibilities include:

  • Hiring the CEO and top management;
  • Providing adequate equity capital for growth;
  • Exercising control over the company’s assets and ensuring that they are used effectively in a manner consistent with the company’s values;
  • Furthering the Mission and providing strategic advice that supports the long-term vision;
  • Representing the larger shareholder base; and
  • Meeting quarterly with the executive leadership team and the company and communicating regularly with shareholders

The board invites management from all levels of the organization to participate and meet with them and tries to stay visible and engaged with the Seventh Generation community. We have three standing committees:

  • Compensation Committee
  • Audit and Finance Committee
  • Nominating and Governance Committee

Board Membership and Decisions

At the close of 2012, our board of directors included eight elected directors, two females and six males, including our CEO John Replogle. Of the eight directors, six are independent.

In 2012, the Board reviewed the company strategy, led a deep dive into our sustainability principles and mapped a course to a more robust financial footing. The Board also reviewed the audit and company valuation to ensure that appropriate financial controls and metrics safeguarding shareholder value were in place. A new compensation plan that supported our triple bottom line focus in which employee performance was rewarded based on growth, profits and our sustainability goals was established. Finally, the Board continued to review its own performance by undertaking a self-evaluation as well as seeking feedback from the Executive Leadership Team and engaging in small group meetings with employees from across the business.

4.2 Governance chair

Peter Graham is the Chairman of the Board.

4.14 and 4.15 Stakeholders See Reporting

Economic Performance Indicators

EC1 Direct economic value

Data on direct economic value, revenue, operating costs, retained earnings, and payments to capital providers and governments are proprietary information.

EC3 Coverage of the organization’s defined benefit plan obligations

Seventh Generation firmly believes in creating wealth and financial prosperity throughout all levels of the organization. All full-time employees receive a variety of benefits including company supported, paid medical premiums, an employee stock incentive plan, and participation in other value-building benefits, such as a 401(k). Seventh Generation contributes up to a five percent match on employee contributions into a 401(k) plan. Eligibility is 1st day of the month after their hire date. 99 percent of employees contribute voluntarily to this plan. Also see LA3.

EC4 Significant financial assistance received from government

None was received.

EC5 Ratio of standard entry-level wage compared to local minimum wage

The purpose of our company’s compensation plan is to share our financial success and celebrate our employee owners for their contributions to the growth and success of the company. In addition to the benefits noted in EC3, the company currently pays a minimum starting base rate of $16.15/hour, which is much higher than the current Vermont minimum wage of $8.60/hour and is substantially higher than the federal minimum wage rate of $7.25/hour. Burlington, VT has a living wage ordinance. The livable wage for FY 2013 is $13.94/hour with health insurance and $17.71/hour without health insurance. All full-time employees are also eligible to participate in the company's cash and equity incentive plans as well as the company’s benefits plans including health insurance.

Environmental Performance Indicators

EN1 Materials used by weight or volume See Materials in Nurturing Nature

EN2 Percentage of materials used that are recycled input materials See Materials in Nurturing Nature

EN16 Total direct and indirect GHG emissions by weight See Greenhouse Gas Accounting in Nurturing Nature.

Greenhouse Gas Accounting Methodology. As we do not control the production of our goods, we use component-specific GHG emissions factors from industry sources and published reports to account for more than 85 percent (by weight) of the carbon intensity of our materials, ingredients and packaging. These sources provide a gross estimate of GHG emissions. Where data are missing, we estimate using information for similar materials. Periodic life cycle assessment studies of key products enhance our understanding of the energy intensity of some of our product lines. While estimating is not ideal, our year-to-year comparisons are fairly accurate. We use the widely accepted GHG protocol developed by the World Resources Institute and the World Business Council for Sustainable Development to guide our GHG tracking.

EN 18 (from the Additional Standards category) Initiatives to reduce GHG emissions and reductions achieved See Nurturing Nature

EN26 Initiatives to mitigate environmental impacts See Nurturing Nature

EN27 Percentage of products sold and their packaging materials that are reclaimed by Category See Materials, and Packaging, in Nurturing Nature

EN28 Fines and Noncompliance

None

Labor Practices and Decent Work Performance Indicators

LA1 Total workforce See Building A Great Workplace in Building Communities

LA2 Total number and rate of employee turnover by age group, gender, and region:

  • Overall turnover was 12.5% or 16 people
  • Voluntary was 8.6% or 11 people
  • Involuntary was 3.9% or 5 people
  • Total of 8 females: 5 females <40, 3 females >40
  • Total of 8 males: 2 males <40, 6 males >40

LA3 Benefits provided to full-time employees that are not provided to part-time temporary or part-time employees, by major operations: All employees receive the same benefits; part-time employee time-off benefits are pro-rated based on their scheduled days worked. In 2012, we employed 10 temporary staff.

Seventh Generation was founded on more than a belief in the fundamental need for a safe and healthy environment. We also believe that we all have the right to do fulfilling work in a nurturing workplace. To promote equity, our highest executive salary is currently measured at 15 times our lowest full-time salary. An annual bonus incentive program based on company results, individual contributions and our sustainability goals provides additional financial support for our staff. Stock option awards and new-hire stock grants make each employee an equity stakeholder in our company regardless of their position. Employees are also eligible for up to $500 in energy efficiency reimbursement and 100% of the cost of public transportation. Our most progressive benefit, our $5,000 carbon loan benefit was eliminated at the end of 2012. This loan, which became a grant if the employee remained with the company for five years, supported home energy improvements, renewable energy installations and the purchase of hybrid cars. We also ended the free product benefit for employees in 2012.

To enhance the health and wellness of our coworkers and their families, each employee receives up to $800 in annual fitness reimbursements, and all enjoy access to comprehensive health insurance that draws no distinctions between married, unmarried, and same-sex life partners.

Helping our staff achieve a positive work-life balance is another key focus of our effort to build a great place to work. To support this, we encourage the use of flex-time and telecommuting technologies.

We also believe in carrying our philosophies out into the world around us and doing all we can to build a healthy and sustainable community in which to live. We discuss our industry-leading employee volunteer program here. We’ve also gone the extra mile to forge an office environment that is both a fun and rewarding place to spend each weekday. In addition to providing stunning Lake Champlain waterfront views of New England’s most spectacular sunsets, our LEED Gold-certified facility ensures a high level of sustainable design and a safe non-toxic environment in which to work. Our long-established Vibe Team, a group of employee volunteers, promotes laughter and smiles by organizing informal workday social events and after-hours gatherings, company parties, and participation in external community events.

LA4 Percentage of employees covered by collective bargaining agreements: None.

LA10 Average hours of training per year per employee per employee category

In 2012, we shifted our employee training focus from individually directed efforts to more consistent skill development across the company. We eliminated the employee development training option that had allowed employees to spend $1,000 for the development opportunities of their choice. Redirecting this money in-house, we expanded the number, volume and breadth of our internal trainings. Through this new approach, we dedicated ourselves to building a powerhouse from within by focusing on team development, functional competency development and personal development. For the first time, we developed regular training forums that all of our managers attend to enable us to develop our internal management leadership skills.

https://mail.google.com/mail/u/0/images/cleardot.gifIn 2012, each employee engaged in an average of 26 hours of training (managers received an average of 38 hours) focusing on:

Skill/capability development through classes offered internally or externally

Education on our products and our business through varied training vehicles including brown bags

We spent approximately $135,000 on trainings offered in-house to employees and managers in 2012.

Society Performance Indicators

SO5 Public policy positions and lobbying See Transforming Commerce

SO8 Fines and sanctions for noncompliance with laws and regulations

None.

Product Responsibility Performance Indicators and Marketing

PR9 Fines concerning the provision and use of products and services

None.

Report Assurance

Many of our environmental indicator performance metrics take advantage of the company’s Materials, Ingredients and Packaging database, which tracks information on the materials used in our products. We have chosen not to independently assure our report, and have relied instead on our sustainability team and our controller to review and substantiate the report’s accuracy and authenticity. We have also benefited from our outside reviewers’ comments. Our sustainability consultants Pure Strategies provided an independent review of our assumptions and conducted our materials and environmental footprint-related calculations.