Pearson

It goes without saying that Pearson cannot solve these world issues alone. Though our environmental footprint is relatively small compared to that of many industries, minimising our environmental impact makes business sense. It resonates with a core objective of our business strategy to operate more efficiently and effectively, but also reflects our concern for good environmental stewardship which is shared by many of our stakeholders.

Our company is also changing. Digital solutions are growing across all our businesses. E-books have reached a tipping point for Penguin, digital revenues are 40% of the total at the FT and in education, we are changing from being a textbook publisher to a broad-based supplier of education technology and services as well as curriculum materials. At the same time, non-digital revenues continue to grow. These trends mean a changing environmental footprint for us to track and shape.

Reflecting public policy and investor interest in climate change, carbon management is a major focus for us. That does not mean that we think other everyday environmental issues are not important – we encourage recycling in our offices; we're reviewing and reducing the types of packaging we use; and replacing Styrofoam cups with ceramic mugs where possible too. Our section on environmental management describes how we pick up on wider issues.

On climate change, we decided that our initial focus should be on our own operations. We had been steadily making reductions in our energy use on a like-for-like basis at about 2% per year but wanted to do a lot better.

So, in 2007, we adopted a target adopted for our then existing operations to become climate neutral by the end of 2009. We achieved this and maintained it in 2010 through:

• A carbon management programme. Primarily, this focused on improving energy efficiency in our buildings (e.g. more efficient lighting; server virtualization – which harnesses unused capacity in servers for IT) as well as providing alternatives to business travel, such as upgrading our videoconferencing facilities;
• Investing in generation of renewable energy at our sites. We installed solar panels on the roof of our Old Tappan on-demand print centre in 2009 and have started two additional projects – solar roof panels at our Cranbury distribution centre, which will be among the largest projects of its type in the world; and a wind turbine at our site in Owatonna, Minnesota;
• Purchasing electricity from renewable sources where it is available and affordable to do so, currently in the US, the UK and Canada.
• Establishing partnerships that deliver carbon offsets. Examples from 2010 include the FT Rainforest in Costa Rica and partnering with the Woodland Trust. Past projects include the 96-acre Penguin Wood in the UK.

Together, these covered around 75% of our impact in 2010. For the balance, we added a Pearson Rainforest, building on the existing FT Rainforest in Costa Rica. This compares to 90% of our impact covered in 2009, as we have now included businesses acquired in 2008 and 2009 in the scope of the 2010 commitment.

The primary purpose of the climate neutral commitment was to focus people within Pearson on reducing our own environmental impact. This it has done, as the savings in our buildings and from reduced business travel are running at three times previous levels. We continue to improve on our data gathering and for 2010, we can report an absolute climate footprint 7% lower than the previous year.

We have also given people who are passionate on green issues an opportunity to get involved – there are some 40 green teams at larger Pearson locations around the world and we will work to incorporate a Planet Pearson space into our new online collaboration platform, so that it will be available globally, not just in the US.

Case study: Renewable energy generation – Harnessing the sun and the wind

2010 is the first full year of energy generation from the installation of solar panels on the roof of Pearson's data centre in Old Tappan, New Jersey. Over the 25-year life of the panels, the switch to solar energy at that facility is expected to offset about 4,000 tons of carbon dioxide, the equivalent of planting more than 100,000 trees. Work started in February 2011 on our next two projects – a wind turbine at our print services facility at Owatonna, Minnesota and a second solar panel project at our Cranbury distribution centre in New Jersey.

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Paper for our books, magazines and newspapers is the most significant natural resource we use in our business. Our section on supply chain management describes our approach to responsible paper purchase. Over the last few years, we have focused on improving our resource efficiency. Through initiatives such as using the whole tree rather than part of the tree in the papers we purchase, reducing the base weight of the papers we use and custom publishing, we have made huge strides in this area.

The next phase of our climate neutral work involves understanding and mapping our climate impact across our supply chain. There is no agreed methodology for this, so we have set out to work with industry partners to develop a common methodology. Penguin in the UK is leading the way in this field, while our businesses in North America have also mapped the carbon footprint relating to paper purchase.

Once we have mapped our climate footprint, we will consider what targets might be appropriate.

Pearson has had an environmental policy since 1992. Our businesses in the UK are accredited against ISO 14001, the international environmental management standard, and the businesses in Australia are working towards accreditation. We will introduce this into other countries or businesses by consulting local business heads and stakeholders. Other parts of the world apply our own environmental management system, which we describe on our website http://bit.ly/h7eYpK.

Our work on environmental responsibility and climate neutral commitment is guided by our Environment Executive Committee. The committee is chaired by Robin Freestone, the chief financial officer, and includes senior executives from operations, communications and those leading implementation across the business.

Getting Pearson people involved in our environmental work has always been an important objective for us. Staff-led initiatives include:

• Green/Eco Teams. We now have 40 groups of volunteers in place in Pearson buildings in the UK, the US, Canada, Australia, South Africa and India Green/Eco Teams;
• Planet Pearson, a cross-company environmental intranet site currently available in the US. This site offers ideas for carbon reductions, links to local green groups and performance reports.

Our books, magazines and newspapers continue to cover climate change as an issue and have developed some innovative ways to provoke debate, inspire action and celebrate success.

Case study: FT/IFC Sustainable Finance Awards – Sustainable Finance Conference

The Financial Times and IFC, a member of the World Bank Group, have launched the Sustainable Finance Awards, a major global programme designed to recognise the institutions across the financial industry that have shown leadership and innovation in integrating environmental, social and governance considerations into their business. The awards form part of the FT's annual sustainable finance conference.

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• The Dow Jones Sustainability Index has named Pearson as the Global Sector Leader for the last four years – environment is a major part of the index methodology.
• Penguin in the UK was ranked 11th in the Sunday Times Best Green Companies listing in 2010.
• Pearson in the US was named as a 2010 Green Power Leadership Award winner by the U.S. Environmental Protection Agency (EPA). Pearson currently ranks No. 25 on EPA's National Top 50 list of green power purchasers. We offset 100% of the energy we use in North America through the purchase of wind power credits.
• Penguin was recognised in the Forest Stewardship Council (FSC) Global Partner Awards for outstanding achievement in promoting the FSC brand worldwide.

Pearson commissioned Corporate Citizenship to provide verification of its 2010 global environmental data.

We have verified the 2010 global carbon footprint documented in the environment section of the Pearson 2010 report "Our Impact on Society" in accordance with the World Resources Institute/World Business Council on Sustainable Development Greenhouse Gas Protocol Guidelines (WRI/WBCSD GHG Protocol). Based on the scope of work undertaken nothing has come to our attention to indicate that Pearson's carbon footprint has been materially misstated.

Corporate Citizenship www.corporate-citizenship.com