In our stores and online, Staples offers our customers more than 4,500 products with positive environmental attributes. These include recycled products, paper products from certified responsibly managed forests, recycled and refillable writing instruments, ENERGY STAR® qualified office technology products and eco-certified cleaning products that use safer and greener ingredients. When customers shop at staples.com® as well as our other online ordering platforms globally, they can filter by these attributes to find greener products that meet their needs.

Making it easier for customers to find greener products

Staples is making it easier for business customers everywhere to identify environmentally preferable products. In 2010, for example, Staples Australia launched the Go Green Guide, which contains product information for more than 1,500 EarthSaver-classified products. The Guide also includes:

• Facts and figures demonstrating the effect businesses can have on the environment by using environmentally preferable products
• Certification labels throughout to help businesses identify certified products
• An action plan that provides Australian businesses with simple steps for creating a greener workspace

We’ve also invested in launching more sustainable products under various Staples® brand names. For example, we offer an assortment of Sustainable Earth by Staples™ products designed to integrate leading environmental features, such as cleaning products that reduce the use of harsh chemicals, and paper made from sugarcane waste.

Using eco-labels to identify sustainable products

We continually evaluate the criteria we use to identify products as more environmentally sustainable. For example, Staples Austria has integrated the consideration of the “Österreichisches Umweltzeichen” eco-label into its qualification criteria for sustainable products. This prestigious eco-label is administered by the Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Management, and has high visibility and recognition within the Austrian market.

• By integrating this eco-label and preferentially sourcing products meeting its standards, Staples Austria supports locally sourced environmentally responsible goods and aligns to the national government-approved standards demanded by customers.

Taking the next step

While we’ve made many investments over the years in improving our sustainable product offerings, we realize we could do much more by engaging with our suppliers and addressing the impacts associated with our Staples® brand products:

• Through an analysis conducted for Staples in 2010, we discovered that more than 90 percent of our overall carbon footprint across our entire supply chain is embedded in the products we sell, with less than 10 percent resulting from our operations (e.g., facility energy use and fleet operations).
• At the same time, we modeled the potential benefits of packaging improvements across our key suppliers. We found that, together with our suppliers, we could realize significant financial and environmental savings by focusing on improving the packaging for the products we sell and the shipments we make.

Those findings, combined with continued evidence of increasing customer demand, led us to make the development of more sustainable products and packaging a central focus of our new sustainability strategy. We kicked off the strategy — the supplier “Race to the Top” — at our Retail Supplier Summit in Boston in October 2010.

The “Race to the Top” sustainability initiative challenges our suppliers to reduce the environmental impacts of what they produce through innovations in packaging, product design and manufacturing — including Staples® brand product lines.

As a first step, we’ve asked our top suppliers to make environmentally sustainable packaging a priority in 2011 and beyond. Excessive and unsustainable packaging drives up costs, wastes resources and burdens our customers with packaging waste that they then must either recycle or throw away. By reducing packaging volume and using more sustainable packaging materials, we’re asking our suppliers to help us ease the burdens that our entire industry places on natural resources and the environment.

We recognize that there are a number of challenges to developing sustainable packaging in our industry. We are already working with our suppliers to overcome them. Such challenges include:

• Protecting the product from damage and theft, and ensuring that we can effectively market the product in stores while minimizing the amount of packaging.
• Lack of alignment and competing priorities across retailers regarding sustainable packaging directives for their suppliers.
• Overcoming concerns about loss of shelf space relative to competitors, and existing beliefs such as “the package has to sell the product.”

Measuring product sustainability

Starting in late 2011, we will also work with several of our largest suppliers to drive increased sustainability in those product categories that we believe, based on previous analyses, have the greatest environmental impacts of all the products we sell to our customers. This collaboration will be a major effort, starting with the creation and implementation of scorecards and metrics for measuring product sustainability. We are committed to working through the many challenges of developing a more sustainable product assortment for Staples customers, including:

• Defining what makes a product more sustainable. Our intention is to focus on “what matters most” within specific product categories. This means taking a holistic approach to identify and focus on reducing the greatest environmental impacts of the product across its life cycle, from raw materials extraction and manufacturing to use and end of life.
• Establishing effective incentives to embed sustainability into our purchasing decisions.
• Finding cost-effective ways for our suppliers to integrate sustainability into the products we purchase so that we can offer customers more sustainable products at competitive prices.
• Ensuring that we are aligned with the interests and needs of customers, suppliers, emerging industry standards and other key stakeholders.
• Overcoming customer confusion about what makes a product “green.”

Sustainable paper-based products

We source and sell millions of tons of paper products each year. It is important to us and our customers that these products not only perform well, but are also sourced and manufactured in a sustainable manner.

Our Sustainable Paper Procurement Policy establishes our commitment to increasing the sustainability of our paper products and defines our expectations for suppliers of paper-based products. We updated this policy in January 2010 to reflect our objective to increase our sourcing of products that minimize environmental and social impacts throughout their life cycle and that are certified to the Forest Stewardship Council (FSC) standard.

In 2010, we continued several initiatives to support the objectives in the policy. Through our partnership with Rainforest Alliance’s SmartSource program, we supported the Alliance’s efforts to develop a Web-based sustainability sourcing evaluation tool for wood and paper products. This online evaluation is based on existing analytical tools the Alliance had already developed, but is designed to be easier for larger companies to manage and track progress. We anticipate that the tool will be ready for launch in late 2011.

Internally, we’re also working to improve our ability to more accurately measure and quantify the sales of paper products with particular sustainability attributes. We still can’t report in detail on our paper sales, but we are working to implement a better, more comprehensive reporting system and have it in place starting in 2012.

One of the challenges of shifting our paper purchasing to mostly FSC-certified stock is the difficulty of finding enough certified fiber in the areas where we source paper, particularly in the southeastern United States. In response to this challenge, Staples and the Dogwood Alliance announced a program called Carbon Canopy in October 2009. This multi-stakeholder effort engages other conservation groups, wood products companies and landowners to protect forests, combat climate change and help develop sources of FSC-certified paper and wood products. The goal is to create financial incentives for private landowners to increase forest conservation and restoration efforts and work toward FSC certification.

In 2010, Carbon Canopy made considerable progress in increasing membership and also in establishing a valid and credible carbon value for forest conservation and restoration efforts undertaken as part of the initiative. The group has identified a 20,000-acre pilot site that is currently undergoing an evaluation by the Pacific Forest Trust and FSC. Over the next year, members plan to hold initial meetings with carbon market specialists to evaluate opportunities to make an initial sale of carbon credits.

We’re actively promoting sustainable paper sourcing in our supply chain as well. Paper products will be a focus of our product sustainability efforts under our “Race to the Top” initiative in 2011 and beyond. To help direct our merchants to more sustainable paper choices, we anticipate testing and launching a paper scorecard that leverages the work we’ve done with the Environmental Paper Assessment Tool (EPAT), a project of GreenBlue. We believe that EPAT will enable us to evaluate one of the most important elements of “what matters most” for paper, which is environmental efficiency at the paper mill level.

Combined with our work with the Rainforest Alliance’s SmartSource program, WRI’s Forest Legality Alliance and the Carbon Canopy, we believe our improved paper procurement policy and “Race to the Top” initiatives position us to address the most important and globally relevant sustainability issues related to paper products.

We will continue to work closely with our suppliers to ensure they are taking action to improve their forest-management practices, protect endangered and high conservation–value forests, and develop more sustainable products.

Copy & Print services

We are also making it easy for Staples customers to make more sustainable copies. Since March 2008, Staples® Copy & Print Centers have used 50 percent post-consumer recycled FSC-certified paper as the standard offering for high-speed black & white copying. In fact, 64 percent of all copies produced at Staples in the United States in 2010 were made on FSC-certified paper, and 28 percent of copies were made on paper containing post-consumer recycled fibers.

Staples offers a variety of recycling solutions for our customers, including recycling of rechargeable batteries, ink and toner cartridges, mobile devices, laptop computers and other electronics.

Recycling programs are a win-win-win for our customers, the environment and Staples. Our customers enjoy a convenient and free or low-cost opportunity to responsibly dispose of used technology products; the refurbishing or recycling of products helps reduce the burdens of mining and prevents landfill waste; and, as a company, we build customer loyalty.

Electronic waste recycling

Recycling electronic waste (eWaste) in a responsible manner helps capture metals, plastics and other recoverable materials while ensuring that hazardous components such as lead and mercury are properly managed. Staples works with electronics recycling vendors that are pursuing or have earned certification to the E-Stewards Recyclers Program standard or the EPA Responsible Recycling standard. Both standards seek to ensure that facilities responsibly handle and recycle eWaste. Vendors working with Staples have also certified their facilities to the ISO 14001 environmental management standard.

In 2010, Staples stores held several trade-in, trade-up events that focused on printers, shredders and several other devices. These events encourage customers to bring in a used product to be recycled at no charge while earning a coupon toward the purchase of a qualifying new device. We’ve found that these events drive recycling volumes and sales of new products. As such, we plan to continue to offer these trade-in recycling events.

Staples UK helps customers turn old computers into new

In November 2010, Staples UK introduced an initiative to allow customers to turn in their old computer in exchange for a £60 voucher toward the purchase of a new one from Staples. In order to qualify for the voucher, customers followed a simple process to request recycling, and a UK Staples store associate returned the computer to our partner, Anovo.

Anovo is a leading specialist in repair and regeneration of technology products; once products are received, they are refurbished and rebuilt for resale. Customer data security is ensured through the use of British government defense-certified “KillDisk” software to completely erase the hard drives. Any machines that are beyond repair are broken down and fully recycled.

Since the start of this initiative in November 2010, we have recycled a total of 3,200 computers, with 95 percent of customers using their vouchers for a new computer sale through the Staples UK business.

Ink and toner cartridge recycling

Staples encourages our customers to take advantage of our ink and toner recycling services and help protect the environment. In addition to reducing waste going to landfills, and saving resources, our retail customers in the United States receive $2 back in Staples Rewards® for any brand of ink or toner cartridge they return to our stores, up to 10 cartridges per customer each month.

In 2010, we introduced our successful ink and toner recycling program to our Staples Advantage® customers. Launched in 2009, the program allows our drivers to pick up ink and toner cartridges for recycling directly from customers when delivering their office supplies.

Our customer-based recycling efforts extend across our global operations. A few examples are highlighted below:

• In Canada, we support a Recycle for Education campaign with each eligible ink and toner cartridge recycled in our retail stores. In 2010, more than 2 million cartridges were collected from retail locations. Since its inception in 2004, the program has raised more than $2.7 million for public schools in Canada. We have a goal of collecting 2 million ink and toner cartridges in 2011 through the program. Staples also collects ink and toner cartridges from our Canadian Staples Advantage business customers through driver pickup programs.
• In the U.K. we support ChildLine, a non-profit organization that provides counseling services for children and young people, with £1 donated for each cartridge, plus a discount extended to customers for a future purchase.
• Staples Australia also has a program for delivery customers linking charitable donations to ink and toner recycling.

Recycling supports charities in Belgium and the Netherlands

Staples Belgium has partnered with Recyca, a printing supplies recycling company, to create a unique charity support scheme with Beyond the Moon, an organization that provides and organizes vacations for seriously ill children and their families. The scheme helps Staples reduce the environmental impact of its own and its customers’ operations by ensuring that customer waste, such as ink and toner cartridges, is recycled, reused or properly disposed of. Recyca provides this service for free but for certain products a small fee is charged to customers, which Staples in Belgium has decided to donate to the Beyond the Moon charity.

Similarly, Staples in the Netherlands operates a customer program that collects mobile phones and ink and toner cartridges. The proceeds from this recycling program are donated to UNICEF. Plans are being made to expand this program to retail stores in the months and years to come.

Just as we encourage customers to use eco-conscious products and recycle old equipment, we look to reduce, reuse and recycle in our stores and across our operations. These efforts benefit our bottom line as well as the environment.

In addition to having requirements and procedures in place at all our facilities for the recycling of cardboard, mixed paper, shrink wrap, pallets and other items, we continue to implement new initiatives to promote recycling by our associates. For example, Staples Australia developed and implemented the “@desk Waste Education and Management Program” in 2010 to help associates manage office-based waste. The program was implemented across all Staples Australia sites, and provided waste management options for “at-point-of-disposal” desk-based recycling accompanied by educational material.

Over the past several years, waste generation has continued to increase in the United States on an absolute basis despite efforts to increase our waste minimization and diversion efforts. Part of the increase is due to improved estimation of waste generation from sites not serviced by our largest waste providers. We recognize, however, that there is much more we could do to reduce waste across Staples.

To help understand and reduce waste generation, we kicked off a Lean Six Sigma Black Belt project in late 2009 to evaluate all sources of waste at our U.S. retail stores. The project has a goal of saving 10 percent in waste disposal costs compared to the 2009 baseline. After identifying several waste diversion and minimization opportunities and best practices, we started rolling out the program in a phased approach in 2010. So far we have found that in most cases, participating stores have been able to cut the pickup frequency of their waste containers in half through increased recycling diversion. These best practices will continue to be extended to more than 1,000 locations in 2011, and we expect to see an improvement in our waste reduction figures as a result.

In our North American Delivery distribution facilities, we’ve dramatically increased our focus on waste reduction and diversion. We have implemented a number of new and improved processes and have developed communication and reporting tools to drive improvement. For example, we:

• Established capacity utilization targets for both waste and recycling compactors and started to implement waste diversion metrics at all fulfillment centers to benchmark facilities and establish specific facility level goals.
• Conducted waste audits of all fulfillment centers and most service delivery operations (SDOs) to identify diversion challenges and improve recycling in those facilities.
• Made additional recycling equipment investments in fulfillment centers that needed expanded equipment, which will provide necessary capacity to maximize their recycling activities.
• Developed monthly reporting to help the fulfillment centers manage their waste and recycling programs.

Finally, over the longer term, we fully expect to see benefits from the packaging initiatives implemented as part of our “Race to the Top” strategy with our 23 key suppliers. These additional reductions in materials to be recycled or disposed of will come from shrinking package sizes, allowing more items to fit into cases and optimizing outbound shipments to fit more items.

Staples has been an ENERGY STAR® partner since 1999. A joint program of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy, ENERGY STAR helps companies like Staples save money while protecting the environment through the use of energy-efficient products and practices.

EPA’s ENERGY STAR partnership program offers companies a proven energy management strategy that helps in measuring current energy performance, setting goals, tracking savings and rewarding improvements. The EPA provides an innovative energy performance rating system that has been used with more than 130,000 buildings across the country.

In 2010, working in partnership with ENERGY STAR, Staples once again made substantial progress toward sustainability.

• For our work in 2010, Staples was recognized as an ENERGY STAR Partner of the Year for Energy Management for 2011, a distinction shared by only two other retail companies in this awards cycle.
• Staples’ ENERGY STAR goal, announced by CFO John Mahoney at the 2010 Edison Electric Institute Conference, is to have 500 facilities designated as ENERGY STAR locations by 2012. A total of 125 Staples stores, warehouses and distribution centers were awarded the ENERGY STAR rating by the end of 2010.

Reducing our energy consumption

Another focus of Staples’ energy management effort is our commitment to continuously reduce energy consumption. We anchor these efforts in our KWh Reduction Initiative, which incorporates energy waste elimination, energy awareness training, energy usage metrics, outlier identification and store recommissioning as fundamentals of superior energy management.

Under the initiative:

• Since 2008, Staples has retrofitted lighting in more than 750 stores to upgrade from 32-watt T8 bulbs to 28-watt T8s with new electronic ballasts. Additionally, HID lights in our distribution centers have been upgraded with new T8/T5 lights and motion sensors.
• We launched a Lean Six Sigma program to expand the KWh Reduction Initiative to Staples distribution centers in the United States and Canada after pilot sites achieved more than 13 percent energy use reductions. This expansion is anticipated to cut Staples’ energy expenses by more than $2 million per year.
• We expanded our store energy controls monitoring and recommissioning program, a relatively new initiative to reduce electricity consumption by ensuring that the systems that control energy usage in our stores are operating properly.
• We expanded our participation in energy consumption demand response programs, resulting in the elimination of up to 5 MW of load from the grid during peak hours at a savings of $800,000 in 2010.

Promoting Leadership in Energy and Environmental Design (LEED)

The LEED® green building certification program promotes sustainable building and development practices though a rating system for building projects that implement strategies for better environmental and health performance. Staples was one of the first companies in the retail industry to participate in the LEED program, and in April 2010 we received the U.S. Green Building Council’s LEED Gold certification at two of our distribution/sales facilities and two retail stores. We will continue to look to the LEED system (and our own LEED-accredited architects) to promote eco-conscious design at our facilities worldwide.

Reaching out to associates and communities

Staples spearheads many educational and community initiatives to inspire its employees and the members of the wider community to “think green” about saving energy, including:

• During Energy Awareness Month in 2010, Staples hosted a “Bring Your Green to Work”’ energy fair at the corporate headquarters. This educational program brought together Staples associates and vendors of energy-efficient products and services to help associates learn to save energy at home and at work.
• At 10 regional kick-off meetings across the United States and Canada during August 2010, we launched the Staples North American Delivery Energy Reduction Program. More than 1,200 employees at Staples distribution facilities participated in the seminars and were provided with ENERGY STAR assessment tools and communication materials.
• The EEI/Staples Wake Up Kids school energy education program, staffed by Staples volunteers, helped educate more than 1,000 K–12 students last year about the necessity of energy efficiency.
• As a symbol of our commitment to superior energy and environmental management, Staples has developed its own icon of energy efficiency: Wattson. A six-foot-tall fluorescent light character, Wattson is designed to inspire ongoing exploration of new ways to save energy at work and at home. In 2010, Wattson appeared regularly at a variety of events to help educate employees, customers and school children about the importance of energy conservation.

Reducing greenhouse gas emissions

Staples has made great strides in minimizing greenhouse gas (GHG) emissions resulting from our operations. Along with our adoption of renewable generation technologies, our reduction in energy use has been instrumental in helping Staples far exceed our commitment to cut our absolute carbon footprint by 7 percent, as measured against a 2001 baseline, by 2010. In fact, despite our significant growth and acquisitions in recent years, our energy conservation and green power investments have reduced our GHG emissions by 30 percent since 2001 —exceeding our goal by a comfortable margin.

Staples has set a new global goal to reduce the company’s absolute GHG emissions by 50 percent by 2020, using 2010 as a baseline.

For more information about our efforts to reduce GHG emissions, please read Staples’ 2010 response to the Climate Disclosure Project.

Working toward Carbon Trust accreditation

Staples in the UK and Ireland is pursuing Carbon Trust accreditation. Our progress to date includes establishing a recorded carbon footprint across all business units for the past three years (as part of the statutory UK-based Carbon Reduction Commitment). All Staples facilities have exceeded expectations by installing devices to monitor and record electricity consumption every 30 minutes. This measurement aids in the management and accountability of Staples’ energy consumption, and allows us to identify ways to increase our facility efficiency. The final step to accreditation will be to demonstrate an average carbon output reduction over a three-year period, a goal we will work to meet in 2011.

Fleet efficiency

We electronically limit the top speed of our delivery fleet trucks to 60 miles per hour and employ idle management technologies to shut off engines after three minutes of idle time. These and other initiatives have improved fleet fuel economy 18 percent since 2006. In 2010 we saved 724,000 gallons of fuel and reduced CO2 emissions by 8,000 tons in the United States.

We are making fleet efficiency improvements across our global operations as well. For example, in Germany, Staples has taken measures to reduce the impact of its vehicle fleet by purchasing more efficient vehicles, training drivers on how to save gas, and incorporating vehicle maintenance and driving tips into regular internal communications.

Electrifying the Staples fleet

Staples ordered 53 electric delivery trucks in 2010 — the first of their kind to join our fleet. We were also one of the first major U.S. companies to do so.Ten of the trucks were placed in service in Ohio; 30 in California; six in the Atlanta, Georgia area; three in Texas; three in Portland, Oregon; and one in Kansas City, Missouri. The trucks cost about $30,000 more than equivalent diesel-powered vehicles, but the extra expense will be quickly recovered; in fact, electric vehicles can provide greater savings to businesses than to consumers compared with diesel or gasoline models, in both fuel and maintenance costs. In addition, in May 2009, Staples applied for and was granted Federal Stimulus money through the Clean Cities Grant coalition. This funding will cover 50 percent of the actual cost of alternatively powered vehicles.

Each of the electric delivery trucks will run a daily route of less than 70 miles before recharging at night.

We are evaluating additional fleet efficiency initiatives, including:

• Additional hybrid vehicle testing (to begin in early 2011 in partnership with Eaton and BAE Systems)
• Installation of advanced idle-reduction technology
• Engine horsepower reduction to minimize fuel consumption
• Transmission change-over to a fuel-efficient double-overdrive transmission for all new trucks to reduce engine rpms and fuel consumption

Through better planning, we reduced truck miles traveled between warehouses and stores in the United States by 2.6 million miles in 2010, significantly reducing fuel use and associated CO2 and other emissions.