A strong belief in transparency is fundamental for us at Seventh Generation as we highly value corporate responsibility, sustainability and stakeholder engagement. We find that producing our annual Corporate Consciousness Report is a valuable exercise in reflecting on our progress (or lack thereof) and reminding ourselves of the central role that sustainability plays in our everyday work. We communicate frequently through our website, newsletters, press releases, social media, our product labels and many other ways. But this report provides a critical vehicle for us to convey who we are as a company and puts the different aspects of our work in a context where they may be seen as a whole. 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 searchable content that will invite readers to view small sections at a time and to comment or ask questions. We hope this new platform will promote an exchange of ideas on our sustainability efforts among a variety of audiences. We plan to provide more timely sustainability updates in the future and plan to provide more details on many of the topics discussed in this report through stories and posts that will appear on our website throughout 2011.

Stakeholder Consultation

Our annual reporting process benefited greatly from a stakeholder review convened by Ceres on July 6, 2011. 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, Seventh Generation, and the consulting community, there were seven participants from the business and environmental communities. As a further level of review, an internal cross-disciplinary team provided comments. The feedback was invaluable and we deeply appreciate the review team’s willingness to share their time and insights.

Reviewer Comments: Reviewers liked the candor and transparency of the report and the balance of discussion regarding challenges and achievements. They also made specific suggestions:

Discussion of Leadership Changes: While appreciating the honest treatment of this difficult period in the company’s history, reviewers felt the tone was too negative; this section should be more forward-looking and should celebrate Seventh Generation’s having emerged whole and reinvigorated from the transition from an iconic founder to new leadership – the type of transition that has weakened other companies. Section has been rewritten.

CEO Letter: Reviewers felt this letter did not provide a clear sense of the company’s current direction. This has been tweaked slightly. The focus remains at a high level as our CEO has only been with the company a few months.

Business Case for Sustainability: While it may be intuitive for us at Seventh Generation that our deep commitment to sustainability has provided us a positive brand image and a positive bottom-line – initiatives such as our logistics work have saved significant amounts of money – it is not obvious to outsiders. Reviewers wanted a clearer demonstration that our model of sustainable business is a profitable one. This has been added most specifically to the logistics section and less explicitly throughout the report.

Governance: Noting that governance and management accountability were at the core of the company’s recent philosophical difference between its founder and its Board of Directors, reviewers challenged Seventh Generation to integrate sustainability and oversight of sustainability issues more explicitly into the governance structure. A discussion was added in the Governance section.

Reviewers provided additional, insightful comments throughout the report covering topics such as external stakeholder engagement and policy work, carbon and water footprinting, and management and raw material sourcing. While we were not able to address every single comment due to time constraints or other reasons, we made changes and clarifications throughout.

Materiality

A materiality assessment involves examining numerous issues to discern their importance and relevance to our company and our stakeholders to help us determine our sustainability program priorities as well as the content of this report. While we did not conduct a formal quantitative 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, and the members of our own company. 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. While we hold a formal stakeholder engagement event, supported by Ceres (see above) once each year, a commitment to fully engaging our stakeholders is one of the hallmarks of our business approach. Our website is rich with conversations that address topics that are important to our consumers and others who are interested in healthy lifestyles, green cleaning, sustainability and corporate responsibility. We communicate with our “Nation” continually throughout the year and invite their participation in conversations with us on many topics.

Our model for working with our retail and manufacturing partners also involves a deeper level of conversation than may be typical in the business world. We provide many opportunities for our employees to express their concerns informally as well as through our annual workplace satisfaction survey. Our stakeholders’ needs and concerns and our understanding of them are evolving and the depth, variety and frequency of our interactions assist us in gauging how well we are responding to their needs.

Through these avenues of communication, we have determined that the following issues are of high concern: toxins in household products, the supply chain and the environment; employee well-being and fulfillment; 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 content of our ingredients to be material to our company. Our efforts to make Seventh Generation a great place to work, the internal turmoil in our company in 2010, and our efforts to create positive change beyond our own company 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. Having identified those areas that are of highest importance, our company’s long-standing commitment to transparency prompts us to try to report on as many additional topics as we can.

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 this C level.

GRI Content Index

Organizational Profile
GRI Guideline	Description	Link
2.1 2.4 3.4	Organizational Name, Location, Contact Point: Seventh Generation 60 Lake Street Burlington, Vermont 05401 tel: 802-658-3773 www.seventhgeneration.com or email responsibility@seventhgeneration.com See Our Company
2.2	Brands, products, services See Our Company, Our Products
2.3	Operational structure See Our Company
2.5	Countries where company operates See Our Company, Sales
2.6	Ownership and legal form: privately-held See Our Company
2.7	Markets served: global; primarily USA and Canada See Our Company, Sales
2.8	Scale of reporting organization: 108 employees Net sales, total capitalization, quantity of products provided: We are a privately held corporation and choose not to reveal this financial and strategic data. See Our Company
2.9	Significant changes: We have new executive leadership and a new distribution center in Atlanta. See Leadership Changes for information about our new CEO. See Logistics.
2.10	Awards received See Executive Summary, Awards

Report Parameters
GRI Guideline	Description	Link
3.1	Reporting Period Calendar year 2010 with occasional mention of relevant achievements in early 2011.
3.2	Date of previous report Our report was published in 2010 and covers the year 2009.
3.3	Reporting cycle Annual. This report covers 2010.
3.4	Contact point for questions
3.5 3.6 3.7	Process for defining report content; Report boundary; 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. Also see Logistics, Manufacturing, and the Environment section.
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 Products for a discussion of our newest product line.
3.12	GRI content index
3.13	Report assurance Many of our environmental indicator performance metrics take advantage of the company’s MIPs database, which provides us with accurate 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.

Governance, Commitments, Engagement
GRI Guideline	Description	Link
4.1 4.3 4.4	Governance structure, Independent members, employee input to board See Governance.
4.2	Governance chair Peter Graham is the Chairman of the Board.
4.14 4.15	Stakeholders See International Reporting Standards.

Economic Performance Indicators
GRI Guideline	Description	Link
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 100% paid medical premiums, an employee stock incentive plan, and participation in other value-building benefits, such as a 401(k). Seventh Generation contributes an automatic 4% of an employee’s wages into their 401(k) plans whether or not the employee also contributes to the plan. Eligibility is 1st day of the month after their hire date. 91.7% of employees contribute voluntarily to this plan.
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 $16.06/hour which is 99% higher than the current Vermont minimum wage of $8.06/hour and is 122% higher than the federal minimum wage rate of $7.25/hour. All full-time employees are also eligible to participate in the company’s cash and equity incentive plans.

Environmental Performance Indicators
GRI Guideline	Description	Link
EN1	Materials used by weight or volume See Materials.
EN2	Percentage of input materials that are recycled See Materials.
EN16	Total direct and indirect GHG emissions by weight See Greenhouse Gas Accounting.
EN18	(from the Additional Standards category) Initiatives to reduce GHG emissions and reductions achieved See Products. See the Environment section
EN26	Initiatives to mitigate environmental impacts See Products. See the Environment section
EN27	Percentage of products sold and their packaging materials that are reclaimed by Category See Products. See The Environment section
EN28	Fines and Noncompliance None.

Labor Practices and Decent Work Performance Indicators
GRI Guideline	Description	Link
LA1	Total workforce See Building a Better Workplace.
LA2	Total number and rate of employee turnover by age group, gender, and region: Overall turnover was 10% or 1 people producing an overall increase of 10% or 10 people Voluntary was 3% or 3 persons Involuntary was 6% or 6 persons Total of 3 females: 1 females <40, 2 females >40 Total of 6 males: 6 male <40, 0 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.
LA4	Percentage of employees covered by collective bargaining agreements: None.
LA10	Average hours of training per year per employee per employee category: Each employee engaged in an average of 25 hours of training in 2010 broken down as follows: 10 hours of development training and an average of 15 hours of company specific training related to our products and business, delivered in brown bag lunch meetings. In addition, each employee is eligible to spend $1,000 on a development opportunity of their own choice. Approximately $31,000 was spent on the 61 employees who pursued this individual training benefit in 2010 — averaging 10 hours of training each. This represents a significant increase in employee usage of this benefit — in both dollars and employee participation — over 2009.   2010 brought a renewed focus on internal development efforts, particularly in the areas of leadership and team development. Sixty percent of the population participated in the Authentic Leadership process, aimed at identifying and developing individual strengths for both personal growth and contribution to team success. The average amount of time spent on this program was 8 hours per employee (included in development training figure listed above). We are continuing this program in 2011, with the intention of having all employees participate by the end of Q3.

Society Performance Indicators
GRI Guideline	Description	Link
SO5	Public policy positions and lobbying See the Engagement section
SO8	Fines and sanctions for noncompliance with laws and regulations None.

Product Responsibility Performance Indicators and Marketing
GRI Guideline	Description
PR9	Fines concerning the provision and use of products and services None.