2008 Corporate Social Responsibility Report

Increase the amount of energy we consume from renewable sources

So far in FY09, we have signed a new contract to purchase green power in Germany and renewed the contract for green power in the UK. These contracts account for 10% of Sun's global power consumption.

Reduce Scope 1 and Scope 2 CO₂ emissions from global operations by 20% over 2007 levels by 2015

The base-year 2007 inventory was submitted and the goal was approved by EPA Climate Leaders; GHG accounting has been migrated to OpenEco.org.

Reduce year-over-year growth in global business travel emissions by 5%

Global travel emissions numbers for 2008 are not yet available from American Express, Sun's corporate travel provider.

Retrocommission Sun-owned buildings in the San Francisco Bay Area, Colorado, and Oregon

Scope of work and budgets have been prepared for retrocommissioning buildings on campuses in Menlo Park and Santa Clara, California; and Broomfield, Colorado.

Achieve LEED certification for our MPK10 building in Menlo Park, California

We have completed a number of green initiatives toward LEED certification for this building, including increasing recycled content of our copy paper; improving recycling; initiating composting, green cleaning, and improved energy usage and ventilation; and instigating hybrid parking in some locations. We began a three-month performance period in December 2008 and will submit our results to the U.S. Green Building Council (USGBC) in March 2009.

Reduce operational energy use (excluding datacenters) by 15,500 MWh (or 4% from fiscal 2008)

No data is available at this time.

Focus on reducing the environmental impact of all our major events, including JavaOne, CommunityOne, and Tech Days

Sun's events team has been working on ways to apply the sustainability principles developed at JavaOne to our other major events. These principles include reducing or eliminating printed materials such as brochures and direct mail. Most of these events occur in the second half of the fiscal year, so we expect to have a more robust update in our 2009 CSR report.

Conduct a Sun transportation summit in early FY09 to review program components and effectiveness; coordinate program management and develop a unified strategy for transportation support; and set up a metrics and reporting framework

The summit was held during Q1 FY09. A survey is being conducted to ascertain program needs and benefits for employees. The survey will be completed during Q4 FY09.

Develop and implement a pretax transit subsidy program

A flexible spending account (FSA) program is on track to be implemented as an employee benefit in Q1 FY10.

Expand tracking of water usage to all regions, focusing in particular on obtaining data for buildings with more than 75,000 square feet of active space, or document why this data cannot be obtained

We completed an assessment of buildings in the Americas that can be tracked, and we're working to determine those buildings that can be tracked in EMEA an APAC.

Choose three sites to target for water reduction from the list of facilities for which water use data is available

Menlo Park, Santa Clara, and Broomfield campuses will focus on reducing water consumption in FY09. In addition, we're working with major leased sites in United States and Canada to implement savings initiatives, and we're pursuing water audits for buildings and landscaping to identify opportunities and rebates. We're also developing proposals for smart controllers in landscaping.

Improve data collection and reporting

Significant progress has been made in oversight, collection, and analysis of operational waste data for U.S. campuses in Q1 and Q2 FY09, and will continue throughout the fiscal year. We will also determine if data can be collected and reported for leased sites.

Reduce the total waste-to-landfill ratio by 2% over FY08

We are ahead of our target at major U.S. facilities: the diversion rate for Q1 FY09 was 68%, whereas the rate was 54% for Q4 FY08. Initiatives implemented at U.S. campuses in Q1 include deskside recycling, composting in cafeterias, and recycling in conference rooms. Other initiatives under consideration include eliminating third-class mail, using compostable cups in vending areas, and implementing composting of food waste in vending areas and paper towels in restrooms.

Profile the waste/recycling programs at all sites, including those managed by third parties

Surveys were developed, distributed, and collected during Q1 and Q2 FY09 to establish profiles for all sites, and 100% of the surveys have been received for sites managed by Jones Lang LaSalle (JLL) in the United States and APAC. For U.S and APAC sites managed by other third parties, 30% of the surveys have been received, and 75% of non-JLL, third-party-managed sites in EMEA have been received. Profiles have been summarized by region and will be used to track data and implement waste-reduction initiatives.

Publish energy-consumption data for all products

The technical specifications for all Sun systems provide information about maximal (rated) power draw. Sun also makes power calculators for all Sun systems available on sun.com. The calculators we provide online for specific configurations are based on actual measured power for different configurations that are precalibrated in the lab.

Drive increased energy efficiency in microprocessors, systems, and storage through investments in targeted R&D

No data is available at this time.

Provide tools for datacenter customers to monitor power consumption of Sun products

No data is available at this time.

Exceed industry targets for energy efficiency of power supplies used in Sun products

No data is available at this time.

Calculate the embedded energy used to manufacture Sun products

No data is available at this time.

Measure and report on how much spending is placed with suppliers identified as promoting CSR

Sun is currently testing a new contract management tool that will house and track this information. We expect to begin data gathering and measurement in March 2009 and should be able to report some FY09 data in our 2009 CSR report.

Adopt and implement a global sustainable procurement policy

Initial drafts of Sun's sustainability policy have been created, and it's expected to be completed and adopted by Q3 FY09.

Include privacy checks and balances throughout the product lifecycle

No data is available at this time.

Integrate privacy checks into the takeback and disposal process by 2009

Due to internal transitional issues, we are not yet prepared to report data specific to these privacy goals. However, a new privacy policy was implemented in January 2009, and we have made progress in other areas of privacy protection, including certification under the U.S. Department of Commerce's Safe Harbor framework. We will report these and other updates in the 2009 CSR report.

Report the following data internally on a quarterly basis as of July 2008: pounds put on the market; pounds returned; percent reused, recycled, or committed to landfills

We first reported much of this information in July 2008, but the report was incomplete. The first full internal report will appear in January 2009. We will provide as much information as possible in Sun's 2009 CSR Report.

Develop a schedule to include consistent reporting for percentage of old products returned and recycled in Canada, China, India, Japan, and Australia

A simplified reporting framework has been agreed to and the first reports are expected in January 2009. The goal is to have in-country teams in place by March 2009.

Implement (in the United States) a distributed Product Recycling Center model closer to the source points of our product and service parts returns, thus reducing transportation miles by more than 50%

As of October 2008, the number of certified product recycling sites in the United States increased from one to six. Service and Engineering and Operations started the sites in September of last year, our Installed Base Business started in October, and our capital asset management system (CAMs) is targeted to begin in January 2009. In addition, our disk-erase process has been documented and rolled out to all Sun factories, contract manufacturers, and recyclers. Monthly reporting and audits have been completed at three recycling sites, and the remainder will be completed by June 2009.

Expand the standard returns and recycling process to other countries, starting with those with the most sales

No data is available at this time.

Centralize and standardize compliance training for new and existing employees; report data in 2009 CSR report

We're on track to deliver revised compliance courses for all Sun employees by early Q4 FY09 – three courses replacing eight existing courses. New hires will be required to take these courses once they're released, and existing employees will need to complete these new courses in 2009. We'll be able to report data about course attendance in our 2010 CSR report.

Update and/or create compliance-related policies on the following topics:

• Standards of business conduct
• Conflicts of interest
• Anticorruption
• Hospitality/business courtesies
• Publications
• Antitrust
• Export

Our conflicts of interest policy was updated in October 2008; our anticorruption, publications, and hospitality policies are in the process of being updated and are due in Q3 FY09. The business conduct, antitrust, and export control policies are on target for revision by the end of FY09.

Ensure 25% of hires come through our employee referral program

No data is available at this time.

Ensure 35% of hires come through our employee referral program

No data is available at this time.

Achieve Employee Recommend Sun Index of 83%

The actions Sun identified to achieve this goal in FY09 are underway. Those actions include better leadership communication through town hall meetings and increased participation in leadership development programs.

This year, we will not have a midyear check on the goal status. The metric is contained in our Power of Sun employee survey, which was delayed in light of the restructuring effort announced in November 2008.

Enable Sun employees to excel in performance by providing job-relevant learning opportunities

No data is available at this time.

Establish a goal for Open Work's contribution to Sun's overall GHG emission reduction goal

We're working to create a process for gathering data from existing reporting and determining a methodology for reporting Open Work's contribution to Sun's overall GHG emissions.

Expand wellness programming globally, where appropriate

We're conducting RFPs for U.S. services and are readying several pilot locations globally; we're scheduled go live with the new program on September 1, 2009.

Expand outreach to include spouses, domestic partners, and dependents

No data is available at this time.

Increase U.S. campus fitness center membership by 5%

As of October 2008, fitness center membership is up 4% over FY08.

Aim for a 5% increase in hits on internal Sun Wellness Web site

No data is available at this time.

Expand the geographical coverage of health fairs to five new locations (covering an additional 2,000 employees)

In October 2008, we conducted onsite biometric screenings (cholesterol and diabetes testing and flu shots) in Hillsboro, Oregon; McLean, Virginia; Austin and Dallas/Ft. Worth, Texas; and San Diego, California.

Begin an annual comparison of general screening results

No data is available at this time.

Achieve a 75% completion rate of EHS Awareness training for new hires

As of December 2008, 47% of new hires have completed the online training course.

Maintain total Occupational Safety & Health Administration (OSHA) recordable case rate below .4 incidents per 100 employees

Sun's OSHA recordable case rate is .21 for 2008.

Aim for 75% of field and lab engineers to complete EHS online training requirements

No data is available at this time.

Increase number of suppliers covered by supply chain CSR program from 59 suppliers, 142 sites to 84 suppliers, 181 sites

All suppliers participating in the program this year have been contacted, and those suppliers are developing goals for Q3 and Q4 2009. (We spent Q1 and Q2 training suppliers on additional requirements and helping suppliers create their programs.)

Require all suppliers included in supply chain CSR program in FY09 to formally commit to Sun's Supplier Code of Conduct and demonstrate compliance

This goal covers all contracted suppliers (direct, logistic, subtier), which should exceed 95% of Sun forecast spend. Currently, 49 suppliers are committed to Sun's Supplier Code of Conduct. The remaining suppliers are required to commit to the code formally by the end of Q3 2009.

Require second-tier suppliers (supplying our contract suppliers) to demonstrate compliance with Supplier Code of Conduct

All 49 suppliers committed to Sun's Supplier Code of Conduct are working with their suppliers and will report on their progress in Q3 and Q4 2009.

Require suppliers to provide expanded evidence of the environmental criteria in Sun's Supplier Code of Conduct

Our Supplier Code of Conduct requires suppliers to have programs to address air emissions, pollution, resource reduction, wastewater and solid waste, hazardous substances, and product content restrictions. This year, we'll gather data from contract manufacturers on specific reduction targets for air emissions, pollution prevention, and wastewater treatment. We expect suppliers to continue managing all criteria. Targeted suppliers are engaged to provide information on their greenhouse gases in Q3 and Q4 2009.

Increase the total number of employee volunteer hours by 10%

For the five-month period from July through November, 244 Sun volunteers donated 1,630 hours of their time for various causes. We'll report the final numbers and percentage increase in our 2009 CSR report.

Form at least two new chapters of Engineers Without Borders

We began development of a new EWB "kit" within the Employee Volunteer program to help employees jump-start the creation of new chapters. (The kit will launch in Q3 FY09.)

Expand Meetup Mashup events globally

We hosted a Meetup Mashup event in Brazil in Q2 FY09, and a second in-person event is planned for the CommunityOne event in Q4. Due to budget constraints, further in-person events are not feasible, but the development of an online program is in discussion.

Increase the total number of global employee program participants by 5%

By Q1 FY09, we had 1,295 participants, which is 26% of the goal. We'll have Q2 results by February 2009.

Global Giving Drive: increase total amount raised by 10% over fiscal 2008

As of December 2008, the drive had raised 8.7% less than the previous drive had by December 2007. We will report final results in our 2009 CSR Report.

Continue to drive $30 million in matching grants to educational institutions worldwide

No data is available at this time.

Connect 500,000 students to Sun technology through offerings of free software and technology curriculums, the Campus Ambassador programs, and the many Sun community forums

As of Q2 FY09, we have connected approximately 380,000 students.

Provide energy calculators for all products on our Web site

Energy calculators for Sun products can be found on our Web site.

Reduce greenhouse gas (GHG) emissions from U.S. operations by 20% from 2002 levels by 2012

Sun attained this goal during FY08, several years ahead of schedule.

Produce a baseline of our global GHG emissions

We met this goal in FY08.

Introduce a company-wide GHG management plan and reduction target

Sun has announced a goal to reduce GHG emissions from global operations 20% over 2007 levels by 2015.

Reduce energy consumption in our buildings by 3% compared with FY07

Electricity consumption in buildings in FY08 was 7.5% lower than in FY07, a reduction of 36,600 megawatt hours (MWh). Natural gas consumption also dropped 7.5%, a reduction of nearly 14,000 MMBTUs.

Increase the amount of energy we consume from renewable sources

We achieved a small increase in renewable energy consumption FY08.

Achieve LEED certification for one Sun building by the end of FY08 and another 10 to 20 buildings by the end of FY09

We've not yet achieved LEED certification but are making good progress. We're no longer driving toward the goal to LEED-certify 10 to 20 additional buildings because it doesn't fit with our long-term approach to sustainable facilities management.

Introduce peak-load reduction plans at all our U.S. facilities

We achieved this goal during FY08. As a result, there was a reduced risk of brownouts or blackouts at these facilities.

Decrease CO₂e emissions from the 2008 JavaOne Conference by 20% compared with 2007

The elimination of all direct mail pieces for the 2008 JavaOne conference resulted in a 54% decrease in CO₂e emissions, plus a 128-metric-ton reduction in paper usage.

Increase employee participation in SMART by 5%

During FY08, employee participation in SMART increased 10%.

Develop an evaluation and measurement system for waste management programs at all of our facilities

Tracking of waste-to-landfill and recycle commodities began in January 2008 for U.S. campus locations where waste/recycling is managed by Sun. (This does not include leased office space where Sun waste is commingled with other tenants' waste.) The tracking includes Sun campuses in Santa Clara, Menlo Park, and San Diego, California; Broomfield, Colorado; Austin, Texas; and Hillsboro, Oregon.

Require contract suppliers to achieve ISO 14001 accreditation by 2007

Contract suppliers have ISO 14001 certification.

Require contract suppliers to formally commit to following Sun's Supplier Code of Conduct by Q1 FY08 and to demonstrate adherence

Contract suppliers committed to adhering to Sun's Supplier Code of Conduct. Suppliers demonstrate compliance by providing policies/processes that address code requirements, participating in our audit program (20 completed in fiscal 2008), and completing an annual CSR self-assessment. Supplier contracts now include requirement for compliance with our code. Site visits show there are still nonconformities. Sun supplier scorecards now include CSR criteria. Suppliers complete an annual self-assessment document that describes social and environmental responsibility programs. Sun conducts risk assessments based on self-assessments, which determine the suppliers to include in the audit plan.

Require second-tier suppliers (supplying our contract suppliers) to demonstrate compliance with Sun's Supplier Code of Conduct

Sun provided information to suppliers on this future requirement during site visits and other forms of engagement.

Identify opportunities to incorporate CSR into procurement decisions and develop metrics to track our progress

We've identified several opportunities and will continue to do so. We also plan to use our contracts management tool to assess whether the suppliers we consider promote environmentally sound products and services, and if not, why. We'll use the findings to inform future sustainable procurement strategy.

Measure and report on how much spending is placed with suppliers identified as promoting CSR

We're on track to meet this goal and will publish the figures in our 2009 CSR report.

Increase employee volunteer hours for digital divide projects by 30%

This year there was a 71% increase in volunteer hours dedicated to eliminating the digital divide. This was largely attributed to a heavy push on these kinds of projects for Worldwide Volunteer Week.

Increase Sun Foundation matching by 15%

We've matched approximately $1.7 million of employee gifts, which is approximately 22% higher than FY07's $1.4 million.

Determine environmental impact/savings of Sun's Open Work program (using new methodology)

In FY08, Sun undertook a study of U.S. Open Workers and their habits to understand the program's environmental impact. The study found that in FY08, Open Work enabled employees to drastically reduce travel time and miles driven, while contributing to our company's overall greenhouse gas emissions reductions.

Put in place systems for gathering and sharing data on product takeback

We continue to face challenges collecting and reporting comprehensive product takeback data. We're committed to improving this process and reporting on our efforts in Sun's 2009 CSR report.

Roll out a formal takeback process to all regions

We'll provide an update on this effort in our 2009 CSR report.

Include privacy checks and balances throughout the product lifecycle

We successfully implemented a privacy-analysis requirement in the legal portion of Sun's product lifecycle; more work is required to formalize an engineering-specific metric.

Develop Web-based privacy training for all Sun employees

This goal has been met.

Integrate privacy checks into the takeback and disposal process by 2009

This is still in progress.

Publish recommendations for organizations that want to deploy OpenID providers

In FY08, our security team rigorously assessed OpenID and published its findings and recommendations on various Sun blogs.

Narrow the gap between employees to whom it is important that Sun be socially and environmentally responsible and those who believe we already are (with a focus on nonexecutive employees)

In the FY08 Power of Sun survey, in every type of job and in every region, the proportion of employees who agree or strongly agree that Sun is a socially and environmentally responsible company increased from the previous survey, sometimes dramatically.

Increase employee CSR Advisory Board participation to include more representation from regions outside the United States

Sun's CSR Advisory Board was renamed the Employee Sustainability Council. The council grew from 28 to 47 members in 2008, 13% of whom are based outside the United States.