In 2003, Xerox made a public commitment to reduce greenhouse gas emissions – our carbon footprint – by joining the U.S. EPA Climate Leaders program and launching an internal program known as Energy Challenge 2012. We adopted a goal of reducing by 10% our absolute greenhouse gas emissions, across all company operations, by 2012 from a 2002 baseline. By focusing efforts on energy efficiency, new technologies and business productivity, Xerox met this target six years early – in 2006. Recognizing our obligation to do even more, in 2007 Xerox set a new and challenging goal to reduce our greenhouse gas emissions by 25% by 2012 from a 2002 baseline. Through 2008, we have cut emissions by 20%, or 100,000 tons of carbon dioxide equivalents. This was achieved by reducing energy consumption in our facilities, manufacturing operations and across our service and sales vehicle fleet. In 2008, energy consumption was down 16% compared with 2002.

Energy Consumption

Greenhouse Gas Emissions

Greenhouse Gas Inventory
In keeping with the international guidelines of the Greenhouse Gas Protocol developed by the World Resources Institute and the World Business Council for Sustainable Development, Xerox tracks the six major greenhouse gases: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF₆). We express our carbon footprint in terms of carbon dioxide equivalents (CO₂e). In fact, energy sources account for more than 99% of our greenhouse gas emissions. Xerox’s greenhouse gas inventory includes direct emissions from the combustion of fossil fuels, primarily natural gas, and indirect emissions from purchased electricity and steam at our manufacturing sites, offices and warehouses. The inventory also includes the combustion of gasoline and diesel fuels in our service and sales vehicle fleet. Xerox’s inventory does not yet include optional sources such as employee business travel, contract manufacturing or outsourced product distribution.

Source of Greenhouse Gas Emissions

In 2008, Xerox greenhouse gas emissions totaled 400,000 metric tons of CO₂e. About 55% were indirect emissions from purchased electricity and steam. The remaining 45% were direct emissions from the combustion of natural gas, gasoline and diesel fuel. Xerox-owned or leased facilities such as manufacturing sites, offices and warehouses are associated with 73% of our greenhouse gas emissions. The remaining 27% are emissions from our service and sales vehicle fleet and other mobile sources.

Environmental Protection Agency Recognizes Xerox for Climate Protection

Xerox was awarded the EPA’s 2008 Climate Protection Award for its achievements in reducing energy use and greenhouse gas emissions. Xerox reduced its total global greenhouse gas emissions by 18% from 2002 to 2006, surpassing several years early its original goal of a 10% reduction by 2012. Xerox achieved its goal ahead of schedule by developing a clear framework for greenhouse gas management, involving the

entire company by establishing clear roles and accountability, engaging the full value chain, integrating climate protection into core business strategies and practices, allocating appropriate funding and rewarding success.

Xerox has pledged to further minimize its carbon footprint by reducing greenhouse gas emissions by 25% by 2012 from a 2002 baseline.

Strategies for Meeting Our Reduction Target
Our ultimate goal is to be climate-neutral. While our strategy for achieving that goal is evolving, our first priority is to reduce our total greenhouse gas emissions by reducing the energy intensity of our operations. To that end, we have cut our energy intensity by 25% from 2002 to 2008 (energy consumption per million dollars in revenue). Xerox is finding success with these approaches:

• Shifts toward More Energy-Efficient Technologies
  One example is Xerox’s commitment to emulsion aggregation (EA) technology, or chemical toner, which is estimated to generate 25% fewer greenhouse gas emissions in the manufacturing process than conventional toner.
• Process Improvements That Reduce Energy Demand
  Xerox has changed the way we make certain conventional toners, reducing energy demand by an estimated 15–25% per pound of toner. Xerox is its own best case study for the efficiency of using digital multifunction systems in workplaces instead of stand-alone printers, copiers, fax machines and scanners. In Xerox locations worldwide, employees depend on networked Xerox systems for all document management needs. One multifunction system can cut energy consumption by half compared to several single-function devices.
• Increased Reliability of Xerox Equipment and Parts
  Digital technology has improved the reliability of components inside our products. This reduces service calls, which results in fewer miles driven by Xerox technicians and less gasoline consumed. Longer-lasting parts also mean that less manufacturing energy is invested over the life of a Xerox product. One example is: an office product print cartridge that needed replacement after 30,000 impressions in 1999 has been redesigned and now lasts for 500,000 impressions as of 2007.
• Equipment Upgrades and Energy Management Programs
  Every year, Xerox facilities identify opportunities to reduce energy consumption through equipment upgrades and better energy management. Some Xerox facilities save energy through “free” cooling. In winter months, the facilities cool process water by running it through outdoor pipes instead of using chillers, which are the equivalent of industrial air conditioners.
• Use of Renewable Energy Sources
  By purchasing “green power,” several Xerox sites, including sites in the United Kingdom and the U.S., are taking advantage of opportunities to further reduce greenhouse gas emissions. An example is the purchase of renewable energy credits that largely offset electricity consumption at our Corporate Headquarters in Norwalk, Conn.

To learn more about how we’re meeting our greenhouse gas emission goals, visit www.xerox.com/environment.

Climate Change Risks and Opportunities
Xerox has examined the regulatory, physical and commercial risks and opportunities associated with climate change. We are preparing for potential future regulation by investing in a robust greenhouse gas emission inventory. Through our 2008 participation in the U.S. Climate Action Partnership, we were actively involved in calling for a rational approach to climate legislation in the United States. Consistent with our sustainability strategy, the company will continue to invest in energy-efficient product designs and solutions to meet future customer demands and product-centric regulatory requirements.

Xerox is not subject to unique risks due to changing weather patterns, rising temperature and sea level rise. In the case that our operations or customers’ operations are impacted by unpredictable events such as extreme weather, the company’s well-defined crisis management plan will be executed. It covers communication with employees and customers, management of employee health and safety issues, business continuity and resumption processes, and interaction with government organizations.