June 1, 2017

Welcome to Berlin, The Consumer Goods Forum

Berlin (photo: turtix/Shutterstock)
The decision by The Consumer Goods Forum to hold its 61st global summit this year in Berlin from June 20 to 23 is an honour for Germany. It also reflects the size and dynamism of the local market.

Yet surprisingly only 25 of this influential trade body's 400 world-wide members, equally divided between retailers, manufacturers, and service providers/industry associations, come from Germany*. However, they number such heavyweights as Metro, Rewe or Henkel, and speakers at this year's venue include the CEOs of local retail giants Edeka and dm.

Doubtless, representatives of secretive discounters Aldi, Lidl, and Kaufland will also attend the event, albeit with upturned collars and shaded glasses.

But the mere presence of the good, great and beautiful doesn't protect any organisation, however illustrious, from becoming a mere talk shop.

So we put Managing Director Peter Freedman through his paces and challenged him on how much progress the forum has made on international issues of vital strategic interest to the trade.

 

"We move the dial"

 

Peter Freedman, MD, The Consumer Goods Forum (photo: CGF)
Peter Freedman
Mr Freedman, is The Consumer Goods Forum (CGF) a paper tiger?
Hardly! Our members from 70 countries have combined annual sales of around 2.5 to 3 trillion dollars, so we represent a very sizeable proportion of the global consumer goods industry. Therefore what we do is significant and will move the dial.

Our mission is to drive positive change in areas where the industry can make a real difference through the collaboration of manufacturers and retailers. We have never strayed from that. The CGF as a forum for exchange is also important, but it is a means to an end rather than an end in itself.

When you came to the CGF at the start of 2014 you defined the industry's number one priority as consumer trust. Is this still true today?

Our guiding mission is still to build and sustain consumer trust in the industry, which is a multi-facetted project and involves such issues as food waste.

What goal has the CGF set itself on this particular issue?

Food waste has a huge environmental impact on the planet. We currently throw a third of our food away. This is even more of a crime when one remembers that there are still so many undernourished people in the world. It is obviously also an issue for industry efficiency.

We passed a resolution in March 2015 to halve food waste by 2025 within our membership and thus to contribute to the UN food goal for that date.

Making a commitment is one matter, but what are your members doing to achieve this?

We collaborate with the only other global organisation focused on this issue, Champions 12.3. We've also agreed on how to measure food waste. This might sound trivial, but if you can't measure something, you can't move it.

We are now sharing best practices on how to drive food waste down. Some countries and companies are clearly more advanced on this than others and they can share their expertise through CGF.

What are the main issues as regards food waste?

There are multiple causes, but let me concentrate on date labelling. This is important because in some countries you can see multiple dates on the same package, which confuses consumers.

One particular source of confusion and therefore waste is the difference between the date beyond which food quality might deteriorate slightly from its peak and the date beyond which food is not safe to eat. It is the later "consume-by" date which is the more important one.

So what are you doing to help?

One of the things we are going to do, and may well announce in Berlin, is to support the rollout of a strategy that has already been adopted in the UK, Japan and very recently in the US, which simply aligns the definitions of "best before" and "consume by". This imposes a rule of only one date per package so as not to confuse customers.

It is a very simple thing that we as an industry want to get behind. Although markets differ, we think that, if we can roll this strategy out globally, it will reduce a lot of confusion with consumers and therefore make a significant contribution to the reduction of food waste.

Peter Freedman, MD, The Consumer Goods Forum (photo: CGF)
"If you can't measure something, you can't move it"
How can one measure food waste?

The devil is in the detail, but the important thing is to measure it in a consistent way, otherwise it is very hard to exchange best practices between retailers. We have set a protocol for measurement in conjunction with the World Resources Institute – an approach which has also been endorsed by Champions 12.3 – and encourage all our members to adopt the same. It is critical to have the same approach, if we want to reach our target.

But will your members keep to their commitments?

We measure how many of our relevant member companies have committed themselves privately and/or publicly to implementing our resolutions. We feel that a commitment made by a company, particularly if it has been made publicly, will exert considerable pressure to achieve it. It is not always possible for companies to go public with such commitments, but we certainly therefore encourage them to do so.

The CGF will of course help and encourage all participants to achieve their commitments, and peer pressure will doubtless also be exerted towards their implementation.

So how many members have signed up to your resolution to date?

I can only speak for our Board with its more than 50 members, where close to 100 per cent of relevant members have adopted our food waste resolution. I use the word relevant because we are not just an organisation of food companies but also of non-food companies.

To what extent can you exert pressure on your members to keep to their commitments?

It is important to remember that we are not a watchdog. Our aim is to set goals which we believe will make a real difference and where we feel that the industry needs to work together rather than on an individual company basis. That said, of course, we are very interested in standards for this very reason.

Without actually setting them?

No, but, if a standard doesn't reflect our high aspirations, we will work with standard setters to encourage them to incorporate these. This will then cascade into very detailed, nitty-gritty supply chain auditing standards, which will get a virtuous circle going whereby companies can report back against a particular standard via their audits.

Could you give a specific example?

Excerpt from the 61st Global Summit brochure (photo: CGF)
In the case of palm oil, for instance, there are numerous standards around as to what is sustainable. None of these are perfect, but many of them are reasonably well-accepted. The companies who sign up to our resolution will audit against those standards.

So when you read the Corporate Social Responsibility Report of one of our members who has publicly signed up to our deforestation resolution, you will see the words "independently verified". This means that the auditors have attested whether the claim a company has made on the percentage of sustainably sourced palm oil it has used is actually correct.

In other words, we create a positive dynamic where companies are held accountable by the public, investors, and consumers. So that's the role we play: We get our members on board and help them to implement.

What are your goals on climate change?

This is another huge, multi-facetted topic. The CGF has to be very selective on the things we choose to do in order to be very detailed and practical. We are the opposite of a talk shop and only pick issues where we really believe that we can implement change.

As regards climate change, we have already discussed food waste. The two other main areas we are working on here are: refrigeration, i.e. hydrofluorocarbons (HFCs), and deforestation with its many contributing causes.

Did you achieve your past goal of phasing out the use of HFCs within your membership by 2015?

Yes, we did achieve our resolution to pilot natural refrigeration consistency using a completely natural source. And those pilots have been enormously valuable in helping all companies to see that there is a reasonable business case for eliminating HFCs. The cost of refrigeration equipment is coming down, and there are often efficiency benefits as well. So those pilots serve their purpose to inspire the industry.

What more could be done to replace refrigerants with natural products or less environmentally damaging alternatives?

We passed a second resolution last October to start implementing "low global-warming potential refrigerants" in refrigerant systems. This is because there are a number of non-HFCs which do not meet this goal. We've started by identifying those companies with good practices and getting them to share these with others. We have also set up working groups to figure out how to implement our new resolution.

Could you name one particular model pupil?

I think it would be wrong to name just one. Your readers are welcome to refer to a booklet of ours entitled "Refrigeration", where each of the companies is named, and where typically a CEO describes what his or her company is doing in this field.

You are now only 1,000 days away from the goal of zero-net deforestation you set your members for 2020. What key areas are you working on?

It's an ambitious goal, and we are very mindful of the importance of achieving it. We have identified four different commodities which contribute most to global deforestation and where our industry can really make a difference: palm oil, soy, paper and pulp, and beef.

All are fairly obvious to the public except, perhaps, beef. This is because cattle emit methane and substantial forest clearance is required in order to accommodate world demand.

Palm oil is arguably the largest contributor to deforestation. What action have you been taking on this front?

To be clear, we are not trying to eliminate palm oil because it is an incredibly useful commodity in both food and non-food products which benefit consumers. But its production can contribute to deforestation, if palm trees are not replanted. So we are trying to encourage companies to source palm oil sustainably by not purchasing from sources who chop down forests in order to replant with this commodity.

Peter Freedman, MD, The Consumer Goods Forum (photo: CGF)
"We currently throw a third of our food away. This is a crime given that there are still so many undernourished people in the world"
If all relevant members fully committed themselves to your initiative, how far would this go towards solving the problem?

Something like 20 per cent of global palm oil comes through our industry.

What progress have you made so far?

We track how many companies are committed to implementing our resolution and how many have gone public on their commitments. It is not 100 per cent, but it is pretty good. Also a number of independent reports, including one by the Carbon Disclosure Project, praise how our members are more advanced than the rest of the industry, which obviously doesn't mean that there is still not an awful lot to do.

The palm oil industry has also been linked to forced labour. You are partnering this year's forum with the International Labour Organization and the U.S. Department of Labor because you regard forced labour in global supply chains as an important trade issue. How can your members ensure that production conditions are both safe and fair?

We reckon that around 21 million people are subject to modern-day slavery, which is 21 million too many. Some of them are children, but most are adults. We think our industry is very well-behaved on this topic. However, you are alluding to the third- or even fourth-tier suppliers to the industry further up the supply chain who are very much harder to influence.

Can you do anything at all when these are not your members?

In theory, forced labour is an utterly solvable problem. One example of what we are doing is so extraordinarily simple that I am amazed nobody ever thought of it before.

We've set three basic principles which we encourage all our members and their suppliers to adopt, and which we think they should worry about. Number one is passport retention where workers don't have freedom of movement. Secondly, no workers should pay gangmasters etc. for a job. And, thirdly, no one should be indebted in such a way that they have to pay off something in order to get a job.

All these three principles are not a sure-fire sign of slavery, but they are fairly easy to spot, and they are places where you need to dig deeper and send an auditor in. These principles can also be built quite easily into supply contracts so that they will cascade up along the supply chain.

What is your organisation doing on the reduction of packaging?

We think this is an extremely important issue, but it is not one of the areas we are currently working on because we do not wish to duplicate a number of existing initiatives. Therefore we don't have a specific resolution on packaging yet, but we might develop one, if we think that we can add real value to it.

This doesn't mean, however, that there aren't a number of other initiatives, not specific to this industry, such as the Ellen MacArthur Foundation, in which our members are very actively involved.

What progress have you made on reducing obesity?

This is certainly one of the areas where we are making measurable progress as an industry. We have made several commitments, including the reformulation of products to make them healthier. Around 180,000 different products were reformulated last year alone.

Berlin panorama (photo: Norbert Meise)
See you there!
We are also trying to help consumers and shoppers by giving them the tools to make healthier choices about what they buy and lifestyle advice. Both retailers and manufacturers can work together here in providing better packaging details and in-store advice. We are currently conducting some pilot projects in Columbia and are just about to launch one in the US town of Hagerstown/Maryland. We will probably also launch some pilots in Europe later on this year.


Related article in German: "Unser Forum bewegt was" on page 3 of Lebensmittel Zeitung, no. 22, 02.06.2017


* German CGF members: Bahlsen, BVLH, Capitalent, Cavendish & Harvey, Dalim Software, Develey Senf & Feinkost, Dohle, Dr. Oetker, Dr. Wolff, Freiberger, GfK, GPS Dataservice, GS1 Germany, Henkel, HR Group, Hugo Boss, Lambertz, Metro Group, Nagel-Group, Payback, Rewe Group, Rheingold Salon, SSI Schäfer, Symrise, Witron Logistik + Informatik



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