Retailers & suppliers talk sustainability
Satellite photography reveals that the arctic ice cap has receded 45 per cent since the year 2000, and some experts estimate that it could disappear altogether during the summer months as early as 2016.
Doubtless, alien historians will note with puzzlement that we had due warning of the catastrophe.
The World Wildlife Fund computes that the human race is living as if we had one and a half worlds at our disposal in terms of resources. We Europeans are consuming enough for three worlds and our American cousins for five. Add another 2.5bn people by 2050, and most of us are in denial.
Why don't we act?
“Why don’t we act?” asks Keith Weed of Unilever. The Chief Marketing & Communications Officer surmises that this is due to the economy. It is also a leadership issue, he says, when 60 per cent of the world’s GDP are in election mode this year.
Truly, several years of economic downturn have pushed environmental issues down the agenda of western voters behind worries about one’s job and health.
Yet consumer research tells us that shoppers increasingly favour those companies and brands that they trust as regards corporate responsibility.
This is confirmed by Michael Jary, Partner at OC&C Strategy Consultants and Chairman of the UK organics brand Duchy Originals. Jary insists that customers have big expectations of retailers and suppliers when it comes to sustainability.
“Consumers are deeply interested in sustainability and strongly scrutinise the carbon footprint and ethics throughout the food chain. They expect the trade to source locally, preserve wildlife and bio-diversity, farm responsibly using a minimum of chemicals, reduce emissions, and care about climate change.”
If this is true, one must still ask, whether sustainability is a promise which can be delivered? Also, what low-carbon, emissions-reducing role can retailers and manufacturers realistically play without being accused of mere “green wash”?
Ian Cheshire, Group Chief Executive of Kingfisher, whose DIY subsidiary B&Q has been sourcing sustainably since 1989, remains realistic: “No company, however large, can go it alone. Collaboration between retailers and suppliers, governments and consumers is essential.”
He also points out that, unlike the days when retailers could charge premium prices for organic food, we are now living in “thrifty-green” times. “Consumers expect retailers to make a difference, but they are not prepared to pay for it.”
So why are companies as diverse as Kingfisher, Marks & Spencer or Unilever willing to take leadership positions in sustainability?
Ian Cheshire says that environmental responsibility and being a good corporate citizen is “a point of difference, if you can do it right”. B&Q therefore aims to increase the amount of responsibly-grown wood products from 82 to 100 per cent.
Mr Cheshire also contends that sustainability makes good business sense. “Our assortment includes around 16,000 wood-based SKUs, which means we consume a forest as large as Switzerland every year. If, therefore, we didn’t secure our timber supplies by re-foresting etc., our annual earnings could take a £50m hit.”
Net positive carbon footprint
As part of its goal to achieve a “net positive” carbon footprint within the next 20 years, B&Q is also concentrating on improving home energy efficiency (for instance by phasing out incandescent light bulbs in favour of long-life ones), recycling, and the communal role of its 1,000-odd stores in Europe.
Surprisingly, however, just doing the right thing is not enough. Kingfisher has found that it must also increase its PR activities.
Cheshire: “When we started our forest-friendly campaigns we assumed that the public would quickly know about and understand them. But the level of communication required is higher than we originally thought, and we have found that we need to explain more.”
Meanwhile, Marks & Spencer is focussing on its store base and various public awareness campaigns. The London-based department store retailer is using its new 15,000m² Cheshire Oaks branch, near Chester, as a test bed for new technologies.
As per the motto “reuse is better than refuse”, recycled materials were employed in 30 per cent of the building, and energy consumption is 30 per cent lower than at other recent new stores.
This year Marks & Spencer celebrates the fifth anniversary of “Plan A”, its eco- and ethical-plan. This has enabled the company to call itself the world’s first carbon-neutral major retailer, although it admits to buying credits in order to cement the claim.
Marks & Spencer now sends zero operational waste to landfill, and all of its fish come from the most sustainable sources available.
Also its “shwopping” campaign, which encourages customers to donate used or unwanted clothes for Oxfam to resell, has been tremendously successful. Half a million garments were donated within the first eight weeks of the launch.
Given the fact that the whole exercise only brings Marks & Spencer sorting and logistics costs, why is this Plc aiming to “recycle as many clothes as we sell”? Good PR?
“I want to get customers engaged and aware. I want them to think and reflect, otherwise I’m not doing my job,” says CEO Marc Bolland speaking at this year’s World Retail Congress in London.
Here, Bolland talks the cultural philosopher. He regrets that the American dream is stronger than ever in emerging countries. “The wrong role models are being used there. They are pointing consumers in the wrong direction.”
Pearly King Marc Bolland
As ever, Marc Bolland looks decidedly dapper in a suit which at first glance might have come from Savile Row.
However, he says this Marks & Spencer clothing item was made out of recycled bottles and discarded buttons. “We won’t make much money out of it, but we need to set an example in as many parts of our business as possible even during the recession.”
Keith Weed at Unilever is also a man who likes to carry rather than just talk about corporate responsibility. In the case of a brand manufacturer which serves retailers in 180 countries and whose products are used by 2bn people every day, that is a lot of responsibility to shoulder.
The company has also taken a lot of flak recently regarding its position as the largest palm oil purchaser in the world accounting for around 3 per cent of global demand. (cf. orang-utan habitats etc.)
Unilever Sustainability Project
So what is Unilever doing to realise a sustainable business model? “Our vision is to double our business by catering for the coming 2.5bn people by 2050, while halving our carbon footprint,” says Weed.
“This year we will source all our global palm oil sustainably, and we shall then move on to tea, soy etc.”
Currently, the Unilever Sustainability Project is 86 per cent on target to use only sustainable resources by 2020 while providing health benefits to around 1bn people.
Keith Weed strongly advises “looking at the whole value chain and not just one’s own footprint". Unilever offices make up around 6 per cent of its global footprint, 25 per cent are farming and manufacturing and the rest is consumer use and disposals.
Mr Weed also stresses that “corporate sustainability should not just be about poster-child examples and lead by that bearded guy in the corner. It has to embrace the whole business.”
It's different in India
Before these western-based paladins allow us to become too hopeful, it is worth remembering the situation in threshold economies. "In India we do not talk about the world, but about our people – all is oriented towards the local consumer base," says BS Nagesh, Vice-Chairman, Shoppers Stop Ltd. and founder of Trrain.
This engaging Indian businessman pulls no punches when it comes to administering a dose of reality to starry-eyed westerners: “We have twelve million small retailers in a country of one billion people. How can modern self-service retailers with currently only half a per cent of the national retail market seriously hope to move the masses?...Some companies donate 100,000 rupees for sustainability, but they don’t do a thing for the well-being of their staff.”
Let us hope that all the BRICs join the sustainability bandwagon soon, but not just them. The sustainability session at an otherwise packed World Retail Congress in London this year was virtually empty. As they say in British pubs: "Time, gentlemen, please…"
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