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Sustainability is changing the grocery business

Toby Pickard, Senior Sustainability Analyst at the Institute of Grocery Distribution (IGD), considers how the grocery industry is responding to sustainability issues, drawing on recent IGD research into shopper attitudes to the environment and industry practices. The IGD has recently published a free Environmental Sustainability Matrix to help industry understand key sustainability issues.

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Sustainability issues and initiatives are making headlines and driving competition within the grocery industry.

This October, Welsh shoppers became the first in the UK to be forced to pay a charge for single-use plastic bags. Reading the headlines, campaigns and messages from governments you might think that plastic bags are the biggest environmental issue of our time. Unfortunately, there are much bigger issues, like water scarcity and natural resource depletion: if everyone in the world lived as we do in Europe we would need three planets to sustain our existence.

The reason for the high profile of plastic bags is they have a very tangible and visual impact in our homes, countryside and oceans. They suffer the same high profile problem as product packaging, seen to be of great environmental concern and impact for the shopper. When we poll shoppers about their environmental concerns the amount of waste and packaging that industry produces is always in their top five concerns, and often number one.

The food and grocery industry is making a conscious effort to reduce the use of plastic bags and packaging, through industry-wide voluntary agreements. Many retailers are incentivising shoppers to purchase bags for life and to recycle in the store, to reduce the environmental impact.

Industry’s ambition to reduce the impact of carrier bags and packaging is certainly worthwhile. However, many other steps that industry is taking to become more sustainable are not visible to the shopper. Industry ambitions and initiatives include sending zero waste to landfill from shops and manufacturing sites, developing carbon neutral stores, and introducing a revolutionary new grass for beef, lamb and dairy herds to reduce their carbon impact.

There are many reasons for these messages not being passed onto the shopper. Some of the issues are too complex to communicate in a simple message. Our most recent consumer research on environmental issues also shows that shoppers are often not concerned with the details in store and just want industry to deal with the issues on their behalf.

Shopper attitudes to environmental sustainability

Our recent shopper survey shows that shoppers expect the industry to ensure that it is doing the right thing and to be constantly checking its supply chain to ensure it is acting responsibly.

IGD shoppers surveySource: IGD Shopper Track, Environmental Sustainability – How to Engage Shoppers

Shoppers want industry to lead on the sustainability agenda, and they will not be happy if they find out that products that they have bought have a poor environmental record. This is something that industry is beginning to understand and address with the introduction of scorecards to monitor suppliers.

Many of the major retailers and manufacturers are starting to drive efficiencies through the supply chain and become more sustainable in the areas greenhouse gas emissions, packaging, water and waste, and have created their own scorecards to measure improvements.

Those companies that haven’t started to measure and monitor their impacts in these areas would do well to start acting now. A recent study by the Carbon Trust Advisory team found that 50% of multinationals look set to select their suppliers based upon carbon performance in the future. In the UK, 56% of multinationals say that in the future they expect to drop suppliers based upon low carbon performance.

It’s not a luxury, it’s a necessity

Our industry research shows that sustainability issues are playing a greater role in trading relationships, and industry expects it to play an even greater role in the coming years.

“If we are to meet the sustainability challenges that lie ahead, it is important that companies such as Sainsbury’s invest in the future right now. We do not see this plan as a luxury, it is rather, an essential investment.”
Chief executive, Justin King, 11th October 2011

Sainsbury’s ‘20 by 20’ plan is only the most recently launched sustainability plan of many major retailers and manufacturers. It looks certain that sustainability will play an even greater role in trading relations in the future. Given the competitive nature of the industry, each company is likely to try and out perform each other in this arena.

The reason sustainability will play an increasing role is the challenges that industry faces in a resource constrained world, with a growing population who have increasing aspirations for resource intense products and services, along with shoppers’ expectations of industry to act responsibly and the potential reputational threat of not doing the right thing.

It is also important to remember the business case for being more sustainable. Marks and Spencer set aside £200 million in 2007 to deliver its sustainability plan, Plan A, by 2012. Rather than costing Marks and Spencer, Plan A contributed a net benefit of £50 million within the first three years, and this year it contributed £70 million, clearly highlighting the business benefits of operating in a more sustainable way.

The food and grocery industry is recognising the strategic importance of sustainability issues, from the cost savings that it can deliver to ensuring supply chain resilience through better collaboration with suppliers.

Environmental Sustainability Matrix

To help industry understand some of the key sustainability issues the IGD has developed a free Environmental Sustainability Matrix.

IGD environmental sustainability matrix

The matrix highlights the interconnectivity of sustainability related topics (greenhouse gases, packaging, water and waste) and offers solutions and examples of best practice from industry to reduce its impact:

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