© IGD 2014

Toby Pickard, Senior Sustainability Analyst

托比·皮卡德 , 可持续发展高级分析员

Prepared for:

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Centre for insight, education and best practice

• 750+ members across consumer goods sector

• Total value chain perspective

• 40 industry experts, trainers and facilitators

• Well connected and well travelled

• Our expertise:

– Retail and channel strategies

– Future proofing and horizon scanning

– Commercial, category and supply chain excellence

– Collaboration with trading partners

IGD is a research and training charity that helps the food and consumer goods industry deliver the needs of the public.

Source: IGD

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Cutting to the chase...

24th October

2005

15th January

2007

18th January

2007

Source: IGD

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Scene Setting: The Perfect Storm...

Source: IGD

By 2030, the world’s population will rise from 7 billion to over 8 billion Source: UN / World Bank

BILLION BILLION

7 8

By 2030, demand for food will increase by 50% Source: FAO

50% FOOD

By 2030, demand for energy will increase by 50% Source: IEA

By 2030, demand for water will increase by 30% Source: IFPRI

H2O 30% ENERGY 50%

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Why are UK retailers focusing on Sustainability?

The UK food industry accounts for:

• About 14% of energy consumption by UK businesses per annum

• 7 million tonnes of carbon emissions per year

• About 10% of all industrial use of the public water supply

• About 10% of the industrial and commercial waste

• 25% of all HGV vehicle kilometres in the UK

Source: IGD research and Defra

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UK retailers’ key Sustainability focus areas

Source: IGD research

Tesco

‘Scale for Good’

Opportunities for young people around the world

Improve health and tackle obesity

Reducing food waste globally

•Trade responsibly •Reducing impact on the environment •Great employer •Support local communities

M&S

‘Plan A’

Climate change

Waste

Natural resources

Fair partnership

Health and wellbeing

Involve customers

Make Plan A how they do business

Morrisons

‘Food with thought’

Responsible sourcing

Excellence in selling

Health and well-being

Community investment

Waste prevention and carbon management

Asda

‘Sustainability 360’

Energy – save energy and costs

Maximising recycling and sending zero waste to landfill

Selling sustainable products

Acting to reduce carbon emissions across operations

Charity and health

Sainsbury’s

‘Live Well For Less’

Best for food and health

Sourcing with integrity

Respect for environment

Making a positive difference to their community

A great place to work

Env. Sourcing Community Health Company

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Who is most at fault for causing environmental damage?

Source: Unilever

24 47 14 1 1 1 10 0 2

21 56 10 1 1 0 6 1 4

18 61 10 1 0 0 7 1 3

17 54 17 1 1 0 9 0 1

15 63 11 1 1 0 2 1 7

14 66 11 1 0 0 5 0 2

12 65 10 2 0 0 6 1 5

8 70 9 1 0 0 7 1 3

0 10 20 30 40 50 60 70 80 90 100

ITA

JAP

FRA

SPA

USA

AUS

UK

GER

Individuals Industries / companies

Central government

Local government - my council Non-Governmental / Non-Profit orgs Local community groups

International bodies

& agreements (e.g. Kyoto)

None of these Not Stated

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Shoppers want transparency...

Source: IGD ShopperVista, July ‘13

Knowledge of how grocery products are made

... % who can imagine restricting their purchase of food and grocery products to

fully traceable items

2011 2013

2010 2013 34%

19%

56%

12%

60% 75%

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Examples of levers for individual action Consumers are more informed than ever...

Source: IGD Research

GoodGuide helps shoppers find safe, healthy, green & ethical products based on scientific ratings

Buycott helps you to organize your everyday consumer spending so that it reflects your principles

puurBuy’s mission is to make it easy to find sustainably-sourced food wherever you are.

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Transparency… an unstoppable force

Source: IGD Retail Analysis

Digital labelling – Nestlé

Traceability app – McDonald’s

Nestlé has started to add QR codes to its Kit Kat bars, so that people have access to information about the nutritional profile and environmental and social impacts of the product.

TrackMyMacca’s is a ‘behind the scenes’ traceability app of your McDonald’s meal, showing where the food comes from.

Edible labelling – Moshi MoshI Sushi chain Moshi Moshi has taken QR codes to the next level by creating an edible code made from rice paper and squid ink. When consumers scan the code with a smartphone, it will take them to the www.eatmsc.org website where they can read about where the fish comes from and how it was caught.

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Reasons to invest in sustainability

What are the business reasons to invest in sustainability?

• To add brand value (e.g. Unilever)

• Supporting a brand (e.g. Kenco coffee)

• Anticipate possible regulation (e.g. plastic bag reductions)

• Leadership (e.g. Marks and Spencer (?) )

• Differentiation

• Cost saving

• Consumers expect it

• It’s the right thing to do

Source: IGD Research

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Financial advantages of an effective Sustainability strategy

Source: IGD

“Asda sustainability strategy set to deliver £800 million in

savings by 2020”

“net benefit of £185m in its first five years”

“On track to become a zero-carbon business and our low-carbon investment is already

saving us £200 million a year”

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Tesco – Reducing packaging

Source: IGD research and Tesco

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Sainsbury’s - Fairtrade

Source: IGD research, Sainsbury’s, Comic Relief and FairTrade

Sainsbury's Fairtrade sales

have increased by 19% to

£280million over the past

year, meaning one in every

four pounds spent on

Fairtrade in the UK is spent

at a Sainsbury's store

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Sainsbury’s – Reducing consumers waste

Source: Sainsbury’s presentation at IGD packaging conference

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Sainsbury’s - Noble Foods and the Woodland Trust

Source: IGD research, Sainsbury’s, Noble Foods, Woodland Trust and Business in the Community

By 2020, Sainsbury's aims to double

the amount of British food it sells and

wants to source all key raw materials

and commodities sustainably.

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Asda - Increasing transparency

"My ambition for Asda is to actively involve customers in every aspect of the business, to lift the lid on how we do things“

Former CEO Andy Bond

Source: Adsa

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Asda – Reducing packaging and road miles

Source: IGD research, Asda, businessGreen, Which? and The Grocer

In-store refillable detergents

Trial was run at five stores,

with Asda delivering two

variants of their own-label

fabric conditioner.

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Marks and Spencer - Schwopping

Source: IGD research and Marks and Spencer (2013)

In the four years since M&S worked on

clothes recycling with Oxfam, it has seen

over 11 million items donated, worth an

estimated £8 million to the charity.

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Southern Co-operative - Educating customers

Source: IGD Research (2013)

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Thornton’s Budgens - Local produce

Source: IGD research (2013)

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Direct and indirect impact - Supplier engagement

Source: IGD research and Asda: part of the Wal-Mart family (2009)

Not including consumers’ consumption

The index will bring about a more transparent supply chain, drive product innovation and, ultimately, provide consumers the information they need to assess the sustainability of products. If we work together, we can create a new retail standard for the 21st century. Mike Duke, President and Chief Executive Officer, Wal-Mart Stores, Inc

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Joint Business Plan: Unilever promotion with Walmart to empower shoppers Save money and help the environment

– Did you know that your family could

save up to $100 and 3,200 gallons of water per year by turning off the water when you shampoo and condition?

– Did you know your family could save up to $150 and 4,600 gallons of water per year by shortening your shower time by 2 minutes?

Source: IGD research and Unilever (June 2011 )

These messages resulted in promotional packs of Suave being sold out in three weeks

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Tesco knowledge sharing with suppliers

Source: IGD research, 2degrees and Tesco

● Launched in March 2011

● The Tesco Knowledge Hub currently has over >1,800 supplier members from >700 different organizations.

● The Hub is a private space exclusively for Tesco suppliers to share experience and questions on carbon reduction and wider sustainability challenges

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Joint Business Plans: Tesco and Unilever

Educate Reward

Shopper approach

SMALL ACTIONS in home can make a

BIG DIFFERENCE for the environment!

Source: IGD research and Unilever (2011)

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Tesco Climate Week activities in-store

Source: IGD research and Tesco (2011)

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Joint Business Plans: Tesco and Procter and Gamble

Source: IGD research, Tesco store visit, Tesco and P&G (2012)

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Asda knowledge sharing with suppliers

Source: IGD research, 2degrees and Asda (2012)

● >1,000 members from +350 companies

● Connecting suppliers across categories and issues

● Sharing knowledge through case studies, webinars, events and discussions

Asda launched its Sustain & Save Exchange, through 2degrees, with the support of IGD in 2012, which is a online information sharing platform. The Exchange is hosted by 2degrees and is supported by senior management within Asda-Walmart, and IGD.

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Asda and Procter and Gamble

The partnership with Asda will help shoppers save a life every hour by 2020

Source: IGD research, P&G and Asda (2014)

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Industry wide collaboration

• ECR UK - Efficient Consumer Response

• Product Sustainability Forum

• The Consumer Goods Forum

Source: IGD research, ECR, WRAP, Consumer Goods Forum and Sustainability Consortium

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Summary and round up of retailer strategies

Retailers are...

• recognising that the majority of the impact within the supply chain is outside their direct footprint

• increasingly looking to source products that are both local and ‘sustainability certified’ (Palm Oil, FSC, MSC etc)

• opening their doors and are becoming more transparent

• developing scorecards to monitor success and increase transparency

• working with NGO to ensure that they are focusing on the most pressing area

• seeing sustainability as a competitive issue

Source: IGD

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Where Next?... Profit and Loss account on natural resources

Puma says it has produced the first-ever Environmental Profit and Loss (EP&L) statement.

The account valued the greenhouse gas and water consumption impacts of the company’s operations and supply chain at €94.4 million ($133.5 million).

Puma now plans to factor water scarcity into its procurement decisions.

The company now requires its top suppliers guarantee that sub-suppliers meet Puma’s core environmental standards.

Source: Puma and Environmental Leader (2012)

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One step further... Net Positive

Source: IGD research, BT and Kingfisher (2012 and 2013)

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Final thoughts

• Sustainability is a journey, not a destination

• Different organisations have different focuses and are at different stages of the journey

• Organisations will need to continuously improve performance; to mitigate negative impacts and maximise the positive impacts

• There is a need for collaboration and improved integration; no individual person, company or country can address the issues alone

• Need to mainstream sustainability in core business strategies and values

Source: IGD

© IGD 2014

Further information and questions

Source: IGD.com, IGD’s Retail Analysis and IGD’s Supply Chain Analysis

Access free information on Sustainability by visiting IGD’s sustainability website, www.igd.com/sustainability. The website is a one-stop-shop information resource to assist you in rising to the challenges associated with sustainability issues.

See the Supply Chain Analysis ‘Sustainable Supply Chains’ hub page for the latest insight, presentations and news from retailers and manufacturers in food and grocery: http://supplychainanalysis.igd.com/Hub.aspx?id=18&tid=6&fid=3

Go to IGD’s Retail Analysis for the latest news, presentations and developments from retailers in food and consumers goods industry. Find out more here: http://retailanalysis.igd.com/

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Website Case studies

Downloads

Website Presentations

Retailer news Presentations

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Contact details

For further information, please contact: toby.pickard@igd.com

Or visit: www.igd.com/sustainability

Follow us on Twitter @TobyPickard_IGD