29 Sep Planning a winning retail sustainability strategy
I recently attended the FMI/GMA Global Sustainability Summit which through a variety of speakers, was very successful in presenting sustainability strategies, practices and opinions in the food industry.
The summit brought together many elements of our food supply chain to have an open dialog on sustainability issues. Attendees were encouraged to share experience and best practices to proactively take on the challenges of balancing environmental, economic and social impacts throughout the food supply chain.
Here are some my top-line takeaways from the summit I’d like to share:
- Most industry executives agree that the food industry has environmental obligations to preserve biodiversity and reduce water consumption, waste and emission gasses, as well as minimize any environmental damage to local communities which could negatively impact their health and wellness.
- As the world population continues to grow, the global food industry is faced with increasing pressure regarding raw materials, ingredient sourcing, and food production in an environment of constant optimization and supply chain control.
- The agriculture and fishery industries are stretched today and the expected increase in the population of 38% in the next 15 years will demand clever strategies to enable the rate of production to grow while sustaining our environment and reducing social impact.
- Sustainability is a big challenge for the food industry and requires a collective approach.
- Sustainability factors could alter the growth projections for CPG companies and retailers, seriously affecting their total returns to shareholders.
For retailers the large majority of the impact is in their products and the supply chain. Therefore, when prioritizing a retailer’s supply chain impacts, it’s important to identify the critical issues which are a focus for trading partners, industry groups and consumers and integrate these into sustainability initiatives. Retailers would expect supply chain partners to be focused on the same priorities. To integrate these critical issues into sustainability initiatives will require a method which minimizes risk and improves performance.
The Sustainability Imperative – insights on consumer expectations
According to a Nielsen report presented at the summit:
- Consumers care about sustainability. 66% of consumers say they are willing to pay more for brands with a commitment to sustainability.
- Being a socially responsible company is critical to attracting talent.
- Sustainability touches many aspects of a company’s reputation.
- On average, products created with sustainable and ethical practices contribute to over 4% greater growth than products created without these practices. This applies to both sustainability efforts and wider CSR processes such as contributions to worker welfare, animal welfare etc.
- 42% of global consumers want more new products that are socially responsible and environmentally friendly.
Here are some examples of industry leaders and support organizations that are taking on the challenge:
- Walmart’s commitment is that by the end of 2017, 70% of the goods they sell will be from suppliers who use their Sustainability Index and suppliers are responsible for improving their Index scores.
- Project Wet Foundation has established a goal to reach 2 million people worldwide with water conservation and hygiene education by the end of 2017.
- Materials Recovery for the Future have a commitment to finding recovery solutions for flexible plastic packaging which is not typically recycled. By collaborating with the industry, their research program is helping to shape the recovery system of the future.
How can retailers successfully implement sustainability initiatives?
For retailers to implement sustainability initiatives, there will inevitably be an increased focus on sustainability throughout the supply chain. Incorporating sustainability initiatives into the supply chain is a complex process but the rewards are worth the effort.
By managing and improving environmental, social and economic performance throughout supply chains, retailers can conserve resources, optimize processes, uncover product innovations, save costs, increase productivity and promote corporate values.
Where to start with progressing sustainability initiatives?
As mentioned above, to address this big challenge requires a collective approach between the retailer and external partners. However, one key thing that many retailers lack is the platform for this meaningful external collaboration.
Walmart engages suppliers to meet sustainability targets with Walmart Sustainability Hub
In 2010, Walmart made the commitment to reduce 20 million metric tons of greenhouse gas emissions from its global supply chain by 2015 – an audacious goal which it did go on to meet. To achieve this required educating suppliers and supporting them to work collaboratively towards this goal.
Rob Kaplan, Director of Product Sustainability for Walmart during the project said that when looking at Walmart’s environmental impact, more than 90% of opportunity is in the supply chain. “The challenge for us on managing the sustainability in our supply chain is that it’s very different whether you are working on bananas, laptops or breakfast cereal. Our big effort in sustainable products is how we manage that at a category level, define what success looks like and then track progress against it.”
To achieve this, Walmart partnered with S4RB to provide a Supplier Engagement platform – Walmart Sustainability Hub – to engage with hundreds of suppliers across thousands of products. Walmart went on to win an Eco Enterprise Award for the Sustainability Hub project.
Here at S4RB we refer to this collaborative process as a ‘One Team’ way of working where retailers and suppliers work together towards a shared goal. To enable this level of collaboration requires the employment of Supplier Engagement which results in the supplier having the motivation and understanding to complete the project accurately and efficiently.
We use our supplierENGAGE™ software to deliver an online platform for collaboration between retailers and suppliers. From the work we have undertaken in supporting retailers globally in their sustainability initiatives, we’ve seen that using a systematic approach by engaging through a single platform to execute a program helps to build collaborative ecosystems and communities which is key to success.