Is Sustainability Sustainable?

Date : 31 March 2009

With industry focused on the bottom line, are businesses putting their sustainability agendas on the backburner? We look at current government initiatives and business strategies, as well as some outstanding industry best practice and why sustainability has become an essential part of corporate responsibility.

a green new dealGovernment intervention

Calls for a Roosevelt style New Deal to stimulate the global economy have come to the fore, but this time in the guise of a ‘Green New Deal.’ President Barack Obama has signed into law one of the most expensive bills in US history. Within the emergency stimulus package more than $100bn (£68bn) will go into green measures in the hope of saving America’s tumbling economy, through job creation in the ‘green’ economy and a focus on resource efficiency.

Many governments around the world are also investing in new green measures as a way to kick-start ailing economies and help tackle climate change.

Only the strong will survive

It is not just governments that view sustainability-related initiatives as one of the answers to economic decline; many businesses are embracing this belief. Retailers and manufacturers have shown that, through innovation, streamlining and new technologies, they can couple sustainability with cost-cutting.

"Companies consistently participating in the CR Index outperform the FTSE 350 on total shareholder return 2002-2007 by between 3.3% and 7.7% per year."
Source: BITC, October 2008

Research conducted by Ipsos MORI for Business in the Community (BITC) has shown that the food and grocery industry is wise to be at the vanguard of the sustainability agenda. This is something that Sir Terry Leahy, chief executive of Tesco, agrees with: ‘I think if you look into the future you may have to be green in order to grow.’

In January 2007, Sir Terry Leahy, set a series of long-term targets to reduce the carbon footprint of Tesco. These included a commitment to construct new, low carbon stores with a carbon footprint 50% smaller than the stores it was building in 2006.

The new Tesco store in Cheetham Hill, ManchesterIn January of this year, Tesco opened their first example of a store built using their new, low carbon Environmental Blueprint. The new 52,000 sq ft store has a carbon footprint 70% smaller than stores built in 2006.

Tesco has reduced the environmental impact of the new store in the following ways:

  • A sustainable timber frame instead of metal, significantly reducing the store’s embodied carbon footprint
  • Roof lights allow more natural daylight into the store, saving on electricity
  • A natural refrigeration system which uses CO2 instead of HFCs (reduced the carbon footprint by a fifth)

We have also seen an increase in small scale energy production at supermarkets. Both Tesco and Sainsbury’s have installed wind turbines at their stores to reduce their carbon footprint.

Marks and Spencer has been extremely bold when it comes to pledging to sustainability. Their 100 point plan – Plan A – has resulted in some impressive results. Twenty-two months into the Plan and M&S has reported that the scheme is currently cost neutral, but they believe it will become cost positive as they reap the rewards of energy reduction in-store, hanger recycling and reduction in clothing packaging.

"Plan A has made us think of new ways of working. This has helped to deliver not only benefits to the environment and people across our supply chain but also savings to our customers and our business."
Sir Stuart Rose, Chairman of Marks & Spencer
Company commitments to sustainability continue despite the downturn. In January 2009, Asda launched a new advertising campaign and strapline as part of its focus to communicate its value and sustainability credentials to shoppers.

"All 165,000 Asda colleagues will continue to work flat out this year to save energy, cut waste and carrier bag usage, and we will invest the money we save in lowering the price of the products customers buy week in week out."
Andy Bond, President and CEO of Asda
The new advertising campaign explains how Asda’s focus on sustainability leads to ongoing price reductions within stores. Through energy saving initiatives and recycling, the retailer states that it will reduce the price of 4,000 products in January – with 1,000 rollbacks per week – as part of its ‘New Year Rollback’ campaign.

In February 2009, The Co-operative Group launched an advert showcasing their ethical credentials. The advert focuses on climate change and ethical investment among other things. The rationale behind it is that people don’t abandon their beliefs in a downturn and it has proved to be successful. The Co-op’s CEO Peter Marks was quoted in The Grocer saying: ‘We work very hard on both value and values and have had significant sales success. In month one of our new financial year like-for-like sales were up 6%, so people like what we’re doing on price and promotion.’

Win-Win-Win

Businesses that recognise the opportunities that being sustainable represent will be best placed to succeed in the current economic climate, and in the future.

In recent years the major food and grocery multiples and manufacturers have made ambitious pledges to become more ‘green’ and sustainable.

Clearly, they see the move to sustainability as a benefit to the environment, their consumers and their balance sheets – so fully incorporating the triple bottom line of sustainability.

While not all food and grocery companies will maintain the momentum of their sustainability programmes, those planning to be successful in the coming resource constrained and low carbon economy certainly are.

The current economic downturn is the ideal opportunity to start implementing energy saving schemes, as not only will it help organisations reduce their energy consumption and therefore their carbon footprint, it will also help them to save money.

In the long run, for an 80% reduction in emissions to be achieved by 2050, long term initiatives will have to be implemented by the food and grocery industry. To find out what the industry is currently doing to become more sustainable please visit our industry Case Studies web-area via the link below.