Why sustainability is a smart strategy

Date : 10 November 2011

In September 2011, Welsh shoppers became the first in the UK to be forced to pay a charge for single-use plastic bags. Judging by the media attention this received, it would be easy to assume that plastic bags are the biggest environmental issue of our time.

However, this is not the case. In fact, there are much more pressing problems for us to deal with, such as water scarcity and natural resource depletion. Indeed, if everyone in the world lived like we do in Europe, we would need three Planet Earths to sustain our existence.

A high profile issue

But like product packaging, plastic bags have a high profile because they are tangible and visible. We see them in our homes, in the countryside, even in our oceans. In our ShopperVista research, when shoppers are asked about their environmental concerns, the amount of waste and packaging the industry produces is always in their top five concerns, and is often at the top of the list.

Understand the interconnectivity of sustainability issues within the grocery industry supply chain with IGD's free Environmental Sustainability Matrix. Download it here.

As a result, food and beverage manufacturers and retailers are making a conscious effort to reduce product packaging and the amount of plastic bags given out, often through industry-wide voluntary agreements. Many retailers are also incentivising shoppers to purchase ‘bags for life’ and recycle used plastic bags at stores, in an effort to reduce their impact on the environment.

Lower profile does not mean less important

However, there are also a number of significant steps the industry is taking to become more sustainable that are not being communicated back to shoppers so effectively. These include sending zero waste to landfill from shops and manufacturing sites, developing carbon neutral stores and introducing revolutionary new grass for beef, lamb and dairy herds to reduce their carbon impact.

There are numerous reasons why these messages are not being passed on to the shopper. Sometimes, it is because these initiatives are too complex to communicate. But it is also true that many shoppers simply want the industry to deal with issues like this on their behalf.

Here, we detail what our ShopperVista research is telling us about consumers' views on this subject:

Shopper attitudes to environmental sustainability

Graph of shopper attitudes to environmental sustainability

Source: IGD ShopperVista, Environmental Sustainability - How to Engage Shoppers 

Shopper expectations

It is clear from the results of our research that to meet shopper expectations food companies need to constantly monitor their supply chains to ensure they are acting responsibly.

Many shoppers would like the industry to take the lead on the sustainability agenda and would be unhappy if they discovered that the products they’d bought had a poor environmental record. This is something that the industry is beginning to address with the introduction of scorecards to monitor suppliers.

Businesses taking the lead

Carbon performance is becoming an increasingly important issue for trading partnersMany major retailers and manufacturers are starting to drive efficiencies through the supply chain and become more sustainable in several areas, such as the emission of greenhouse gases, the use of packaging, water consumption and waste generation. Many have created their own scorecards to measure improvements.

A survey by the Carbon Trust found that 50% of multinationals looked set to select their suppliers based upon carbon performance in the future. In the UK, 56% of multinationals said that in the future they expected to release suppliers whose carbon performance was poor.

Good environmental practice is no longer a luxury; it is a necessity.

The impact on trading relationships

"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."

Sainsbury's Chief Executive Justin King, 11.10.2011

Our industry-wide research shows that sustainability issues are playing a greater role in trading relationships, and this is expected to continue in the future. 

The launch of sustainability programmes by the likes of Sainsbury’s, Tesco, Marks & Spencer, Morrisons and Asda, among others, means it is certain that sustainability will play an even greater role in trading relations going forward.

The challenges food companies face within a resource constrained world can no longer be ignored. Further, shoppers now expect the industry to do the right thing.

The financial benefits of taking sustainability seriously

It is also important to remember the business benefits that can be derived from being more sustainable. For example, Marks & Spencer set aside £200m in 2007 to deliver its sustainability programme, Plan A. Within its first three years, rather than costing Marks & Spencer £200m, Plan A contributed a net benefit of £50m. In 2011, it contributed another £70m. This example clearly highlights the business benefits of operating in a more sustainable way.

There is no doubt that the industry is recognising the strategic importance of sustainability measures and the range of benefits they offer, from cost savings to supply chain resilience.