Consumer demand for increased transparency and a drive for efficiency are changing the way food and grocery retail works. In response, businesses are recognising the inherent and indirect commercial benefits of operating more sustainably. Toby Pickard explores how transparency and technology are steering the sustainability agenda.
The increase in the industry’s CSR reporting is a logical way of demonstrating its commitment to the environment and society. But while CSR strategy has previously been isolated from financial and commercial strategy, companies are beginning to understand the link between corporate responsibility and business continuity.
The business case for sustainability
'Plan A' generated a net benefit of £185m for M&S in its first five years
Facing into volatile commodity prices and a burgeoning global population, companies recognise they can improve their bottom line and enhance their brand’s reputation by making their processes more sustainable. Businesses that don’t use resources more efficiently are likely to come under increasing pressure as prices for scarce commodities rise.
Sainsbury’s was one of the first to recognise the significant cost savings that result from saving energy and becoming more resource efficient. They have created an integrated approach to their long-term business plans, in which corporate responsibility and financial performance are now inextricably linked.
In January 2007, Marks & Spencer (M&S) launched Plan A, a five-year CSR programme to tackle key challenges in the areas of:
- climate change
- sustainability of raw materials
- fair partnerships
After early success, M&S extended Plan A in March 2010 to encourage ‘greener lifestyles’. The retailer invited employees and customers to bring unwanted M&S clothing back into one of their stores so the clothes could be donated to charity or recycled into new garments.
M&S also committed to embed sustainability into the way it does business. The original 100 Plan A commitments have since been extended to 180 and M&S has said it hopes to become the world’s most sustainable retailer by 2015.
Technology can build consumer confidence
Technology is one of the key enablers for the industry to become more transparent and efficient. Companies that don’t embrace this trend could be left behind as their competitors engage with consumers and use trust to their competitive advantage.
Some recent industry examples include:
- Online communities In the UK, Tesco announced it will introduce a new website to allow consumers to see what happens within its supply chain. The ultimate aim is to help build consumer trust by allowing them to view Tesco’s farms and factories, seeing where products come from and how they are produced.
- Video streams Asda has already introduced video cameras at a number of its factories and even within its head office, creating live streams that can be viewed on its corporate website. This initiative is just one way that Asda is demonstrating its commitment to being as open as possible in the way it operates. This may also encourage its suppliers to become more transparent.
- QR Codes Technology can also be applied at the point of purchase to increase transparency for consumers thanks to a range of new options like QR (Quick Response) codes. Nestlé added QR codes to its Kit Kat chocolate bars, for example, giving access to information on the nutritional breakdown of the product, along with its environmental and social impact.
Sushi chain Moshi Moshi took QR codes one step further and created an edible code made from rice paper and squid ink. When consumers scan the code with a smartphone, it takes them to the Marine Stewardship Council website, where they can read about how the fish was sourced.
Collaborate to compete
Retailers are also becoming increasingly focused on ensuring their suppliers' supply chains are best-in-class, having identified that significant environmental impact of food production sits outside of their direct control.
So the drive for more transparency will also bring the whole supply chain closer together; no single company will be able to address the mounting challenges that the industry faces. Creating a more secure and resilient supply chain will result in better quality, better service and more transparency for shoppers.
IGD has developed free best practice guides designed to help businesses understand what they can do to reduce their environmental impact. You can find these guides − along with articles, factsheets and case studies − on IGD’s sustainability website www.igd.com/sustainability.
Last updated April 2014
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