Sustainable Retail Management
Will O’Brien
April 6, 2010
Topics
Drivers , Trends & Practices
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Environmental Footprint
Business & Environment
Industry Trends /Consumers
Initiatives:
– Australia
– Europe
– United States
• Implementation:
– Engaging stakeholders
– Best practices
– Benefits
Leadership Examples
• BMW
• General Electric
• Kingfisher
• Panasonic
• Starbucks
• Tesco
• Unilever
• Wal-Mart
Environmental Footprint
An environmental footprint is a measure of the amount of
resources consumed and the amount of pollution; e.g.,
green house gas and waste created by an entity and by the
firms that serve the entity, usually summarized by the
equivalent are of land needed to assimilate these impacts.
Source: “Measuring Environmental Footprint: A Financial Services Industry Case Study”, 2008, UNC
Business & Environment
Business Has Traditionally Assumed
an Infinite Capacity Planet
• Business principles based on assumption of infinite natural
resources and waste absorption capacity
• “The concept of multiple industries collaborating on a
‘whole systems’ approach, recycling each other’s outputs
into inputs is completely antithetical to the cult of the
individual and the pioneer myth that so deeply characterizes
American corporate culture.”*
• US antitrust legislation has not allowed “collaboration”
*Oliver Kellhammer, MBA Student, Bainbridge Graduate Institute
Industrial Pollution
What is in a Landfill?
• 22 billion disposal diapers in
landfill/year
• 100 million cell phone put out of
service/year
• 2 million tons of e-products
disposed/year
• 63 million computers in the U. S.
became obsolete in 2005
• Circuit boards - lead & cadmium
• Flat screen & switches - mercury
80% of Toxic Wastes are from Electronics Products
• The electrical and electronic waste (WEEE) law, in 2005, EU
authorities introduce legislation for free take back of waste goods
by final owners and ensure that equipment producers are
responsible for financing the collection, treatment, recovery and
disposal of all waste.
– 30% of Fortune 500 companies’ business are in Europe
• Silicon Valley Toxics Coalition
– http://www.svtc.org/ecomaps/svtc_ecomaps/index.html
• Oregon Natural Step
• Zero-waste Coalition
• Green IT
Earth’s Systems
Complexity, Cycles & Interconnections
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A system is a collection of interdependent parts (with flows and stores) enclosed
within a defined boundary.
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The earth has four major systems
– Lithosphere – soil, rock
– Hydrosphere - water
– Biosphere – living organisms
– Atmosphere – air
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Human activity is disrupting
these systems in complex,
ways
Dave McKay, 2009
CO2 CH4 NOx, others (CFCs, PFCs)
Retail Industry Trends
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Increasingly, the retail market is being taken over by multinational conglomerates
with huge supply and distribution chains, inventory management systems and
wide scale marketing plans.
Retailers have to continuously collect customer information to detect their buying
patterns so as to become more agile, responsive, and efficient in implementing
solid customer relationship management.
At the operational level, the efficiency of transport systems and the use and
disposal of packaging have to be addressed.
E-commerce and home delivery services are becoming indispensable elements in
the competitive retail market.
Ethical sourcing has gained significance amongst various stakeholders; although it
increases the cost, the consumers are willing to pay a premium for adopting
healthy environmental practices.
With regard to this, retail companies need to establish long-term stable
relationships with their suppliers and increase their transparency through
reporting along the supply chain to minimize economic, social and reputational
risk.
Source: DJSI World
Triple Bottom Line
Green Lessons
February 10, 2009
Karen Grimm, Chief Strategy Officer, Siddall, Inc.
Senior Vice President, Chief Strategy Officer
kgrimm@siddall.com
Green
A term used to capture behaviors, products and
services designed to inflict minimal to no harm on
the environment.
1. Understand their world
Why aren’t we embracing green?
• Life is hectic and times are hard
– Green choices make life more complicated
– Green choices can be more expensive
What Really Matters?
• Protecting the
environment fell from
56% to 41% in one year
• Of the 20 issues raised,
global warming is now
ranked last
Pew Research Center 2009
Why aren’t we embracing green?
• Solving the problem seems overwhelming
– It’s hard to see how individual efforts make a difference
• People are confused and/or suspicious of
information and claims
• The information provided isn’t relevant to the target
2. It’s not just what you say, it’s what you
do.
The American Consumer
What they say….
A vast majority of consumers say a company's environmental
practices are important in making key decisions including:
the products they purchase (79%),
the products they recommend to others (77%),
where they shop (74%),
where they choose to work (73%),
and where they invest their money (72%).
--2007 Gfk Roper Study
What they do…
• So, what's keeping consumers from doing more?
– 74% say greener products are "too expensive"
– 61% say they don't work as well
– 55% believe that many 'environmentally safe' products are
not really better for the environment
--2007 Gfk Roper Study
3. It’s not just what you say, it’s what you
do.
The Company
The Do’s
• Instill the “green” vision from the top down
• Set a timetable with key milestones
– Share milestones (even small) along the way
• Be transparent and realistic
Initiatives - Australia
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Clearly defined global trend towards the mainstreaming of environmental and
social criteria in the business arena means future success lies with businesses
ensuring they are, and are seen to be, good operators.
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Financial performance is no longer the sole driver for business. Companies are
focusing on a combination of economic growth, environmental balance and social
progress.
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Employees, communities, activist groups, government, and increasingly financial
institutions are putting pressure on companies to actively demonstrate they
control their environmental and social risks and are improving their performance
in these areas.
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Companies are publishing sustainability reports, or "Triple Bottom Line" reports, to
communicate their environmental, social and economic performance to internal
and external stakeholders.
Source: The State of Sustainability Reporting in the Trade and Retail Sector
A study to assist Australia trade and retail companies with the preparation of public environmental,
social or sustainability report. KPMG Sustainability Advisory Services Environment Australia, Nov. 2002
http://www.environment.gov.au/sustainability/industry/publications/trade-retail/index.html
Initiatives cont’d.
• Retailers Environmental Action Programme
www.eurocommerce.be/content.aspx?PageId=41456
• Stocking the Shelves with Green
www.fivewinds.com/english/retail/retail-stocking-the-shelves-with-green.html
LEADERSHIP EXAMPLES
Bayerische Motoren Werke AG,
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Sustainability is an integral part of BMW business principles and practices, which
has led to a confirmation of its leadership position in the automotive industry. The
company has been able to surpass its peers by exhibiting unparallel commitment
to environmental issues.
BMW strives to conserve environmental resources throughout its value chain from
production systems to materials used in-bound and out-bound logistics, and
recycling and disposal of used vehicles.
The company has implemented efficient environmental management systems, and
undertakes regular external and internal audits for its operations as well as for its
suppliers.
BMW has also included a package of multiple emission reduction measures in
large parts of the car fleet (called Efficient Dynamics) in order to meet the
challenges of global warming and fossil fuel reserves, which is illustrated by 25
percent decline in car fleet emissions in 2008 as compared with 1995 levels.
Along with various initiatives undertaken to achieve environmental efficiency, the
company also takes measures, such as 360 degree feedback and benchmarking of
brands against that of peers, to strengthen its brand image and gain competitive
advantage.
Source: DJSI World
Kingfisher
• Kingfisher Plc is a London-based international home improvement retailer.
The company's main retail brands run on the do-it-yourself (DIY) concept
and include products such as complete kitchens, bathrooms and
bedrooms.
• The company sets sustainability targets and regularly measures its
progress through a social and environmental management system called
'STEPS'.
• Its "Future Homes" strategy for instance is designed to integrate
sustainability into commercial operations, bringing innovative products to
the market to help its customers adopt more sustainable lifestyles.
• In Kingfisher's specialized DIY home improvements stores (e.g. B&Q in the
UK and Castorama in France) customers are increasingly enticed to choose
from a wide range of green products.
• In 2008 this accounted for 7% of total sales.
Source: DJSI World
Panasonic Electric Works
• Panasonic ‘s concentrated efforts to develop environment-friendly
operations has resulted in operational excellence, which is evident from a
sharp decline in greenhouse gas and dust emissions; and reduced
electricity, water and waste consumption.
• The concept of restoring bio-diversity is also adopted at a strategic level in
the company; e.g., the company constructed a 'Prosperous Park' including
biotope in a building premise in Osaka in March 2009.
• In the social dimension, the promotion of labor practices within the
organisation differentiates it from other companies. The company has
established 'Diversity Promotion Office', and has been awarded Diversity
Award Semi Grand prize.
Source: DJSI World
Starbucks
In 2004, with support from CH2M HILL, Starbucks voluntarily conducted an inventory of its
greenhouse gas emissions in an effort to understand and evaluate its contribution to climate
change. Using the WRI Greenhouse Gas Protocol, Starbucks limited the inventory to areas with
the biggest environmental impact: retail, coffee roasting, administration operations and its
distribution network. Based on the results, Starbucks made a commitment to reducing emissions by:
• Purchasing renewable energy—annually, five percent of the energy needed by its North
America retail stores, generated by 11 large-scale windmills, and estimated to reduce CO2
emissions by two percent;
• Addressing the impact of its transportation operations—working with Business for Social
Responsibility’s (BSR) Clean Cargo Group on ocean transportation and using the Clean Cargo tool
to engage freight vendors;
• Monitoring roasting plant operations— an environmental team at each of the company’s four
roasting plants are creating measures for reducing emissions and conserving energy;
• Taking leadership and raising awareness—by encouraging others to take action.
• Setting a reduction target—in fiscal 2005, the company established a gas emissions reduction target.
Sources: Starbucks http://www.starbucks.com/aboutus/beantocup.asp
http://www.greenatworkmag.com/gwsubaccess/05julaug/starbucks.html
Tesco - Carbon Labeling
Jan. 23, 2007 Tesco, the largest supermarket chain in Britain, has announced
that it will begin labeling all 70,000 products on its shelves with the amount
of carbon generated from the production, transport and consumption of
those items.
http://www.terrapass.com/blog/posts/british-superma
The Unilever Group
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Unilever is one of the world's leading food producers, and household and personal
care product manufacturer. The company owns 270 manufacturing plants across
six continents. It employs around 174,000 people in more than 100 countries
worldwide.
The company has out-performed others in the environmental and economic
dimensions by strategically focusing on achieving a long-term sustainable business
model. This is reflected through a decline in the ecological footprint of the
company.
The company has initiated the Sustainable Agricultural Initiative (SAI) and the Lead
Agricultural Program to promote the adoption of a responsible approach towards
farming practices and has also published guidelines for sustainable farming
practices.
Unilever has developed the 'Greenhouse Gas Profiling Tool' in order to assess the
environmental impact of its new products. It also creates nutritional awareness
among consumers by labeling the nutritional value of ingredients on packets.
Source: DJSI World
Wal-Mart - Profitable Sustainability
Wal-Mart & Suppliers
WSJ, July 17, 2009, “Wal-Mart to Assign New “Green” Ratings”
ENGAGING STAKEHOLDERS
Stakeholders
Engaging Stakeholders
• While executive support is a critical key component to business success, it
is not the only form of leadership present in an organization. Business
sustainability leaders understand the value in leveraging their internal
resources as well as their key business relationships.
• Whether led by a sustainability executive or traditional management, the
pursuit of long-term business sustainability enables:
– Employees: Create incentives to lower costs, initiate process improvements,
and stimulate innovation.
– Customers: Establish expectations that are defining products and service
attributes.
– Suppliers: Align supply chain expectations to drive sustainable material
requirements and efficiencies.
– Local Community: Defined framework for initiatives carried out at the local
level through partnership with community groups, local businesses, and
governing bodies.
– Investors: By comprehensive and accurate reporting; e.g., CDP, DJSI.
– Others?
Source: http://news.socialyell.com/878/csr-advice/engaging-stakeholders-as-a-path-to-business-sustainability/
BENEFITS
Benefits of Sustainable Operations
The application of sustainable operations can result in
significant business benefits including:
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Greater operational efficiencies
Cost reduction
Positive publicity; improved brand >incremental revenue
Respect from the local community
Staff loyalty
Conservation of the environment
ADDITIONAL INFORMATION
Recommended Reading
Books:
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Anderson (1998), Mid-Course Correction
Brown, Christopher Stephen. (2005). Sustainable Enterprise
Cunningham, William P. (2007), Environmental Science
Doppelt, Bob (2003) Leading Change Toward Sustainability
Elkington (1997), Cannibals with forks (The “Triple Bottom Line”)
Epstein, Marc (2008), Making Sustainability Work
Esty, Daniel C and Winston, Andrew S. (2006), Green to Gold
Galea, Chris (August 2004). Teaching Business Sustainability
Hawken, Paul (1999) Natural Capitalism
Hawken, Paul (1993), The Ecology of Capitalism.
Holiday et al, (2002), Walking the Talk
McDonough/Braungart (2002), Cradle to Cradle
Meadows, Donella H. (1992), Beyond the Limits
Savitz, Andrew W. & Weber, Karl (2006) Triple Bottom Line
Willard, Bob (2002), The Sustainability Advantage
Strategic Sustainability Consulting
http://www.sustainabilityconsulting.com/
Bentley University
Global Business Symposium - Sustainability
May 17th
www.bentley.edu/symposium/theprogram.cfm
Note: free for students; send me an email if interested.
Additional Information
www.greenprof.org