The Green Issue 2011: How green is grocery?

They’re as green as them there hills - so they say.

Tesco has been named top global retailer for tackling climate change for the past two years by the Carbon Disclosure Project. Sainsbury’s has ambitions of being Britain’s greenest grocer and says it will have cut a quarter from its 2006 carbon emissions per square metre by the end of 2012. Asda reckons it will be the ‘customer champion’ of sustainable products whatever that means by 2015. And all have eco-stores out-trumping the last.

Their suppliers are banging the green drum just as hard. In the fmcg arena everyone from Coke to Unilever says they’re striving to reduce their impact on the planet. The world is awash with green claims. Carbon is the new demon and everyone says they are trying to banish it. But is it all just greenwash?

The industry faces an uphill struggle convincing consumers otherwise. A poll of 1,000 shoppers, commissioned by AB Sustain earlier this month, found that 56% believe major food retailers are “only playing at being” green, with 50% of shoppers levelling the same accusation at food producers.

It’s certainly not difficult to pick holes in the efforts of an industry that makes such significant demands on resources. And while the progress made by fmcg suppliers and retailers to lessen their impact on the planet is to be applauded, many claim they’ve simply been grazing on low-hanging fruit, cutting emissions and resource use relative to sales while making little impact on overall footprints. Critics argue businesses need to set absolute caps on energy, water, waste and resource intensity. And, they say, it needs to happen now.

“There are a lot of strong and legitimate targets out there, but there will always be attempts at greenwash,” says Sally Uren, deputy chief executive of non-profit organisation Forum for the Future. “Just having relative efficiency targets will disguise the increase of overall footprints. I believe very strongly that absolute emissions targets are the way forward.”

Finally, business appears to be taking heed. The Grocer can reveal that Mars UK is in the process of setting itself absolute caps on its emissions, a move experts say will put the company at the very front of the pack when it comes to the environment. The decision is arguably all the more significant given the company’s US ownership some say it could suggest a thawing of US attitudes towards the climate change debate.

Heather Rankin, director of corporate sustainability consultancy Context, says other suppliers need to follow this example. “If everyone just sets normalised, relative carbon reduction targets and continues to grow, there’ll be absolutely no impact on climate change whatsoever. Even Unilever’s Sustainable Living Plan pretty much the most ambitious in this sector doesn’t set absolute reductions. Unilever is looking to maintain it while growing its ­business.”

Companies with a greater presence in emerging markets are seemingly more cautious of absolute targets because of the growth opportunities the developing world presents. For example, SABMiller has set ambitious efficiency targets to cut carbon emissions (by 50% per litre of beer by 2020) and water use (by 25% by 2015) but with the company predicting huge growth in its core emerging markets in coming years, its total footprint could well increase.

Retailers should also be setting absolute caps, says Chris Shearlock, environment manager at The Co-operative Group, one of the few British supermarkets to have done so (and also The Grocer’s 2011 green retailer of the year). “It’s better to set bold targets and fall short of them than go for the short-term easy wins,” he says. “Businesses also need to set targets on a shorter lead time. There’s no point planning reductions by 2050 because you may not even have a business by then.”

Nor, indeed, a planet that can sustain an expected population of 9 billion people. To ensure we have the necessary resources, more needs to be done to encourage sustainable practices throughout the supply chain. “The vast majority of relevant sustainability impacts lie in supply chains, not in the store or the factory,” says Mark Line, executive chairman of agency Two Tomorrows. “No one really has a handle on driving change at farm level, particularly where there’s a complex chain of middlemen.”

Suppliers, therefore, need to adopt a common approach towards driving change in the supply chain to avoid farmers being bombarded with disparate demands from their customers.

It’s what Mark Pettigrew, Pepsi-Cola’s European agricultural sustainability manager, calls ‘farmer bothering’ and he insists fmcg players will need to collaborate if this is to be reduced.

“If we are all talking the same language from the same platform and asking the same questions, farmers are more likely to listen,” says Pettigrew. PepsiCo has worked with potato farmers to encourage more efficient irrigation and developed software to formulate energy plans. The work has been shared with McCain, Unilever and Marks & Spencer so far. “This is about ensuring the raw materials for the future, otherwise we won’t have a business,” he adds.

Ask the BRC, IGD or FDF and they will say collaboration is already taking place, via a range of forums, to share best practice. FDF members have halved food waste to landfill in recent years and hope to achieve zero waste to landfill by 2015. BRC retail members achieved an 18% reduction between 2005 and 2010 in both energy-related emissions from buildings and carbon dioxide emissions from transporting goods.

But there is still a long way to go. “There’s lots of individual stuff taking place, but businesses have to work far more collaboratively,” says Mark Driscoll, the WWF’s head of One Planet policy. “They are concentrating on their own footprints, but not on the supply chain, possibly because it’s not so easy to tackle. They need to put more resources into this. A significant number of businesses are dragging their feet.”

The Carbon Trust suggests a reason for this reticence. In a recent survey, the Trust found 75% of businesses thought setting environmental targets enhances their reputation while only 40% saw it as a means of increasing revenues, and just 30% said it could increase profits.

Given the soaring cost of energy and resources and the increasing expense of government regulation, this perception needs to change across the industry, says Dominic Burbridge, senior client manager at the Trust.

“The impact on a business is significant. Energy prices are going to rise by an estimated 20% to 30% by 2016. It’s the visionary leaders setting the most ambitious environmental targets that are likely to be generating longer-term returns to the bottom line and share price,” he argues, adding that food and drink companies are leading the pack when it comes to sustainability.

When the Trust chose eight FTSE 100 companies as shining examples of sustainable practices, four were from the food and drink industry Diageo, Tesco, Unilever and Marks & Spencer, which this year claimed to have turned its green policies into a £70m net benefit thanks to their strategies and early adoption of new green policies set by the government.

But many insist they need to be even bolder. “The business case for taking sustainability more seriously has never been stronger,” says Uren. “A business that succeeds in 10 years’ time won’t be a business that is pumping out loads of carbon and using resources inefficiently. Successful businesses will completely decouple business growth from their environmental impact.”

How fitting that in a bid to save planet earth, a company called Mars is leading the pack.


Green grocers?

The Co-operative Group One of the few retailers to have set absolute emissions caps, The Co-op wants to be sourcing 25% of its energy from renewable sources by 2017

Marks & Spencer It wants to be carbon neutral by the end of 2012. M&S may have scrapped plans to switch to biofuel, but it’s made 20% efficiency savings on fuel instead

Tesco Neutrality is a long way off for Tesco it says it won’t be ‘zero-carbon’ until 2050. In the meantime, it wants to cut its products’ emissions by 30% by 2020

Sainsbury’s By the end of 2012, Sainsbury’s reckons it will have cut a quarter from its 2006 emissions. Packaging relative to sales will be down a third by 2015, it says

Morrisons By 2020, the retailer says it will have shaved 30% off its ‘total operational footprint’ (from a 2005 baseline), regardless of new store openings

Asda It wants to use 100% renewable energy, to be zero-waste and sell products that “sustain people and the environment”. But it won’t say when it will have achieved these goals

Aldi The discounter says its responsibility to the environment is at the core of its values. But it’s decidedly lacking in concrete targets. “The lack of visibility raises questions about how serious Aldi is,” says one commentator

Lidl It’s “an entire generation behind the likes of Tesco” when it comes to the green agenda, says one commentator. Indeed, the environment doesn’t get a mention on Lidl’s website