Sustainability in Overdrive in the Retail and CPG Industry

Jan 25, 2008

By Ronald Margulis, Managing Director, RAM Communications

The first thing to note about the Grocery Manufacturers Association’s Environmental Sustainability Summit held in Washington last week is that it was sold out. The Thursday night reception was packed with industry leaders, politicians and non-governmental organizations with a stake in the environment issue. Interestingly, there were few if any of what most would consider the traditional environmental lobby (i.e., tree huggers in Birkenstocks). The attendees were more often than not in suits and ties, and represented the largest companies in the consumer products supply chain. The sponsors, which included IBM, Monsanto and CHEP [Disclosure: a RAM Communications client] were undoubtedly pleased.

The keynotes by Peter Seligman, CEO and founder of Conservation International, and Dan Esty, co-author of Green to Gold and director of the Yale Center for Environmental Law, were very enlightening. Mr. Seligman outlining a clear vision for sustainability in the CPG industry. The educational sessions were varied, addressing water conservation, energy efficiency and packaging innovation.

Retailers grabbed some of the spotlight by highlighting their sustainable efforts. Wal-Mart, for instance, reported it has saved over $1 million in related energy costs by unplugging the lights on the break room vending machines, a suggestion that came from a store associate.

“Wal-Mart doesn’t consider itself a green company but we are doing great things and making progress in the area of sustainability,” Matt Kistler, senior vice president of sustainability, said during a panel discussion that included executives from Safeway, General Mills and Sysco. “[Wal-Mart CEO] Lee Scott has been a tremendous leader in this area for our company, but I also urge you to listen to store associates and implement things from the bottom up.”

For his part, the executive from Safeway, Joseph Pettus, senior vice president, Fuel and Energy Operations, reported that his company expects to eliminate 75 million pounds of carbon emissions by moving all of Safeway’s trucks to biodiesel. “We believe that we are the greenest grocer in the U.S. and maybe even the greenest retailer,” said Mr. Pettus, adding that the company has set the goal of reducing greenhouse gas emissions by 1.5 percent during each of the next four years. “Safeway has made green a priority.”

CPG companies also reported making dramatic advances in sustainability. In a high-powered session that included senior executives from Coca-Cola Enterprises, Campbell Soup, Unilever and Monsanto, attendees heard that a lot has been accomplished, but much more has to be done. Unilever, for instance, has reduced carbon emissions by 30 percent and plans to lower water usage by 50 percent during the next 10 years.

Discussion Question: How can retailers and their suppliers work together to make the trend toward sustainable operations a competitive advantage?

[Author’s commentary]
The only downer at the conference came from the Bush administration. Stephen Johnson, the administrator of the Environmental Protection Agency, gave a stump speech that was boring at best. Nothing new from the person who is charged with protecting the environment, and certainly no vision for this industry or any industry other than petro-chemical.

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5 Comments on "Sustainability in Overdrive in the Retail and CPG Industry"

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DL Baron
DL Baron
14 years 4 months ago

REI recently published a study which broke down the components of greenhouse emissions from their stores. The greatest single source–more than electricity or product transportation–was employees commuting to work. Environmentalists say that the best thing we can do for the environment is to “stay where we are.”

Following is some compelling data on telecommuting:

• Merrill Lynch reported a 6% decrease in employee turnover as a result of its telecommuting program, along with a 15 percent increase in productivity.

• Telecommuting saves the equivalent of 9 to 14 billion kilowatt-hours of electricity per year–the same amount of energy used by roughly 1 million U.S. households every year

• If Wal-Mart could source 5 store positions from home-based teleworkers, it could reduce its current store emissions footprint by 5.6%.

And the impressive benefits go on and on.

Mark Lilien
14 years 4 months ago

Certainly any retailer, no matter the size, could reward and recognize energy-saving suggestions from the staff, customers, and suppliers. Almost no retailers have suggestion programs. It doesn’t take much. You don’t need to calculate the ROI to 2 decimals. Just pay folks $20 or $100 or $1000 for modest, medium, and big suggestions. And if you have 1,000 stores, there can be $10,000 and $100,000 reward levels. Toyota pays a minimum of $2 for suggestions, and they’ve implemented millions of them. At Toyota, supervisors whose work groups don’t make good suggestions are looked down upon. It’s nice to go to a conference, but if the execs at the conference took suggestions seriously from the folks at all levels, they’d probably save their employers many times the cost of the trip.

James Tenser
14 years 4 months ago
It is heartening to see the consumer goods industry vigorously address sustainability as a strategic imperative. There are many areas where incremental improvement is possible, with the beneficial side effects of lowering operating costs and advancing a “green” public image. Packaging, transportation and lighting have gained the most attention so far. Within this context, I’d like to reiterate a few facts about my personal obsession–solar retail rooftops. I call this the greatest unused resource in America, and a potential pathway to a saner, safer national energy market. Wal-Mart alone has an estimated 58 million square meters of rooftops nationwide atop 3,700 facilities. Some back-of-the-envelope calculations: If even half the surface of each rooftop were made available for photovoltaics (solar cells), they could generate approximately 900,000 kilowatt hours (KWh) of electricity apiece, or a total of 3.3 billion KWh, worth about $300 million annually. After using some of this electricity to operate its stores and D.C.s, Wal-Mart could become a net producer of excess power. Oh–and by the way–buildings with solar rooftops have lower A/C costs… Read more »
Susan Rider
Susan Rider
14 years 4 months ago

The news that this conference was sold out is very good. When major retailers start focusing on conservation, it will begin to trickle down and this can only benefit the world.

Retailers sharing ideas on how to save energy, conserve water and reduce packaging is certainly refreshing. Hopefully, the packaging conference will follow suit and the abundance of wasted packaging will be reduced also.

Anne Howe
14 years 4 months ago

One thing both retailers and CPG companies can do is to engage in some benchmarking shopper research to determine where shoppers really are on the issue of willingness to spend more for greener products or even just greener packaging. At the end of the day, we all are aware that big public companies are not going to just absorb the costs of all this change without a pass along to the consumer.

Yes, it needs to be done, yes I am a supporter and am willing to vote with my wallet. But as a marketer, I need to understand the shopper and not many companies or retailers are moving in the direction of obtaining answers that are category focused AND shopper centric. It is hard to act locally against national research and insights.


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