MAKING THE
BUSINESS CASE
FOR SUSTAINABILITY
A G U I D E F O R
PRACTITIONERS
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L ...
Upcoming SlideShare
Loading in...5
×

Making the Business Case for Sustainability Guide for Practitioners

261

Published on

A new, free guide for sustainability practitioners to use in helping to develop a plan to present and make the business case for sustainability initiatives, with many examples from the food industry.

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
261
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
18
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Making the Business Case for Sustainability Guide for Practitioners

  1. 1. MAKING THE BUSINESS CASE FOR SUSTAINABILITY A G U I D E F O R PRACTITIONERS
  2. 2. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S i INTRODUCTION AND ACKNOWLEDGEMENTS This document was created by retailers for retailers to assist in defining, communicating, and engaging senior executives in making the business case for sustainability. The targeted outcome of this guide and associated training session is to secure the support needed to broaden and accelerate sustainability initiatives in the food retail industry. Why is this guide needed? Sustainability is a strategic imperative across all sectors for business today. FMI members recognize that their industry is uniquely positioned to make a difference by providing consumers with more sustainable choices, producing food as efficiently as possible, and reducing their direct environmental and social impacts throughout the supply chain. However, because sustainability is complex, many companies have a hard time moving beyond quick wins, such as reducing energy use. In a recent FMI survey of its members (Section 3), most report good progress “within their 4 walls”: 90% report having made significant progress pursuing quick wins; over 50% have addressed the broader impacts of their operations (e.g., waste) and include sustainability as a consideration in store design. They are having greater difficulty gaining traction for more challenging initiatives, where the rewards have a longer timeframe. As examples, only 35% of members are reporting progress in making their supply chain more sustainable and only 6% currently educate consumers about what they can do to be more sustainable. “The FMI Sustainability Executive Committee is continuously working to help move the industry forward on sustainability. We provide education and opportunities for pre-competitive collaboration to help address ever-changing sustainability challenges.” Patti Olenick, Sustainability Manager, Weis Markets Former Chair, Sustainability Executive Committee In a 2010 survey by the United Nations Global Compact of 766 CEOs worldwide, 93 percent of CEOs said sustainability issues will be a critical factor to the future success of their business. “…never before have we seen the marketplace and today’s consumers have such a deep interest in and knowledge about what companies stand for and how they are living up to their promises.” Howard Schultz, CEO Starbucks Global Responsibility Report 2012 More than 50 large companies believe the risk-based business case for sustainable behavior change will be replaced by innovation and market share drivers within five years. Survey Report, Sustainable Lifestyles Frontier Group BSR/Futerra Sustainability Communications September, 2013
  3. 3. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S i i Given the disconnect between aspirations and results to date, there is an opportunity for food retailers to elevate the importance of sustainability in their companies, embed sustainability more deeply into business processes and day-to-day decisions, and find ways to make better use of limited resources. While this deeper implementation of sustainability is more challenging, it can also provide greater benefits, not just on direct financial returns but brand enhancement, employee recruitment and retention, and a more secure supply chain. There are numerous studies, resources and tools that are available for free to help businesses develop the business case for a given sustainability initiative, but they often go untapped. This guide provides sustainability leaders in food retail with a practical approach; links to key resources; and specific company examples to make the business case for sustainability, where the results are clear as well as where results may be long-term and less tangible. For these reasons, FMI has partnered with Blu Skye to capture the experience of industry leaders, as well as Blu Skye’s expertise to develop this resource customized to food retail. FMI would also like to thank Kats Maroney for her hlep and expertise in the development of this guide. While the examples highlighted in this document focus on the food retail industry, many of the lessons are applicable to any sector. This guide is comprised of this summary document and additional sections that provide details on: • company examples of sustainability in action (Section 1); • sustainability mega-trends that can be customized to help substantiate the business case (Section 2); and, • results of FMI’s member survey (Section 3); In addition to company examples, contacts are listed should you be interested in more detail or have questions. “Retailers have already discovered the revenue benefits and expense reductions that are possible through the implementation of recycling and other waste diversion programs. Plus, the environmental benefits are huge. Using a sustainability lens to evaluate processes and projects will help companies unlock more growth opportunities.” Susan Ghertner, Director of Environmental Affairs, H-E-B Vice Chair, Sustainability Executive Committee The FMI Sustainability Executive Committee (SEC) works to identify and prioritize issues for action, develops tools and resources on sustainability for the industry, and makes recommendations to FMI’s Board and the industry on policy and program development. This group oversees a number of working groups on: sustainable seafood, packaging, and food waste. “True sustainability is complex because it needs to be interwoven throughout a company and its culture as well as considered in every decision.” Jeanne von Zastrow, Senior Director Sustainability Industry Relations, FMI Blu Skye is a management consultancy that works with current and aspiring sustainability leaders to transform business for the 21st century and beyond. It helps companies and industries develop and execute strategies that create measureable value for shareholders, stakeholders, and the world.
  4. 4. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S i i i CONTENTS Executive Summary.......................................................................................................................1 Step 1: Lay the Groundwork..........................................................................................................4 Step 2: Develop the Content..........................................................................................................6 Step 3: Build Support and Buy-In.................................................................................................10 ADDITONAL SECTIONS Section 1: Company Examples of Sustainability in Action ............................................................12 Section 2: Sustainability Mega-Trends..........................................................................................21 Section 3: Results of FMI Member Survey ...................................................................................26
  5. 5. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 EXECUTIVE SUMMARY SCOPE AND DEFINITION OF “MAKING THE BUSINESS CASE” The corporate sustainability leader is focused on four main activities: 1. Identifying the emerging issues and opportunities material to the business, 2. Formulating a strategy to address these issues and opportunities, 3. Defining the business case, 4. Engaging a team to take action, and 5. Leading action and implementing change. The first two activities are covered in the previously published FMI Sustainability Starter Kit, while the last three are the focus of this guide. The first step is to define the business case for sustainability. A business case in traditional terms is well known: what is the financial impact of a given strategy or initiative? However, with the relatively new lens of sustainability applied to business, the business case is not just about increasing profit but increasing profit while conserving the planet and enhancing communities. In the U.S. alone this past year, we saved customers more than $1 billion on fresh fruits and vegetables through sustainable agriculture practices and sourcing improvements. Walmart 2012 Annual Report “Making the business case for sustainability requires a company to examine its entire operation. From supply chain to customer satisfaction, it requires a dedicated team of people with a passion for change and patient persistence.” Suzanne Lindsay-Walker, Director of Corporate Sustainability, The Kroger Company Chair, Sustainability Executive Committee Marks Spencer is realizing £185 million in net benefits from Plan A over the last 5 years, which will be reinvested back into the business.
  6. 6. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 Many companies are discovering the significant financial benefits of integrating efficiency measures and waste reduction strategies. However, to be a truly sustainable company, larger and more transformative approaches are needed. Many companies have integrated sustainability into major strategies that cut across the company, such as Ahold’s “Responsible Retailing”, Campbell’s “Nourishing Our Neighbors, Our Community, Our Employees and Our Planet”, and Unilever’s Sustainable Living Plan. Effectively implementing this type of change is complex, will not happen overnight, and therefore requires patience and collaboration both within the company and potentially across the value chain. Focusing on the business case is the right place to start. To do this, it is important to have compelling facts to support your analysis as well as a plan for communications and execution. This guide will focus on both the content as well as how to use this information effectively to make the case for sustainability in your organization. Based on our collective experience, there are three key steps to making the case: Step 1. Lay the Groundwork Step 2. Develop the Content Step 3. Build Support and Buy-In Each of these steps is important and mutually reinforcing. “Our current economic model assumes the planet’s resources are infinite and that limitless growth is a good thing. We’ve been drawing down our natural capital instead of living off its interest. Any financial planner knows that is unsustainable.” Bob Willard, 2013, Industry Consultant on Sustainability Unlocking growth through sustainability is an exceptional opportunity for retail and CPG companies to create shareholder value. FMI/McKinsey Survey, July 2013
  7. 7. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 3 STEPS FOR MAKING THE BUSINESS CASE FOR SUSTAINABILITY The guide is organized by these three key steps: Step 1. Lay the Groundwork • Conduct a personal assessment • Close gaps • Outline a plan for success Step 2. Develop the Content • Establish a clear vision • Conduct a business analysis (materiality, financials, tangible and intangibles) • Define Urgency (Why now?) • Identify simple requests Step 3. Build Support Buy-In • Understand the audience perspective • Deliver effectively • Refine and persist
  8. 8. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 4 STEP 1: LAY THE GROUNDWORK CONDUCT PERSONAL ASSESSMENT When you’re preparing to lay the groundwork, it is important to start by conducting an honest personal assessment. Many skills are key for effectively engaging others in the business case for sustainability, and no single person has them all. What are your strengths? What are your weaknesses? Who do you need to help you achieve success? Subject matter expertise is necessary, but will deliver only partial results. As a sustainability leader, it is important to be able to sell the concept to others. It is also important to indentify champions within the company. Champions may include those within your function but also look across the company for those that may share your vision and could be influential with others in helping your plan move forward. Consider having someone on your team with the required interpersonal skills and broad sustainability expertise act as the catalyst, connector, and collaborator to help drive change. CLOSE GAPS Once you have thoroughly assessed your strengths and weaknesses, as well as your workload and organizational dynamic, there are several ways you can address identified gaps: • Build your skills by training and mentorships, • Find additional sources of support both internally and externally. Internally, look for colleagues who complement your skillset gap (e.g., marketing and sales) or are better positioned to build support on your behalf. Externally, look to NGOs, peers at other companies, and consultants. “[Unilever Sustainable Living Plan] gives a tremendous sense of purpose to what we are doing as a business that creates an enormous energy here and employee engagement that I’m sure will explain half of the growth we will be producing.” Paul Polman, CEO, Unilever Building an Internal Team: A leading food retailer created cross-organizational strategy teams to develop two potential business strategies – one where the company was taking the lead, and one where they were matching their competitors’ action. The teams were then asked to recommend their choice and present to senior leadership. By involving this cross-section of employees in the strategy creation and asking them for their recommendations, the retailer leveraged the thinking of the teams, increased the visibility and stakes for the individuals involved, and ultimately built more commitment within the team. Choosing an External Partner: An external perspective can provide a critical reality check for your company, as well as help shape an effective path forward. Walmart and McDonalds continually engage stakeholders in their decision- making. For detailed information on stakeholder engagement, go to Section 6 of the FMI Sustainability Starter Kit
  9. 9. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 5 OUTLINE YOUR PLAN FOR SUCCESS In making the business case for sustainability, you should think through all the steps that will lead to success. What are the details of your end goal? What are the critical milestones to help you get there? What departments or people do you need to bring on board? What information do you need to have and share? If possible, share your ideas and get honest feedback on how you can be most effective. An unconventional approach may include taking your target audience or key influencers on a “learning journey” or a trip into the field for an organized tour and discussion. Think through your entire plan. What if you hit a hurdle or get stuck? What is your Plan B? As has been said, sustainability is a journey, not a destination. Carefully consider feedback (both positive and negative) and be prepared to continually refine your end goal and key milestones. The Sustainable Food Lab organizes “learning journeys” where they can design and facilitate a customized learning experience with diverse stakeholders around the world. “Seeing is Believing: CEOs’ Experience Sustainability Challenges Firsthand” This recent article in The Guardian details how executives at Walmart and Coca-Cola are changing policy because of what they see traveling around the globe. Wegmans’ Seafood Department regularly visits suppliers’ operations and frequently brings in other in-store employees as well as those from customer relations to better understand the issues surrounding sustainable seafood and to better communicate with customers. More information on these learning journeys can be found in Section 1.
  10. 10. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 6 STEP 2: DEVELOP THE CONTENT ESTABLISH A CLEAR VISION Establishing a clear vision that is aligned with your company’s core business strategy, is the anchor for your case. The best-known food retail example is when Walmart embarked on its sustainability journey, it tied sustainability directly to its core business strategy of helping customers “save money, live better” as their sustainability goals would help to save their customers money and provide a better environment for future generations. Based on our survey of FMI members (Section 3); the food retail industry is best positioned to: • Improve its direct environmental and social impact, • Produce food as efficiently and fairly as possible and eliminate waste, and • Encourage consumers to make more healthy, more sustainable choices. When framing your vision, be broad and expansive, not single-issue focused. Keep it simple, but compelling to as many people as possible. If you cannot articulate your vision in one brief sentence, it may need refinement. CONDUCT BUSINESS ANALYSIS The business analysis is the summary of the anticipated costs and benefits associated with your initiative. It should include both the tangible impacts (e.g., financial accounting) as well as the often intangible (e.g., impact on brand and reputation). This analysis should cover both your recommendation, as well as other scenarios, including most notably the costs and benefits of maintaining the status quo. As part of the business analysis, you should consider a materiality analysis as well. Materiality is defined by the Global Reporting Initiative as topics that have a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and society at large. The Heinz Company conducted a materiality analysis as part of their ongoing Corporate Social Respondents cited cost reductions (74%) and managing risks (61%) as two of the three key drivers of their company’s sustainability agenda. Eighty percent said new revenue opportunities will drive sustainability initiatives. And 66 percent have seen an increase in inquiries about sustainability-related issues in the past 12 months from investors and shareholders. Ernst Young “Six Growing Trends in Corporate Sustainability” Walmart’s partnership with J. Durban Farms increased the amount of locally grown peaches sold in their stores. Not shipping peaches from states or countries that are hundreds or even thousands of miles away has reduced transportation and storage costs. This has allowed Walmart to pass savings on to their customers, as well as enabling the farmer to have the security that his produce will be purchased by a major retailer.
  11. 11. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 7 Responsibility strategic planning efforts. They interviewed external as well as internal stakeholders to understand issues and perceptions that resulted in an “issues matrix” that informed the development of their priority issues. The following graphic outlines the different drivers of business value: increased revenues, reduced costs, competitive advantage, and risk management. A clear return on investment is highlighted in the examples for revenue increase and cost reduction. For competitive advantage and risk management, the financial proof is more intuitive and longer-term. In trying to determine this business benefit, you can start with competitive analysis to help build your case. Many companies, such as Safeway, Kroger, Wegmans, and Publix, are using sustainability to define their strategy for long-term leadership and growth. Sustainability in the food retail sector is rapidly moving from changes within a company’s four walls to innovation throughout the value chain. “Being socially and environmentally responsible is part of our foundation. It’s part of our mission statement. It’s part of our company strategy. And most importantly— it’s something we’ll never stop doing.” Ed Crenshaw, CEO, Publix Super Markets 2012 Publix Sustainability Report “If you can show me the business case, it’s too late.” Bill Gates Revenue Increase • new revenue streams • innovation • differentiation Cost Reductions • increased efficiency • waste reduction • increased margins Competitive Advantage • license to operate • enhanced brand/reputation • energized workforce Risk Management • minimize regulatory risk • decrease environmental liabilities • secure supply chain • Journey to Zero Waste has $1 million reward for Hannaford • Weis initial Energy Efficiency Program reduces energy consumption by 3% • Through innovative reclaim process, Kroger reduces waste stream expenses, third party fees, leveraged tax deductions, and streamlined processes, which have resulted in more data control. • Campbell’s saves $42.9 million over 5 years from sustainability investments • Ahold’s Peapod creates virtual supermarket aisles for commuters, which has increased loyalty reward • “Tesco.com provides all the growth in our core food businesses these days.” Philip Clarke, Tesco CEO • Whole Foods profit up 21% on sales growth • Kellogg’s Raisin Bran finds double-digit growth with focus on health • Hy-Vee’s Garden Growth: Supporting the Community • AHOLD USA on Dow Jones Sustainability Index for Fifth Straight year • Wakefern uses competitive analysis to determine their sustainable seafood commitment. • Loblaw is “One of 10 Most Admired Corporate Cultures in Canada.” • Starbucks’ Success Tied to Farmer Success (both risk management and competitive advantage) • General Mills works to secure critical resource of vanilla bean from Madagascar. • Delhaize America’s Sustainable Seafood Program creates a more collaborative supply chain.
  12. 12. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 8 Numerous tools and resources are available to help uncover the bottom-line benefits: Bob Willard, a leading expert on quantifying and selling the business value of corporate sustainability strategies, has found that a typical company using best-practice sustainability approaches can expect increased profits, saved expenses, avoided impending risks and enhanced brand value, resulting in significant profit improvements. For additional information on how to realize these profits, Bob has designed online business case simulators that are available for free on his website. Forum for the Future has recently launched a new toolkit as part of their “Better Decisions, Real Value” project. Since sustainability typically offers “softer” numbers than most financial executives are used to,sustainability initiatives often get caught in the vicious cycle of “prove the value before you get approval, but you need approval to prove the value.” This toolkit helps overcome these obstacles by providing ways to handle the complexity and uncertainty of sustainability, and by providing numbers that are “good enough” to help a company take the first step out of the cycle. BSR in partnership with Futerra Sustainability Communications, has created the Sustainable Lifestyles Frontier Group. Working with leading brands such as L’Oreal, Mars, Disney, eBay, and Carlsberg Breweries, they are looking for ways to enable sustainable lifestyles across industries and around the world. In October, 2013, this Group launched the Business Case Builder developed from over 50 case studies and a series of global workshops with leading brands. This tool features six steps towards building the business case for consumer behavior change. It categorizes case studies and, as part of its continual development, asks other companies to share their stories. Harvard Business Review (HBR) published a Guide to Building Your Business Case (an eBook with accompanying Tools). This Guide can help you 1) Spell out the business need and align it with strategic goals, 2) Gather feedback to shape and test your idea, 3) Calculate ROI, 4) Analyze risks and opportunities, 5) Gain support from colleagues, 6) Present your case to stakeholders, 7) Secure the resources your project needs. The downloadable tools and templates provide examples of two well-wrought business cases and their ROI worksheets. Other sustainability strategy firms are also making significant inroads into quantification of the intangibles. Recent whitepapers include: • PWC’s Sustainability valuation: An oxymoron? • PE-International’s Ten insider tips for building the business case for sustainability Additionally, there are studies tying company value to sustainability, such as CSR Hub’s recent study correlating 28% of brand value to companies’ CSR performance. Forum for the Future’s Better Decisions, Real Value Project offers a Toolkit to Help Companies Make Millions from Sustainability. Greenbiz.com August 13th, 2010 Bob Willard’s Sustainability Advantage— what to expect for a typical company: 1. Reduce energy expenses by at least 75% 2. Reduce waste expenses by at least 10% 3. Reduce materials and water expenses by at least 10% 4. Increase employee productivity by at least 2% 5. Reduce hiring and attrition expenses by at least 25% 6. Reduce strategic and operational risks
  13. 13. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 9 DEFINE URGENCY In defining the urgency of your initiative, answer these questions: of “Why should we do this?” “Why now?” “With many competing priorities, why should this one be addressed this year?” Like the other elements of your case, ensure that you answer these questions in a way that will resonate with your audience and company culture. At the highest level, there are macro trends that can be cited for “why we should do this?” A short list is included below, with additional content and detail in Section 2: • Increasing consumption of finite resources creates stress on environmental systems critical to food retailers, • Increased awareness of sustainability issues has raised consumers’ expectations of transparency and performance, • With increased expectations are specific interest in hot-button issues and products, • Digital trends will continue to transform the retail experience, and • Environmental issues are increasingly framed in terms of impacts on human health. Additionally, there are company-specific drivers for urgency, including: competitive pressures, industry trends, government regulation, and consumer expectations. These are the primary drivers of change for a corporation. Secondary drivers include the impacts of NGOs and other external stakeholders, ratings indices, and the influence of the media. IDENTIFY SIMPLE REQUEST(S) What is the simple, tangible request you have for this particular audience to forward progress? Focus your request on the critical few actions that contribute to the outcome you want. It is about building momentum, so tailor your request to your audience. What are they uniquely positioned to contribute and what will fit with their performance targets? What will they see as ambitious, integral, yet actionable? Proactive vs. Reactive to Issues: Being proactive provides an opportunity to lead and shape the playing field. It requires stepping into the unknown and committing resources upfront. Waiting and being reactive allows someone else to set the agenda. This approach may appear easier, but it could be more costly and damaging to a corporate reputation as you try to manage real or perceived issues. In 2012, U.S. natural/organic retail sales grew 13.5%, reaching a whopping $81.3 billion.” SPINS NaturaLink “Most businesses operate and say, ‘how can I use society and the environment to be successful?’ We are saying the opposite – ‘how can we contribute to the society and the environment to be successful?’” Paul Polman, CEO, Unilever
  14. 14. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 0 STEP 3: BUILD SUPPORT AND BUY-IN UNDERSTAND AUDIENCE PERSPECTIVE To confirm your key audience, think expansively about the actions and resources that will be needed. It is important to engage your CEO early in the process as their support of your overall vision and urgency is essential. Other key audience members may include: Chief Marketing Officer, Chief Merchant, Chief Risk Officer, Head of HR, Head of RD, etc. Once you are clear on your key audience, understand their needs. In other words, what is important to them – not you – right now? DELIVER EFFECTIVELY The following provides a crash course in meeting design and communication. Experts in engagement spend years mastering effective techniques; we would encourage you to consult advisors for key interactions. Meeting Design Once you have identified who is important to engage and what their current needs are, develop a goal and objective(s) for the meeting. The goal should be a proposed outcome of the meeting that everyone who is attending can be excited about. It may be an explicit goal, or a hidden one, but it should be compelling, help you get closer to the overall outcomes you want to achieve, and provide a clear vision for a successful meeting. At Walmart, sustainability remained an abstraction for most people, and gained little traction until they aligned it with who they were as a company and their core competency of driving waste out of their supply chain. Lee Scott spoke to an audience of a thousand home office associates and said, “You know, I’ve been thinking about the fact that when we throw anything away, I am paying for it twice – once to buy it, and once for someone to take it away. I don’t like paying for things twice.” The idea of sustainability as ‘hidden costs’ was the most impactful way to get traction in the culture. The Sustainability Team at HEB developed a short but sharp 30-minute presentation for corporate leadership that focused on financial benefits as well as brand enhancement to engage leadership. For more information, please go to Section 1.
  15. 15. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 1 Communication Clear and compelling communication is paramount to your success. Some tips in achieving this are as follows: 1. Always have your elevator pitch ready. Practice it and refine it as you go, and know how you want to tailor it for each audience. Your pitch should be supplemented by compelling stories and crisp sound bites. 2. Make it a conversation. People tune out when it’s one-sided. Ask questions and be authentic. 3. Frame what you say in terms of not only business value, but also terms that resonate for the specific business, company’s business model, and culture. 4. Use person-specific messaging, including “what’s in it for you.” 5. Use positive psychology; focus on the strengths that enable collective success—not on obstacles. 6. Don’t use jargon that is unfamiliar to audience. For instance, if you are discussing sustainable palm oil with a merchant, avoid sustainability acronyms like “CSPO” and technical jargon like “mass- balance.” REFINE AND PERSIST (MAKE IT BETTER) As you work to promote your approach to management, you will receive lots of questions and most likely hit some roadblocks. Some questions you may hear may include: 1. Of my top priorities, sustainability does not top the list. Why should I pay attention to this? 2. Do our customers care about sustainability? Are they asking for it? 3. How quickly will the upfront investment be paid back from a sustainability initiative? 4. Sustainability seems expensive. How do I reconcile paying more in a cash constrained environment? When you receive these questions, be prepared and do not give up. First and foremost, understand where their concerns are coming from. Ensure you ask for feedback, and clearly understand potential points of contention. Consider inviting an observer to the meeting who can provide you with unbiased feedback. Test ideas with them for what different tactics could create a different outcome. The key here is a balance of persistence and patience. More groundwork may need to be laid. Use the “no” as an opportunity to refine, tune, and make your case better. It may be helpful to remember that the initiative with the most commitment and staying power is the one that’s been collaboratively shaped. Safeway created a cross-functional Corporate Social Responsibility (CSR) Task Force, chaired by an Executive Vice President, who convenes senior leaders across the company to build on and accelerate the company’s efforts on CSR. The Task Force meets quarterly to discuss progress on current initiatives and potential future initiatives. For more information, please see Section 1. Steve LaBard at Unified Grocers wanted to draw attention to the broken pallets that were being thrown away and not recycled with the “whole” pallets in a warehouse. He brought toothpicks in to show that every little bit counts and added them to the recycling bin for pallets. His initiative is now saving approximately $20,000 per year in waste hauling costs.
  16. 16. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 2 SECTION 1: COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION (listed in alphabetical order) 5th Year on Dow Jones Sustainability Index (September 2013) Goal: Enhance Competitive Advantage by Achieving DJSI Listing Overview • The DJSI scores international companies on their economic, environmental, and social performance. Ahold’s economic performance increased by 9% from 2012; environmental performance went up a significant 15% over the last year; and social performance was up 2% from 2012. • Ahold scored especially high on two criteria: crisis management (for which Ahold was awarded the highest score in its sector) and the sourcing of raw materials. • 2nd Year on Dow Jones Sustainability Index Europe Business Case • Listing and improvement demonstrates great progress on Ahold’s Responsible Retailing Strategic Pillar •  For more information, please contact Jihad Rizkallah at Ahold US. Big Savings through Sustainability Result: Saved $42.5 Million over 5 Years from Sustainability Initiatives Overview Components of savings include: •  Advanced Battery Technology that had annual savings of $1.7 million •  V8 Packaging Team eliminated cardboard insert for an annual savings of $230,000 •  Energy Network Team found areas to reduce water, fuels, and electricity used in production for an annual savings of $2.5-5 million Business Case Part of Social Responsibility Strategy of “Nourishing Community, Neighbors, Employees and Planet” •  For more information, please contact Dave Stangis at Campbell’s.
  17. 17. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 3 Implementing a Sustainable Seafood Program Goal: Gather Support from Suppliers •  Delhaize America Sustainability Team developed and implemented a seafood sustainability program. The program involved significant communication and buy-in from the supply base. It was important that ALL suppliers of products containing seafood be on board and 100% compliant with policy. •  Some suppliers were quick to sign on and get involved with the program. Yet, there was significant pushback from a small, but vocal, percentage of suppliers. “Suppliers were hoping we would get tired and go away.” •  A new category manager was hired and was able to quickly identify the issue – suppliers were worried that the effort would be costly and cause multiple problems. Lay the groundwork •  Took the time needed: It was better to build consensus and seek out champions, than unilaterally drive progress as a sustainability team. •  Educated each other and continually reassessed situation: Met with Seafood CM several times to better understand each other’s respective disciplines; Sustainability provided background on the program and its importance; Seafood CM provided commercial context and identified areas where plan objectives could adversely impact business. Develop the right content •  Found where business and sustainability overlapped: Found the convergence of commercial and sustainability interests, which led to a much stronger program that was championed by the category. This reinforced the fact that the, “why this is good for the business” cannot be overemphasized. Build support and buy-in •  Always prepared: Brought up the business case at every opportunity. •  Persisted: Creating momentum requires lots of conversations (at every level). •  Excellent recognition and brand value enhancement for the work; suppliers making great progress •  Better alignment: Category is now “pulling” for more/better versus Sustainability “pushing.” •  For more information, please contact George Parmenter at Delhaize America. Securing Critical Vanilla Supply Chain Overview BACKGROUND •  Madagascar produces more than 80% of the world’s vanilla. •  Vanilla is a key ingredient in General Mills’ Haagen-Dazs ice cream. APPROACH •  Project is part of GMI’s broader sustainable sourcing commitment •  Collaborative effort between General Mills, Virginia Dare (flavor and extract company), and CARE International (NGO serving poorest communities in the world) •  Training and education provided to help farmers produce more sustainable and higher quality vanilla •  By adding value at the farm level, vanilla growers can significantly increase their incomes. Business Case •  Ensure a high quality vanilla supply for the business and for future generations. •  Foster greater economic vitality for smallholder vanilla farmers. •  Create long-term economic, social, and environmental value. •  For more information, please go to website or contact Steve Peterson at General Mills. Goal: Ensure Sustainable Supply of Vanilla from Madagascar COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  18. 18. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 4 Moving to Zero Waste Goal: Build Commitment for a Zero-Waste Goal •  Wasted food at Hannaford Supermarkets stems from the sheer volume of fresh items the stores handle. With 181 stores and over 27,000 employees in Maine, New Hampshire, Vermont, Massachusetts, and New York, Hannaford focuses primarily on fresh produce, meat, seafood, and deli. •  Hannaford diversion by recycling was above 65%, but the company recognized it could do better. By paying close attention to waste bins, management became aware of the large amount of discarded food. “If we do everything correctly, we shouldn’t have this much waste,” says Kasey Harris, Hannaford’s Sustainability Program Specialist. •  When pursuing LEED EBOM certification for 2 specific stores, the company noticed waste diversion numbers went up significantly. Lay the groundwork •  Get senior support: Parent company has identified sustainability as a key component of the company’s business strategy Develop the right content •  Articulate business value of zero waste: Cost savings, improved brand equity, associate engagement, and staying ahead of pending legislation. Identified potential for over $1M in savings Build support and buy-in •  Conducted pilot to prove concept: After noticing increases in waste diversion in 2 stores as part of pursuing LEED EBOM certification, tested the same process with a “district” comprised of 11 stores in central Maine, the test district showed excellent results in both recycling percentages and reduction in waste volume. •  Company committed to moving to Zero Waste. Increased waste diversion for recycling and composting from 61% to 79%, well above industry average of 45% •  Excellent enthusiasm and excitement from associates, which will likely lead to increased retention and employee satisfaction at work •  For more information, please contact George Parmenter at Hannaford. Making the Business Case for Sustainability Goal: Engage Leadership •  Educated leadership about the business case for environmental sustainability •  Helped leadership understand that sustainability is becoming more important to customers and necessary for long-term business planning •  Assured that environmental sustainability is not seen as a “tree hugger” charter •  Developed an elevator speech that was put both in financial terms as well as brand enhancement Lay the groundwork •  Developed short presentation: Developed impactful 30 minute PowerPoint presentation; easily tailored to different audiences Develop the content •  Stressed financial benefits: Main focus of presentation was financial benefit of sustainability (e.g., savings from recycling, etc) •  Included other intangible benefits: Emphasized benefits for hiring and retention and being responsive to customer inquiries •  Provided long-term view: Include long-term risks to the business and impact on “your kids and grandkids” Build support and buy-in •  Tailored message to the audience: Each presentation was slightly different and included updates specific to a particular region, product, etc. For example, highlighted emerging supply chain risks to merchants and financial benefit of recycling to store managers •  Offered to help: Offered to be a resource that can help audience achieve their goals •  Increased awareness and interest •  Store leaders asking for help to respond to customer and employee requests (e.g. additional commodities for recycling) •  For more details, please contact Susan Ghertner at HEB. COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  19. 19. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 5 Enhancing Brand Through Community Gardens Goal: Support Development of Local Community Vegetable Gardens Overview •  Employees saw community gardens as a way for stores to support local families •  Provide land adjacent to stores and store dietitians for support and education •  Work with local non-profits to connect students, families and immigrant communities. •  Hy-Vee works with other local businesses that donate gardening supplies Business Case •  Effort part of Hy-Vee’s combined healthy living and sustainability effort •  Efforts summarized at www.Hy-Vee360.com •  Program helps build brand awareness and loyalty within community •  Hy-Vee recognized for promoting health and local growing in its communities •  For more information, please contact Mike Smith at Hy-Vee. Kellogg’s Raisin Bran Finds “Healthy Growth” Result: Double Digit Growth with Unique Nutrient Claim Overview •  Kellogg’s Raisin Bran was known to appeal to consumers over 50 and was perceived to have health benefits similar to many other cereals. However, it lacked a distinguishing nutrient claim. •  The nutrition label for Kellogg’s Raisin Bran original showed a higher level of potassium than most other cereals, driven by the combination of wheat and raisins in the product. Potassium was identified as a nutrient consumers age 50+ were seeking to increase in their diets. A slight recipe adjustment achieved a claimable “good source of potassium,” with no impact on flavor or texture. •  With this differentiated nutrient claim in the cereal category, a full media plan was deployed. Business Case •  Retail scanner data for Kellogg’s Raisin Bran Original before the communication launch, showed that the product was in decline versus the previous year. During the initial 12 weeks of the new communication, retail sales showed a near double- digit increase versus the previous year (an overall +13ppt change in retail sales performance). •  Driven by the increased sale of Kellogg’s Raisin Bran original, the total Kellogg’s Raisin Bran franchise grew significant market share in the ready-to-eat cereal category. •  For more information, please contact Jeff Delonis at Kelloggs. COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  20. 20. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 6 Innovative Reclaim Process Goal: Create Compelling Case to Bring Reclaim Process In-house •  Dry groceries and shelf-ready staples that were safe to eat, but unsalable, were sent to external reclaim centers, where they were processed for vendor credits, sold by third parties to salvage markets, or donated to food banks. This resulted in some donations to food banks, but it was also a time consuming, expensive, duplicative and difficult-to-manage process for the company. •  Many apprehensions and questions about pulling the process “in-house”: Can food banks deal with Kroger directly instead of 3rd parties? Is there a risk of losing revenue or increasing costs? Are there brand risks for suppliers? Develop the content •  Identified and answered key questions •  Apprehension to pull process “in-house” ! showed more control of data/product and no new long-term head count to manage process •  Could food banks do it? Did they want to ? ! showed how it facilitated increase in donations, reduction of trash expense, expanded relationship with retailer •  Lost revenue ! showed risk associated with salvage operations, as they became more and more value competitors •  Initial Costs ! initial investment for training and software was offset by long-term hauling costs, third- party fees •  CPG’s brand management guidelines ! partnered with Feeding America in an effort to change their rules to allow for donation Build support and buy-in •  Used cross-functional team to show long-term benefit of taking process in-house •  Tailored case to win over hearts and minds: educated minds on operational efficiencies and overall cost reductions, while captured hearts through expanding and increasing donations and commitment to the communities served. •  Great social and environmental benefits: Kept organics out of landfills; reduced transportation emissions due to long hauls from DC to reclaim centers; increased availability of safe, nutritious food to hungry neighbors; expanded relationships and partnerships locally •  Financial benefits: Reduced waste expenses, third party fees, transportation costs, leveraged tax deductions, streamlined processes resulting in more data control •  For more information, please contact Suzanne Lindsay at Kroger. Top 10 Canadian Corporate Cultures Goal: Effectively Engaging Employees around Sustainability Overview •  CSR is an integral part of Loblaw's business practices and is based on five principles: Respect for the environment, source with integrity, make a positive difference in the community, reflect the nation’s diversity, and be a great place to work. •  Have once-a-year Tell It Like It Is survey and online CSR training for new employees Business Case •  86% of employees participate in “Tell It Like It Is” Survey •  It’s working: Employees report improvements in areas highlighted in survey •  For more information, please contact Sonya Fiorini at Loblaw. COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  21. 21. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 7 Launch of Virtual Interactive Supermarket for Commuters Goal: Increase mobile order size Overview • Ahold subsidiary is #1 U.S. online grocery • Features ~70 items with links to 20,000 additional items • Customers use app to scan items that they then add to virtual shopping cart • Over 100 virtual supermarkets in commuter rail stations in Boston, Connecticut, New York, New Jersey, Philadelphia, Washington, D.C., and Chicago. Business Case • Expected to increase mobile order size • Drives loyalty: 90% who scanned an item ordered from Peapod again •  For more information, please contact Jihad Rizkall Source:  McKinsey  Retail  Prac5ce   peapod.com Improving Food Recovery Efforts Goal: Build Support for More Ambitious Targets •  The cross-functional CSR Task Force chaired by an executive vice president in the organization, convened senior leaders across the company to build on and accelerate the company’s efforts. The task force meets quarterly to discuss progress on current initiatives and potential future initiatives. •  On the topics of food waste/food recovery, the organization wanted to build on existing efforts and move from compost to higher uses of the organic materials based on the EPA Food Recovery Hierarchy Lay the groundwork •  Current reality: Identified current practices in place and results of the practices. Compared Food Waste: Tier 2 Assessment /BSR Report to company results •  Pre-meeting reviews: Reviewed deck with executive team prior to delivery of the message to the CSR Task Force Develop the content •  Used video: Showed a portion of the TED video featuring Tristram Stuart: “The global food waste scandal”, to set up the issues/challenges that exist globally •  Shared current state: Practices in place within the organization and results (such as composting, food to feed, and donation programs) •  Used legitimate 3rd party expertise: Walked through the EPA Food Recovery Hierarchy Build support and buy-in •  Recognized success: Recognized current efforts and challenged team to move from composting to higher needs •  Next step objective is to identify baseline information for each item on the EPA hierarchy and goals to achieve (% increase or decrease) •  Team was identified to begin working on the initiative •  For more information, please contact Chris Ratto COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  22. 22. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 8 Ethical Sourcing and Farmer Support Goal: Source 100% Third-Party Certified or Verified Coffee by 2015 Overview •  Starbucks is committed to buying and serving high quality, responsibly grown, ethically traded coffee to help create a better future for farmers and a more stable climate for the planet. •  The company’s long-term success is linked to the success of the hundreds of thousands of farmers who grow the company’s coffee. That’s why they work on the ground with farmers to help improve coffee quality, ensure environmental best practices, and invest in loan programs for coffee-growing communities. •  Third parties include: C.A.F.E. Practices, FairTrade or another externally audited system. •  In 2011, Starbucks sourced 86% of its coffee as third-party certified. Business Case •  “It’s not just the right thing to do, it’s the right thing to do for our business. By helping to sustain coffee farmers and strengthen their communities, we ensure an abundant supply of high-quality coffee for the future.” •  For more information, please go to Starbucks’ Ethical Sourcing Fact Sheet . Rapid Growth of Tesco.Com Goal: Tesco.com = the engine of company’s future growth l “Tesco.com provides all the growth in our core food businesses these days” Philip Clarke, Tesco CEO Overview •  Built five “dark stores” (grocery stores that are not open to the public and are used to fulfill online stores) •  Installed automated picking and handling system at two new dark stores, doubling pick rates •  Transferring online shopping operations from nearby local stores •  Invested $1.5 billion in makeover of stores and $879 million to accelerate the roll- out of digital services •  Adding 8,000 full-time equivalent staff Business Case •  All 5 dark stores among Tesco’s top ten sites by revenue in 2012 •  Achieved 57% market share of online grocery shopping •  Online sales expected to double in the next five years •  For more information, please go to Tesco.com COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  23. 23. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 1 9 Establishing a Sustainable Seafood Commitment Goal: Build Internal Support Lay the groundwork •  Educated, using credible external advisors: To further understand the issue, Wakefern engaged external NGOs with an in-depth understanding of the issue, scientific credibility, as well as a keen awareness of business realities (e.g. Marine Stewardship Council, Global Aquaculture Alliance). Additionally, materials from credible resources such as the National Oceanic and Atmospheric Administration (NOAA) were reviewed and shared with key decision-makers. •  Engaged procurement first, then engaged the rest of the organization: Started working first with the procurement division to gain support and understanding of the issue. Then was able to engage Wakefern’s leadership team and its ShopRite store owners to gain consensus. Develop the content •  Used competitive analysis: “Nobody wants to be left behind.” A thorough competitive analysis formed the backbone of the business case. In addition, the group discussed and determined where they wanted to lead and where the data was incomplete. Build buy-in and support •  To ensure support from the entire organization, input was received from all impacted internal stakeholders including various product divisions and ShopRite store owners. on the importance of conserving energy Lay the groundwork •  Established a baseline: Completed Greenhouse Gas Emissions assessment according to WRI protocols and developed a baseline report for company’s carbon footprint and energy usage •  Established clear responsibilities: Stores have a designated Energy Captain to promote energy awareness and conservation at the store level. •   Developed an easy-to-use Energy Awareness Toolkit including: -   Energy Awareness Manual for every store’s use -   Daily store walkthrough checklist, mission statement, monthly energy conservation report, energy saving opportunities, and additional recycling program information, use and distribution of FMI’s “Energy Management in Your Store” video -   Introduction of company mascot, Captain Wattley, as an icon to identify sustainable programs throughout the company Develop the content •  Focused on the financial benefit: Measured energy savings and reduction in store expenses through documented reduction in energy use. Reducing energy consumption by 3% reduced operating costs. Build support and buy-in •  Selected natural leaders: Selection of Energy Captain role was a key factor in associate engagement •  Promoted engagement: Senior Management supported Middle Management in Energy Awareness training of store associates. Established a direct line of communication with store level to provide feedback. •   Tracked progress: Provided stores with continuous energy usage data and highlighted successes companywide via internal newsletters and email •  Direct reduction in each store’s bottom line by 3-5% determined by monitoring store’s energy performances •  Weis will build on this success and expand the scope to include all store-level sustainability initiatives •  For more information please contact Patti Olenick at Weis. •  Weis Markets operates 166 stores in 5 states with over 16,000 associates in the mid-Atlantic region. •  Energy is one of the company’s largest controllable operating costs. The key objective was to create an energy awareness program to reduce energy consumption in stores. Goal: Reduce Operating Costs and Company’s Carbon Footprint Creating Energy Awareness Program COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  24. 24. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 0 • For more information please go to Wegman’s Sustainability Website or contact Jeanne Colleluori Result: More Secure Supply Chain and Empowered Employees “Learning Journeys” into the Supply Chain Overview •  Wegmans’ Sustainability Mission Statement includes “…we all have a responsibility to be aware and be accountable. We promise to take steps to protect our world for future generations—it's part of our commitment to make a difference in every community we serve.” •  This statement is a guide to promoting the long-term well-being of people, the environment, and the company, including sourcing from “trusted partners.” •  Since Wegman’s first seafood department opened in 1974, it wanted to provide the freshest, highest quality, affordable seafood available. •  To ensure it lives up to this goal, buyers, along with in-store employees and consumer affairs, regularly visit suppliers. Business Case •  Securing Supply Chain: Wegmans seafood buyers recognize the importance of nurturing long-term relationships with suppliers, visiting and auditing facilities, and relying on codes of practice and third-party audits to implement and verify Wegmans’ specifications and suppliers’ capabilities. •  Defining What is Sustainable: With today’s global economy, going out into the world to see the alternatives and understand what is “good” is essential to understanding what is truly sustainable. · •  Empowering Employees: Wegmans’ seafood department employees are provided with information to make them confident in their product and pass that confidence on to customers. COMPANY EXAMPLES OF SUSTAINABILITY IN ACTION
  25. 25. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 1 SECTION 2: SUSTAINABILITY MACRO-TRENDS Increasing consumption of finite resources creates stress on environmental systems critical to food retailers. Increased awareness of sustainability issues has raised consumers’ expectations of transparency and performance. With specific interest in hot-button issues and products, comes increased expectations. Digital trends will continue to transform the retail experience. Environmental issues are increasingly framed in terms of the impact on human health. 1   2   3   4   5   Five sustainability mega-trends that affect food retailers: 1   Increasing global consumption of finite resources… 1. “Humanity Now Demanding 1.4 Earths.” Global Footprint Network, Nov 30, 2011 The Earth is a closed system. It is estimated that 1.4 Earths would be required to sustain our current rate of consumption.1 Population and economic development will increase our impact on the environment, thus we can expect a widening global deficit of resources. Image source: “New Limits to Growth Revive Malthusian Fears,” WSJ, March 24, 2008 ‣  Increasing global consumption due to: –  Exponential population growth, including the rise in life expectancy –  Rise of affluence/middle class in developing countries ‣  Consumption patterns are shifting due to: –  Urbanization –  Redistribution of wealth from west (US, Europe) to east (China)
  26. 26. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 2 …creates stress on environmental systems critical to food retailers Relevant environmental systems affected by consumption trends: Atmosphere, Climate Change: A byproduct of consumption is more carbon particles (greenhouse gasses) in the atmosphere and the associated climate change. Impacts on food sourcing include: ‣  Increasing severe weather (e.g., floods) and disruptions in global weather patterns ‣  Shift and reduction in arable land and production capacity ‣  Change in ocean chemistry (sea level rise and acidification) ‣  Freshwater scarcity and severe droughts Sources: 1) McKinsey, “Charting Our Water Future.” 2009. 2) IEA, from WEF “Summary Report of the Sustainability Summit [at Rio].”;2012. 1   Water Scarcity: In 2030, global water requirements are expected to exceed reliable supply by 40%1. Impacts on food sourcing include: ‣  Lowered agriculture yields and a shift in available food supply ‣  Droughts and severe disruption to regional ecosystems ‣  Competition with non-agriculture demands for water ‣  Nutrient depletion in upper watersheds Energy: Global energy needs will be 40% higher in 2030; under business as usual, 75% of global increase will be met through fossil fuels.2 Impacts of food sourcing and retail operations include: ‣  Reliance on fossil fuels will increase carbon in atmosphere, which can exacerbate climate change impacts on food production (as described above) ‣  Predicted energy demand could lead to higher fuel costs in supply chain and store operations Source: “China and India Account for Half of Global Energy Growth Through 2035.” EIA, Increased food prices ‣ Rising global demand could lead to volatile food prices and pressures on quality and safety (e.g., rise in commodity index) ‣ Reduced supply of food due to climate change, water shortages, and declining aquaculture (e.g., corn prices in 2012 due to drought in Midwest) ‣ For example, the USDA expects unit costs of cereal production to rise by up to 15% by 2016-17, in part because of changes in supply and demand1 Stress on environmental systems will continue to affect food retailers in direct and indirect ways: How  individual  companies  respond  to  environmental  trends  (e.g.,  through   innova5on,  and  partnerships)  will  influence  profitability  and  longevity.   1   The full impact of increasing global consumption of finite resources will continue to evolve in ways we cannot yet predict. Some impacts that seem likely include: Rising living standards in the developing world have boosted demand for resources, lifting prices. CRB Spot Index of prices for 22 commodities, including oil, steel, and hogs: Increased operational costs: ‣  Possible increases in energy costs due to rising demand, which could result in higher operational and transportation costs ‣  Possible increase in operational costs due to regulation; although difficult to predict, introduction of new legislation on carbon, waste (e.g., organics to landfill), recycling and transparency/reporting could also increase operating costs Sources: 1) “Rising Food Prices: A Global Crisis.” Overseas Development Institute. April 2008. Source: http://buzz.money.cnn.com/2012/07/10/corn- prices-drought/ Source: http://www.fafcosolar.com/learn-more/why-is- now-the-best-time-to-buy-solar-energy-products/ SUSTAINABILITY MACRO-TRENDS
  27. 27. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 3 2   Consumers increasingly aware of sustainability, awareness reflected in purchasing choices and reporting expectations Consumers are evolving. Their awareness of sustainability issues (especially climate change) continues to grow: ‣  Climate issues are now common in headlines, having been connected with Hurricane Sandy (“It’s Climate Change, Stupid”), melting icecaps, and extreme droughts. ‣  Over 60% of US adults think human activity has had a negative effect on the natural environment in the past 10 years.1 Source: Fair.org, “US Climate Change Coverage in the ‘00s”. Maxwell Boykoff. As awareness increases, so does consumer expectations of retailer performance: ‣  In 2009, 54% of consumers considered sustainability to be one of their decision-making factors in product and store selection.2 ‣  92% of consumers agree with the statement that it is important for the U.S. food industry, both food manufacturers and supermarkets, to be more proactive about addressing environmental concerns.3 ‣  87% say they want a company to support issues based on where its business can have the most social and/or environmental impacts.4 Corresponding to consumers’ (along with investors’, shareholders’, NGOs’, and governments’) demands for higher performance from retailers, comes an increased expectation of transparency and reporting. ‣  73% of consumers want companies to provide more environmental information on product packaging to help inform their shopping decisions.5 ‣  71% wish companies would do a better job helping them understand the environmental terms they use to talk about their products and services.6 Sources: 1)“As Rio Summit Commences, Americans See Environment Deteriorating.” Washington Post, June 19, 2012; 2) GMA/Deloitte Green Shopper Study, 2009; 3) FMI-Harris Poll, 2007; 4) Cone Cause Evolution Survey 2007; 5) need citation; 6) need citation A growing sentiment among forward-thinking businesses: If you are going to be naked, you might as well be buff. ‣  More companies are voluntarily reporting data, and they are expected to report performance results. ‣  Brands are more accountable for their actions and those of direct and indirect suppliers. ‣  Stakeholders, including investors, increasingly consider environmental, social, and governance (ESG) data. ‣  The public and non-profit sector are more sophisticated in monitoring performance. ‣  Companies increasingly see transparency not only as a risk, but also as an opportunity to build trust and loyalty. New era of transparency: performance accountability 25 Participation in disclosure programs, like the Carbon Disclosure Project, has grown exponentially, along with supplier scorecard and sustainability indices. Source: Carbon Disclosure Project, https://www.cdproject.net/en-US/Pages/ HomePage.aspx Given the growing influence of environmental responsibility in the public consciousness and brand perception, retailers should stay abreast of stakeholders’ evolving expectations of reporting. 2   SUSTAINABILITY MACRO-TRENDS
  28. 28. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 4 3   Complementary to consumers’ increased awareness are specific interest in hot-button issues and products. Confidential 26 Forward-looking retailers are keeping an eye on environmental and social hot-button issues that are increasingly important to consumers and other stakeholders. Some of these issues include: Although hot-button issues and products represent risk, they also represent potential upside and a new source of growth, if retailers can cater to their consumers’ interests. Product Water Carbon Waste GMO Animal Welfare Deforest- ation Ecosystem Health Local sourcing Social / Labor Palm oil and Soybean ! ! ! ! ! ! Seafood ! ! Beef ! ! ! ! ! Packaging ! ! ! ! ! Paper, Forest Products ! ! ! ! ! Eggs ! ! Bananas ! ! ! ! Coffee, Tea ! ! ! Cocoa ! ! ! •  Water intensity •  Carbon, energy intensity •  Waste, including food waste and packaging •  GMO •  Animal welfare •  Deforestation •  Ecosystem health •  Local sourcing •  Social/Labor rights Particular products that correspond to one or more of these issues are drawing increasing attention. Retailers should consider their position on the sourcing of these products: Digital trends will continue to transform the retail expectations for environmental performance. Confidential 27 Second, more people use social media to inform decisions and share opinion. Digital connectivity and social media give consumers increased opportunity to spot and report environmental performance, compounding the previous mega-trend regarding performance accountability and transforming how companies interact with their customers and with society. Movements in digital will continue to empower customers in their quest for transparency about hot-button issues, creating an evolving opportunity for retailers. 4   First, more consumers are making purchases online and through handsets. By 2013, more than 2B globally will have made a mobile purchase and e-commerce spending will reach $278 billion by 2015. With online retail comes an increased expectation of product information at their fingertips, including sustainability and social performance. Two digital trends will especially impact customer’s expectations of retailers’ sustainability performance. SUSTAINABILITY MACRO-TRENDS
  29. 29. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 5 We see movement away from “environment for environment’s sake” and towards how the environment impacts human health, which complements existing food retail priorities around health, obesity, and ingredient reformulations. ‣  Environmental health issues are tied to more inputs (e.g., BPA, phthalates, formaldehyde, parabens) and the definition of “safe” tolerance levels continues to narrow (e.g., lead) as our scientific learning evolves. ‣  Governments and advocacy groups are explicitly reframing environmental issues (such as climate change) as a human health issue to increase saliency. ‣  Prominent non-profits have reframed how they communicate their conservation mission, from an orientation around saving the planet to a focus on how conservation serves human health and security. ‣  Hot-button environmental issues such as organic food, are framed as health issues, as opposed to environment-oriented issues like pollution and watershed health. §  For example, a Nielsen study has found that consumers are driven to organic food purchases because they are healthier choices and significantly less because of socially conscious reasons such as the environment.1 Connecting human health and the environment Confidential 28 Health and the environment will continue to be closely linked, making environmental performance highly relevant to retailers, especially around food and personal products. Source: 1) The Nielsen Company, Global Online Survey. Q1 2010 5   SUSTAINABILITY MACRO-TRENDS
  30. 30. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 6 SECTION 3: FMI MEMBER SURVEY Executive Summary of FMI Member Survey •  34 members, representing all segments of FMI member companies, responded to the survey; generally, there were “expected” results: •  Majority report great progress on reducing impact within 4 walls, may be attributed to ease of quantifying and influencing ! Not a priority focus area for toolkit •  Biggest opportunities for impact are where the business case is the least tangible and/ or longer term •  Employees ! limited perceived value, important but not a priority in terms of where to focus. Maybe because hard to measure? •  Growth/new products + communications ! big opportunity for improvement + area you see as a top priority (helping customers make better choices) •  Sustainable sourcing ! limited perceived value (maybe because longer term?) but biggest area for impact (produce food efficiently) •  What is needed from the toolkit to make the business case is: •  Elevate importance of sustainability: create urgency and/or demonstrate value •  Make better use of limited resources (most organizations are thinly staffed) •  Integrate sustainability into the day-to-day business The food retail industry is uniquely positioned to make a difference… 43% 65% 66% 71% 76% 79% Other Inspire others to “raise the bar” on sustainability initiatives (e.g., companies in other industries) Enhance social wellbeing of employees, customers and others constituents Reduce your direct environmental and social impact Produce food as efficiently and fairly as possible and eliminate waste Drive consumers to make more healthy, more sustainable choices Where is the industry positioned to make a difference? (Percent of respondents that answered 4 or 5) What progress has the industry made with those topics that matter most? 1 2 3 4 5 6
  31. 31. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 7 Opportunity for improvement in areas where the industry can most make a difference… Encourage consumers to make more healthy, more sustainable choices 1 2 Produce food as fairly and efficiently as possible Where have you made the most progress: (Percent of respondents that answered 4 or 5) 6% 21% 15% 26% 29% Educate and engage customers about what they can do to support sustainability Source more sustainable products and/or packaging that already exist Actively partner with suppliers to create more sustainable products and/or packaging Collaborate with industry, including competitors, to change the entire supply chain Partner with NGOs, government and/or other external stakeholders Most progress has been achieved “within your 4 walls”… 24% 53% 56% 65% 91% Engage and educate employees Influence store design and development (e.g. LEED) Reduce impact of your operations (e.g. reduce waste, in-store packaging, recycling) Meet compliance Find quick wins (e.g. energy efficiency) Where have you made most progress: Percent of respondents that chose rating 4 or 5 Not surprisingly, companies have made the most progress in quick wins. Some progress has been made in further reducing impact of own operations, limited progress in employee engagement. 3 4 FMI MEMBER SURVEY
  32. 32. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 8 Drivers of value that are harder to quantify (in terms of $) or longer-term tend to have less importance 0% 20% 40% 60% 80% 100% Employee hiring and retention Other Supplier relationship / reliability Long-term security of supply Mitigate brand risk Growth (new products, etc) Competitive advantage / brand benefit Cost savings / efficiency Most important drivers of value: (Percent of respondents that chose rating 4 or 5) “Thinking is generally skewed toward short-term wins; many believe that sustainable must mean more expensive.” Companies have a harder time making the business case in areas that have the biggest impact: sustainable sourcing and consumer sustainability. 3 “4 walls” 1 Consumers 2 Sourcing 4 Employees What is needed now? 25% 52% 62% 71% 79% 88% Other Develop your personal leadership and influence skills Access to additional resources and funds Make better use of limited resources Embed in the business processes and day-to-day decisions Elevate the importance of sustainability in your company What is required to achieve your objectives: (Percent of respondents that chose rating 4 or 5) Create urgency and find ways to demonstrate value of intangibles. Engage employees to help, identify external resources. Engage others in the organization, develop the right systems/processes. Toolkit objectives FMI MEMBER SURVEY
  33. 33. M A K I N G T H E B U S I N E S S C A S E F O R S U S TA I N A B I L I T Y A G U I D E F O R S U S TA I N A B I L I T Y L E A D E R S 2 9 Topics where food retailers need the most help creating the business case: 5 10 10 16 18 19 20 20 23 0 5 10 15 20 25 Animal welfare Local sourcing Recycling / EPR Alternative energy Water High-impact commodities (e.g., palm oil) Sourcing more sustainable products Waste / food waste Packaging Topics where you most need help: (Total number of responses) FMI MEMBER SURVEY

×