USC Presentation March 11 2011
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USC Presentation March 11 2011

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Presentation on food industry imperative and actions on sustainability to University of Southern California Food Industry Management MBA Team

Presentation on food industry imperative and actions on sustainability to University of Southern California Food Industry Management MBA Team

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  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • Source: U.S. Census Bureau, “World Vital Events Per Time Unit: 2010” 75.4 million represents births minus deaths. 6.3 million represents births minus deaths. 6.3 million is the approximate combined populations of LA and Chicago.
  • Source: U.S. Census Bureau, “World Vital Events Per Time Unit: 2010” 75.4 million represents births minus deaths.
  • 1250-19200 Food Technology PR Slide Show 03/10/11 T:\\Copy Dept\\Elanco\\1250\\1250-19200 Food Technology PR_v06.ppt
  • 1250-19200 Food Technology PR Slide Show 03/10/11 T:\\Copy Dept\\Elanco\\1250\\1250-19200 Food Technology PR_v06.ppt
  • The Sustainability Opportunity - DRAFT March 10, 2011 Hurricane Katrina August 28, 2005
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011 Growing Power of Civil Society (1) Please note the reference of this slide. This is not a slide of a poll done by Greenpeace. The Enron and World Com scandals only solidified the public’s belief that companies only care about the bottom line, regardless whom might be negatively impacted. Need to work WITH non-governmental organizations as their perspective and input can provide valuable advice into trends in the marketplace.
  • The Sustainability Opportunity - DRAFT March 10, 2011 Growing Power of Civil Society (3) Each of the activist campaigns related to the pictures above had success in changing the way that the target company/sector did business. For example, Home Depot was one of the first retailers to require Forest Stewardship Council (FSC) certified timber for its lumber sales.
  • The Sustainability Opportunity - DRAFT March 10, 2011 Business working WITH NGOs for a better business mutual value propositions. While some environmental groups are still simply looking for a reaction and attention from the media, others are very focused on working WITH business to produce results of mutual value. There are MANY MANY more examples of these partnerships with companies large and small representing a broad range of sectors.
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011 An overview of the opportunities offered by sustainability. The business case for all of these aspects continues to be analyzed but the growing integration of sustainability into business and also into shareholder analyses reinforces that there must be a bottom line benefit or it would not be of interest.
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011
  • The Sustainability Opportunity - DRAFT March 10, 2011 There is a quite a buzz in the mainstream retail marketplace about the growing focus on sustainability and implementation of practices and strategies that reflect this focus. As sustainability begins to infiltrate the retail world, there will be more examples not only of initiatives but financial value.
  • The Sustainability Opportunity - DRAFT March 10, 2011 Since there is no one-sized-fits-all approach to sustainability, FMI is developing a toolkit tailored to the food retail sector. It will be a guide for companies looking to integrate sustainability. It captures learnings from a large assortment of companies that have developed sustainability strategies over the last ten years. The FMI Toolkit builds on a toolkit developed by the Business Roundtable (a group of 160 CEOs from US-based companies) at the end of 2006.
  • Other Resources in the Guide Category specific issue list Examples with hotlinks Reference list
  • The Sustainability Opportunity - DRAFT March 10, 2011 Just to clarify that sustainability is not simply the initialization of one program or system, it is a new way of doing business. Companies used to function as more of an island in society and they are now considered more fully integrated. How they operate and conduct business should reflect this. There is no “guide” that will tell you the steps you need to take to be sustainable. Issues vary from sector to sector and from company to company. And almost more importantly, any corporate strategy on sustainability should fit with the organization’s culture to be effective.
  • The Sustainability Opportunity - DRAFT March 10, 2011

USC Presentation March 11 2011 USC Presentation March 11 2011 Presentation Transcript

  • USC Food Industry Management March 11, 2011
  • The Sustainability Tidal Wave Jeanne von Zastrow, Senior Director, Sustainability, FMI
    • Sustainability:
      • What’s the big deal?
      • Food industry responses?
      • What does success look like?
      • Hurdles and opportunities
      • Ideas for you/your company
      • What’s coming next? How to prepare.
  • About the Food Marketing Institute
    • Feeding Families and Improving Lives
    • 1,500 supermarket/wholesale members worldwide
    • Government, food safety, education, media and consumers
    • Chartered member sustainability initiative in 2006
  • What is Sustainability?
    • Actions, lifestyles and products that meet current needs without sacrificing the ability of future generations to meet theirs.
    • Business strategies and practices that promote the long-term well being of the environment, society and the bottom-line
    • FMI Sustainability Task Force Definition
    • A HEALTHY balance = People, Planet and Profits
  • What’s the big deal?
    • Fragile Planet
    • Developing World
    • Globalization
    • Toxins
    • Changes in Climate
    • Social Upheaval
  • Living beyond earth’s capacity is not sustainable…
    • l/3 of world ecosystems = significant decline
    • l/3 of forests = disappeared in last 50 years
    • Fisheries in collapse = severe crisis by 2048
    • Water Wars - 80% world fresh water = agricultural use and 50% rivers heavily polluted and/or drying up
    • Energy resources - shortages, food to energy
    • Climate change - extreme unpredictable weather playing havoc on prices and supplies
  • Global Population Increases … 6.3 Million Monthly Los Angeles Chicago Source: U.S. Census Bureau
  • 75.4 Million Annually Population of Iran Source: U.S. Census Bureau
  • And by mid-century, the world will be home to 3+ billion more people.
  • In 40 years, the world will need 100% more food than we produce today. Source: Science Magazine, 2005
  • “ By almost any measure, producing food has the largest impact of any human activity. Most estimates suggest that we will need to produce twice as many calories on the same amount of land we use today if we want to maintain biodiversity and ecosystem functions.” - Jason Clay, World Wildlife Fund
  • Society Worldwide Under Stress
    • Inequity -The richest 200 people make more than world’s poorest 2.5 billion people
    • 50% of world population live on under $2 day
    • Despair - 500 million live in squatter camps/ slums
    • Demand doubles by 2050 as developing countries move from poverty to middle class
    • Conflict over freedom, lifestyle, food, water and energy resources
  • Source: NWS We are in the eye of the hurricane…
  • WHO is driving the issue and why?
        • Media
        • Advocacy Groups
        • Customers and Employees
    • Government
    • Education
    • Business
  • “ Environmentalists” What a difference 30 years make!
    • THEN
    • Hippies and Wackos
    • Communists
    • Tree Huggers
    • Granola Heads
    • NOW
    • Sophisticated
    • Educated
    • Socially Conscious
    • Ethical
    • Eco Geeks, Eco Moms
    • Greeniacs, Freegans
  • Media – Are there ANY who have not devoted major stories to sustainability?
  • Recent Consumer Headlines
    • Greenpeace: McDonald’s harming the Amazon
    • Tesco invests 500 M to create ‘green consumer revolution’
    • UN says eat less meat to curb global warming
    • Wal-Mart tells suppliers to ‘go green’
    • “ Green Week” on national and local stations
    • Oprah and others urge consumers to go green, buy local and recycle
    • Planet Green TV Channel
    • 3/3/11 WSJ article about Sustainable Seafood – kudos to Safeway partnership with Fishwise on seafood
    • 12/27/10 SuperValu Announces Partnership with World Wildlife Fund
    • 12/10 Unilever unveils major sustainability commitments
    • 2/2/10 Tesco first” Zero Carbon Store”
    Food Industry Buzzzzz…
  • Advocacy Groups Have Global Clout! World Economic Forum % of “yes” minus % of “no”
  • You don’t want activist groups as your enemies…
  • Successful NGO + Business Partnerships
    • World Wildlife Fund and Coca-Cola conserve and enhance fresh water resources around the world
    • Greenpeace and Target dialogue changed seafood policies
    • Natural Resource Defense Council initiated the multi-stakeholder group developing Sustainability Index for Fresh Produce (growers, wholesalers, retailers, other environmental groups)
    • The Conservation Alliance of 15 NGO’s in dialogue with FMI’s Sustainable Seafood Working Group – led to NGO Advisory Committee.
  • Engaging With Stakeholders Partnerships; sourcing and policy advice; fishery improvement projects
  • Consumers - Global
    • 3 Billion people, l/2 world population are under 25. The most environmentally/socially concerned consumer segment
    • Internet and globalization allow the “haves” and “have not’s” to peer into each others worlds
    • Greenest populations based on individual desire to purchase green products and to work for environmentally responsible organization
        • #1 China
        • #2 Australia
        • #3 Canada
        • #4 Sweden
        • #5 USA
            • Tandberg.com report
  • U.S. Consumer Trends
    • Conspicuous consumption is alive and well
    • Americans produce 2 X daily waste of Europeans,
    • 20 times typical person in developing world and estimated at $2,000 per household
    • They want to change – not sure how
    • 89% interested in green products, 36% regularly buy them
    • Green shoppers twice as loyal to primary supermarket
    • Basket with one green product average ring = 60% higher
    • Sustainability, local sourcing = hottest 2010 menu trends
    • Cooking at home higher in 2009 than previous 25 years
  • From Personal to Planetary: 360 o Revolution Personal health and wellness is the gateway to environment sustainability Consumers enter the “environmental sustainability” culture based on personal drivers – healthy food and exercise – evolve to include growing concerns about the health and sustainability of the planet.
  • Consumer’s Spectrum of Engagement in Sustainability ME What goes in and on… My Body My Household My Community My Country My World © 2009, Natural Marketing Institute Source: 2009 LOHAS Consumer Trends Database™
    • Consumers: ECO-Babble and Certified Confusion
    • Warning: This “green” label may cause the customer anxiety, blurred vision, severe headaches or dizziness, an exaggerated sense of well-being, yawning, irritability and/or a decreased desire to save the Earth.
  • The World of Eco-labeling… confusing, complicated and conflicting – over 90 in North America
  • DRIVERS: Gen-Y Employees:
    • Future Leaders are Increasingly Green
    • 92% of graduating college seniors want to work for an environmentally responsible company.
    • 40% of employees claim they would work for less pay and/or longer hours if working for socially responsible company
    • 61% accept personal responsibility for making a difference in the world and 78% say companies have the same responsibility
  • A New Day Coming….. last week from from CNN
    • Three key categories for best jobs over the next 20 years
        • Medicine
        • Technology
        • The Environment – including sustainability
    • In our industry – explosion of “sustainability” and “corporate responsibility”
        • FMI committee titles, from zero in 2006 to majority now
  • Government is pushing:
    • If you don’t, we will!
    • Climate change legislation going nowhere….so
    • EPA instructed by Supreme Court to issue new regulations
    • US federal departments must implement “Green Purchasing Standards”, green buildings, green travel
    • FTC “Green Guides” – regulating advertising and green claims
    • White House Meeting on Sustainable Communities
    • Extended producer responsibility 2 states, 8 active, federal movement – in Canada law costing Loblaw $30 M annually
    • Worldwide move toward mandatory environmental product declarations in labeling requiring LCA’s
    • MANY Green Government & Business Partnerships i.e. Green Chill, Smart Way, Smart Waste and more through EPA)
  • Drivers: Business
    • “ The entire food industry shares a responsibility to develop environmentally and socially responsible practices, this is a major business imperative of our times, and one of FMI’s top ten priority issues.”
    • Leslie Sarasin President and CEO of FMI
  • DRIVERS: Business
    • Movers, shakers and pioneers:
    If we aren’t at the table, we’re on the menu!
  • Food Industry Responding……
    • Everyone : has initiatives – energy, store design, sourcing – focus is within own four walls and bottom line, short term immediate
    • Majority : just beginning to assign responsibility, develop team. identify strategy, tip toe beyond four walls
    • Pioneers : strategy; leader, team
    • job descriptions; goals and metrics; working with stakeholders, suppliers and government; and recognize strategic advantage for future.
  • BUSINESS DRIVERS: Some examples…..
    • 26 Retailers active on FMI’s Sustainability Leadership Committee and 22 on FMI’s Sustainable Seafood Committee
    • Tesco and Unilever leading the industry joint efforts on Global Sustainable Packaging Standards
    • Winn-Dixie has 60 people internally from many departments on their leading-edge “sustainability team”
    • Wal-Mart initiated “sustainability index” in process, working to reduce packaging; helping employees develop personal sustainability plans
    • Shaw’s, Publix, and others partner with EPA’s Green Business Programs – Green Chill, Smart Way
    • Giant Eagle – LEED pioneer, had Carnegie Mellon students competed in reusable bag design contest
  • Sustainability ECO-Advantages
    • Growth
      • Increase Market Share
      • Build Customer Loyalty
      • Differentiation and Branding
      • Improve Employee Morale and Loyalty
      • Increase Efficiency/Productivity
    • Reduce Risk
      • Secure the Supply Chain for Future
      • Avoid Negative Public Opinion
      • Prepare for/ Be Ahead of New Regulations
  • What Are Steps for Success? 1. Gather information 2. Assemble resources 3. Develop plan 4. Internal team and training 5. Create strategic partnerships 6. Implement 7. Tell the Story
  • What Are Retailers Focused On? Getting own “house in order first, then into the supply chain
    • Internal education and “buy in”
    • Energy, building, operations
    • Sourcing of all products
    • Packaging
    • Waste and Disposal
    • Educating consumers
    • 13 Value Teams – stakeholder meetings to set goals
    • Electronics scorecard to rank suppliers energy efficiency, durability and end of life disposal
    • SEEP program to help suppliers become more sustainable http://walmartstores.com/Video/?id=1233
    • Created sustainable packaging scorecard to reduce amount of packaging in supply chain by 5% by 2013
    • Goals
      • Be supplied by 100% renewable energy
      • Eliminate all landfill waste from US stores by 2025 as compared to the 2008 baseline
      • To sell products that sustain people and the environment
  • http://walmartstores.com/Video/?id=1472
    • 18 solar projects that combined eliminate 9.5 million lbs of CO2 annually
    • On average, California stores divert 85% of materials from landfill disposal
    • First grocery member of the Sustainability Consortium
    • Strong internal team developing on sustainability
  •  
    • “ Get into a Green Routine” Program
    • Recycling programs http://sustainability.publix.com/what_we_are_doing/recycling.recycling_efforts. php
    • Buy local initiative
    • All packaging must be recycled or recyclable unless there is a food safety issue that prevents it
    • Do not use seafood labeling systems because they don’t want to confuse people
  •  
    • Second on Greenpeace’s list for most sustainable seafood retailers
      • Only work with suppliers of wild caught seafood that conforms to all local requirements and is recorded accordingly
      • Work with suppliers certified by third parties, like Marine Stewardship council
    • Pallet trucks powered by fuel cells in distribution centers
    • “ Little Steps, Big Difference” program to teach customers small things they can do to start becoming more sustainable
    • http://videos.wegmans.com/?assetId=297
  •  
  • Getting Upper Management on Board
  • Getting Employees on Board
    • Weave into associate training and development
      • Energy stewardship, like shutting of lights, keep refrigerators shut
      • 30-60-90 day training check ins for new employees
    • Integrate into Leadership development program for management potential employees
      • Make cross functional by taking employee out of their normal department to learn under a mentor in a completely different department
    Source: GfK Roper Public Affairs & Media, December 2007
  • Create sustainable employee culture
    • Incentivize creating healthy habits
      • employees are rewarded for losing weight, quitting smoking, etc
      • Support groups to teach employees about alternative medicine
    • Encourage group fitness
      • Company running clubs and weight lifting groups
    • Employees are happier and more satisfied with their work and company saves on health care coverage costs
  • Getting Employees on Board
    • Personal Sustainability Projects
      • http://walmartstores.com/Video/?id=1223
      • Inspire small changes that add up
      • Foster the culture from within
      • “We’re going to succeed because it is coming from us—your associates—not from corporate.” – Monika, a Wal-Mart associate who quit smoking as part of her PSP
  • Packaging
    • Less is more
    • Moving away from PVC
    • Leadership on global packaging project
    • Created Sustainable Products Guide to educate product designers and merchants about packaging implications and alternatives
  • Packaging
    • One Example: Quilt Packaging
    • Before:
    • Large corrugated and plastic insert cards
    • After:
    • Smaller corrugated insert cards, no plastic
    • Savings:
    • 30,000 lbs of plastic and 32,000 lbs of paperboard annually
    • $150,000 annually in material costs
    Target 2009 CRS Report
  • Packaging
    • Water bottles made from recycled PET
    • Removed wax from frozen product cartons so they can be recycled
  • Find what works for you
    • Piloting four different types of solar panel systems on different size stores
    • Most efficient systems depending on stores size will be rolled out across more locations
    • As a result of a wind program, the Porter’s Lake location now has Windmill that supplies 25% of store’s energy needs
  • Biogas Initiative
    • Partnerships with StormFisher and Organic Resources Management
    • Organic matter leftover from stores is added to manuer and fed into anaerobic digestors
    • The result is biogas that is then used to create electricity
  • Example of Companies Working Together on Sustainable Seafood Hurdles and Opportunities
    • Hurdles:
    • Many passionate stakeholders
    • A globally hunted resource
    • Conflicting information
    • Media & marketplace confusion
    • Complexity – we are not scientists
    • Opportunities
    • Strategic advantage for leaders
    • Buying power changes markets
    • Harness the power of consumers
  • Sustainable Seafood - Retailer Research
    • 90% either working on or have policy/mission/guidelines
    • 60% engaged with environmental organizations
    • 70% engaged on sustainability with their suppliers
    • Traceability is one of highest priorities, rates 4.1 (on 1-5)
    • Complexity and inconsistency are two most significant challenges
    • This issue is NOT being driven by consumers NOW, but by multiple stakeholders including industry, government and NGO’s.
  •  
    • Sustainable Seafood – Walmart Website Policy:
    • In the United States, we will require all fresh and frozen, farmed and wild seafood products sold at Walmart and Sam’s Club to become certified as sustainable by a third party using Marine Stewardship Council (MSC), Best Aquaculture Practices (BAP) or equivalent standards.
  • Safeway and FishWise Partnership; trainings; product signage
    • More than 1,500 stores
    • Goal: All products are sustainable and traceable
      • Product and supplier assessments
      • Improvement plans and alternative sources
      • Staff training
      • Consumer education
      • Policy engagement
  • Lunds & Byerly’s in Minneapolis – 21 stores Sustainably Sourced Seafood Launch
    • NGO Partners
    • Site Visits
    • Policy and Goals – 75% by 2013, 100% by 2015
    • Employee Education – all day off site with partners
    • Roll Out to Consumers March 10
  •  
  • Best Practices from outside grocery
    • Timberland Nutritional Label
      • Shows customer exactly what went into making their shoes
  • Best Practices from outside grocery
    • Aveda
    • Green-e
      • Offset 100% of the electricity used at headquarters with renewable
    • Cradle to Cradle
      • Environmentally intelligent design with a movement towards zero waste, 7 gold certified products
  • Best Practices from outside grocery
    • Patagonia
      • Footprint chronicles allow customer to track the life of their new products
      • 1% of sales are donated to preservation and restoration
  • What the future could bring…
    • Labels that show every element of a product’s environmental impact
    • Retailers influencing people to shop less and for only what they need
    • Reusable/refillable containers eliminate packaging
    • Retailers new business opportunities with waste
  • Some Multi-Stakeholder Efforts
    • The Sustainability Consortium
    • The Innovation Center for Dairy Industry
    • The Stewardship Index for Specialty Crops
    • The Keystone Field to Market Initiative
    • The Global Packaging Project
    • FMI’s Sustainable Seafood Initiative
    • The Sustainable Food Lab
  • Global Packaging Project
    • Goal is to develop an industry wide language for packaging and sustainability
    • Common metrics to measure sustainability within packaging
    • Guidelines as a tool for industry to reduce duplication, improve supply communication, streamline
    • Multi stakeholder effort, in final stages of completion
  • How FMI’s Members Develop A Sustainability Strategy
  • The FMI Sustainability Starter Kit The “How”
    • A guide to develop strategy
    • Practical tips and advice
    • Best practices and examples
    • Tested with 5 retailers
    • Available in PDF with live links
    Sponsoring companies of the FMI Sustainability Starter Kit
  • FMI’s Carbon Calculator
    • A free tool to calculate your carbon footprint
    • Compare against your peers
    • Communicate your results
    • Understand your impact and potential savings
        • Free webinar on FMI website
        • Created “by industry for industry”
        • Guidelines, checklists on how to talk to suppliers and source greener products
  • What is Green Sourcing?
    • Products we sell – farm to fork to disposal
    • Equipment/supplies for operations
    • Materials/energy to create our buildings
    • Contractors we use for services
  • FMI Sustainable Sourcing Guide - Tools General Questions for Starting the Conversation with Suppliers
  • FMI Sustainable Sourcing Guide - Tools Category Specific Questions Questions about Sustainability Issues
  • SUSTAINABILITY: Business practices and strategies that promote the long-term well being of the environment, society and the bottom-line. FMI’s Sustainability Task Force
  • They say “sustainability is difficult” because it IS….
    • A fundamental change in mindset and culture.
    • Unique to every company, no one-sized-fits-all approach.
    • Retailers are increasingly held responsible for products upstream and downstream
  • Land Mines to Watch Out For
    • Naysayer's
    • Get internal alignment & everyone singing from same book
    • Getting pigeonholed in philanthropy
    • This is not “feel good stuff” –
    • it’s triple bottom line
    • Being labeled a “green washer”
    • Walk the talk - get your house in order “inside” before you go “outside”
  • What Defines Success?
    • Senior management commitment
    • Engaged team and passionate leader
    • Dedicated resources, human and $$
    • Clear governance, glaos and strategy
    • Embedded throughout company
    • ROI – Meets triple bottom-line goals
    • Collaboration with stakeholders
  • Beyond the tidal wave……
    • Sustainability embedded in every decision
    • Full traceability in supply chain
    • Waste, recycling, EPR take center stage
    • Water and other “footprint” metrics
    • Radical collaboration becomes norm
    • Quality of life vs. Quantity of Things, or SMART consumption revolution
    Beyond the tidal wave……..
  • Guest Experts on Conference Call
    • Tom McIntyre, Albertsons
    • Katharine Maroney, Ecos US
    • Keely Wheaton, Target
    • Bill Sweet, Price Chopper
    • Laurie DeMerrit, The Hartman Group
  • WILLIAM R. SWEET Vice President Engineering & Construction Price Chopper Supermarkets
    • Over 128 Stores, three warehouses & Main Offices in Schenectady, NY
    • 25,000 Associates
    • Six Northeastern States
      • New York, Vermont, Connecticut,
      • Pennsylvania, New Hampshire, Massachusetts
    • Stores offer a variety of services including:
      • Pharmacies
      • Scratch bakeries with artisan breads
      • Custom-cut meat shops
      • Seafood departments with sushi
      • Full-service floral departments
      • Kosher sections
    Price Chopper
  •  
  •  
  • Group Dialogue
    • Biggest barriers to the food industry in understanding, buying in to, and implementing sustainability?
    • What are your key recommendations for getting started?
    • What do you think the most effective one or two ways a retailer could communicate the value of their sustainability activities to their consumers?
    • As you look through your "crystal ball" – how will companies and consumers be different in 5 or 10 years?
    • Questions?
    • Jeanne von Zastrow
    • Senior Director, Sustainability and Industry Relations
    • [email_address]
    • j
    Questions?..… Jeanne von Zastrow, [email_address] www.FMI.org/sustainability/