Introduction
Through January and February 2020, the IPLC team in nine European countries completed a detailed review of the sustainability strategies of all the key grocery retailers. We were able to compare and contrast the activities of over 60 retailers, looking at what commitments they were making in PR and online and comparing that to what was actually happening at a corporate, in-store and product level. Before covid-19, the sustainability agenda was the top issue for most industry players. Sustainability and the related dynamics in food waste, health, veganism and plant-based foods were dominating the conversation
UN SDGs
In concluding the report we found that most retailers had created very robust strategies dealing with issues across the seventeen UN SDGs (sustainable development goals). For example, Tesco state:
“Tesco contributes in different ways and to different degrees to all the SDGs. In line with UN Global Compact guidance, we have identified which goals are particularly relevant to us: where expectations, risks and opportunities for Tesco are greatest, and where we can make the most significant contribution.”
And this is a reasonably consistent approach for most forward thinking retailers. They look at the SDGs, they ask themselves “Where can we make the most difference?” and then they build their plans accordingly. In practice, this means that most retailers have a sustainability strategy that deals with the following areas:
1. Improving Health & nutrition
- Reduction of food additives
- Reducing pesticides
2. Sourcing sustainably
- Buying Locally
- Promoting sustainable agriculture
- Improved animal welfare
- Sustainable fishing and aquaculture
- Sustainable commodities (palm oil, cocoa, tea, coffee, soy)
- Hazardous chemical reduction
3. Forest Protection
- Sustainable paper pulp
- Brazilian rainforest protection
4. Reducing food waste
- At consumer level
- In retail stores
- In production and supply chains
5. Reducing Carbon Footprint
- Using green energy
- Reduced carbon emissions
6. Sustainable food packaging
- Reduce, re-use, recycle
- Renewable sources
- Plastic shopping bags initiatives
7. Ethical Trading
- Ensuring human rights and working conditions
- Supporting fairtrade
- Benefiting communities in the supply countries
- Benefiting communities in the retailer countries
8. Diversity & Inclusion
This is a robust and ambitious framework for all retailers to follow but our research did point out two risk areas:
- Firstly, since most retailers have given themselves measurable targets, we can expect them to hold themselves to account. In addition, since food retail has become quite globalised we can see that international retailers are taking the opportunity to develop central strategies, then harmonise these across the countries they are active in. However, this puts local retailers at a disadvantage since they do not have the powerhouse of international head office thought leadership. And they don’t have any concerns about how their brand is viewed internationally.
- Secondly, our research found that retailers had made the best progress on issues where there was a carrot or stick. A combination of commercial and regulatory imperatives have created significant action in some areas. Grocery retailers operate in a highly competitive environment with thin profit margins so they have been particularly energetic about sustainability initiatives that reduce the waste of materials, resources or energy since these savings go straight to the bottom line of their P&L. We questioned whether some retailers would focus on headline sustainability initiatives that would maximise PR or commercial benefits? What about the initiatives that need to be done because it’s the right thing to do?
The Covid-19 Lens
As this article is published (01/06/20), there have now been almost 6.3 million recorded cases of covid-19, with almost 375,000 deaths globally. Consumers have been dealing with fear of infection, fear for vulnerable loved ones, lockdowns impacting their mental health, working from home, schooling from home. For many, dealing with sudden unemployment, there is a grim economic outlook putting severe question marks over their financial health. And, as yet, there is no vaccine to protect against second or third waves. We have been totally occupied by covid-19, so has the sustainability agenda gone away?
Covid-19: distraction or inspiration?
There is a growing sense that the covid-19 outbreak has been a shocking but relatively brief distraction from the bigger issue that is the climate crisis. For sure, in developed countries, we mobilised a wartime spirit of collective action against the virus. We have rightly honoured our heroes in the health services and food supply chain, and our efforts have apparently worked. We have successfully ‘flattened the curve’, but there is a much greater wave coming in the climate crisis.
Is the difference in approach due to the immediacy of the threat, and therefore the ease of mobilising around the fear? If we plot a graph on two axis, the x-axis being the immediacy of the threat, the y-axis being the real impact of the threat then this becomes more clear.
My own research of over 600 Irish shoppers has found that for nearly 20%, sustainability was never really high on the agenda. For 36%, they reckon that sustainability will become even more important in a post-covid 19 world. But concerningly, for 46% of shoppers sustainability was on the agenda previously, but they are now focused on the more immediate challenges of the coronavirus and the associated fallout. Only 11% were optimistic for the country’s economic outlook. So here lies the crucial issue. If we’re facing into a potentially deep and lengthy recession, then how can we keep momentum on addressing the climate crisis and sustainability issues? How do we harness the momentum that the lockdown has gifted us cleaner air, bluer skies, less pollution and a more thoughtful human race? Will retailers put their major efforts into being recession-ready at the expense of the sustainability agenda? Or can they do both?
At IPLC, we think that there are four opportunity areas.
1. Packaging:
Our research showed that 46% of shoppers were now wary of buying unpackaged foods such as loose fruit & veg, in-store bakery etc. So, for the immediate future at least, covid-19 will end any hopes of transitioning to a society of bulk shoppers, using refillable containers to reduce single use plastics. If anything, shoppers will find reassurance that food is packed in plastic, in a central, controlled location since it reduces the opportunity for exposure to the virus. The challenge will be for retailers and manufacturers to maximise the drive toward more sustainable packaging focusing on reducing, recycling and sourcing from renewable materials. More packaging doesn’t need to be less sustainable.
2. Reducing Carbon Emissions:
Perhaps one approach is to look at the overall impact of the retail business. Perhaps there will be more single-use plastic, but this could be compensated by reducing the carbon footprint of food shopping. Think about the dramatically increased demand for grocery home deliveries. That supermarket delivery van will service 30 families on a 50km round trip, using a fraction of the diesel that the 30 families might have used on their collective trips. Retailers have an opportunity to keep polluting cars off the road by rapidly expanding their home delivery capacity, but only if consumers accept a reasonable lead-time so that vans can deliver with full capacity and maximum efficiency.
3. Reducing Food Waste:
Consumers are currently buying big trolleys with reduced frequency. Since they are at home, they are planning meals, buying just enough food, finding creative ways to use the leftovers. This is good for reducing food waste but the bigger issue now is down the supply chain. Since the effective closure of the ‘out of home’ sector, many food service suppliers are looking at stock inventories that could eventually become food waste. And further down the chain, will the market need all of the crops that will be harvested soon. If pubs remain closed, will we need all the barley that would have become beer? If restaurants remain closed or subdued will we need all the potatoes that would have become fries, or the tomatoes that would have found their way onto burgers or pizzas? There is a difficult rebalancing coming down the tracks, and big retailers in developed countries can take an active part in ensuring that food is not wasted when so many are going hungry.
4. Supply Chain Transparency
Many consumers don’t consciously think about where their food comes from or how it gets to their supermarket. Until recently they were largely unaware that huge amounts of harvested foods were dependent on the labour of migrant workers, both locally and in far flung corners of the global supply chain. The coronavirus has created huge turbulence in the movement of both people and food commodities. When there is turbulence, we see bottlenecks, reduced availability, price spikes, commercial pressures and corners being potentially cut. Whilst retailers can test for food quality, safety, integrity and adulteration, it is much harder to guarantee and demonstrate that humans were not exploited in a turbulent supply chain. As well as shortening their supply chains, retailers need to think of creative ways to demonstrate the integrity of their supply chains and the transparency of their purchasing processes. Covid-19 has created a sense of collective global wellbeing, that ‘we’re all in this together’ so consumers will not reward retailers that cannot demonstrate their care for the humans in the supply chain.
Final Thoughts
The covid-19 pandemic has demonstrated just how effectively a country and an industry can mobilise in the darkest hour. Next time you’re in a supermarket just count the sheer number of covid-related touchpoints: posters, floor graphics, shelf edge POS, announcements, customer flow directions, staff and customers wearing gloves and masks, alcohol hand gel, trolley sanitising, physical distancing in queues, controls on bulk buying, contactless payments etc etc. When the fear is immediate enough, our industry can get very creative about how to mobilise mass effort and make a real impact. Yet, when we surveyed stores in January and February on the sustainability agenda we found relatively little evidence of the retailers’ very robust and complex strategies. The primary communication was around price. The challenge will be to find the equivalent calls to action on the sustainability agenda. If covid-19 was all about washing your hands, staying at home and working together, then what is the rallying call on the climate crisis? And can retailers put the same effort into the climate battle as they have into the covid battle?