Going Green
In the spring of 1970, a few conservationists and local activists gathered in San Francisco for the first Earth Day celebration. Fast forward 27 years and an informal get-together has been replaced by an influential new brand of corporate environmentalism that is being embraced as one of the key issues in business today.
Most companies prefer the term ‘sustainability’ over ‘environmentalism’, the latter conjuring up images of protest rather than proactive planning. And, instead of taking to the streets, manufacturers and retailers are taking to the boardroom, putting together detailed long-range programmes for supply chain sustainability – best practices that touch on sources of supply, energy efficiency, transportation and packaging.
But this kind of global governance is not an easy task and the question is whether companies can make a long-term commitment to being green while maintaining the bottom line.
Talk is cheap
“We’ll have to see what happens. When you talk about sustainability you’re talking about limiting resources. You have to be prepared for the fact that things will cost more,” said Richard George, professor of food marketing at St. Joseph’s University in Philadelphia. “Talk is cheap and I don’t think sustainability is as big an issue in the US as source traceability.”
However, efforts in this area are not entirely altruistic. An estimated US$178 billion is held by mutual funds for investment in companies that meet social responsibility and sustainability issues, according to BusinessWeek magazine, and leading brokerage houses like Deutsche Bank Securities, Morgan Stanley and Goldman Sachs have entire teams of people analysing how companies are affected by things like climate change and energy efficiency.
Nonetheless, a raft of global players is walking the talk when it comes to sustainability. Wal-Mart’s campaign in the US and overseas markets has become a crusade with president and CEO Lee Scott leading the charge. Recently, BusinessWeek reported that Wal-Mart’s wide-ranging strategies were a matter of self-defence against an onslaught by environmental groups and anti Wal-Mart rhetoric.
However, development of corporate policies and selling environmentally-friendly products quickly became seen as cost effective, it was noted. For example, switching stores to more efficient bulbs and adding skylights has cut 17 per cent off the chain’s electricity bill since 2002 and less packaging on private label toys, alone, is expected to save US$2.4 million annually in shipping costs.
Supply chain sustainability
Scott’s fervour came to a head in early February in London when he addressed the Prince of Wales’ Business and the Environment programme, unveiling ‘sustainability 360’, a company-wide initiative to reduce the chain’s impact on the environment and promote sustainable practices by suppliers, employees, customers and the communities in which it operates. “We believe every business can look at sustainability in this way. In fact, in light of current environmental trends, we believe they will – and soon.”
“We all have an opportunity to be more sustainable. But even more, we have a responsibility,” said Scott. We need to be sustainable companies and countries made up of people who live sustainable lives,” he said, emphasising efforts to make environmentally friendly products more affordable and the company’s ability to “do well while doing good.”
Although detractors view Wal-Mart’s actions as public relations designed to draw attention from negative publicity surrounding labour and healthcare policies, the company and its subsidiaries have put serious plans into action.
At ASDA in the UK, a long time leader on sustainability issues, the chain plans to reduce packaging on food products by 25 per cent, while Wal-Mart corporate is working with suppliers to reduce packaging by five per cent by 2013. Meanwhile, ASDA has begun an experiment at two stores in Northwest England, which involves removing packaging from most fresh produce – a significant shift considering 60 per cent of all its produce is now prepacked. Additionally, ASDA is planning to replace environmentally harmful plastic meal trays with biodegradable materials made primarily from starch.
ASDA has also taken the lead on sustainable resources, having been officially certified in the UK under the Marine Stewardship Council’s traceability programme. It now only sells products from sustainable or well-managed fisheries. “Customers tell us they want to buy fish with a clear conscience,” said the chain’s fish buyer Chris Bates. As such, the company has banned the sale of monkfish and has urged well-known chefs like Jamie Oliver to join the boycott.
Generating power
On the energy front, Sainsbury’s is building a new warehouse with state-of-the-art environmental features including, photovoltaic panels to generate electricity, solar walls to produce heat and an onsite power plant that reuses heat produced by air conditioning.
Tesco’s efforts to turn green, consists of a plan to spend nearly US$1 billion over the next five years to cut energy consumption. This includes cutting emissions from stores and distribution centres 50 per cent by 2020 and by running trucks on a biodiesel blend. This will have the same effect as removing 20,000 medium sized cars from the road, according to company officials.
Basically, the chain wants to become what it calls a “leader in helping to create a low-carbon economy.” Under this programme, Tesco plans to put labels on all its 70,000 products that will enable shoppers to compare carbon used to produce each one – much the same way they now compare prices or nutritional content of different products. “We are going to publish this carbon footprint on our tesco.com website, similar to what we do with price checker,” said chief executive Terry Leahy.
Meanwhile Marks & Spencer has pledged to become “carbon neutral” by not sending waste to landfills after 2012 and chief executive Stuart Rose has underscored the chain’s commitment by pledging to trade in his BMW for a hydrogen-fuelled car.
The question of whether these programmes were precipitated by government edict remains to be seen. Last year, David Miliband, environmental secretary of the UK, told the heads of the four largest supermarket chains to set targets and cut carbon emissions. However as Tesco’s Leahy noted: “Tesco has come to be portrayed as part of the problem. This could not be more wrong. When you want to reach and empower the many, Tesco is a big part of the solution.”
Cutting greenhouse gas
In the US, Wal-Mart is clearly trying to be part of the solution when it comes to cutting emissions. The company has begun working with vehicle suppliers to develop a more fuel-efficient truck. The goal is to increase efficiency of its 7,000 vehicle fleet 25 per cent by 2008 and then double it by 2015, the company said.
At Costco, a new solar power energy system at a warehouse in California is not only expected to cut electricity costs by some US$3.8 million, but also eliminate over one million pounds of carbon dioxide annually.
Meanwhile, Safeway has also taken the initiative on reducing greenhouse gases by becoming the first supermarket chain to join the California Climate Action Registry, which helps companies track, reduce and reduce greenhouse gas emissions.
“Joining the California Climate Action Registry was the next logical step in demonstrating Safeway's continued leadership in protecting the environment," said chairman and chief executive officer Steve Burd. "We have committed ourselves to a company-wide clean energy initiative that is already having a positive impact on our business and the communities in which we operate.”
The same sentiments were echoed recently by Patrick Cescau, chief executive of Unilever, one of the world’s leading food producers, whose company has spearheaded numerous sustainability initiatives. “You can’t ignore the impact your company has on the community and the environment,” he said in a recent interview. “But it’s also about growth and innovation. In the future, it will be the only way to do business,” he said.
.jpg)
