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The Sustainability Opportunity
Purpose of Presentation: Provide senior
executives with background and business
case for initiating sustainability strategies.
Outline:
• Why is sustainability a business issue
for retailers?
• What is sustainability?
• How to initiate a sustainability strategy
in your company.

2


Defining sustainability:
Business strategies and practices
that promote the long-term well
being of the environment, society
and the bottom line
FMI Sustainability Task Force

3


Sustainability Is…..
• A change in mindset and the way you
do business and not just a new
program or two.
• Very unique to every company and
therefore, there is no one-sized-fitsall approach.

4


Why is Sustainability a
Business Issue for
Retailers?

5


Who Cares About Sustainability?
Our Customers
• 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.
•

FMI-Harris Poll 2007

• 89% of consumers are interested in “eco-friendly” products and
30% actively look for them. Information Resources, Inc. 2007
• 43% of Americans think that they will be extremely
green in the
next five years while only 11% classify themselves as extremely
green now. Wal-Mart Live Better Index 2007
• Sales of “green” cleaning products increased 52% in 2006.
•

Information Resources, Inc.

• Organic food sales were up 109% between 2001 to 2005 and up
22% in 2006. Mintel Research/Organic Trade Association

6


Who Cares About Sustainability?
The Public
• Americans consider a company’s commitment to social issues when
deciding the following:
• Which companies they want to see doing business in their
communities, 86% (vs. 58% in 2001)
• Where to work, 77% (vs. 48% in 2001)
• Which stocks or mutual funds to invest in, 66%
(vs. 40% in 2001)
•

87% say they want a company to support issues based on where its
business can have the most social and/or environmental impacts.

•

80% of respondents listed health as the leading issue for companies to
address.
2007 Cone Cause Evolution Survey

7

Who Cares About Sustainability?
Our Future Employees
A survey of 1,800 Gen Y-ers (people between the
ages of 13 and 25) in 2006 found that:


61% agreed they are personally responsible for making a
difference in the world;



78% think companies have the same responsibility;



75% are more likely to pay attention to a company's messages if it
has a deep commitment to a cause; and,



Nearly 90% stated they are "likely" or "very likely" to switch from
one brand to another based on a strong association with a good
cause. Cone and AMP Insights

8


Who Cares About Sustainability?
Our Future Employees (2)
From a survey in October 2007 by MonsterTRAK

(division of Monster Worldwide geared towards entrylevel positions) of college graduates found:


College graduates are looking for more than just a
first job or an internship. They are looking to work
for businesses that help the environment.



80% of those surveyed said they are interested in a
job that has a positive impact on the environment



92% would chose working for an environmentally
friendly company.

9


Who Cares About Sustainability?
Supermarkets! Green is Green…..
 The average basket size is three times larger when Eco-Friendly or
Green products are in the basket, and the more items purchased,
the higher the average basket size.
 Potential Green buyers are current Organic food buyers;
recognizing that only 10% of Organic buyers are currently
purchasing Green products.
 Green and Organic shoppers are 59% loyal (share of grocery
wallet) to their chain and more than two times loyal than the

average consumer.
Catalina Marketing September, 2007

10


Who Cares About Sustainability?
Other Companies
• Of the top 100 largest retailers, 83% are involved in green
practices and 62 of those have increased their green
investments during the past two years.
BDO Siedman Retail Compass Survey, October 2007

• 79% of S & P 100 companies have special sections on their
website dedicated to social and environmental policies and
performance, up from 59% in 2005.
Social Investment Research Analysis Network

• Green consumerism will be a huge driver of innovation and
product change in the food retail sector….the biggest
consumer trend of them all”.
Lucy Neville-Rolfe, Tesco

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Who Cares About Sustainability?
Shareholders/Investors
• In 1990, there were 5 investment indexes based on sustainability in
North America, Europe and Australia. In 2007, there are 21 including

the Dow Jones Sustainability Index.
• Most of the leading brokerages (Goldman Sachs, Citigroup,
JPMorgan, Merrill Lynch, and Morgan Stanley) have published
investment research on the impact of social and environmental
trends on the performance of companies in key industries; and,
• 51 banks from 17 countries representing an overwhelming portion of
the project finance market (including Bank of America, Citigroup,
JPMorgan Chase, Wachovia and Wells Fargo) have adopted the
“Equator Principles” as a means of standardizing the review of social
and environmental factors in lending.

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Why is Sustainability
an Issue for Business?

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Why is Sustainability
a Business Issue?
•

The world population is growing at unprecedented
rates and putting greater pressure on already
overstressed natural resources;

•

There are growing expectations on business to help
solve environmental and social issues from
government, employees, customers and the public
broadly; and

•

How individual companies respond to these trends
will influence their profitability and longevity.

14


Sustainability in the Marketplace:
The New Equation
Social & Environmental
Issues as Market Forces

+

Global Trends Magnify
Market Forces

• Global Population Explosion

• Growth/Impact of Civil Society

• Wealthy Nation Consumption
Patterns

• Globalization

• Declining Availability of
Natural Resources

=

Changed Operating
Conditions for Retailers

• Role of Government
• Connectedness

Business Value
at Stake

Business Response:
Seek Out Opportunities from Social and Environmental Trends
Integrate Social and Environmental Trends into Business Strategy
& Other Decisions
Copyright Ecos Corporation 2006

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Environmental & Social Issues:
Business Perspectives
Old School: cost to be lived with
and minimized
New School: can add shareholder value

Next School: central to brand value
Which is your school…today and in
the future?

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Living Beyond Earth’s Capacity
•

Where Are The Fish?
About half of all monitored [global fish] stocks are now fully
exploited and another quarter are overexploited, depleted,
or slowly recovering. 2004 Food & Agriculture Organization

•

Better Food Uses More Water
70% of world freshwater use is for agriculture. Growing
global populations coupled with the shifting trend in the diet
to more water-intensive food such as meat and fruits will
further exacerbate already stressed regional water
supplies. United Nations Environment Programme

•

Climate: The Food Chain’s Weakest Link
The impact of climate change coupled with the efforts to
mitigate climate change will have a variety of impacts on
availability and price of many agricultural products,

especially corn. Wall Street Journal Market Watch May 2007

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Climate Change
•

A group of 284 institutional investors with assets of $41 trillion under
management have requested and received detailed information from
approximately 1000 companies about their greenhouse gas emissions
and plans for managing those emissions.

•

In a 2007 survey of consumers in the US and the UK, 60% of respondents
said that they want companies to provide more product-based information
at the point of sale and half would rather do business with companies that
are working to reduce their contribution to global warming .
AccountAbility

•

In response to shareholder request, The Home Depot, Lowe’s and Simon
Property Group (largest shopping mall company in US) have agreed to
significantly expand reporting and disclosure on energy-efficiency
performance, with the two big-box retailers also agreeing to discuss
greenhouse gas emissions.
GreenBiz.Com

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Living Beyond
Earth’s Capacity
Humans are drawing on capital
rather than interest, and once that is
exhausted, they will find Mother
Nature reluctant to make a loan.
February 13, 2007 The Columbus Dispatch

19


Global Becoming Local:
Trends in the Marketplace
•

The public believes retailers are responsible for the
environmental and social issues associated with their
supply chain (Think Home Depot)

•

Increasing globalization continues to cloud the
source of raw materials and government food
inspectors are stretched too thin (Think China)

•

Compliance with environmental, health and safety
regulations are no longer the ceiling for the public’s
expectations but the floor (Think Teflon)

20


Activists are Becoming
Increasingly Credible
Who the Public Believes to Act in the Best
Interest of Society
30
20
% of
“yes”
minus %
of “no”

10
0
-10
-20

NGOs

Unite d
Na tions

La rge Loca l
Com pa nie s

Na tiona l
Gove rnm e nts

Globa l
Com pa nie s

World Economic Forum 2005

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Activists are Having an Impact

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Companies Working with Environmental
Groups for Sustainable Results
•

World Wildlife Fund and Coca-Cola have created a partnership to
conserve and enhance fresh water resources around the world.

•

Unilever partnered with Greenpeace to develop HFC-Free Freezers
and market them to specific customers.

•

FedEx Express and Environmental Defense worked together to
develop new generation of pickup and delivery trucks that decrease
particulate emissions by 96 percent and travel 57 percent farther on
a gallon of fuel, reducing fuel costs by over a third.

•

GreenBlue Institute created the Sustainable Packaging Coalition
that brings together a range of stakeholders to create a more robust
environmental vision for packaging.

23


Globalization & Safety of
U.S. Food Supply Chain

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The Changed
Operating Environment
• Higher Consumer Expectations
(want performance and price while being
environmentally and socially responsible.)
• Voluntary Actions Becoming New Standard
• Sustainable Supply Chain Offerings
• Shareholders/Investors Using Sustainability
in Ratings and Analyses

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