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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 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 Sustainability Is… • A change in mindset and the way you business and not just a new program or two • Very unique to every company and therefore, there is no one-sized-fitsall approach Why is Sustainability a Business Issue for Retailers? 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 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 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 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 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 Change in Mindset: Sustainability is More Complex Than Any Other Market Trend Past or Present • Impacts all aspects of business • Most effective strategies are those that deliver financial value for the company (not PR or philanthropic) • Involves Those in the Value Chain and Beyond: - Suppliers - Producers - Governments - NGOs - Consumers - Shareholders - Employees - Other 29 A Sustainable Company… • Understands environmental and social issues as business issues • Develops business strategies around issues that generate shareholder and societal value • Continually engages with a broad network of external stakeholders within and beyond the value chain 30 Integrating Sustainability Will… • Help manage complexity from environmental and social issues now impacting the marketplace • Sharpen the “over the horizon radar” and open up “insights” into the evolution of the market place • Hedge against future risks by connecting to key stakeholders and trends in society 31 Potential Hurdles in Implementing Sustainability • Internal Alignment: Sustainability impacts all aspects of the company and must be seen as aligning with the culture and changing the way employees think There will be naysayers, it takes time to have this alignment • Not Just “Feel Good” Fluff: Sustainability tends to be relegated to the philanthropic department or for external affairs to handle but it is a business issue with real value at stake • Walk the Talk: A company that makes big promises with little delivery or one that brands itself “green” with little behind the curtain will get caught and labelled a “greenwasher.” 32 Framework for an Effective Sustainability Strategy 33 Detail on Framework 34 Your Sustainability Team • Identify one person to lead the effort who has experience in developing and implementing business strategy • Build a core-team representing areas of Operations, Sourcing, Management and Marketing/Consumer Affairs - should assist in development and implementation • Senior Management must provide support and be included in regular updates on progress 35 Where to Start: The FMI Sustainability Toolkit • A framework and guide to help you initiate and “operationalize” sustainability within your company at the strategic level • Practical tips, advice and strategies on approaching and implementing sustainability • Best practices, learnings and other examples of companies in the food retail value chain that are working on sustainability 36 FMI’S Sustainability Task Force Mission: To develop the tools and resources needed by the industry to help move sustainability initiatives forward 37 “It is not the strongest species that survive, nor the most intelligent, but the ones who are most responsive to change.” -Charles Darwin- 38 FMI recognizes the commitment and support of our sponsoring companies in the development of the soon to be released FMI Sustainability Starter Kit (release January 2008) We are grateful for their help in making this important resource available to help you move forward quickly with your company sustainability programs: 39 ADDITIONAL SLIDES ON ENVIRONMENTAL ISSUES 40 Science Rationale Living Beyond the Earth’s Capacity Global Population Increasing Exponentially 41 Science Rationale Living Beyond the Earth’s Capacity Where Will We Get Our Fish in the Future? UN Millennium Assessment 42 Living Beyond the Earth’s Capacity Increase in Portion of Land Cultivated Continues More land was converted to cropland in the 30 years after 1950 than in the 150 years between 1700 and 1850 Cultivated Systems in 2000 cover 25% of Earth’s terrestrial surface UN Millennium Assessment 43 [...]... progress 35 Where to Start: The FMI Sustainability Toolkit • A framework and guide to help you initiate and “operationalize” sustainability within your company at the strategic level • Practical tips, advice and strategies on approaching and implementing sustainability • Best practices, learnings and other examples of companies in the food retail value chain that are working on sustainability 36 ... price while being environmentally and socially responsible.) • Voluntary Actions Becoming New Standard • Sustainable Supply Chain Offerings • Shareholders/Investors Using Sustainability in Ratings and Analyses 25 The Opportunities Growth Opportunities • Grow Market Share • Build Customer Loyalty • Differentiation and Branding • Improve Employee Morale and Loyalty • Increase Efficiency/Productivity Reduce... world are implementing sustainable practices throughout their supply chains resulting in major positive impacts on the bottom line, and impacts on the price and availability of environmentally and socially preferable goods and services • Catch of the Day for Tomorrow: A small retail chain responded to consumer requests for more choice in sustainable seafood They adopted Fishwise, a sustainable seafood... education and marketing program Results were increased customer loyalty, sales and profits and have transitioned their product offering to almost completely sustainable seafood 27 How to Initiate a Sustainability Strategy in Your Company 28 Change in Mindset: Sustainability is More Complex Than Any Other Market Trend Past or Present • Impacts all aspects of business • Most effective strategies are those that... stakeholders and trends in society 31 Potential Hurdles in Implementing Sustainability • Internal Alignment: Sustainability impacts all aspects of the company and must be seen as aligning with the culture and changing the way employees think There will be naysayers, it takes time to have this alignment • Not Just “Feel Good” Fluff: Sustainability tends to be relegated to the philanthropic department or... food retail sector….the biggest consumer trend of them all” Lucy Neville-Rolfe, Tesco 11 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,... NGOs - Consumers - Shareholders - Employees - Other 29 A Sustainable Company… • Understands environmental and social issues as business issues • Develops business strategies around issues that generate shareholder and societal value • Continually engages with a broad network of external stakeholders within and beyond the value chain 30 Integrating Sustainability Will… • Help manage complexity from environmental... 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 24 The Changed Operating Environment • Higher Consumer Expectations (want performance and price while being environmentally and socially responsible.) • Voluntary Actions Becoming New Standard • Sustainable... big promises with little delivery or one that brands itself “green” with little behind the curtain will get caught and labelled a “greenwasher.” 32 Framework for an Effective Sustainability Strategy 33 Detail on Framework 34 Your Sustainability Team • Identify one person to lead the effort who has experience in developing and implementing business strategy • Build a core-team representing areas of Operations,... 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 12 Why is Sustainability an Issue for Business? 13 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 ...The Sustainability Opportunity Purpose of Presentation: Provide senior executives with background and business case for initiating sustainability strategies Outline: • Why is sustainability... Actions Becoming New Standard • Sustainable Supply Chain Offerings • Shareholders/Investors Using Sustainability in Ratings and Analyses 25 The Opportunities Growth Opportunities • Grow Market Share... About Sustainability? Shareholders/Investors • In 1990, there were investment indexes based on sustainability in North America, Europe and Australia In 2007, there are 21 including the Dow Jones Sustainability