Sustainable futures for African retailers

Businesses, food retailers in particular, often struggle to implement sustainability measures; this is often thought of as taking money from shareholders. However, as more pressure builds from the public, they are forced to look at combining sustainability and good business practices. In Africa it is particularly difficult as there are development and infrastructure challenges. An in-depth look at prominent retailers across the continent gives an indication on how far the continent is on this development.
South Africa’s largest retailer, The Shoprite Group, has an increasing footprint in Africa which includes Shoprite, Checkers, OK stores, House & Home, Megasave Wholesalers, Hungry Lion, and TransPharm. According to the group, it does not have a designated sustainability officer, instead sustainability is viewed as a shared responsibility by a number of divisional managers and heads of department.
In their 2014 non-financial report the group indicated that it is focusing on the environmental impact of its value chain. The environmental impact of their activities has a direct impact on the current and future price of the products.
“Our response to climate change forms part of our overall business strategy and is aligned with investor requirements, regulatory changes and operational impacts. We have completed four reports to the Carbon disclosure project with extensive reports on our approach to climate change, our perceived risks and opportunities,current initiatives and targets to drive future projects. We recognise the potential impacts of climate change on our business and are committed to managing these in a sustainable manner. The biggest direct impact of climate change on our business will be increased costs due to the impact of the planned South African carbon tax, operational costs due to potential requirements for mandatory emissions reporting, costs associated with fuel and energy taxes and regulations, increases in capital expenditure due to green building requirements and other general environmental regulations,” said Whitey Basson, Group CEO. Furthermore the group is implementing emission reduction projects as well as assisting their wider value chain by replacing light fittings with more energy efficient alternatives; optimising supply chain activities both with trading partners and within the Shoprite distribution network, at all-time optimising travel distances; fuel efficient driving practices, reduced kilometres travelled and fugitive emission reductions; and utilising environmentally friendly fuels for refrigeration in trucks, to reduce carbon emissions. The group says that it supports the National
Environmental Waste Act of 2008 principle of waste avoidance first, followed by reduction, re-use and recycling where possible, “Shoprite aims to reduce the use of one-way packaging by purchasing re-usable packaging equipment.
Ways to recycle materials and reduce landfill contribution are constantly being assessed, and the group collaborates with suppliers on new packaging initiatives.
A reclamation centre in Centurion centre remains the testing ground for all store returns including the return of damaged product – further reducing the mileage, fuel and carbon emissions of our trading partners. The Group introduced reusable equipment for moving products,including plastic totes, crates and rolltainers.This change resulted in a large reduction in wooden pallets. Also, an added benefit of this equipment is the reduced physical involvement of effort required from staff, thereby increasing efficiency. Their present implementing procedures for the collection of recyclable waste with a view to bale and sell it centrally.
For their first year, they baled and sold more than 100 tons of cardboard and 30 tons of plastic. The potential to increase this is promising and they have set significantly higher targets for the coming year.
Retailer Pick n Pay says sustainable development is one of its key business drivers. According to Marketing and Sustainability Director, Bronwen Rohland, “We do not do a thing in the business without knowing the impact. We want to be on the leading edge and set the tone for other retailers to follow. The approach is to ensure it becomes more resilient by embedding sustainable practices into core activities.” As a food retailer, food security is top priority for the group. This is supported by six pillars, or focus areas, which impact on PnP’s ability to do business and create value into the future. These focus areas are: enhancing governance and accountability; empowering staff; supporting communities (corporate social investment); providing safe food and expanding sustainable product lines; building a resilient supply base; and working for a clean and healthy environment. PnP is implementing new solutions through- out its business.
“There is a lot of theory out there from suppliers and it is important to be willing and able to test it in your own stores, and this helps to build the case for return on investment. It is often a leap of faith, but it must be worked back into the business case,” says Rohland. There are a number of ‘greener’ options available to consumers in PnP stores. Feedback through consumer focus groups has shown that PnP customers want to engage in more sustainable living, but want this to be easy. They want to be given a choice, and they want relevant information on products to be easily accessible.It has been important for PnP to be able to supply these products at a reasonable or comparable price to traditional products.
“PnP really aims for a pricing entry point that is not prohibitive. We don’t want it to be an elite offering. Yes, the more affluent customer can afford to pay a premium, but it should be accessible to all,” says Rohland. According to the retailers, in 2012/2013 it was awarded numerous sustainability achievements in response to climate change when it was awarded the Climate Change Leadership Award for the retail sector. They were also the only retailer to be included in the top 10 companies on the 2012 Carbon Disclosure Leadership Index. Furthermore an announcement by the retailer to sell only Marine Stewardship Council (MSC) certified seafood sustainable products across their entire fresh, frozen and canned seafood range, by the end of 2015.
Pick n Pay becomes the first African retailer to follow the growing international trend by making a formal commitment to source only from sustainable fisheries, thereby transforming their seafood operations.
South Africa’s second largest retailer already currently stocks a variety of frozen South African hake products bearing the globally recognised MSC eco-label and through this initiative the number and range of certified products is likely toexpand further. Rohland says: “As one of the country’s largest retailers, we cannot ignore the fact that seafood is inextricably linked to food security and that it provides the primary source of food or income for 2.6-billion people globally. As a retailer and significant role player in the seafood industry, we will help to drive positive change in fisheries by supporting and promoting sustainable seafood choices from legal and responsibly managed sources.”
According to Justin Smith, Woolworths Head of Sustainability, “sustainability within the business is somewhat a moving target and is a constant learning process, and for that reason, that is why they refer to their process as a Good Business Journey Plan, “Four years into the programme we revised our targets and priority areas as much had changed and some of the assumptions we made did not apply any longer. We realised, for instance, that energy savings should be given greater priority. We also assumed that reducing packing was the trick to managing waste and reducing landfill sites. We soon learned that reducing packing often results in food waste and that using recycled material in packing and making the packaging itself recyclable was a better option most of the time. We had committed to only selling free range eggs and later, using only free range eggs in prepared means. We set ourselves challenging targets which we sometimes couldn’t meet as customers and suppliers could not afford the additional costs of the initial phase of developing a free range industry. We persevered; the costs are now affordable for customers and currently about 90% of our prepared food is made with free range eggs.”
He added, “We’re also committed to selling only sow friendly pork. We’ve met our own deadline to sell sow friendly fresh pork by December 2014 ahead of the industry target of 2020. But our plan to roll out sow friendly pork to prepared meals is proving more challenging than initially thought due to the costs and time required for farms to change infrastructure. What you have to do is keep the commitment and try and find a different way to get there. We were committed to free range eggs and we got there. We’re committed to sow friendly pork meals, and we’ll get there.”
Furthermore Smith highlighted that Woolworths realised quite early that being a successful business also depends on protecting the environment and supporting the people impacted by the business, “When it comes to driving sustainability in the business, a few critical issues work in our favour. We have support for our programme at Board and executive level which means there is a serious and consistent commitment to doing business more sustainably.
Secondly, we have targets that we measure regularly and incorporate in our company balanced scorecard. Thirdly, we have focused on sustainability issues that are not only important for Woolworths and our suppliers, but for the entire country. These include, for instance, water, energy, transformation and social development. Finally, we could not have done this without the support of our customers.”
Smith says the retailer is also transferring their Good Business Journey plan to other countries where its interests lie, “We are in the process of extending our programme to 2020 at a Group level, making sure we do so in a way that drives consistency of approach, but allows for recognition and consideration of local issues and standards too. These are exciting opportunities as it means we can almost ‘export’ our sustainability capital to other territories in the southern hemisphere where we have an interest.”
The Shoprite Group tel: +27 (0) 21 9804000;
Pick n Pay Group tel: +27 (0) 21 658 1000;
Woolworths Group: tel: +27 (0) 21 407 7002;