usc presentation march 11 2011
DESCRIPTION
Presentation on food industry imperative and actions on sustainability to University of Southern California Food Industry Management MBA TeamTRANSCRIPT
1USC Food Industry ManagementMarch 11, 2011
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The Sustainability Tidal Wave Jeanne von Zastrow, Senior Director, Sustainability, FMI
Sustainability:
1. What’s the big deal?2. Food industry responses?3. What does success look like?4. Hurdles and opportunities5. Ideas for you/your company6. What’s coming next? How to prepare.
About the Food Marketing Institute
• Feeding Families and Improving Lives• 1,500 supermarket/wholesale members worldwide• Government, food safety, education, media and consumers• Chartered member sustainability initiative in 2006
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What is Sustainability?
Actions, lifestyles and products that meet current needs without sacrificing the ability of future generations to
meet theirs.
Business strategies and practices that promote the long-term well being of the
environment, society and the bottom-lineFMI Sustainability Task Force Definition
A HEALTHY balance = People, Planet and Profits
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What’s the big deal?
• Fragile Planet • Developing World• Globalization• Toxins• Changes in Climate • Social Upheaval
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Living beyond earth’s capacity is not sustainable…
• l/3 of world ecosystems = significant decline• l/3 of forests = disappeared in last 50 years• Fisheries in collapse = severe crisis by 2048• Water Wars - 80% world fresh water = agricultural use
and 50% rivers heavily polluted and/or drying up• Energy resources - shortages, food to energy • Climate change - extreme unpredictable weather playing
havoc on prices and supplies
Global Population Increases …6.3 Million Monthly
Los Angeles Chicago
Source: U.S. Census Bureau
75.4 Million Annually
Population of Iran
Source: U.S. Census Bureau
And by mid-century,the world will be home to
3+ billion more people.
In 40 years, the world will need 100% more food than we produce today.
Source: Science Magazine, 2005
“By almost any measure, producing food has the largest impact of any human activity. Most estimates suggest that we will need to produce twice as many calories on the same amount of land we use today if we want to maintain biodiversity and ecosystem functions.”
- Jason Clay, World Wildlife Fund
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Society Worldwide Under Stress
• Inequity -The richest 200 people make more than world’s poorest 2.5 billion people
• 50% of world population live on under $2 day • Despair - 500 million live in squatter camps/ slums• Demand doubles by 2050 as developing countries move
from poverty to middle class• Conflict over freedom, lifestyle, food, water and energy
resources
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Source: NWS
We are in the eye of the hurricane…
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WHO is driving the issue and why?
• Media• Advocacy Groups• Customers and
Employees
• Government• Education• Business
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“Environmentalists” What a difference 30 years make!
THEN
• Hippies and Wackos• Communists• Tree Huggers• Granola Heads
NOW
• Sophisticated• Educated• Socially Conscious• Ethical• Eco Geeks, Eco Moms• Greeniacs, Freegans
Media – Are there ANY who have not devoted major stories to sustainability?
Recent Consumer Headlines
• Greenpeace: McDonald’s harming the Amazon • Tesco invests 500 M to create ‘green consumer
revolution’ • UN says eat less meat to curb global warming • Wal-Mart tells suppliers to ‘go green’• “Green Week” on national and local stations• Oprah and others urge consumers to go green,
buy local and recycle• Planet Green TV Channel
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• 3/3/11 WSJ article about Sustainable Seafood – kudos to Safeway partnership with Fishwise on seafood
• 12/27/10 SuperValu Announces Partnership with World Wildlife Fund
• 12/10 Unilever unveils major sustainability commitments
• 2/2/10 Tesco first” Zero Carbon Store”
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Food Industry Buzzzzz…
-20
-10
0
10
20
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NGOs UnitedNations
Large LocalCompanies
NationalGovernments
GlobalCompanies
Who the Public Believes to Act in the Best Interest of Society
World Economic Forum
% of “yes” minus % of “no”
Advocacy Groups Have Global Clout!
You don’t want activist groups as your enemies…
Successful NGO + Business Partnerships
• World Wildlife Fund and Coca-Cola conserve and enhance fresh water resources around the world
• Greenpeace and Target dialogue changed seafood policies
• Natural Resource Defense Council initiated the multi-stakeholder group developing Sustainability Index for Fresh Produce (growers, wholesalers, retailers, other environmental groups)
• The Conservation Alliance of 15 NGO’s in dialogue with FMI’s Sustainable Seafood Working Group – led to NGO Advisory Committee.
Engaging With StakeholdersPartnerships; sourcing and policy advice;
fishery improvement projects
Consumers - Global
• 3 Billion people, l/2 world population are under 25. The most environmentally/socially concerned consumer segment
• Internet and globalization allow the “haves” and “have not’s” to peer into each others worlds
• Greenest populations based on individual desire to purchase green products and to work for environmentally responsible organization
#1 China#2 Australia#3 Canada#4 Sweden#5 USA
» Tandberg.com report
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U.S. Consumer Trends
• Conspicuous consumption is alive and well • Americans produce 2 X daily waste of Europeans, 20 times typical person in developing world and estimated
at $2,000 per household• They want to change – not sure how • 89% interested in green products, 36% regularly buy them• Green shoppers twice as loyal to primary supermarket• Basket with one green product average ring = 60% higher• Sustainability, local sourcing = hottest 2010 menu trends • Cooking at home higher in 2009 than previous 25 years
From Personal to Planetary: 360o Revolution
Personal health and wellness is the gateway to Personal health and wellness is the gateway to environment sustainabilityenvironment sustainability
Consumers enter the “environmental sustainability” culture based on personal drivers – healthy food and exercise – evolve to include
growing concerns about the health and sustainability of the planet.
Consumer’s Spectrum of Engagement in Sustainability
MEWhat goes in and on… My Body
My Household
My Community
My Country
My World
© 2009, Natural Marketing InstituteSource: 2009 LOHAS Consumer Trends Database™
Consumers: ECO-Babble and Certified Confusion
Warning: This “green” label may cause the customer anxiety, blurred vision, severe headaches or dizziness, an exaggerated sense of well-being, yawning, irritability and/or a decreased desire to save the Earth.
The World of Eco-labeling… confusing, complicated and conflicting – over 90 in North America
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DRIVERS: Gen-Y Employees:Future Leaders are Increasingly Green
• 92% of graduating college seniors want to work for an environmentally responsible company.
• 40% of employees claim they would work for less pay and/or longer hours if working for socially responsible company
• 61% accept personal responsibility for making a difference in the world and 78% say companies have the same responsibility
A New Day Coming…..last week from from CNN
Three key categories for best jobs over the next 20 years
1. Medicine
2. Technology
3. The Environment – including sustainability
In our industry – explosion of “sustainability” and “corporate responsibility”
• FMI committee titles, from zero in 2006 to majority now
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Government is pushing:
If you don’t, we will!
• Climate change legislation going nowhere….so• EPA instructed by Supreme Court to issue new regulations• US federal departments must implement “Green Purchasing
Standards”, green buildings, green travel• FTC “Green Guides” – regulating advertising and green claims• White House Meeting on Sustainable Communities• Extended producer responsibility 2 states, 8 active, federal
movement – in Canada law costing Loblaw $30 M annually• Worldwide move toward mandatory environmental product
declarations in labeling requiring LCA’s
MANY Green Government & Business Partnerships i.e. Green Chill, Smart Way, Smart Waste and more through EPA)
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Drivers: Business
“The entire food industry shares a responsibility to develop environmentally and socially responsible practices, this is a major business imperative of our times, and one of FMI’s top ten priority issues.”
Leslie SarasinPresident and CEO of
FMI
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DRIVERS: BusinessMovers, shakers and pioneers:
If we aren’t at the table, we’re on the menu!
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Food Industry Responding……
• Everyone: has initiatives – energy, store design, sourcing – focus is within own four walls and bottom line, short term immediate
• Majority: just beginning to assign responsibility, develop team. identify strategy, tip toe beyond four walls
• Pioneers: strategy; leader, team job descriptions; goals and metrics; working with stakeholders, suppliers and government; and recognize strategic advantage for future.
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BUSINESS DRIVERS: Some examples…..
• 26 Retailers active on FMI’s Sustainability Leadership Committee and 22 on FMI’s Sustainable Seafood Committee
• Tesco and Unilever leading the industry joint efforts on Global Sustainable Packaging Standards
• Winn-Dixie has 60 people internally from many departments on their leading-edge “sustainability team”
• Wal-Mart initiated “sustainability index” in process, working to reduce packaging; helping employees develop personal sustainability plans
• Shaw’s, Publix, and others partner with EPA’s Green Business Programs – Green Chill, Smart Way
• Giant Eagle – LEED pioneer, had Carnegie Mellon students competed in reusable bag design contest
Sustainability ECO-AdvantagesGrowth
• Increase Market Share• Build Customer Loyalty• Differentiation and Branding• Improve Employee Morale and Loyalty• Increase Efficiency/Productivity
Reduce Risk• Secure the Supply Chain for Future• Avoid Negative Public Opinion• Prepare for/ Be Ahead of New Regulations
What Are Steps for Success?
1. Gather information2. Assemble resources3. Develop plan 4. Internal team and training5. Create strategic partnerships6. Implement7. Tell the Story
What Are Retailers Focused On?Getting own “house in order first, then into the supply chain
• Internal education and “buy in”
• Energy, building, operations
• Sourcing of all products
• Packaging
• Waste and Disposal
• Educating consumers
• 13 Value Teams – stakeholder meetings to set goals• Electronics scorecard to rank suppliers energy efficiency,
durability and end of life disposal • SEEP program to help suppliers become more sustainable
http://walmartstores.com/Video/?id=1233
• Created sustainable packaging scorecard to reduce amount of packaging in supply chain by 5% by 2013
• Goals– Be supplied by 100% renewable energy – Eliminate all landfill waste from US stores by 2025 as compared to the
2008 baseline– To sell products that sustain people and the environment
• 18 solar projects that combined eliminate 9.5 million lbs of CO2 annually
• On average, California stores divert 85% of materials from landfill disposal
• First grocery member of the Sustainability Consortium
• Strong internal team developing on sustainability
• “Get into a Green Routine” Program • Recycling programs
http://sustainability.publix.com/what_we_are_doing/recycling.recycling_efforts.php
• Buy local initiative • All packaging must be recycled or recyclable unless
there is a food safety issue that prevents it • Do not use seafood labeling systems because they
don’t want to confuse people
• Second on Greenpeace’s list for most sustainable seafood retailers – Only work with suppliers of wild caught seafood that
conforms to all local requirements and is recorded accordingly
– Work with suppliers certified by third parties, like Marine Stewardship council
• Pallet trucks powered by fuel cells in distribution centers
• “Little Steps, Big Difference” program to teach customers small things they can do to start becoming more sustainable
• http://videos.wegmans.com/?assetId=297
Getting Upper Management on Board
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Source: GfK Roper Public Affairs & Media, December 2007
Getting Employees on Board
• Weave into associate training and development– Energy stewardship,
like shutting of lights, keep refrigerators shut
– 30-60-90 day training check ins for new employees
• Integrate into Leadership development program for management potential employees– Make cross functional by
taking employee out of their normal department to learn under a mentor in a completely different department
Create sustainable employee culture
• Incentivize creating healthy habits– employees are rewarded for losing weight, quitting
smoking, etc– Support groups to teach employees about
alternative medicine• Encourage group fitness
– Company running clubs and weight lifting groups• Employees are happier and more satisfied with
their work and company saves on health care coverage costs
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Getting Employees on Board
• Personal Sustainability Projects– http://walmartstores.com/Video/?id=1223– Inspire small changes that add up – Foster the culture from within
“We’re going to succeed because it is coming from us—your associates—not from corporate.” – Monika, a Wal-Mart associate who quit smoking as part of her PSP
Packaging
• Less is more• Moving away from PVC• Leadership on global
packaging project • Created Sustainable Products
Guide to educate product designers and merchants about packaging implications and alternatives
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Packaging
One Example: Quilt Packaging Before: • Large corrugated and plastic
insert cards After: • Smaller corrugated insert cards,
no plastic Savings: • 30,000 lbs of plastic and 32,000
lbs of paperboard annually• $150,000 annually in material
costs
Target 2009 CRS Report
Packaging
• Water bottles made from recycled PET
• Removed wax from frozen product cartons so they can be recycled
Find what works for you
• Piloting four different types of solar panel systems on different size stores
• Most efficient systems depending on stores size will be rolled out across more locations
• As a result of a wind program, the Porter’s Lake location now has Windmill that supplies 25% of store’s energy needs
Biogas Initiative
• Partnerships with StormFisher and Organic Resources Management
• Organic matter leftover from stores is added to manuer and fed into anaerobic digestors
• The result is biogas that is then used to create electricity
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Example of Companies Working Together on Sustainable Seafood
Hurdles and Opportunities
Hurdles:• Many passionate stakeholders• A globally hunted resource• Conflicting information• Media & marketplace confusion• Complexity – we are not scientists
Opportunities• Strategic advantage for leaders• Buying power changes markets• Harness the power of consumers
Sustainable Seafood - Retailer Research
• 90% either working on or have policy/mission/guidelines• 60% engaged with environmental organizations• 70% engaged on sustainability with their suppliers• Traceability is one of highest priorities, rates 4.1 (on 1-5) • Complexity and inconsistency are two most significant
challenges• This issue is NOT being driven by consumers NOW, but by
multiple stakeholders including industry, government and NGO’s.
Sustainable Seafood – Walmart Website Policy:• In the United States, we will require all fresh and frozen, farmed and wild seafood
products sold at Walmart and Sam’s Club to become certified as sustainable by a third party using Marine Stewardship Council (MSC), Best Aquaculture Practices (BAP) or equivalent standards.
Safeway and FishWisePartnership; trainings; product signage
• More than 1,500 stores• Goal: All products are
sustainable and traceable• Product and supplier
assessments• Improvement plans and
alternative sources• Staff training• Consumer education• Policy engagement
Lunds & Byerly’s in Minneapolis – 21 stores Sustainably Sourced Seafood Launch
•NGO Partners•Site Visits•Policy and Goals – 75% by 2013, 100% by 2015•Employee Education – all day off site with partners•Roll Out to Consumers March 10
Best Practices from outside grocery
• Timberland Nutritional Label– Shows
customer exactly what went into making their shoes
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Best Practices from outside grocery• Aveda• Green-e
– Offset 100% of the electricity used at headquarters with renewable
• Cradle to Cradle – Environmentally intelligent
design with a movement towards zero waste, 7 gold certified products
Best Practices from outside grocery• Patagonia
– Footprint chronicles allow customer to track the life of their new products
– 1% of sales are donated to preservation and restoration
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What the future could bring…• Labels that show every element of
a product’s environmental impact• Retailers influencing people to
shop less and for only what they need
• Reusable/refillable containers eliminate packaging
• Retailers new business opportunities with waste
Some Multi-Stakeholder Efforts
• The Sustainability Consortium
• The Innovation Center for Dairy Industry
• The Stewardship Index for Specialty Crops
• The Keystone Field to Market Initiative
• The Global Packaging Project
• FMI’s Sustainable Seafood Initiative
• The Sustainable Food Lab
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Global Packaging Project
• Goal is to develop an industry wide language for packaging and sustainability
• Common metrics to measure sustainability within packaging
• Guidelines as a tool for industry to reduce duplication, improve supply communication, streamline
• Multi stakeholder effort, in final stages of completion
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How FMI’s Members Develop A Sustainability Strategy
The FMI Sustainability Starter KitThe “How”
• A guide to develop strategy
• Practical tips and advice
• Best practices and examples
• Tested with 5 retailers
• Available in PDF with live links
Sponsoring companies of the FMI Sustainability Starter Kit
FMI’s Carbon Calculator • A free tool to
calculate your carbon footprint
• Compare against your peers
• Communicate your results
• Understand your impact and potential savings
• Free webinar on FMI website• Created “by industry for industry”• Guidelines, checklists on how to talk
to suppliers and source greener products
What is Green Sourcing?
•Products we sell – farm to fork to disposal•Equipment/supplies for operations•Materials/energy to create our buildings•Contractors we use for services
FMI Sustainable Sourcing Guide - Tools
General Questions for Starting the Conversation with Suppliers
FMI Sustainable Sourcing Guide - ToolsCategory Specific Questions
Questions about Sustainability Issues
SUSTAINABILITY: Business practices and strategies that promote the long-term well being of the environment, society and the bottom-line.
FMI’s Sustainability Task Force
They say “sustainability is difficult”because it IS….
• A fundamental change in mindset and culture.
• Unique to every company, no one-sized-fits-all approach.
• Retailers are increasingly held responsible for products upstream and downstream
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Land Mines to Watch Out For
Naysayer'sGet internal alignment & everyone singing
from same book
Getting pigeonholed in philanthropyThis is not “feel good stuff” –
it’s triple bottom line
Being labeled a “green washer” Walk the talk - get your house in order
“inside” before you go “outside”
What Defines Success?
• Senior management commitment• Engaged team and passionate leader• Dedicated resources, human and $$• Clear governance, glaos and strategy• Embedded throughout company• ROI – Meets triple bottom-line goals• Collaboration with stakeholders
Beyond the tidal wave……
• Sustainability embedded in every decision• Full traceability in supply chain• Waste, recycling, EPR take center stage• Water and other “footprint” metrics• Radical collaboration becomes norm• Quality of life vs. Quantity of Things, or SMART consumption revolution
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Beyond the tidal wave……..
Guest Experts on Conference Call
• Tom McIntyre, Albertsons
• Katharine Maroney, Ecos US
• Keely Wheaton, Target
• Bill Sweet, Price Chopper
• Laurie DeMerrit, The Hartman Group
WILLIAM R. SWEETVice President
Engineering & ConstructionPrice Chopper Supermarkets
• Over 128 Stores, three warehouses & Main Offices in Schenectady, NY
• 25,000 Associates • Six Northeastern States
• New York, Vermont, Connecticut, Pennsylvania, New Hampshire,
Massachusetts
• Stores offer a variety of services including:• Pharmacies• Scratch bakeries with artisan breads• Custom-cut meat shops• Seafood departments with sushi • Full-service floral departments • Kosher sections
Price Chopper
Group Dialogue
1. Biggest barriers to the food industry in understanding, buying in to, and implementing sustainability?
2. What are your key recommendations for getting started?
3. What do you think the most effective one or two ways a retailer could communicate the value of their sustainability activities to their consumers?
4. As you look through your "crystal ball" – how will companies and consumers be different in 5 or 10 years?
Questions?
Jeanne von Zastrow
Senior Director, Sustainability and Industry Relations
j
Questions?..…
Jeanne von Zastrow, [email protected]/sustainability/