The timing, perhaps, could not have been better. Just as some of Canada’s top green grocery leaders gathered for our annual sustainability roundtable in Toronto in May–a look back and ahead on green in CPG and food retail–more bad news about California’s epic drought rolled in.
California, North America’s produce basket, hadn’t had a good soak in years. Now, farmers, who take 80% of the state’s water, were told to slash use by up to one-quarter. Most couldn’t recall ever having to cut irrigation. But in a state literally running out of water, it seemed the only option.
“Twenty-five per cent [less water], I can handle,” a farmer growing tomatoes, alfalfa and corn on 5,000 acres in the Sacramento-San Joaquin river delta, said. But “anything more than that–man, I’m done.”
Parched California seemed a good jumping off point for our roundtable. After all, 84% of Canada’s imported broccoli and cauliflower comes from the state, 76% of fresh strawberries, 69% of root veggies and 68% of lettuce.
So what are the implications of a bone-dry California on our grocery aisles?
That was among the topics discussed during our fourth annual Leaders in Sustainable Thinking roundtable, put together by Canadian Grocer and Kruger Products to promote industry collaboration.
In past years, we examined the green consumer, sustainable sourcing and logistics. This year, we decided to go big and examine the state of grocery sustainability itself. What progress has been made in the last 10 years? Where are we lagging?
Or, as Steven Sage, vice-president of sustainability and innovation at Kruger Products, noted: “An amazing amount of work is happening around sustainability issues by manufacturers and retailers. The roundtable was meant to share industry best practices, spark further actions and showcase this work by industry leaders.”
Dealing with such weighty issues required an all-star roster. Thankfully, our roundtable fit the bill. On the retailer side: Scott Tudor, director of sustainability at Sobeys; Sonya Fiorini, senior director of corporate social responsibility at Loblaw Companies; Andrew Telfer, manager of sustainability at Walmart Canada; and Chris James, sustainability manager at Federated Co-operatives. Supplier-wise, in addition to Sage, our panel included Karimah Hudda, sustainability manager at Mondelēz International, and John O’Leary, manager of PR and communications at Coca-Cola.
One thing our panel immediately agreed on was that grocery retailers and suppliers have accomplished a great deal in the last decade. In some areas, grocers and CPGs have arguably led the way.
Take Sobeys. It was among the first retailers in North America to embrace natural refrigeration systems, such as CO2, over then-common less efficient hydrochlorofluorocarbon (HCFC) and hydrofluorocarbon (HFC) refrigerant systems, noted Sobeys’ Scott Tudor.
While HCFC and HFC do a wonderful job keeping the ice cream and Hungry Man dinners frozen, just one kilo of these leaked refrigerants is the equivalent to leaking approximately 4,000 kilograms of carbon dioxide into the atmosphere. Not good.
New natural refrigeration systems installed in some 72 Sobeys stores since 2009 have reduced greenhouse gas emissions by more than 800,000 kilograms per store per year. That’s equivalent to taking 180 cars per year off the road per store, Tudor said. These systems also cut electrical consumption by 15% and heating gas costs by 80%. Sobeys is now switching over 15 to 20 stores a year to natural refrigeration.
Another leader has been Loblaw. Its 2008 commitment to buy only sustainably sourced seafood led the way for other food retailers to make similar commitments. As of last year, 93% of seafood products in Loblaw’s stores were from certified sources, such as the Marine Stewardship Council and the Aquaculture Stewardship Council.
On the CPG side, Coke developed PlantBottle technology, in 2009, which allows 30% of PET bottles to be made from plants rather than fossil fuels. About one billion PlantBottles have been distributed in Canada to date, said O’Leary, noting that when presented with a green product, consumers tend to buy it. “People want to make those good choices,” he said.
Coke is no longer the only company using PlantBottle; Heinz started licensing the technology for its ketchup bottles four years ago, and Ford uses the material in the interior fabric of its new cars.
Our panel also agreed that, for the most part, grocery’s greatest green successes have been in three areas: energy efficiency, waste reduction and sustainable packaging.
No surprise there. Not only were these among the first tackled by retailers and suppliers, they also tended to offer decent financial paybacks. In short, going green saved companies some green as well.
That’s not to say cutting energy, waste and packaging weren’t worthy goals. They absolutely were–and still are.
Grocery, a $130-billion industry in Canada alone, is a massive user of water, power, paper and plastic. Any reduction in these resources is worthwhile, both from a sustainability standpoint and for efficiency’s sake. Our Exhibit A here might be Walmart.
In October 2005, Walmart’s then CEO, Lee Scott, convened a conference call with his global executives. The world’s largest retailer, Scott explained, was so humongous that if it were a country, it would be the 20th largest on Earth. Given its heft, could Walmart do something good for the planet? Yes. Then he outlined three goals for Walmart worldwide: 1. to be supplied 100% by renewable energy; 2. to create zero waste; and 3. to sell products that sustain people and the environment.
Fast-forward 10 years and those goals still form the backbone of Walmart’s green strategy. “It’s sort of a North Star guidance that leads us,” Walmart’s Andrew Telfer noted.
Walmart has yet to meet its goal of generating zero waste, but it’s getting closer: 72% of waste in Canada, 82% in the U.S. and 68% of garbage produced at Walmart stores, head offices and warehouses internationally was diverted from landfill as of last year.
Likewise, 26% of Walmart’s energy consumption now comes from renewable resources, and the company aims to cut energy consumption by 20% by 2020 from energy usage in 2010. In an interesting waste-energy reduction twofer: 130 Walmart stores in Ontario now ship organic waste to Kevron Recycling, a company in Peterborough, Ont., that uses anaerobic digesters to turn the waste into biogas used to generate electricity.
Other companies have also made progress in curbing energy and waste. In 2014, Loblaw reduced its electricity consumption in comparable stores by 3.2%– enough electricity to power 5,273 homes for a year. The company now has 62 stores, warehouses and offices with rooftop solar panels.
On the manufacturing side, Mondelēz cut its energy usage per tonne at its operations worldwide by 7% between 2010
and 2014, and reduced greenhouse gas emissions 16% through energy-saving initiatives, the use of cleaner fuel and the
purchase of renewable electricity certificates. Kruger Products, meanwhile, cut its greenhouse gas emissions by 21.5% in Canada and 11.5% worldwide between 2009 and 2014; while Coca-Cola achieved a 20% improvement in energy efficiency worldwide between 2004 and 2013.
If there is good news beyond the above achievements, it’s that the grocery industry is still making sustainability a priority, and many companies have set new green goals for 2020 and beyond. Why is that such a big deal? Because it would have been easy for the CEOs of retailers and CPGs to cut back on sustainability goals several times in the last decade due to economic circumstances.
The 2008 recession, for instance, could have been an easy excuse to drastically cut back on their companies’ green programs. Likewise in Canada, the period of grocery price deflation between around 2011 and 2013 might have been a good time for CEOs to reconsider green. That they did not shows that sustainability has, as several members of our roundtable pointed out, become embedded in firms.
“I attend a lot of business-planning sessions in our organization, and sustainability is definitely one of the goals,” said Federated Co-operatives’ Chris James.
Sustainability is also getting big buy-in from the top of companies. Last year, Mondelēz CEO, Irene Rosenfeld, signed the United Nations’ New York Declaration on Forests, which aims to cut forest loss in half by 2020, and end it by 2030.
Shareholders, employees and potential employees are also chipping in. During our roundtable, Steven Sage of Kruger Products, said that “younger people coming into our companies want to work for companies that are making a difference through sustainability.”
Sonya Fiorini added that she’s attended Loblaw’s annual general meetings for the past 17 years, and each year questions about sustain- ability have risen. “Last [spring], I would say more than half the questions were about sustainability. I absolutely loved it– the fact we’re being asked and being held accountable.”
Another reason to cheer? The grocery industry’s sustainability actions have, over the last few years, exploded in myriad directions. No longer is going green only about energy and garbage; it’s also about tackling food waste, agricultural sustainability, water conservation, animal welfare, seafood sustainability and preserving natural resources in far-flung countries where many of the ingredients for products are sourced. Dealing with these has not been as easy as installing an LED bulb in the centre aisle. Such quandaries require collaboration among companies, NGOs and government.
On seafood sustainability, for instance, many grocery and CPG chains work with third-party certification groups, such as the Marine Stewardship Council and Oceanwise, to ensure the fish they sell in their stores are caught in ways that help preserve ocean life.
Loblaw, Sobeys and Mondelēz are among the members of the Roundtable on Sustainable Palm Oil, a global not-for-profit that includes top CPGs and retailers. And Loblaw and Walmart are involved in the newly formed Canadian Roundtable for Sustainable Beef, which aims to ensure the country’s beef industry is environ- mentally and economically healthy and socially responsible.
Animal welfare, in particular, is getting more attention lately, notably from retailers. Sobeys now carries several brands of meat–Blue Goose poultry, Du Breton pork and Aspen Ridge beef–that carry the Certified Humane logo, meaning those brands meet the animal welfare standards of Humane Farm Animal Care, a Virginia-based not-for-profit.
And Loblaw is working with egg suppliers to transition its PC Blue Menu line of eggs to free-run, meaning they come from hens that live in open environments, inside and out. Loblaw also said it will buy only fresh pork from suppliers that transition to loose housing rather than gestation crates by 2022. And last year, Loblaw hired Dr. David Fraser, a pioneer in the science of animal welfare, as an advisor.
CPGs, meanwhile, are rightly paying attention to water conservation. Kruger has cut its water consumption by 11.4% since 2009, Mondelēz by 10% per tonne of product since 2010, while Coca-Cola said that it had improved the efficiency of its water usage by 8% globally between 2010 and 2013.
All of these improvements are increasingly backed by measurement as companies put together a data-driven history of their march to make their operations green. “What gets measured, gets managed,” noted James. “If you’re not measuring things, you don’t know where you are and you can’t set goals for improving.” Many of these measurements show up in companies’ annual corporate social responsibility reports, which sometimes list not only successes but also–to each company’s credit–where they have failed to meet their targets.
In its most recent CSR report, for instance, Loblaw noted that last year it had not met its goal of reducing waste from corporate stores by three percentage points, and was still somewhat behind in a goal to reduce control brand packaging 5% by the end of this year. Mondelēz’s 2014 CSR, meanwhile, noted that the company had only reduced energy worldwide by 7%, thus lagging in its goal to cut energy in manufacturing by 15% by 2015.
Loblaw’s Fiorini called CSR reports an important “engagement tool” for the grocer’s employees, and when putting the reports together she said she doesn’t want to sound all rosy. “There are challenges and I want to show people that.”
This past summer, it wasn’t just dry California that was a problem. Western Canada was feeling the heat. In July, Saskatchewan cattle producers called for government help to deal with drought that had withered their crops. And in Alberta, Leduc County, south of Edmonton, declared an agricultural disaster due to drought.
Given that situation, it was no wonder our panel cited climate change to be the single biggest sustainability issue ahead.
“It’s no longer about climate-change mitigation; it’s now climate-change adaptation. How are we going to adapt? How do we deal with extreme weather situations?” Andrew Telfer of Walmart said.
Climate change will affect many different parts of retailer and CPG businesses. For instance, on the sourcing end, if the drought conditions in California continue and worsen, where will all that lettuce and strawberries on Canadian supermarket shelves come from?
“Canadian retailers,” said Tudor “will have to adapt not so much to using less water themselves, although this will become increasingly important, but rather to adapt to agricultural supply chains that are less water intensive, support more drought tolerant crops and expand local sourcing.”
Added Fiorini at Loblaw: “We are trying to diversify our sourcing now and the need to address these resource challenges.”
On the manufacturing side of the business, companies are looking to help farmers till more sustainable businesses. For instance, Mondelēz works with small cocoa farmers because, as Hudda noted, “cocoa is grown in the tropics, and the tropics are most vulnerable to climate change.”
On a more local level, Coca-Cola has pitched in to help the Nature Conservancy of Canada restore native grasslands in the Bow River Watershed, a drinking water source for Calgary.
At the store level, climate change might come down to the role that stores can play in weather-related and other disasters to ensure people have access to food, water and other necessary supplies.
This summer’s wildfires in Saskatchewan proved an excellent example when thousands of people were evacuated near the town of La Ronge. The local Federated Co-op store manager, Margaret Flock, stayed behind at her store to help feed emergency workers.
As extreme weather causes havoc, grocery stores may need to forge partnerships with government to make sure food is available in areas where, say, the power is cut off for days at a time.
Case in point: a recent study by the University of Waterloo for The Co-operators pointed out that Canadian municipalities haven’t done enough planning to deal with flooding caused by extreme rainfall. The study suggests towns and cities need to work in advance with grocery stores to make sure food is available, banks to ensure ATMs are working and telecoms to supply phone service.
Another looming issue: food waste. An estimated $31 billion in food is thrown out in Canada each year, according to Value Chain Management International. The biggest chunk of that is tossed out by consumers in their homes.
One way the grocery industry can help lessen that amount is through improved packaging that keeps food fresher longer. Last month, the Consumer Goods Forum, whose members include the largest food retailers and CPGs in the world, pledged to halve food waste globally by 2025.
In its proclamation, the group noted that food waste is responsible for adding 3.3 billion tonnes of greenhouse gases into the atmosphere per year. If food waste were a country, it would be the third biggest emitter of greenhouse gases globally, after China and the U.S.
The Consumer Goods Forum’s pledge, coupled with the successes and activity noted above in energy, waste and more, provide some room for optimism. As Tudor noted at the end of our roundtable: “I think we as an industry will be amazed at how much we accomplish on sustainability in the next 10 years. ”