When it comes to decisions around environmental sustainability, it’s about time retailers started leading the conversation – and the conversion, says Jai Breitnauer. We take a look at some initiatives striding forward.
In September 2019, an incredible 170,000 people took part in the School Climate Strike action in New Zealand. That’s 3.5 percent of the country, and participants were largely Gen Z and Gen Alpha. The message is clear – making changes to your operation to suit the environmental narrative that has dominated popular culture for the last few years is future-proofing your business, as well as the planet.
“People do want more sustainable products,” says Colleen Ryan of TRA. “Of course, that’s a generalisation and some people care more than others and it also depends on the framing. Kiwis have a strong connection with nature, so if you frame it up as being about the natural environment then they are more attuned to buying sustainable products and services.”
But, says Ryan, what the consumer really wants is for businesses to take control of the environmental narrative.
“Yes, they do expect retailers and all organisations to take the lead. The New Zealand values survey by Auckland University shows that people believe that the quality of our natural environment is declining. There is also an increase in concern about things that affect it such as climate change. But there is a decline in people’s beliefs that they can have much impact whereas they believe that organisations can – by developing products and services that will make it easy for people to take action.”
New Zealand research released in November 2019 by Porter Novelli, Perceptive and the Sustainable Business Council backs this up. The In Good Company report shows 68 percent of people care about the sustainability of a large retailer brand when making a purchase.
The report indicated that sustainability is a concern for 87 percent of New Zealanders, and the second most important factor behind quality when New Zealanders are choosing a large retailer to shop with.
Large retailers, however, are perceived to be doing less than retailers in other industries to become more sustainable.
Abbie Reynolds, executive director of Sustainable Business Council, says businesses need to step up to the challenge.
“New Zealand businesses are increasingly embedding sustainability into their strategies and business practice; however, many businesses are reluctant to talk about what they’re actually doing.
“In many cases, it’s a matter of ‘green hush’, rather than greenwash. This research shows there is an important opportunity for business in New Zealand to show leadership,” says Reynolds.
Meeting the market
Any business, especially bricks and mortar retailers, not asking themselves what they can actively do to meet the market in this space right now risks being left behind, rapidly. The retail community no longer has the luxury of responding to consumer feedback. The landscape no longer requires you to only make change when enough tangible pressure is put on you by your shoppers. The consumers of tomorrow want retailers to lead this conversation; they want to know they are already in good hands when they walk across your threshold. They want you to be making decisions in their own best interest, and that best interest is of course environmental sustainability. As we greenies are fond of saying, there is no Planet B.
“The number of people who attended the recent school’s climate strike was one of the largest numbers of the population proportionally for the action worldwide,” says David Benattar, chief sustainability officer at The Warehouse Group. “It’s clear what New Zealand wants, and if you are in touch with your customer, you understand this.”
The Warehouse, despite its reputation for low-priced goods, has proven itself to be one of the most forward-thinking large businesses in New Zealand when it comes to the environment. Examples of their initiatives include the Better Cotton Initiative, ending single use coffee cups at head office and the commitment to transition 30 percent of their company vehicles to EVs.
Benattar says it’s in their company culture, lead by the values of their leadership – most notably founder Sir Stephen Tindall himself. One of those central cultural values of The Warehouse is listening to its customers in a broad range of ways, so it can make change organically.
“We listen to social media, customer feedback, we monitor data collected from shoppers. The media are also doing an awesome job reporting around consumer demand, creating a positive reinforcing loop between what people are talking about, media reporting and customer demand,” says Benattar.
“And then we have our employees, who are our first customers. We have constant dialogue with them, and they are speaking to our customers daily.”
Benattar notes that The Warehouse has high participation from shoppers in in-store schemes like plastic recycling, and generosity in their campaigns, such as their recent one in support of Plunket, which engaged over 5000 people. This paints a picture for The Warehouse senior team of shoppers who want bang for their buck, but are socially and environmentally conscious as well. It is at this point, says Benattar, that retailers like The Warehouse Group have a responsibility to take the lead when it comes to the environment.
“New Zealand is our customer and we want to help the country at large to move toward environmental sustainability,” he says. “I reject the notion that some customer segments don’t care about environmental change.”
Benattar agrees that some consumers don’t have the luxury of making environmental choices in a market that usually attaches a premium price point to such products. He says that by making positive environmental change, The Warehouse is enabling a group who haven’t had the chance to make environmental decisions with their retail shopping before to engage in that way.
“It is the responsibility of big companies like ours to put pressure on suppliers and also lead the way with change,” he says. “There will come a point when [environmental sustainability] will be a non-negotiable.”
Zero carbon shopping
In February 2019, The Warehouse Group announced it is finally, completely and forever, a carbon neutral business. Having become CarboNZero certified in 2015, The Warehouse Group offset all of its emissions for 2018, and has set itself the challenge of reducing them in real terms (from the 2015 baseline) by 32 per cent by 2030 – a guideline that fits with the Paris agreement. They’re only the third major retailer globally to have achieved this.
“This really was a thought leadership move,” says Benattar, who says this matters because it is important for businesses to see such a large and corporate organisation take this important step – a step that has perhaps always been seen as ground occupied only by quirky SMEs on the periphery of retail success.
“It takes a lot of work to become carbon neutral. You have to measure footprint, understand how to reduce it, make those changes and offset,” says Benattar, who admits this could be hard for some SMEs. This is an area where The Warehouse Group hopes to help too.
“We are working on a project that should make the carbon neutral process more viable for smaller businesses,” says Benattar. “We have many smaller commercial customers and want to help. We plan to make some big announcements about this, and other environmental initiatives, in February on our one-year anniversary of carbon neutrality.”
Tracing the source
One area where The Warehouse still comes under some criticism is with regard to the products it stocks. It’s one thing to run a carbon neutral business, but many would be quick to point out its suppliers don’t necessarily embrace the same sentiments. Benattar is philosophical about this, saying it accepts all criticism and that it is on a journey.
Meanwhile, Countdown has very much embraced the idea that the products on their shelves need to be clean and green, not just operations.
“Our decision to phase out plastic bags late last year was in response to both Countdown’s commitment to reduce our environmental footprint and customer demand. Our customers are continually asking us what we’re doing next in terms of plastic and other sustainable initiatives,” says Kiri Hannifin, general manager corporate affairs, quality, safety and sustainability. It has been working with suppliers to secure product options that meet this growing demand.
“The percentage of vegan customers has doubled in the last year. We’ve seen a whole new range of products developed to cater to the growing trend for alternative plant-based proteins including Sunfed chicken meat alternatives, faux bacon and dairy-free cheese,” she says. “We’re [also] helping our customers reduce their environmental impact through our ‘Odd Bunch’ range. Our customers are getting more comfortable with buying the ‘imperfect’ fruit and vegetables we offer through Odd Bunch, and we saw sales increase by more than 145 per cent in the last year. This benefits food affordability, but also helps growers improve their farm profitability and reduce food waste.”
Countdown has also stepped up certification requirements for own-brand products, and improved its chain-of-custody oversight with other suppliers as well.
“Our Own Brand products have to meet a number of environmental requirements and demonstrate compliance with our Responsible Sourcing programme,” says Hannifin. “We take a commodity-led approach and have currently targeted paper, pulp, timber, palm oil, cocoa/chocolate, sugar, tea and coffee. Suppliers of products with these primary ingredients must demonstrate compliance through a range of carefully selected certifications, including the Forest Stewardship Council, Programme for the Endorsement of Forest Certification, Roundtable on Sustainable Palm Oil, Fairtrade, Rainforest Alliance, Utz and Bonsucro.”
As part of the requirements of the responsible sourcing programme, Countdown needs suppliers to comply with certain minimum standards in their supply chain. For example, they must ensure the human rights of workers involved at all stages of the supply chain, and have very specific statements regarding what they expect.
Increasingly, we are seeing businesses like Countdown taking ownership of issues around supply chain ethics, rather than using it as a grey area in which transgressions can be easily hidden.
In 2019, Kathmandu joined 3,000 businesses globally as a Certified B Corp. This certification, run by not-for-profit B-Lab, shows that a business is actively committed to reducing inequality, improving community, embracing environmental sustainability and working toward a positive economy. So far, Kathmandu is the largest retailer in NZ to join this niche but respected cohort.
“Sustainability is part of Kathmandu’s DNA and is integral to our entire operation, from our supply chain, to our materials and products and our operational footprint,” Kathmandu CEO Xavier Simonet told The Register in September.
Simonet felt that among the many good reasons to make this step was the simple fact that it might encourage other businesses to do the same. It is also an exercise in future proofing – and keeping the business honest, says Olivia Barclay, spokesperson for sustainability at Kathmandu.
“Becoming a certified B Corporation is a reflection of Kathmandu’s commitment to sustainability over the past 30 years,” said Barclay when we contacted Kathmandu for comment.
“We made no significant changes in order to become certified. We scored highly in Workers, Environment and Community (including suppliers) sections of the certification. This reflects the great commitment our team has had over many years to protecting workers’ rights in our supply chain, lowering our environmental footprint and our ongoing commitment to using sustainable materials in our products. Equally as important becoming a certified B Corp means we are committing to hold ourselves to the highest standards in future as we undergo periodic recertification. For our customers, it is an additional endorsement of our commitment to sustainability, which is something we know they value highly.”
Barclay says that, rather than being a reactive decision to meet the needs of vocal customers, this was a proactive decision taken by the company and encouraged by employees who were keen to have the effort Kathmandu already puts in to making positive social and environmental change verified, and the company’s integrity reinforced.
“We believe we have been leading the way in sustainability for over thirty years and the encircled ‘B’ is a way for customers to instantly recognise that our business acts as a force for good,” she says.
The whole package
Both Countdown and The Warehouse Group have taken forceful steps to reducing packaging.
“The Warehouse are working actively and aggressively on packaging reduction and we are working toward a more responsible sourcing programme,” says Benattar. “Every brief in our product team involves packaging reduction.”
“We’re committed to removing and reducing as much unnecessary plastic and packaging as we can from across our business,” agrees Hannifin at Countdown. “Reducing plastic packaging and improving recyclability continues to be a focus for our us. In June last year, Countdown committed to using 100 per cent reusable, recyclable or compostable packaging in our own brands by 2025 or earlier, which includes produce packaging. When packaging is needed, we’re working to find alternative solutions that are right for both the New Zealand environment and our current domestic waste infrastructure.”
Both the introduction of recyclable hard-plastic packaging for in-store bakery products, and the launch of the BYO container scheme for over the counter food by Countdown have been New Zealand firsts that are well celebrated among shoppers. This also meets their obligations as part of the international plastic packaging declaration signed in 2018.
Other NZ businesses seeking to reduce the impact of rubbish before products even reach the checkout include NZ Post, which has been piloting a range of 100 per cent recyclable paper-based bags, and Frucor Suntory, which has committed to using 100 per cent recyclable packaging by 2025, as well as reducing their carbon footprint by 35 percent and using 20 percent less water by 2030.
However, according to New Zealand Product Stewardship Council coordinator Hannah Blumhardt, even when things are recyclable they aren’t always recycled.
“New Zealand uses about 2.23 billion beverage containers a year. Yet only about 40 percent get returned for recycling,” she says. The NZPSC is supporting a container return scheme. “A mandatory nationwide bottle deposit scheme could push bottle return rates as high as 90 percent. This would mean far better recycling rates and much less plastic escaping into our environment.”
Such a scheme has now been proposed by Minister of Conservation Eugenie Sage, but of course, less or no packaging trumps recycled or recyclable packing.
“The plastic bag movement has interrupted people’s habitual behaviour and whenever that happens it causes a re-appraisal and we are seeing people thinking about packaging much more than they used to,” says Colleen Ryan from TRA. “Of course, packaging is not always something the retailers can control but there is nevertheless a halo effect on the retailer.”
When in doubt, disrupt
The Warehouse Group’s David Benattar noted when I spoke to him that culture is the most important factor in whether a company can or will embrace environmental sustainability.
“Culture drives actions,” he said. “And companies started by Gen Z tend to be more socially engaged from the outset.”
This is clearly demonstrated by market disruptors, normally headed up by young, idealistic, fresh thinkers, and 2019’s incredible disruption story was the toilet roll. A product that is wasteful in every aspect, that takes a lot of energy to make, and which is single use by nature, beyond using recycled paper in its production – or the government funding a marketing campaign around bidet use – it was unclear where the gains could be made in the bum-wiping product category.
Enter stage left, Who Gives a Crap. This Aussie social enterprise that sells loo roll direct-to-market through an online subscription model lead the disruption in this sector in 2019. A certified B-Corp, it was started as a cash cow in 2013 to fund other projects, and they have donated half their products – around AUS $2.5m so far – to global organisations working to improve the toilet facilities of some of the most vulnerable people worldwide.
“We give unrestricted funding to organisations that we think are doing the highest-impact work,” co-founder Danny Alexander told Vox in July. He joined business partner Simon Griffiths, who had the idea for Who Gives A Crap, after discovering 2.3 billion people worldwide don’t have access to a toilet, and around 289,000 children die each year from conditions related to poor sanitation and lack of toilet facilities.
“Because we’re motivated, first and foremost, by impact, we’ve mapped out our pathway to ensure that everyone on earth has access to a toilet. It’ll take us a few decades, but we’re going to do it!” Alexander told BroBible in 2018.
What is interesting about this model is that the consumer is buying toilet paper that is just about as environmentally friendly as it can be, but what they are actually purchasing is an idea – the idea that an inherently wasteful product can not only be made in a lower impact way, but that you can offset your need for such destructive decadence by supporting the building of safe sanitation infrastructure in the developing world. This takes the idea of leading the conversation one step further – Who Gives A Crap isn’t just creating a product people didn’t know they needed yet, the product they are manufacturing for sale is almost an afterthought, with its ethics the major draw to most customers.
Taking the lead when it comes to issues of environmental sustainability is also to take the lead regarding your own business sustainability. Although the changes themselves should not be solely about the bottom line, consumers will vote with their feet, says David Benattar, and retailers need to prepare quickly for the incredible sea-change the market is about to experience – lest they lose out.
“Environmental sustainability is part of a wider global conversation, and we are already witnessing change at a fast pace in New Zealand and overseas,” says Benattar. “Retailers not addressing this now will be left behind, and will pay the price.”
This story originally appeared in NZ Retail issue 765 December 2019 / January 2020