BrainTrust Query: Will the Sustainability movement be successful in changing the retail business?
Richmond, Ph.D., President/CEO, Packaging and Technology Integrated Solutions
Sustainability is a concept whose time has arrived. In fact, it arrived several years ago, although initially in the context of environment, health, and safety (EHS) programs. Most of the leading companies ascribing to the philosophy – those recognized by Corporate Knights (a Canadian media firm) on its list of the Global 100 Most Sustainable Corporations – have been on this path for five-to-10 years. Sustainability demands both a long-range perspective and a long-term commitment.
Sustainability is all about delivering superior business solutions – ones that are economically, socially and ecologically positive. This is the Triple Bottom Line and is key to what sustainability is all about:
- Economic Benefits: Continuing to drive waste and cost out of the value chain, and the desire to avoid further regulatory actions which could constrain innovation.
- Social Responsibility: Proactively addressing issues of worker safety, wellness, and quality of life. It is more and more essential for companies to have a work force that is increasingly productive, stable, and motivated.
- Ecological Improvements: Responding to increasing concern with global warming, resource depletion, energy consumption, water usage and other environmental impacts that could become global crises as the earth’s population mushrooms by an expected 40 percent in the next four decades. The most aggressive companies have also seen the opportunity to gain competitive leverage from these efforts.
The primary proponents for sustainability are representative of the entire packaging value chain, from raw material suppliers (Alcoa, Dow, Alcan, Stora Enso, etc.), to converters, to consumer packaged goods firms (Unilever, Nestle, Dannon, Henkel, etc.), to retailers (Wal-Mart, Albertsons, Target, etc.). Wal-Mart, in particular, has put its suppliers, both product manufacturers and packaging for Wal-Mart brands, under significant pressure to embrace its sustainability goals.
A significant number of consumers are beginning to base buying decisions on sustainability. The Natural Marketing Institute (NMI) characterizes these leading edge consumers as the Lifestyles of Health and Sustainability (LOHAS) group. According to NMI’s web site, LOHAS describes a $228.9 billion U.S. marketplace for goods and services focused on health, the environment, social justice, personal development and sustainable living. Approximately 30 percent of the adults in the U.S., or 50 million people, are currently considered LOHAS Consumers.
Discussions Question: How do you see Sustainability
influencing the retail business in the next three years? How widespread will
adoption be and what will it mean for all the parties involved?
Retailers recognize that sustainability-conscious consumers
are too large a segment to ignore. While they are unlikely to focus specifically
on packaging, these consumers may be swayed when packaging is more consistent
with healthier, more “natural” products. Some of the fastest growing retailers
are switching to more sustainable packaging, led by Wal-Mart and Whole Foods
Sustainability represents an opportunity for retailers
in two important ways. First is the potential cost savings that can result from
driving waste out of the packaging value chain. Just three of the results that
Wal-Mart has published add up to over $56 million in annual savings:
- Installing “sandwich” balers enabling the recycling
of stretch wrap film – $26 million
- Reducing the size of Wal-Mart’s brand of toys – $2.4
- Installing auxiliary power units to heat/cool truck
cabs and eliminating idling when drivers are resting – $28 million
Second is the potential for a variety of Triple Bottom
Line benefits that can result in a more highly motivated work force and
increased shareholder value.