Carefully organizing ‘green’ efforts is key to reaping rewards
NATIONWIDE RT REPORT—Sustainability will become an increasingly important business consideration for retailers as consumer opinion, media scrutiny and, inevitably, government regulation weigh on operations. With all the hype in the marketplace, it’s important that retailers decide what they want to accomplish with regard to sustainability and what standards they want to apply, followed by setting clear long- and short-term goals.
Sustainability isn’t an easily defined concept and on top of that, what is considered most critical within the concept’s scope tends to change over time. Fifteen years ago, solid waste and landfills were hot-button topics until people discovered that properly maintained landfills were less environmentally troublesome than they thought. San Francisco officials recently revived the plastic versus paper bag element of that debate, but it’s still difficult to determine which material is more sustainable. Some activists contend that paper is more eco-friendly than nonbiodegradable plastic. Yet waste, including paper, isn’t supposed to degrade in landfills. Degradation creates chemically complex runoff that can eventually contaminate groundwater. Paper bags also take up more volume in a landfill and choke it more quickly than plastic. Paper is manufactured from trees and is heavier, requiring more fuel to ship, a reality that impinges on the petroleum savings argument for paper over plastic.
As Kermit said, “It ain’t easy being green,” especially when the choices are complicated.
A strategy that embraces credible standards and marketing messages that don’t promise more than the standards justify is critical to retailing sustainability programs. A recent front page New York Times article on the challenges The Home Depot faced after asking suppliers to submit sustainable products for its Eco Options product line focused on the deluge of products the company received and the sometimes contradictory sustainability arguments that supported their submission. The Times conceded that Home Depot made an honest effort to use credible standards in deciding which products were ecologically superior, applying Energy Star criteria to appliances, for example. Yet, it included criticism suggesting that those standards might be inadequate. So, the article demonstrates that retail sustainability efforts are garnering recognition but also that they are liable to attack from those who know that criticizing retailers can draw attention to their own agendas.
To establish credibility, retailers need to determine what they want from their sustainability efforts for both the short- and long-term. Among the first considerations that need to be addressed are weighing goodwill and cost cutting. Reducing energy and water usage can have an immediate impact, even providing cost savings that can fund long-term efforts. But goodwill, depending upon a particular retailer’s circumstances, can be even more important as sustainability efforts begin.
As it approaches the sustainability issue, online grocer FreshDirect is initially focusing on goodwill, which is vitally important to the health of a service-oriented retailer. FreshDirect generates solid waste by delivering food in lots of little containers. Given that the company’s clientele tend to be educated, affluent and concerned about environmental issues, the company can’t afford to make anyone feel guilty about purchasing its products.
“Part of a good environmental policy is good business,” said Leitha Matz, FreshDirect’s environmental initiatives leader. “We got a lot of customer feedback, and it encouraged us to take steps toward less waste.”
FreshDirect engaged a new box vendor, Southern Container Corp., to manufacture containers made from 100% post-consumer recycled material. Launched to meet customer concerns, the new containers provided additional benefits. “When we did research and got the company we wanted, we also got cost savings and a better box that we can change messages on more frequently with less effort. So we got benefits from customer goodwill, from the economics and from the design perspective,” Matz said.
Sustainability efforts often turn up secondary benefits including, but also apart from, new environmental measures. “The less waste we have in our company, the better for us economically and the better neighbors we are for the city and region,” Matz said.
Some longer-term FreshDirect sustainability projects concern its particular visibility. Its trucks, for example, have been effective billboards for the company, but they also remind consumers that delivery services come with auto emissions. Its plant, located in Queens adjacent to the heavily trafficked Long Island Expressway connection to the Midtown Tunnel, has a huge video billboard that promotes the company’s products to drivers, but it also prompts customers to consider that FreshDirect’s refrigeration and food processing have environmental impacts.
In response, the company signed a deal with Tri-State Biodiesel, a company that recycles used cooking oil for use in low-emission diesel fuel to help it begin running biodiesel trucks. FreshDirect also is expanding its local food operation, in part to cut down on the miles its raw materials travel, and it’s looking into windmills and other emission-saving electricity sources.
Some of its efforts will cost money, Matz said, but the sustainability culture FreshDirect is establishing will continually generate cost savings. Simply by suggesting it purchase more fuel-efficient company cars, for instance, can help pay down those costs.
Goal setting is another important element in launching a sustainability strategy, said Erich Landis, director of environmental initiatives for Cadence Network, a utility, telecommunications and lease management consultancy, but that must take into account how environmental issues are evolving.
“Every retailer should be grappling with the fact that they should at least know where they are right now in terms of goal setting and time tables. Step one is where they are right now. When things inevitably roll downhill, they’ll be prepared and know where to go. I think the majority of retailers don’t know where they are in terms of carbon footprinting, for example.”
While the United States may be years away from carbon trading, some companies already have seen advantages in exploring energy related tradeoffs. In May, PepsiCo and Sterling Planet announced an agreement on renewable energy certificates that will allow the soft drink supplier to offset the electricity used by all of PepsiCo U.S. facilities. Energy savings and sustainability issues are more closely linked today, which makes Cadence’s job more complex. Landis said goal setting is something “we put a lot of emphasis on. It’s the first conversation we want to have with a company.”
Sustainability discussions now involve more than facilities management, he said, they require bringing “a swirl of departments” together to work in new ways.
“We try to provide a solution to say, ‘Let’s create a road map to where you need to be.’ It’s important to know where you are, where you want to be and to set a time line.”
Cadence claims it helped save customers over the past decade $210 million by cutting energy costs. One of the basic ideas it recommends is simply auditing and comparing utility bills to find pricing mistakes and discrepancies. On a more sophisticated level, it helps with energy procurement that matches clients with electric and gas suppliers. Evaluating the environmental claims that new energy sources make can be difficult. “With everybody being ‘green’ these days, there are lots of charlatans out there. We do legwork to make sure our customers aren’t investing in something that’s going to be obsolete in a couple of years,” Landis said.
Sustainability’s prominence is