The role of retailing in the move towards Sustainable Consumption and Production!
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1 The role of retailing in the move towards Sustainable Consumption and Production! The role of retailing in the move towards Sustainable Consumption and Production : Opportunities for corporate value creation & the most recent European policy initiatives Burcu Tunçer Project Manager, UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production (CSCP) Introducing the CSCP Organisational Setup CSCP UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production (CSCP) A collaboration by Wuppertal Institute for Climate, Environment and Energy UNEP United Nations Environment Programme NRW North Rhine-Westfalian Ministry for Environment, Agriculture and Consumer Protection Supported given by Federal Ministry for Economic Cooperation and Development German state Federal Ministry for the Environment, Nature Conservation and Nuclear Safety Wuppertal Business and Employment Support Agency 2
2 Introducing the CSCP Thematic approach 3 Sustainable consumption and production is an everyday challenge and opportunity 4
3 The role of retailing in the move towards Sustainable Consumption and Production! Why retailing could play an important role in the move towards sustainable consumption and production? Role of retailing in the move towards SCP Opportunities for retailer companies in the move towards SCP Most common activities and exploratory actions of retailer companies Recent SCP policy frameworks and instruments directly targeting retailing Production and consumption systems A diverse range of actors shaping value chains Companies Production choices Supply Companies Resource Extraction Producers Retailers Consumers End-Of-life managers Consumption choices Demand Consumers Policy choices Finance Institutions & Governments & Others Local and National Development 6
4 The role of retailing in the move towards Sustainable Consumption and Production! Opportunities for retailer companies in the move towards SCP Role of retailing in the move towards SCP Opportunities for retailer companies in the move towards SCP Most common activities and exploratory actions of retailer companies Recent SCP policy frameworks and instruments directly targeting retailing Challenges and opportunities for retailer companies Opportunities in value chains are often located in upstream and downstream Resource efficiency opportunities Resource efficiency opportunities high low Raw material extraction Supplier production In-house production Retail shop Distribution Usage Endof-life Value Chain Source: CSCP 8
5 Challenges and opportunities for retailer companies Opportunities in value chains are often located in upstream and downstream Focus areas within value chains Number of focus areas Agriculture Pre-KF KF processing processing Distribution Consumption priority environmental focus areas getting to know the chocolate chain e.g. Agriculture Raw materials Energy Water Land use Waste Emissions to air Effluents to water Cultivation of cocoa in tropical countries and sugar beet in temperate countries contributes significantly to the chocolate chain s footprint. Increased shares of shade grown cocoa, as well as improved soil management practices in sugar fields may help reduce the footprint. Food processing Raw materials Energy Water Land use Waste Emissions to air Energy use is the most relevant aspect in chocolate processing, and also the aspect that receives most attention from stakeholders. Effluents to water Source: CSCP 9 Challenges and opportunities for retailer companies Opportunities in value chains Resource efficiency opportunities Resource efficiency opportunities high low Sustainability in the supply chain? Raw material extraction Supplier production In-house production Retail shop Distribution Usage Endof-life Value Chain Source: CSCP 10
6 Challenges and opportunities for retailer companies Sustainable production opportunities Small enterprises in emerging economies Cost structure of micro-enterprises in Mexico: Costs for material & energy 3.6 as high as salaries paid. Resource efficiency can strengthen local enterprises Source: Herrndorf (2006): Greening SMEs in Developing Countries 11 Challenges and opportunities for retailer companies Upstream opportunities in value chains! In countries of temperate and cold climates, typically 80-90% of total life cycle energy use in housing is consumed during the use phase of a building s life.! Potential energy efficiency lies in electric appliances and lighting. Energy use in the use phase of housing is typically 80-90%! Distribution of energy use in housing use phase in % space heating water heating electric appliances and lighting other Source: Enerdata (2004) in EEA (2006) 12
7 Challenges and opportunities for retailer companies Upstream opportunities in value chains Use phase is the most important lever for change in private road transport! CO 2 emissions over the life-cycle of a vehicle Source: WWF-UK Evidence Base Challenges and opportunities for retailer companies Opportunities in value chains Resource efficiency opportunities Resource efficiency opportunities high low Sustainability during consumption? Raw material extraction Supplier production In-house production Retail shop Distribution Usage Endof-life Value Chain Source: CSCP 14
8 Challenges and opportunities for retailer companies Sustainable consumption opportunities Retailer - Manufacturer Consumption Opportunities better quality choices & high value products improved experience of product use after-sales and end-of-life services What to buy How to use How to discard Consumers Choice Source: CSCP Challenges and opportunities for retailer companies Sustainable consumption opportunities Consumers say they would favor responsible brands and companies Consumers prefer companies with a good reputation for environmental responsibility Consumers believe they can make a difference in how responsibly a company behaves Source: GlobeScan, CSR survey, 2007.! 16 16
9 Challenges and opportunities for retailer companies Sustainable consumption opportunities Markets are expanding: Environmental friendly and ethical products Estimated Fair Trade retail value Investment Luxury Ethical Jewellery Fair Trade/Sports Hybrid cars New media Eco Tourism Fashion clothing Source: Fairtrade Labeling Organisations International Annual Report 2006/2007! Burcu Tunçer Retailer Seminar, Istanbul, November cscp Challenges and opportunities for retailer companies Sustainable consumption opportunities Consumers feel locked-in!! 75% concerned about global warming but challenged to see how they can make a difference. 9% concerned about global warming, willing to make an effort empowered to take significant action. Source: Consumers International/Accountability Survey, 2007.! Burcu Tunçer cscp Retailer Seminar, Istanbul, November
10 Challenges and opportunities for retailer companies Sustainable consumption opportunities What influences you regading your purchasing decision?* Source: Fien, Bentley, Neil - Young People as Agents of Change * First choice in survey question Challenges and opportunities for retailer companies Sustainable consumption opportunities Source: The Eurobarometer survey on Europeans attitude towards SCP,
11 Challenges and opportunities for retailer companies Sustainable consumption opportunities Barriers and Enablers Source: Fien, Bentley, Neil - Young People as Agents of Change Challenges and opportunities for retailer companies Sustainable consumption opportunities A comparison of life-cycle cost between a incandescent lamp and a CFL While the purchasing costs of energy efficient lamps is 5-20 times more than regular lights, they do not only save immensely in electricity costs, but have a much longer lifespan and therefore need less maintenance. Source: Energy Saving Trust (2006) Energy Efficient Lighting: Guidance for installers and specifiers, London. 22
12 Challenges and opportunities for retailer companies Opportunities in value chains Current management efforts high Focus of current management effort Management efforts low Untapped potential Raw material extraction Supplier production In-house production Retail shop Distribution Usage Endof-life Value Chain Source: CSCP 23 SCP can help to create value for business Classic mismatch between opportunities and efforts Resource efficiency potential Management efforts Sustainability high in the supply chain? low Policy, performance and reputation opportunities 80% of overall efforts focus on 20% of the total risk Sustainability during consumption? Raw material extraction Supplier production In-house production Retail shop Distribution Usage Endof-life Value Chain Source: CSCP 24
13 European retailer activities in the move towards SCP Why do retailer companies care? Why should my business care? Economic savings Stakeholder pressure Opportunity to enter green matekts Anticipate regulation 25 The role of retailing in the move towards Sustainable Consumption and Production! Most common activities and exploratory actions of retailer companies Role of retailing in the move towards SCP Opportunities for retailer companies in the move towards SCP Most common activities and exploratory actions of retailer companies Recent SCP policy frameworks and instruments directly targeting retailing
14 European retailer activities in the move towards SCP An overview Source: ETC/SCP, European retailer activities in the move towards SCP Which activities are the most common? Source: ETC/SCP,
15 European retailer activities in the move towards SCP Greening supply chain management The Supply Chain Common Options for Green Supply Chain Management a)! to require suppliers to assess their environmental performance; b)! to assist suppliers in greening their operations, and c) to participate in collective action with suppliers e.g. through farm assurance. Developing a Code of Conduct Various best-practices and potential partnerships (i.e. associations, NGOs und transnational agreements) are explained (see next slide for examples). Guarantee of accomplishment Different opportunities for controlling fulfillment. For example:! Self audit of Code of Conduct`! Third party controls! Training of suppliers 29 European retailer activities in the move towards SCP Greening supply chain management The Supply Chain -! Examples of Instruments and Options for Supply Chain Management - Code of Conduct Business Social Compliance Initiative (BSCI) IKEA - IWAY 2003 founded through the European External Trade Federation. A regular control from outside as well as a database for cutting off different suppliers are available. Training and research operations are regularly conducted. The IKEA Way on Purchasing Home Furnishing Products (IWAY) compares the regional differences IKEA regarding the respect of the Code of Conduct achieving a geographic diversification. 30
16 European retailer activities in the move towards SCP A rare upstream activity: choice-editing What does choice editing mean?! Pre-selecting the particular range of products and services available to consumers. Choice-editing is seen by consumers as increasingly desirable as they look to others to organise the choices that they face.! But how to select & communicate this complex selection effort in a simple way? Choice-editing was first mentioned by Sustainable Development Commission of the UK in the I will if you will Publication Which retailers practice choice-editing?!b&q edits out non-sustainable wood and sources only FSC labelled wood.! Sainsbury s now only see fair trade bananas! Marks & Spencer only sell free-range eggs! MEMO, German office supplier screens and lists best in class products available. 31 European retailer activities in the move towards SCP A frequent in-shop activity: Efficient energy consumption In a voluntary move, some of the major European retailers committed to reducing their own energy consumption by 20% by 2020 (ERRT Declaration on Energy Efficiency). 32
17 European retailer activities in the move towards SCP An overview of upstream activities Marketing & Customer Care Finding different ways to increase the Value of the Product How can productivity of raw materials increase and how to reduce costs of waste management? Product Sales: more sustainable products How to extend into untapped areas to become a market leader and increase profitability? Disposal of Products: Waste Reduction, Recycling and Reutilisation Improvement How to increase service level to achieve more value creation? Product use: Reduction of environmental impact in the use phase 33 European retailer activities in the move towards SCP A rare downstream activity: Carbon labelling has multi-pillar complexity! Which type of carbon labelling to use?! low-carbon, carbon rating, carbon score! How to tackle the scientific difficulties?! types of GHG, system boundaries, life-cycle stages (usephase included?), offsetting, data quality, allocation, land use change Will consumers choose based on carbon footprint? Is carbon footprint enough to compare products? 34
18 European retailer activities in the move towards SCP A rare downstream activity: Carbon labelling has several types Carbon score declared in weight units Low carbon (traffic light) seal (within one category) Low carbon product rating (cross category) 35 European retailer activities in the move towards SCP A rare downstream activity: Carbon labelling has multi-pillar complexity! Which type of carbon labelling to use?! low-carbon, carbon rating, carbon score! How to tackle the scientific difficulties?! types of GHG, system boundaries, life-cycle stages (usephase included?), offsetting, data quality, allocation, land use change Will consumers choose based on carbon footprint? Is carbon footprint enough to compare products? 36
19 The role of retailing in the move towards Sustainable Consumption and Production! Recent SCP policy frameworks and instruments directly targeting retailing Role of retailing in the move towards SCP Opportunities for retailer companies in the move towards SCP Most common activities and exploratory actions of retailer companies Recent SCP policy frameworks and instruments directly targeting retailing Recent European policy initiatives SCP and Sustainable Industry Policy Action Plan EU SCP Action Plan Better Products Review of the scope of the directive on the Eco-design of energy using products, setting minimum requirements for products with significant environmental impact, benchmarks of performance, Smarter Consumption Extension of Energy labelling directive to energy-related products, revision of Eco-label regulation, revision of Energy labeling directive, Green Public Procurement promotion though inicative targets and supportive tools, establishment of a Retailer Forum to reduce environmental footprint of the retailer sector and its supply chains and promote more sustainable products Leaner And Cleaner Production Promotion and monitoring of Resource Efficiency, Eco-Innovation and Environmental Technologies, Review of EMAS, SMEs (Enterprise Europe Network) Global Markets Sectoral approaches in climate negotiations, promote SCP internationally, contribute to international initiatives: 10YFP, Marrakech Process, SWITCH- Asia Programme, help disseminate green technology (Env. l Tech. Verification Scheme) 38
20 Recent European policy initiatives SCP and Sustainable Industry Policy Action Plan Retailers Environmental Action Programme Retailer Forum aims to voluntarily contribute to reducing the environmental footprint of the retail sector and its supply chain, promoting more sustainable products, and better informing consumers. Identify opportunities and barriers, share best practices, collect scientific evidence on evaluation of environmentally-sound products, identify key challenges ahead, deepen understanding of current levels of knowledge and data on key issues, report on progress of actions. No harmonization of actions or sector specific efforts, but wishes for overall improvements based on individual company actions 39 Recent European policy initiatives Retailer Forum s REAP Retailer Forum 40
21 Recent European policy initiatives SCP and Sustainable Industry Policy Action Plan Retailers Environmental Action Programme An open-ended list of initiatives (MAP) will be drawn up in which individual retailers will indicate their own engagements or planned actions. These actions are grouped into three categories: What we sell: includes actions aimed at selling lower impact, better performing products and services; How we sell: includes actions aimed at limiting environmental impacts from retailers own distribution activities (stores, distribution centres, transport of goods) as well as limiting environmental impacts of operations through the supply chain; How we communicate: includes actions aimed at informing and influencing the consumer to make better choices and decisions in consuming, owning and using more sustainable products and services. 41 Recent European policy initiatives SCP and Sustainable Industry Policy Action Plan Retailer Forum Work Plan 42
22 Recent European policy initiatives An overview of policy initiatives on carbon labelling!!!!!! UK: Specification for the assessment of the life cycle greenhouse gas emissions of goods and services (PAS 2050:2008) published by BSI. France: Legal requirement to have environmental indications on products as of 2011; General principles for an environmental communication on mass market products (BP X30-323) published by AFNOR; Methodological guides per product category, including food and drinks. Belgium: The authorities of the Region of Brussels are assessing the feasibility of a carbon footprint label for food. Sweden: Climate labelling scheme for food has been launched with Government support. Germany: Project on CO2 labelling involving WWF Deutschland, Öko-Institut, Potsdam-Institut für Klimafolgenforschung und Thema1. China, Thailand, Canada, Korea and Japan are also working on schemes. 43 Recent European policy initiatives Sector initiatives Sector organisations NGOs Academic and research EuroCommerce CIAA European Food and Drink Industries (CIAA) the European Food SCP Roundtable Packaging Associations Consumer Focus in the UK Rates food retailers in the UK Consumers International Benchmarking CSR initiatives in retailer sector BEUC & EEB Retailer Forum linked activities ETH Zurich with COOP Switzerland ETC/SCP Retailers Role towards SCP Many more We will discuss shortly. International organisations UNEP/SETAC Life Cycle Initative Workshop series on enhancing product chain communication WBCSD Sustainable consumption work area Vision 2050 for Sustainable Lifestyles Project Governmental initiatives Retail Forum (launched March 2009) Part of EU SCP Action Plan German CSR Project 44
23 International initiatives retailers role in moving towards SCP UNEP s efforts Working towards SCP from Retailers Calender! Understanding the context! A Guidelines Manual for Retailers Toward Sustainable Consumption and Production! March August 2007 to Retailer Discussion Groups and Project Groups! Part of UNEP/SETAC Life Cycle Initiative and Marrakech Process! Life Cycle Expert Group Meeting in Paris in January 2009! Prepared a background document mapping around 90 retailer initiatives around the globe.! Scoping workshop for partnerships on communication! April April 2009 implementation International initiatives retailers role in moving towards SCP UNEP s efforts: Retailers Calendar
24 International initiatives retailers role in moving towards SCP UNEP s efforts Working towards SCP from Retailers Calender! Understanding the context! A Guidelines Manual for Retailers Toward Sustainable Consumption and Production! March August 2007 to Retailer Discussion Groups and Project Groups! Part of UNEP/SETAC Life Cycle Initiative and Marrakech Process! Life Cycle Expert Group Meeting in Paris in January 2009! Prepared a background document mapping around 90 retailer initiatives around the globe.! Scoping workshop for partnerships on communication! April April 2009 implementation International initiatives retailers role in moving towards SCP UNEP s efforts: Background paper on SCP initiatives involving retailers
25 International initiatives retailers role in moving towards SCP UNEP s efforts: Results of the workshop with major retailers & manufacturers Visit for the details of the workshop: Way ahead...
26 Way ahead... and the final word: Does sustainable consumption mean selling more and more sustainable products only?
27 The role of retailing in the move towards Sustainable Consumption and Production! Thank you for your attention!!! Burcu Tunçer CSCP Tel Fax
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