Sustainable Sourcing for Category Managers: Using the FMI Guide

Five Winds International &

Ecos US

September 30, 2010

• United Soybean Board

• FMI Sustainability Executive Committee and Council– Specifically those that helped to launch the development of the

guide: Suzanne Forbes (Wakefern), Harriet Hentges (Ahold USA), Tom McIntyre (Supervalu), Karen Meleta (Wakefern), Tracy Taylor (Ahold USA) and Jeanne von Zastrow (FMI)

• All those who participated in our Guide survey and submitted additional comments

Produced “by the industry for the industry”

Thank you to:

Acknowledgements

Background on Guide & Presentation

• This presentation accompanies the document:

Sustainability on the Shelves

A Guide for Category Managers

• Please customize the Guide and these slides for your own use

Agenda

• Learning Objectives• What is Sustainability?• Sustainable Sourcing• Decision Framework for Fresh• Take-Home Messages• Questions

Learning Objectives

1. Provide good working understanding of sustainability in the food retail sector

2. Identify key sustainability issues specific to each product category

3. Possess questions and tools to help understand and verify sustainability claims, recognize “greenwashing”, and select more sustainable products

What is Sustainability?

Sustainability

“Business practices and strategies that promote the long term well-being of the environment, society, and the bottom line” - FMI

Sustainability in Your Company

Poll: Who is in charge of sustainability in your company?

a. Corporate Sustainability Director

b. Senior Executive designated to manage sustainability

c. Sustainability Team

d. Other

e. No one

What is Sustainable Sourcing?

SUSTAINABLE ATTRIBUTES

Quality

Availability Price Service

Sustainable Sourcing

I take my decision-making elements of price, service, quality and availability and

simply add our seafood sustainability priorities as a fifth. Not all elements carry equal weight at all times but they are my top priorities when choosing what to buy.

- Tracy Taylor, Ahold USA

Sustainability is a Strategic Business Issue

300% Growth of U.S. sales of “ethical” cleaning products in 2009. Packaged Research

$73M Additional profit generated by Marks and Spencer’s Plan A sustainability

strategy in 2009. M&S 2010 Progress Report

Consumers are looking for “green”

Source: 2009 GMA/Deloitte Green Shopper Study

Stepwise approach to buying more sustainable products

Step 1: Know Your Priorities

What are your company’s priorities?

Sustainable sourcing strategyCompany sustainability priorities

Product priorities

• Poll: What sustainability issues are your customers asking about? (select all that apply)

a) Packaging

b) Sustainable seafood

c) Organic

d) Local

e) Toxic/natural ingredients

f) Other

Step 1: What are your customers’ priorities?

What is a Sustainable Product?

eco-labelled

less packaging

fair trade

less toxics

use fewer resources durable

organic

recycled content

BPA-free

How do these terms relate to sustainability?

recyclablelocal

What are the Sustainability Issues for Fresh?

Carbon Footprint

See Guide, page 22

A carbon footprint is the sum of all greenhouse gases emitted during a product’s production, transportation, consumption, and disposal.

Carbon footprint calculation for a standard bag of Walkers Crisps is 80g CO2 which compares to 243g CO2 for an average cheeseburger.

Sources: US EPA Greenhouse Gas Equivalencies Calculator and http://www.walkerscarbonfootprint.co.uk/walkers_carbon_footprint.html and http://openthefuture.com/cheeseburger_CF.html

Water Footprint

53 gallons!

Source: http://www.huffingtonpost.com/2009/02/13/1-latte-53-gallons-of-wat_n_166759.html

See Guide, page 22

A water footprint is the sum of all the water used during a product’s production, transportation, consumption, and disposal.

Waste Footprint

Source: http://www.epa.gov/reg3wcmd/solidwasterecyclingfacts.htmSee Guide, page 23

• A waste footprint is the sum of all the waste generated during a product’s production, transportation, consumption, and disposal.

• Every year, the US generates around 14 million tons of food waste, equivalent to 106 pounds of food waste per person

Packaging

Source: http://www.cleanair.org/Waste/wasteFacts.html

Almost 1/3 of the waste generated in the U.S. is packaging

See Guide, page 24

Organic, Local, and Bioengineering

Consumer demand vs. sustainability science?

Source: http://pubs.acs.org/doi/abs/10.1021/es702969f

See Guide, page 25

Organic: grown without pesticides, synthetic fertilizers.Local: sourced or grown locally (distances vary).Bioengineered: use of biotechnology in the production of foods

Sourcing is the life cycle Hot Spot for Fresh

Sourcing is the Hot Spot for Fresh

50% of the Earth's habitable land is used for agriculture

Livestock produce

51% of annual worldwide greenhouse gas emissions

Source: http://www.worldwatch.org/files/pdf/Livestock%20and%20Climate%20Change.pdf

Agriculture consumes

69% of the planet’s fresh water

Step 2: Communicate Needs to Suppliers

I am interested in sourcing products that address:

• The sustainability attributes of my product category

• My company’s sustainability priorities

Step 3: Acquire Information

Poll: How do you typically get information about sustainability from your suppliers?

a) Written marketing material

b) Sales presentations

c) Supplier website

d) Informal one-on-one meetings

e) I have to inquire

f) I don’t receive information

Step 3: Acquire Information

• You’ve started the conversation, now begin to acquire information on company and product sustainability

• See page 21 of Guide for General Questions to ask your suppliers

http://www.greenbiz.com/news/2010/03/11/how-to-embed-sustainability-into-company-dna#ixzz10qIvI7SA

"A lot of companies publish how green their building is, but it doesn't matter if you're shipping millions of power-hungry products with toxic chemicals in them," …."It's like asking a

cigarette company how green their office is.”Apple CEO Steve Jobs

Source: Businessweek 2010

Step 4: Evaluate Information

• If you have information gaps, circle back to “Acquire information”

• Do you have a process to manage information?

• Possible starting points:– Review and compare to information in

Guide & “For More Information” links– Compare information with your

company priorities identified in Step 1– Talk to your sustainability team– Talk to other category managers

Types of information you may receive:

Evaluate Information

SOURCES: World Resources Institute, Big Room Inc. | Bonnie Berkiwitz and Laura Stanton/The Washington Post - May 3, 2010

Learn more about the eco-labels for your category

Eco-Labels: One tool in your toolkit

(Used with Permission)

1. Sin of the Hidden Trade-Off

2. Sin of No Proof

3. Sin of Vagueness

4. Sin of Irrelevance

5. Sin of Fibbing

6. Sin of the Lesser of Two Evils

7. Sin of Worshiping False Labels

For more information, see Guide pages 27-28

Ask for specific data and substantiation on vague terms like:

• Eco-friendly• Sustainable• Green• Environmentally-friendly

Greenwashing

• Poll: If you think you’ve seen greenwashing, what about it made you question the claim?

a) No data/proof provided

b) Vague or undefined terms used

c) Claim seemed too good to be true

d) Hidden trade-offs may exist

e) Other

Make Purchasing Decision

• Evaluate sustainability as only one aspect in your purchasing decision

Quality Availability Price Service Sustainability attributes

Take-Home Messages

1. Know the key sustainability issues for your category and how they fit with your company’s approach

2. Be on the lookout for greenwashing - when you see vague claims (e.g., “green”), dig deeper! (see Guide pages 27-28)

3. Just get started! Start small and build up, using the Guide as a reference tool along the way

Further Questions?

Thank you

for your attention and participation today!

Coming soon via Survey Monkey

Did this webinar:

1. Provide you with a good working understanding of sustainability in the food retail sector?

2. Identify key sustainability issues specific to your product category?

3. Possess questions and tools to help understand and verify sustainability claims, recognize “greenwashing”, and select more sustainable products?

Contacts for more Information

Libby BernickFive Winds Internationall.bernick@fivewinds.com(610) 640-2302 x102

Kats MaroneyEcos USecosmaroney@verizon.com(610) 299-1949

Living Our Values

Five Winds is a Carbon Neutral Company

and follows a Sustainable Purchasing Policy