1 The Sustainability Tidal Wave Jeanne von Zastrow, FMI ROFTA Spring Conference

Sustainability:

1. What is it? 2. What is driving it? 3. How is the food industry responding? 4. Where can I start?

2 What is Sustainability? Actions, lifestyles and products that meet current needs without sacrificing the ability of future generations to meet theirs.

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

FMI Sustainability Task Force Definition

A HEALTHY balance = People, Planet and Profits

3 “Environmentalists” What a difference 30 years make!

THEN NOW

• Sophisticated • Hippies and Wackos •Educated •Communists • Socially Conscious • Tree Huggers •Ethical • Granola Heads • Eco Geeks • Green Thinkers

4 What is driving this?

• Fragile Planet • Developing World • Climate Change •Toxins • Globalization

5 WHAT is driving this? Our Fragile Planet

Humans are drawing on capital rather than interest, and once that is exhausted, they will find Mother Nature reluctant (and unable) to make a loan.

Our lifestyle for everyone = 4 planets!

6 Living beyond earth’s capacity is not sustainable…

• Fisheries in collapse – same course = no fish by 2048

• Water Wars - 80% = agricultural

• Energy resources - shortages, food to energy

• Climate change is real - extreme unpredictable weather playing havoc on prices and supplies

• Demand doubles = we add 3 billion people by 2050

7 ... in the eye of the hurricane

Source: NWS

8 WHO is driving the sustainability movement?

• Media • Government • Advocacy Groups • Education •Customers • Employees • Business

9 An Inconvenient Truth The Debate is OVER – over 70% of Americans believe in climate change and want government and business to act now!

10 DRIVERS: Media Oprah’s Advice: DRIVERS: Media

Start making eco-friendly choices in the .: • Look for minimal packagi ng

Purcha se organic produc e From www.Oprah.com Bring your own 12 bag to DRIVERS: Advocacy Groups Have Credibility

Who the Public Believes to Act in the Best Interest of Society 30 20 % of “yes” minus % of “no” 10 0 -10 -20 NGOs United Large Local National Global World Economic Forum 2005 Nations Companies Governments Companies Who is Credible with the Consumer?

Who the Public Believes to Provide 70 them Accurate Information 60 50 40 Percentage of Respondents 30 20 10 0 ActivistsRetailers Food Gov'tFast Food Manufacturers

Source: GfK Roper Public Affairs & Media, December 2007 Activists are Having an Impact Positive NGO + Business Partnerships

• World Wildlife Fund and Coca-Cola conserve and enhance fresh water resources around the world

• Unilever partnered with Greenpeace develop HFC- Free Freezers

• and Environmental Defense sustainable shrimp farming to help the environment and communities

• Sustainable Packaging Coalition works to innovate new more environmentally friendly packaging. DRIVERS: Consumers Emerging “Ethical” Consumers

• 62% consumers value primary recycling/sustainability efforts

• 50% consumers buying local over organic

• 44% using reusable bags at least part of time

• 89% customers interested in green products, 30% look for them

• Green and organic shoppers twice as loyal to primary than average consumer

• 63% increase in sustainable product sales 2005-2007

17 More Green = More $Green$ Average Basket Size is 3x $129 $133 larger when GREEN is in $116 the basket $98

$29

Average Buy 1 Buy 2 Buy 3 Buy 4

Source: Catalina Connection Builder, 12 Weeks Ending 7/29/07

18 DRIVERS: Gen-Y Employees: Future Leaders are Increasingly Green

• 92% of graduating college seniors want to work for an environmentally responsible company.

• 48% of employees would work for less pay and 40% for longer hours if working for socially responsible company

• 61% accept personal responsibility for making a difference in the world and 78% say companies have the same responsibility

19 DRIVERS: Education

Green is Hip and Stylish

• Increasing emphasis from K – Ph.D. • More colleges and universities offering degrees and more students enrolled • Colleges with “sustainability labs” 1. Partner with business on research and strategies 2. Sustainability “cottages” on campus 3. New research

20 DRIVERS: Government Green is the New Red, White and Blue!

• All three presidential candidates favor new regulation • Big companies have asked feds for carbon caps • 840 Mayors have endorsed the Kyoto Protocol • Ireland, China, Uganda, banned/ taxed plastic bags • Over 80 plastic bag bills in play • Government employees stay at sustainable properties • Government going “green” in buildings (LEED) • MANY Green Government & Business Partnerships

21 Drivers: Business

“The entire food industry shares a responsibility to develop environmentally and socially responsible practices. Preserving the health and well-being of our customers, employees, communities and environment is a major business imperative of our times.” Tim Hammonds President and CEO of FMI FMI’s Sustainability Starter Kit

22 DRIVERS: Business Movers, shakers and pioneers:

If we aren’t at the table, we’re on the menu!

23 Why Do It? ECO-Advantages! Growth • Increase Market Share • Build Customer Loyalty • Differentiation and Branding • Improve Employee Morale and Loyalty • Increase Efficiency/Productivity

Reduce Risk • Secure the Supply Chain for Future • Avoid Negative Public Opinion • Prepare for/ Be Ahead of New Regulations I I n n d

25 Creativity Gone Wild! Cheatneutral Helping you because you can't help yourself What is Cheat Offsetting? • When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere. • Cheatneutral offsets your cheating by funding someone else to be faithful and NOT cheat. This neutralizes the pain and unhappy emotion and leaves you with a clear conscience. Can I offset all my cheating? • First you should look at ways of reducing your cheating. You can use Cheatneutral to offset the remaining, unavoidable cheating.

26 Food Industry Responding……

• Everyone: has initiatives – energy, store design, sourcing – NO coordinated strategy

• Majority: just beginning to identify strategy • Emerging few: identified a key individual and cross functional team • Pioneers: strategy; leader, team job descriptions; goals and metrics; working with stakeholders; educating employees and customers; seeing bottom-line results

27 FMI Research on Retailers Overall sustainability strategy • 41.3% have corporate sustainability programs • 14.7% more plan to implement in 2008

Sustainable options for consumers • 93.5% offer reusable bags, 55.7% offer incentives • 68.4% offer plastic recycling at store for customers

Sustainable building practices • 17.6% have formalized sustainable building team • 25.5% more planning green building team • 8% currently have LEED-certified store; 20% plan to • 20% using recycled building materials, 38% plan to

28 A Few Examples….

• Recycling = Revenue: 3 retailers made $50 million recycling plastics and cardboard, will double in 2008.

• Local is HOT: Retailers + American Association of Family Farms partnership coordinates with local farmers

• SUPERVALU: Partnership with Will Steger Global Warming Awareness Expedition

• Hannaford: Guiding Stars, scientific nutritional evaluation of every product, rated l-3 stars And more….. • Wegman’s parking signage as reusable bag reminders

• Wal-Mart asked 70,000 suppliers + reduced packaging; helping employees develop personal sustainability plans

• United Natural Foods biggest LEED warehouse in U.S.

• Shaw’s and partner with EPA’s Green Business Programs – Green Chill, Smart Way

• – Carnegie Mellon design students competed in reusable bag design contest

30 Not just the big retailers….

• New Leaf Markets + Fishwise, sustainable seafood marketing program increased loyalty, sales and profits.

• Market of Choice, selling extra solar power back to grid + creating compost from food waste to give customers.

• Puget Consumers Co-op sustainability story throughout store + first to eliminate plastic bags • Pizza Fusion: “Saving the earth one pizza at a time” – hybrid delivery cars + offsets all power with wind energy

31 How to Develop A Sustainability Strategy Sustainability, bigger than you think….

• Fair Trade and Local • Regulations • Green Buildings • Green Cleaning •Energy •Employee • Sustainable Agriculture Education • Health and Wellness •Customer • Community Relations Education • Packaging • Marketing •Recycling • Supplier Relations • Waste Management • Supply Chain • Operations • Transportation

33 Framework for Sustainability FMI’s Sustainability Task Force

Issues, priorities, tools, resources

27 people,19 companies, 20,000 supermarkets…

Giant Eagle, Inc. SUPERVALU INC. The Co. Hannaford Bros., Co , Inc. Lunds Food Holdings, Inc. Unified Grocers, Inc. Publix Super Markets Wakefern Food Corporation Ukrop’s Super Markets, Inc. Buehler Food Markets, Inc. Wegmans Food Markets The Great A & P Tea Co., Inc. Schnuck Markets, Hy-Vee, Inc. Raley’s Family of Fine Stores Wal-Mart Stores, Inc.

After four meetings, and many “war stories”…… the key learning's are ….

35 They say “sustainability is difficult” because it IS….

• A fundamental change in mindset and culture and not just a new program or two. • Unique to every company, no one-sized-fits-all approach. • Retailers are increasingly held responsible for products upstream and downstream Paradigm Shift = A New View…..

Old School: Cost to be lived with and minimized

New School: can add economic value

Next School: central to brand value Sustainability Success Plan:

Learning's from Task Force Companies

• Focus on balanced “triple bottom line” • Commitment: top to bottom, bottom to top • Allocate $$ resources • Strategy + Leader + Team • Recognition, accountability and incentives • Get smarter….faster, use existing resources • Create unique partnerships with stakeholders • Start with “easy wins” and build on current success

38 The FMI Sustainability Starter Kit The “How”

• A guide to develop strategy • Practical tips and advice • Best practices and examples • Tested with 5 retailers • Available in PDF with live links

Sponsoring companies of the FMI Sustainability Starter Kit FMI’s Website – fmi.org/sustainability

• Sustainability Opportunity The “What and Why”

• Sustainability Starter Kit The “How”

• LOTS of Free Research

• Resources - Conferences, Publications, NGO’s…

40 Sustainability Summit

•Leading-edge pioneers •Success stories •Ideas and best practices •Brand-new research •Networking •Created for “teams” •Walk away with a plan Land Mines to Watch Out For

Naysayer's Get internal alignment & everyone singing from same book

Getting pigeonholed in philanthropy This is not “feel good stuff” – it’s triple bottom line

Being labeled a “green washer” Walk the talk - get your house in order “inside” before you go “outside”

42 Our present path is not sustainable we can and must act now. Our businesses can help create a better future.

43 “It is not the strongest species that survive, nor the most intelligent, but the ones who are most responsive to change.”

-Charles Darwin- Questions?

Jeanne von Zastrow [email protected] 435-259-3342

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