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Political Economy and Sustainability in the UK Food Service Sector

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Political Economy and Sustainability in the UK Food Service Sector 1 [This is a working paper from the project “Sustainable consumption and production and political economy in the UK food service sector”. Please do not quote without permission of the author] Daniel Welch, Sustainable Consumption institute, University of Manchester [email protected] Corporate ownership and the provision of sustainable consumption: political economy and sustainability in the UK Food Service Sector Introduction This paper arises from a project that set out to examine the relationships between political economy and sustainability in the UK food services sector (comprising of restaurants, cafés, hotels, catering companies etc.). A brief overview of the political economy of the sector is provided in an Appendix. A focus of the project was to examine the effect of Private Equity investments in the sector, and a comparative case study was conducted of the sustainability engagements of two of the largest company groups in the sector: one a shareholder-owned publicly listed company, the other formerly owned by one of the world’s largest private equity groups. The paper proceeds by first addressing corporate sustainability in the sector and its relation to public and private equity ownership. I go on to argue that differences in corporate engagement with sustainability attributable to these corporate ownership forms have eroded with the development of corporate sustainability, closely allied to the sustainable development agenda. I argue we can usefully address the latter phenomena through the concepts of “metrological project” (Latour 1987; Mitchell 2008) and “economic imaginary” (Sum and Jessop 2013). I conclude by reflecting on the prospects for transitions towards genuine sustainability offered by sustainable development, and argue that a more profound transformation of economic institutions is required. Corporate Sustainability in the Foodservice Sector Two initiatives index engagement specific to the sector. In 2010 trade association the British Hospitality Association’s five-year strategic plan saw “Sustainability at the heart of strategy” touted as one of nine strategic commitments (BHA 2011)1. In the same year the Global Reporting Initiative, a voluntary international standards-setting initiative for corporate sustainability reporting (aligned with the UN Global Compact), published a dedicated ‘Sector Supplement’2, demonstrating specification of reporting standards. WRAP (Waste and Resources Action Programme) has played an important galvanising role for sector engagement with waste reduction.3 Subsector specific initiatives include the Sustainable Restaurant Association, which runs an accreditation scheme and works with both independents and company groups (such as Whitbread) and the Soil Association’s ‘Food For Life Catering Mark’ accreditation 1 Notably, these concerns had been crowded out of the BHA’s 2017 report, overtaken by more pressing issues of Brexit. 2 ‘GRI Food Processing Sector Supplement’ (which covers the foodservice sector, including food commodity trading) 3 On the role of WRAP in galvanising the discourse coalition around food waste in the retail sector see Welch, Evans and Swaffield (forthcoming) and Evans, Welch and Swaffield, 2017. 2 scheme.4 Cross cutting the sector and its supply chains are of course the major voluntary transnational certification schemes (e.g. Fairtrade, MSC, Rainforest Alliance, RSPO) operating in numerous value chains with some (e.g. organic) partially integrated with global food governance (Codex Alimentarius) and EU and national legal standards. Engagement in corporate sustainability is generally indexed by sustainability reporting. While reporting is often dismissed as a PR exercise or greenwash, what these criticisms fail to acknowledge is that such engagement with metrics-based company reporting (especially when integrating standards such as the GRI) requires the institution of a range of organisational practices—specialised sets of auditing and monitoring procedures necessary to provide the range of data, figures and targets required for sustainability reporting. This “calculative infrastructure” can have performative effects (Gond and Giamporcaro, 2016). As consultancy AccountAbility note (Forstater, et al., 2006: 11): “...some evidence suggests that the process of building a public report is the single most important driver of change in how things to be reported are managed, since it increases organisational knowledge, enables reflection and catalyses policies and practices”. The adoption of metrics-based sustainability is often largely a function of scale, albeit strongly conditioned by sector, with both non-regulatory and regulatory drivers (such as carbon emissions reporting, e.g. UK Climate Change Act 2008). Most recently the EU Directive on non-financial disclosurehas come into force, applying to 6000 EU companies with over 500 employees (European Commission, 2013), and been incorporated into UK law.5 The legislation requires reporting on environmental, social and employee-related, human rights, anti-corruption, diversity and bribery matters, as well as on the company’s business model and risks associated with these areas. It is expected that the first company reports will be published in 2018 covering financial year 2017-2018. The EU directive encourages organisations to report against well-established and recognised frameworks such as the Global Reporting Initiative’s Sustainability Reporting Guidelines and the UN Global Compact. The top 10 company groups in the Foodservice Sector by sales6 all engaged in corporate sustainability reporting and associated practices, albeit to materially differing degrees (company web sites, http://database.globalreporting.org, 2018). Two examples of corporate sustainability processes in the sector Whitbread Plc Whitbread Plc is the UK’s largest hospitality group and the third largest foodservice group by sales, owning mass market food service brands including the UK’s largest coffee shop chain Costa Coffee, 4 Currently, the Catering Mark accredits more than 180m meals a year, including the catering in over 25% of schools in England, staff canteens and companies such as Pearson and Jaguar/Land Rover as well as institutions including Defra, the Greater London Authority, the Scottish Government and the National Assembly of Wales. http://www.sacert.org/catering 5 Companies, Partnerships and Groups (Accounts and Non-financial Reporting) Regulation No. 1245. http://www.legislation.gov.uk/uksi/2016/1245/pdfs/uksi_20161245_en.pdf 6 McDonalds, Mitchells & Brewer, Compass, Whitbread, YUM! Brands, Greggs, SSP, Green King/Spirit, Starbucks, Restaurant Group, Domino Pizza. 3 largest hotel chain Premier Inns, and restaurant brands Beefeater, Brewers Fayre and Table Table, with over 4,700 outlets, including 650 restaurants and over 2,200 coffee shops and around a 50,000 strong UK workforce (Whitbread 2017). Whitbread had a 6.3% share of the foodservice market in 2016 (Euromonitor 2017). Costa Coffee, the company’s largest brand in the sector was the fourth largest UK chain by outlets in 2016 (2,121). As a PLC, as of 2017, the company was 5% owned by Blackrock, the world’s biggest Private Equity firm (down from 10% in 2015 [ECRA 2015]), with about 15% owned between three further fund managers (Whitbread 2017). Whitbread’s first major commitment with the sustainability agenda began in 2006 with engagement with the Carbon Trust to develop a “low carbon business vision”, establish base line emissions data to institute a long term programme of emission reductions (26% by 2020) and engage in investment in green technologies (Carbon Trust 2010). This was followed by a dedicated 2008/2009 Environment Report and in 2009 all of Whitbread's UK operations were certified under the Carbon Trust's Carbon Reduction Standard (Carbon Trust 2010). Following a large-scale staff survey on attitudes to the environment, in 2009 the company convened a multi-stakeholder “debate on the future of sustainable hospitality”, including industry representatives the BHA, consultancies and NGOs and third sector organisations —e.g. Business in the Community, the Carbon Trust, Soil Association, the Fairtrade Foundation, and WWF. The company’s official account of this event noted that the hospitality sector had “to date done little to demonstrate meaningful solutions to these challenges” (Whitbread 2010). Both internally and externally the case of increasing engagement in the sustainability agenda was made around employee engagement, consumer expectations, expectations of major investors and both the strategic opportunities and civic duty of “leadership” in “sustainable hospitality”, framed in terms of leading the sector in reducing CO2 emissions and social and environmental supply chain auditing. “Raising consumer awareness of climate change and how consumers, through simple behaviour change, can support the move to a low carbon economy is a major opportunity for the sector.” (Whitbread 2010, p. 6) “Educating employees is vital…the cultural benefits of fostering a sense of shared involvement and responsibility in the community can help improve morale, cohesion and, ultimately, staff retention.” (ibid) ““Do our consumers really care? Our research was compelling. Our guests wanted the businesses they were engaging with and the brands they were using to take it very seriously and to start to do something about it…We are trying to do the right things for the planet, for the local communities in which we operate and also commercially. All of this ultimately
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