2012 Sustainability Reporting of the World’s Largest Food Retail Companies Pacific Sustainability Index Scores: A benchmarking tool for online sustainability repor ng Ahold, Carrefour, Cencosud, China Resou rces Ent erpri se, Col r uyt, Delhaize Group, Empire, George Weston, Gru p o Pão d e Açúcar, Herbalife, J Sainsbury, Jeronimo Martins, Kesko, Kroger, Lawson, Metcash, Metro AG, Metro Inc, Safeway, Seven & I Holdings, Shoprite Holdings, Stater's Bros Inc., Supervalu, Sysco, Tesco, Wesfarmers, Whole Foods Market , W m Morrison Supermarkets, Woolworths, and X5 R e t a i l G rou p The Roberts Environmental Center has been Contents the foremost analyst of corporate sustainability reporting for over a decade. We analyze Topics Page Company Rankings 3 corporate online disclosure using our Pacific Director’s Commentary 4 Sustainability Index (PSI) and publish the results Lead Analyst’s Commentary 5 online. PSI Overview 8 PSI Scoring in a Nutshell 9 The goal of corporate report analysis Sector Performance 10 conducted by the Roberts Environmental Visual Cluster Analysis 11 Center is to acquaint students with Environmental Topics 12 environmental and social issues facing the Social and Human Rights Topics 13 world’s industries, and the ways in which Environmental Intent Scores Ranking 14 industry approaches and resolves these issues. Environmental Reporting Scores Ranking 15 Environmental Performance Scores 16 The data presented in this report were Ranking collected by students at the Roberts Social Intent Scores Ranking 17 Environmental Center: Social Reporting Scores Ranking 18 Social Performance Scores Ranking 19 Human Rights Reporting Element 20 Performance by Country 21 Lead Analyst Relationship Between PSI Scores and 22 Hilary Haskell Financial Variables Explicit numerical goals Reported 25 Sustainability Management Analyst Topics Showing Performance 28 Simone Fine Improvement over Previous Year Data Topics in which Performance was Better 34 than Sector Average Environmental Analyst Commentaries alphabetically listed by 36 Damini Marwaha company name Appendix: PSI Questionnaire 134 Social and Human Rights Analyst Erin Rebecca Larsen Questions should be addressed to: Special Project Manager Dr. J. Emil Morhardt, Director Lucas Van Houten ([email protected], 909-621-8190) Media/Public Relation Elgeritte Adidjaja, Research Fellow ([email protected], 909-621-8698) Quinn Chasan Sierra Gibson Roberts Environmental Center Jacob Shimkus Claremont McKenna College 925 N. Mills Ave. Claremont, CA 91711-5916 USA Copyright 2013 © by J. Emil Morhardt. All rights reserved. www.roberts.cmc.edu 2 Sustainability Reporting of the World's Largest Food Retail Companies Company Rankings Woolworths 64.21 Grupo Pão de Açúcar 63.38 Delhaize Group Grade Company Name Country 58.76 Wesfarmers A+ Woolworths Australia 56.42 A+ Grupo Pão de Açúcar Brazil Tesco Plc A+ Delhaize Group Belgium 55.90 Carrefour A Wesfarmers Australia 55.67 A Tesco Plc United Kingdom Kesko ACarrefour France 54.59 A Kesko Finland Seven & I Holdings 52.28 A- Seven & I Holdings Japan Ahold A- Ahold Netherlands 52.22 A- Wm Morrison Supermarkets United Kingdom Wm Morrison Supermarkets 50.57 A- Metro AG Germany Metro AG B+ Safeway United States 50.45 B+ Kroger United States Safeway 47.72 B Jeronimo Martins Portugal Kroger B J Sainsbury United Kingdom 46.85 B Metro Inc Canada Jeronimo Martins B Whole Foods Market United States 42.44 J Sainsbury B- Empire Canada 40.85 B- Supervalu United States Metro Inc C+ Sysco United States 38.73 Whole Foods Market C Colruyt Belgium 38.32 C Shoprite Holdings South Africa Empire C Metcash Australia 33.58 C- China Resources Enterprise Hong Kong-China Supervalu 33.57 D+ Herbalife Cayman Islands Sysco D Lawson Japan 30.63 D X5 Retail Group Russia Colruyt 27.27 D- George Weston Canada Shoprite Holdings D- Cencosud Chile 25.14 D- Stater Bros. holdings United States Metcash 23.63 China Resources Enterprise 19.87 Herbalife 15.94 Lawson 10.85 X5 Retail Group 8.27 George Weston 7.09 Cencosud 4.52 Stater Bros. holdings 2.95 0 20 40 60 80 100 www.roberts.cmc.edu 3 Sustainability Reporting of the World's Largest Food Retail Companies Director’s Commentary T his report, and two other new ones, one for the food processing sector and another for the beverages sector, not only have a new look and additional substance, they have been produced with a new technology developed in the Roberts Center over the last year. This real-time report production software results in the automatic partial production of reports as the data are entered by the student analysts, and has been quite effective in catching errors as they occur. It has also encouraged more topic-specific written analysis to go along with the numbers we have historically reported. Even more important, both the analysts and student managers can see what they have accomplished and how far they have to go in real time, and can often see the finished product before they leave for the summer. Previously we used the summer to assemble reports and clean up any deficiencies, so this new system works out better for everybody associated with the analysis. On another note, as we also see in the new beverages sector report, in this food retail sector report there is a striking (log) linear relationship between the overall PSI score and revenues. The largest companies are almost all doing a stellar job of reporting. This is good news; over the decade that we have been doing this, sustainability awareness and practices have become firmly entrenched at the top and are beginning to move down the supply chain. Clearly, though, there is still plenty of room for improvement at the bottom. J. Emil Morhardt, Ph.D. Roberts Professor of Environmental Biology Director, Roberts Environmental Center www.roberts.cmc.edu 4 Sustainability Reporting of the World's Largest Food Retail Companies “requires the United States Department of Agriculture Lead Analyst’s (USDA) to develop national standards for organically produced agricultural products to assure consumers Commentary that agricultural products marketed as organic meet Hilary Haskell ‘14 consistent, uniform standards.” The Act also requires USDA to establish an organic certification program based on recommendations of a 15-member National Organic Standards Board.”2 In order to address issues regarding organics certification, the USDA has The top three determined that organic products must be produced without methods such as genetic engineering, ionizing companies of the Food radiation, or sewage sludge; only use “allowed” substances from the National List of Allowed and Retail Industry earned Prohibited Substances; and be overseen by a USDA overall Pacific Sustainability National Organic Program-authorized certifying agent Index (PSI) score of “A +.” that follows all USDA organic regulations.ibid. Organic These companies included Grupo Pão de certification and labeling are not mutually exclusive. Açúcar, Woolsworths, and Delhaize Group. The three Without USDA certification, there must not be any companies that earned the lowest PSI score of “D-,” organic claims present on the main labeling display of a included George Weston, Cencosud, and Stater Bros. product. Only the “certified organic ingredients...and percentage of organic ingredients” may be displayed on Holdings. Green Food Purchasing, Locally Grown the product, without USDA organic certification. Organic Food, Sustainable Seafood, and Animal There are additional parameters by which “organic” Welfare were the most reported sector-specific can be defined for food products. 100% Organic, environmental topics. For the social aspect of the PSI Organic, “Made With” Organic, and “Specific Organic score, Customer Wellness and Nutrition was reported Ingredients” are the varying degrees in which a product far more frequently than any other scoring parameter, may be organically certified, ranging in degree from the most stringent to lax regulations by the USDA.3 given its pertinence to the sector. Further initiatives to Interestingly, according to the USDA’s economic unite reporting efforts across social and environmental research report, the main factor in determining organic topics could be an important area for improvement in food consumption is “education” ibid. The report the Food Retail industry. indicates that “Consumers of all ages, races, and ethnic Sustainable procurement from supply chains groups who have higher levels of education are more that demonstrate commitment to both social and likely to buy organic products than less-educated environmental responsibility is an essential aspect of consumers. Other factors, such as race, presence of the Food Retail Industry. One way in which companies children in the household, and income, do not have a can achieve more responsible supply chain consistent effect on the likelihood of buying organic procurement is through locally grown, organic food products”ibid. This finding emphasizes the importance of options that are becoming an increasingly popular accurate and consistent certification and labeling market for consumers. According to the Economic processes as propagated by the USDA, in ensuring that Research Service from the USDA, “Organic foods now consumers are well-aware of the purchasing decisions occupy prominent shelf space...most mainstream U.S. they make. The prominence of organic foods in food retailers... [which] have pushed retail sales of conventional grocery markets has also expanded organic foods up to $21.1 billion in 2008 from $3.6 considerably, growing from 7% to 46% over the course billion in 1997.”1 However, caveats exist in the of the years 1991–2006, and organic food was found to procurement and retail sale of these organic, locally be available in 82% of food retail stores in 2007. Prior grown options. Considerable confusion often arises in to the recent boom in conventional market retail of the organic certification and labeling process, an issue organic foods, Whole Food’s Market “365 Organic” that the USDA has worked to address in recent years. was one of the only organic private labels in the mid- The Organic Foods Production Act (OFPA) of 1990 1990s.ibid.