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Sustainability in Retailing

A Global Retail Perspective developed by the Coca-Cola Retailing Research Councils of Europe, North America, Latin America, and Asia

Responding to growing concern for the environment

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A Global Collaboration: About the report In August 2008, Coca-Cola Retailing Research Councils (CCRRC) representing four continents and the NACS/Coca-Cola Retailing Research Council brought together leading retailers from around the globe at the Global CCRRC Forum that was held in Beijing, China.

Over 150 of the world’s leading retailers assembled to discuss their perspective about how they should be “Responding to the Growing Concern for the Environment” – a topic that council members chose more than a year in advance.

Working at the Forum with some of the world’s most knowledgeable environmental experts, the Councils focused discussion on three key issues facing the industry: waste, carbon emissions, and sustainable agriculture.

Two clear themes emerged in Beijing. First, environmental concerns are critical for the retailing industry. Second, retailers have a strong desire to learn about environmental issues and to share best practices; this report takes a first step toward delivering on that expressed need.

Throughout the Forum, experts challenged the retailers in Beijing to expand their thinking – about these specific issues and about the retailing industry’s response to environmental issues in general – in the following ways: © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Dr. Rajendra Pachauri briefed retailers on the consequences of climate change for business.

Pachauri chairs the Intergovernmental Panel on Climate Change; he accepted the Nobel Peace Prize on the organization’s behalf in 2007. Pachauri is also DirectorGeneral of The Energy and Resources Institute (TERI).

The Rt. Hon. John Gummer explained sustainable agriculture and its importance to retailers, and discussed the global politics of the environment as they relate to retail.

Gummer leads Sancroft International, a consultancy that furnishes some of the world’s largest companies with advice on environmental, ethical, health, and safety issues.

His career in the British government includes service as Secretary of State for the Environment and Minister of Agriculture.

Sir Terry Leahy illustrated, using the example of Tesco, how sustainability makes business sense for retailers.

Dan Esty stressed that good environmental practice is good for business.

Leahy was appointed Chief Executive Officer of Tesco, Britain’s largest supermarket chain, in 1997. While pursuing ambitious sustainability goals, Tesco has also generated significant international growth and increased its lead as the UK’s largest retailer.

Esty is the Hillhouse Professor of Environmental Law and Policy at Yale University. He is the author or editor of eight books and numerous articles on environmental policy issues and the relationships between the environment and trade, globalization, security, competitiveness, and development.

Ma Jun encouraged retailers to use suppliers who support sustainable practices.

Yolanda Kakabadse Navarro served as the subject matter expert for waste discussions.

Ma Jun is a journalist and environmental advocate with the Institute of Public and Environmental Affairs in Beijing, China, where he advises multinational companies on Chinese labor and environmental regulations. Ma Jun recently helped compile China’s first public database on water pollution.

Kakabadse helped build Fundación Natura into one of Latin America’s most important environmental NGOs during the 1980s. Today she is Executive President of Fundación Futuro Latinoamericano, a private, nonprofit organization created in 1993 to promote sustainable development in Latin America.

Carter Roberts outlined how population growth is expected to affect the planet and interviewed Sir Terry Leahy regarding the role of the retailer in managing those effects.

Amory Lovins served as the subject matter expert for carbon discussions.

Roberts is President and Chief Executive Officer of the Washington, DC–based World Wildlife Fund, one of the world’s premier international conservation groups.

Lovins is a MacArthur Fellow and consultant physicist who has advised businesses and governments on how to get less energy to do more work for 35 years. He is the cofounder and leader of the Rocky Mountain Institute and a coauthor of Natural Capitalism.

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CONTENTS About this report: A Global Collaboration Executive Summary

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Foresight: The Environmental Imperative

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Foresight: One Retailer’s Response

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Perspective: Reducing Waste

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• Areas of Opportunity

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• Current Retailer Activity

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• Engaging Key Stakeholders

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• Open Issues

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• Case Studies and Examples

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Perspective: Reducing Carbon

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• Areas of Opportunity

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• Current Retailer Activity

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• Engaging Key Stakeholders

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• Open Issues

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• Case Studies and Examples

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Perspective: Sustainable Agriculture

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• The Value Chain

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• Current Retailer Activity

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• Engaging Key Stakeholders

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• Open Issues

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• Case Studies and Examples

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Case Studies

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Acknowledgements

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About the Coca-Cola Retailing Research Councils

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Sustainability In Retailing Responding to growing concern for the environment

The Report Executive Summary Consumers are increasingly concerned about their own environmental impacts, those of the products they buy, and those of the companies at which they shop. These concerns focus on physical impacts such as global warming and on broader social issues such as how their purchasing actions and choices affect the livelihoods of people in other countries. Food retailers have an opportunity to respond to some of these customer concerns, and in so doing, generate trust and loyalty among consumers.

The goal of this Global Retail Perspective is to equip retailers with information that will help them develop their own approach to responding to the growing concern for the environment while improving customer service, efficiencies, profitability, and their reputations.

This report discusses activities in three critical areas:

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The report should help retailers identify where they are in comparison to their peers, and where they might plan to go next.

Executive Summary CONTINUED...

Reducing Waste: From problem to opportunity. The environmental and business cost of waste is prompting retailers to reduce the amount of waste they produce and seek greater value from that which remains. Retailers, often in conjunction with their suppliers, are rethinking everything related to waste – from packaging and delivery processes to recycling.

Reducing Carbon: A significant environmental and financial opportunity.

As a result of volatile energy prices, retailers have become extremely interested in increasing energy efficiency. Retailers of all sizes are capturing lighting and refrigeration savings, often benefiting from assistance and incentives offered by power providers. Integrated design and new technologies are making it possible to build stores that use dramatically less energy than in the past; and fleet upgrades, new truck designs, and improved logistics management are increasing the efficiency of transportation systems throughout the retailing value chain.

Developing Sustainable Agriculture: Food for the future. Retailers, producers, and suppliers are beginning to collaborate on encouraging farming techniques that protect soil fertility and preserve dwindling clean water supplies. Some retailers are beginning to build relationships with farmers whose techniques and land are recognized as more productive and sustainable. Moreover, standards and sustainability-focused certification programs for individual products are being developed by interested parties that include producer associations, retailers, advocacy organizations, and governments.

After describing the broad range of retailer activity in these three areas, the report introduces some of the open issues retailers are discussing today. Finally, it collects and presents more than 70 case studies in which retailers from around the world describe the outlines, objectives, benefits, key learnings, and application potential of environmental initiatives they have undertaken. The report should help retailers identify where they are in comparison to their peers, and where they might plan to go next.

Throughout the development of this Global Retail Perspective, the participants in Beijing have continually pushed for clear action. One participant expressed “the need for the industry to articulate in strong leadership terms its next steps”.

He called for the industry to: work with governments and non-governmental organization; report against clear legal requirements; help consumers get more involved and develop a forum for ongoing engagement of the industry on this topic. The industry will no doubt continue to evolve how it responds to the growing concern for the environment. This report is intended to serve as an important step in that journey.

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Foresight Climate Change and the Role of Business:

The Environmental Imperative

Dr. Rajendra Pachauri Chairman of the Intergovernmental Panel on Climate Change (IPCC) from his opening remarks to retailers in Beijing

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Warming of the climate system is unequivocal It is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level, that the warming of the climate system is unequivocal. Indeed, 11 of the last 12 years (1995–2006) rank among the 12 warmest years in the instrumental record of global surface temperature (since 1850).

It is likely that: heat waves have become more frequent over most land areas, the frequency of heavy precipitation events has increased over most areas, and since 1975 the incidence of extreme high sea level has increased worldwide. For example, a severe heat wave in southern and central Europe in 2003 that lasted from June to mid-August, raised summer temperatures by 3 to 5°C and has been blamed for 35,000 excess deaths. Hurricanes Ivan in 2004 and Katrina, Rita, and Wilma in 2005 all destroyed infrastructure and had high death tolls. © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Expected future impacts of climate change The Intergovernmental Panel on Climate Change has assessed a range of climate change scenarios for the 21st Century. We could experience warming of anywhere between 1.1°C to 6.4°C, which will induce many changes that would be larger than those observed during the 20th Century. Over the next twenty years IPCC scenarios predict that the planet will continue to warm at around 0.2°C per decade; it is unlikely that this rate can be slowed very much. Even if we were able to hold the concentrations of all greenhouse gases (GHGs) and aerosols constant at year 2000 levels, we would still be likely to see a further warming of about 0.1°C per decade.

However, temperature projections 20 years from now increasingly depend on specific emission scenarios and are therefore more difficult to make.

The Water Crisis People exposed to increased water stress by 2020: • 120 million to 1.2 billion in Asia • 75 to 250 million in Africa • 12 to 81 million in Latin America Possible yield reduction in agriculture: • 50% by 2020 in some African countries • 30% by 2050 in Central and South Asia

Climate change is likely to lead to some irreversible impacts. Even a 0.1°C level of warming per decade is likely to bring a range of impacts on water, ecosystems, food, coastlines, and health -- some of which may be abrupt or irreversible, depending on the rate of change.

These could include: Partial loss of ice sheets causing meters of sea level rise, major changes in coastlines, and inundation of lowlying areas, particularly in river deltas and low-lying islands.

Species extinction. 20 to 30% of species are likely to be at increased risk of extinction if warming exceeds 1.5-2.5°C (relative to 1980-1999), and 40 to 70% of species are likely to be at risk of extinction if temperature increases exceed about 3.5°C. Impacts on fresh water and agricultural productivity. Water use has increased over the last few decades due to population and economic growth, changes in lifestyle, and expanded water supply systems for irrigation. As a result, water quality has generally declined, and estimates of the population living in severely waterstressed basins at the turn of the millennium range as high as 2.1 billion, often in some of the poorest regions of the world.

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The need for mitigation There is urgent need to act to stabilize the temperature changes that will occur over the next 20 to 30 years.

Mitigation efforts and investments over this timescale will have a large impact on opportunities to achieve lower stabilization levels in the future.

Delaying action will significantly constrain its effectiveness and increase the risk of more severe future climate change impacts.

Costs of mitigation.

Acting now is also likely to be more economical in the long term. To stabilize atmospheric CO2-eq at 445-535 ppm would cost a maximum of 3% of global gross domestic product in 2030, and would postpone GDP growth by one year at most over the medium term.

Acting sooner will reduce this cost; acting later will raise this cost.

Some of the costs of mitigation will be immediately offset by other benefits that will accrue. These include health benefits from reduced air pollution, increased energy security, increased agricultural production, and reduced pressure on natural ecosystems due to decreased tropospheric ozone concentrations. However, they are dependent on the policies, technologies, and sectors in which they occur.

Challenges and opportunities for business Direct challenges to business operations will be in the form of extreme weather events rather than gradual climate change. Businesses located in coastal and riverine areas, and in areas where the economy is linked closely to climate sensitive resources (such as agriculture and forest products, water demands, and

tourism) are likely to face higher risks and be more vulnerable.

Indirect challenges will come from increased consumer concern for the environment – customers will expect companies to act to reduce their own impacts and help them to lead more environmentally conscious lives through the products they stock.

Government climate change regulation is also likely to impose new rules for business to reduce their emissions.

The retail industry and climate change Climate change has the potential to affect every link in the retail value chain: supply chain, distribution, locations of stores, workforce health, and consumer patterns of consumption.

For example: Distribution networks will be affected by changing winter road conditions and increases in hazardous weather events.

Climate-change policies are likely to raise industrial and transportation costs, alter world trade patterns, and necessitate changes in infrastructure and design technology.

Perishable commodities. Climate change is likely to alter the sourcing and processing of agricultural produce; policies such as a carbon tax or an emissions offset payment may further alter the geographical distribution of raw materials and product markets.

Trade patterns. Climate change is likely to affect comparative advantages for regions in the global economy and therefore trade patterns. There will be “winners” and “losers” as a result, affecting economic growth and employment in different areas – highlighting the need for careful planning and policy discourse.

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How should business respond?

Develop strategies. Successful companies will start to include climate risk management in overall business strategy and operations, encouraged by investors and shareholders, and will aim to reduce energy consumption, water use, and their general environmental footprint as well as develop low-carbon products.

Measure and report on impacts. Companies can now use standardized systems, often developed with NGOs, such as the Greenhouse Gas Protocol, to report on greenhouse gas emissions. Environmental management systems such as ISO 14001 (ISO, 1996) are also being used by many companies to build capacity for GHG emission reduction. These introduce beneficial elements of staff training on environmental issues such as energy efficiency and waste management.

At the same time, using standardized/certified procedures for GHG recording allows participation in the emerging carbon trading market and can facilitate interactions between local initiatives and national or international climate regimes.

Join and facilitate voluntary agreements between industry and government to reduce energy use and GHG emissions.

These efforts can help to change attitudes, increase awareness, lower barriers to innovation and technology adoption, and facilitate cooperation with stakeholders.

Use new technologies to reduce the environmental footprints of operations and supply chains, for example: • Agriculture – improved cropland management, agronomy, nutrient science, water management techniques, degraded land restoration, erosion control, livestock management, new bioenergy crops, etc.

• Business operations – increasingly efficient electrical equipment, heat and power recovery techniques, improved material recycling technologies, etc.

• Energy supply – improved supply and distribution of energy, renewable heat and power, combined heat and power, carbon capture and storage technologies, and new advanced renewable energy technologies such as tidal, wind, and solar photovoltaics.

• Transport – more fuel efficient vehicles, hybrid vehicles, cleaner diesel vehicles, biofuels, nonmotorized transport, electric vehicles, and more efficient aircraft.

• Buildings – efficient lighting and daylighting; efficient electrical, heating, and cooling devices; improved cook stoves; improved insulation; passive and active solar design; alternative refrigeration fluids; recovery and recycling of fluorinated gases; and intelligent meters to provide feedback and control of energy use.

The world’s climate is changing rapidly and it will be increasingly difficult to sustain life as we know it. This will affect business in serious and significant ways. Those companies that plan for -- and mitigate against -- climate change, are most likely to be the successful companies of the 21st Century. Those that lag behind may suffer competitive losses, and may find themselves without businesses at all. The time to act is now.

Dr. Rajendra Pachauri Chairman of the Intergovernmental Panel on Climate Change (IPCC) © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Foresight Climate Change and the Role of Business:

One Retailer’s Response

Sir Terry Leahy Chief Executive Officer, Tesco Plc from his opening remarks to retailers in Beijing

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Working With Non-Governmental Organizations

By Carter Roberts Every 2 years, the World Wildlife Fund produces something called the Living Planet Report. This report compares the carrying capacity of the planet, as we calculate it, with the demands that are being placed on the planet by our consumption and our business models. Right now, we estimate that we demand 1.25 times what the planet can sustain. We also estimate that if China catches up to the standard of living that we have in the United States, it will require 2 planets to support current models, and if the rest of the world catches up to the standard of living that we have in the United States, it will require 11 planets. Obviously we do not have 11 planets.

This brings us back to the imperative in the 21st Century to produce more with less —less input, less carbon, less water, less pesticide, and less land use. At the WWF, we hope to work with corporations, like those in the retailing industry, to try to make their supply chain more efficient – more green – and to accomplish what is outlined in this report. We believe that the great fortunes of the 21st Century will be made by those who achieve this and grow sustainably.

The imperative for action It is commonly perceived that businesses cannot both make a profit and “go green.”

Yet, in reality the two are not mutually exclusive. From a retailer’s perspective, it is fundamental to go green in order to achieve long-term growth. Failing to act would mean risking economic and social disruption on the scale of the great wars and economic depression of the last century. Any retailer who cherishes growth must act now.

What Will Action Entail?

Tackling the global problem of climate change will require the involvement of a far wider range of people and organizations than politicians and regulators.

If we are to succeed, a new framework in which governments, business, and consumers each play their part and work together is needed.

Governments will play a vital role, but it must be fulfilled in ways that meet the needs of our time. Politicians must continue emphasizing climate change as the greatest threat of the 21st Century but must also act to create tax structures which reward low-carbon activities and investment and to harness the 21st Century power of consumers, incentives and markets.

Consumers are part of the solution to climate change, not part of the problem.

Tesco’s core purpose is to create value for customers to earn their lifetime loyalty.

Customers account directly and indirectly for 60% of carbon emissions. They tell us that they want to go green and do their bit to protect the environment. The challenge for retailers is to help them do that.

Businesses can set an example through cutting emissions and encouraging suppliers to do the same. In turn, this can bring efficiencies and cost savings.

Businesses can also help to empower consumers to buy green products by overcoming the barrier of price, providing better information, and developing new products and services. In turn this will drive customer loyalty, stimulate competition, encourage research and development into new products, and create the beginnings of a much-needed mass movement in green consumption

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Tesco’s Strategy Tesco’s strategy has three main parts: Greening Tesco: We have calculated our carbon footprint to understand where our greatest greenhouse gas emissions impacts lie. The footprint of the Tesco Group in 2007 was 4.47 million metric tons of carbon dioxide equivalent.

We have set targets – for our entire Group – to reduce this as follows.

We aim: • to halve emissions from our stores and distribution centers by 2020 • to halve carbon emissions from all new stores we build between now and 2020 • to halve, by 2012, the amount of CO2 used in our distribution network to deliver a case of goods.

To achieve these aims, we have changed every aspect of our operations. For example: • In the store—we save energy through initiatives such as curtains on freezer doors, better insulation, low-energy lighting, new refrigeration systems, biogas from waste, and new energy management systems. Our new stores in Wuxi and Tianjin, China will use 25% less energy.

• In the distribution network—we reduce the number of empty trips our vans make and use our own train and canals to transport goods in the UK.

• We save water – by using rainwater harvesting and grey water recycling.

• We use low emission technologies – such as solar panels and wind turbines. And we have also set up a £100 million Sustainable Technology Fund to support low-carbon technologies like wind, solar, and ground source heat.

• We work with new partners – we are planting 9 million trees in Thailand by 2012 and holding an annual environmental competition for children in South Korea.

• We support research and development – in the UK, we have invested £25 million in the new Sustainable Consumption Institute, to research how we can best make the transition to a lowcarbon economy. This Institute will work on key debates and will aim to contribute to the development of an internationally recognized carbon footprint methodology. We intend to make the research public and accessible to all as soon as it is published.

We are already achieving results. By the end of 2008, our UK energy use per square foot will be half what it was in 2000. Last year, our Group carbon intensity per square foot of sales space fell by 4.7%. And we are achieving this while Tesco grows - reducing emissions helps us to cut costs.

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Working to green our supply chain: Our supply chain’s total carbon footprint is many times larger than our own. To help reduce it we are working to inform and educate our suppliers to understand that going green is not just good for the long-term health of the environment, but it saves them money and gives consumers what they want.

Examples of our activities in this area include: • Working with some of our Sri Lankan clothing suppliers to develop “green factories” which are solar powered, and where water is recycled, energy saved, and toxins controlled.

• Developing an online database in the UK, into which suppliers can enter information about their packaging so we can help them reduce it.

• Developing a label to tell customers the size of a product’s carbon footprint to allow customers to choose products with smaller footprints. Suppliers must prepare for this, as it will change customers’ behavior.

It ought to be easier to green supply chains in the developing world than in the developed world.

Instead of changing old practices, we can leapfrog straight to new, green supply lines from scratch. This represents a huge opportunity for developing world suppliers.

Helping our customers go green: Engaging consumers is essential to reduce global carbon emissions.

Over the last decade, concern about climate change and a wish to protect the environment have become part of consumers’ mental map; many consumers now want to “buy green.”

Tesco has been trying to make going green easier and more affordable by: • Reducing the prices of green products. In an economic downturn, green products cannot be expensive optional extras, but need to be universally affordable. In the UK, Tesco has permanently halved the price of energy efficient light bulbs and sold over 10 million in just over a year, up from 2 million the year before. These sorts of green products can also help consumers save money.

• Launching our Greener Living brand for products with a low environmental impact.

• Rewarding customers who recycle – giving Green Clubcard points for recycling mobile phones and inkjet cartridges and reusing carrier bags. In China we are testing a new “Recycling Box” at the Guangxin store in Shanghai.

Consumer concern for the environment is now widespread. However, cultures and tastes differ and the way consumers are prepared to act is different in different regions. As a global retailer, we have to reflect those differences in what we do by educating, informing, and encouraging people to go green wherever we operate.

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The Business Imperative

By Dan Esty As outlined in Beijing and this Global Retail Perspective, environmental concerns are real and increasingly central to marketplace success.

Consumers recognize these concerns and are demanding more environmentally friendly products and shopping environments. As a result, the retailing industry’s response to these concerns must be consumer-centric. If done correctly, however, an increased focus on the environment can reap significant economic rewards.

Retailers should first go after low hanging fruit (particularly opportunities for eco-efficiency) as outlined in this Global Retail Perspective. But over the long term, retailers should strive to support sustainability more broadly through the integration of the environment into their core business strategy – building real eco-advantage.

What have we learned?

Tesco has now built green thinking into the very heart of our strategy in each country in which we operate. As of this spring, each of our international businesses has developed its own Community Plan, and in each Plan is a commitment to tackling climate change. We have learned a number of lessons from our experience so far: • Going green is not just good for the environment and right in principle. It also saves money throughout the value chain.

• Greening the supply chain in developing countries can be easier than in developed countries – where practices can be created from scratch.

• We must continue to listen to the customer – customers do not want to pay more to go green, but they do want to be encouraged to do so. If retailers deliver value for customers and earn their loyalty, they will in turn change their behavior.

Each consumer who buys a green product is joining the mass movement in green consumption. That movement is what Tesco is seeking to create – a movement which shows that it is possible to consume, to be green, and to grow.

Sir Terry Leahy Chief Executive Officer, Tesco Plc

To do this, retailers must be systematic in their approach and rigorous in their analysis.

They must offer vison from the top of their organizations, develop clear goals and targets, track progress with quantitative metrics, and reward good results.

Ultimate success will also require cooperation across the industry and with the industry’s suppliers.

But given the rising importance of sustainability as a societal goal, the choice is not whether but how to fold environmental thinking into business practice.

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Reducing Waste FROM PROBLEM TO OPPORTUNITY

The environmental, social, and business cost of waste is prompting retailers to reduce the amount of waste they produce and seek greater value from anything that remains. These efforts are creating significant savings opportunities as retailers and suppliers collaborate to rethink packaging, delivery processes, and recycling opportunities.

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CONTENTS Areas of Opportunity

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Current Retailer Activity

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• Recycling: More opportunities to create value

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• Bags: Moving toward reusable sacks

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• Packaging: Designing away waste

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• Suppliers: Collaborating to find new answers

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• Regulation: Becoming part of the solution

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Engaging Key Stakeholders

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• Assigning internal responsibilities

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• Engaging shoppers

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Open Issues

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• Understanding trade-offs

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• Managing the supply chain

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• Evaluating cooperation vs. competition

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• Expanding reverse distribution

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• Marketing from the perspective of abundance

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• Measuring success

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Case Studies and Examples

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In many ways, waste prevention, reduction, and recycling has always been a broad goal of the food retailing industry thanks to the highly competitive nature of the business. The issue of waste aligns with the constant overriding goal of finding ways to reduce costs and squeeze added efficiency out of every part of operations. Yet environmental realities make the importance of this issue more pressing today.

Today, the world produces as much as much municipal solid waste each year by weight as it does grain (2 billion metric tons) and steel (1 billion metric tons). Retailers are increasingly challenged to address the issue: Shopper concerns are growing, waste management legislation is increasing, waste treatment and disposal costs are rising, raw materials are becoming scarcer, and landfills are becoming much harder to site. Producing less waste to start with is becoming as important as disposing of it responsibly. © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Nearly all retailers understand waste as the residue that is left over at the end of the day: the cardboard, pallets, and shrink-wrap that come in through the loading dock but do not belong on the selling floor, the damaged goods that never make it to the shelves, and the expired products that need to be removed.

Unnecessary packaging and supplies (like plastic shopping bags) can also be considered waste. Managing this material places an obvious drag on the bottom line; it requires raw materials to produce, labor to process, fuel to transport, fees to secure landfill space, and it generates penalties in some jurisdictions.

Yolanda Kakabadse Navarro All waste has value Yolanda Kakabadse Navarro challenged retailers to produce less waste to begin with, and then to find value in what remained. Kakabadse is from Latin America and she brought with her a perspective informed by cultures in which little is “wasted” because nearly all materials are reused one way or another.

One of her lessons was that what the “modern” world thinks of as waste is considered just another part of the economy in other parts of the world.

Her message clearly resonated with Damodar Mall, a participant from India.

Upon his return home, he wrote a thoughtful essay about India’s engrained culture of finding value in used materials that was published in India Retail Report 2008. “The entire gamut of ‘good and green’ customer habits is already woven into the fabric of our society,” he wrote, urging retailers to omit the bad habits of modernity as they moved into the future. “They just need to be rekindled, protected against obsolescence, and adapted to the way in which society is emerging.” Find Mall’s article on the web at http://www.dnaindia.com/report.asp?newsid=1203862 This chapter focuses on waste as physical residue, but waste also occurs when trucks idle too long at distribution centers waiting to off-load, when lights illuminate empty stores, when refrigerated and frozen cases spill cold air into the aisles, and when any link in the value chain – from farmers to processors to shoppers – throws away usable food. The Carbon section of this report discusses energy waste and energy efficiency, and the Sustainable Agriculture section covers waste of agricultural resources. The recurring connections among the topics suggest strongly that the most effective way to address any one issue will be linked to addressing the others in a broad sustainability plan for a company and a supply chain.

Managing waste is increasingly a global concern. This was made abundantly clear in Beijing as one by one, retailers from North America, South America, Europe, Africa, and Asia rose to talk about steps their companies had taken to reduce waste in ways that made both their companies and their communities more sustainable.

Ma Jun Waste is a worldwide issue Ma Jun challenged retailers to understand their connection to waste as a worldwide issue. As the West exported the manufacturing of much of its goods to the developing world, he explained, it also outsourced much of the environmental degradation associated with the production process. The phenomenon is sometimes described as “dumping your environmental footprint in another country.” Jun’s message to retailers: You are the customer.

You have the power to influence your suppliers to trade with responsible manufacturers and you should use it. Customers do care, and corporate reputations can be damaged by not paying attention to supply chain issues. There is information out there – look for it, and use it.

Ma Jun and the Institute of Public and Environmental Affairs (IPE) have created a supply chain management program that asks responsible companies to review their suppliers against a list of local companies that have violated Chinese environmental laws.

This program, The Green Choice Alliance: Helping Control China’s Pollution through Responsible Supply Chain Management, also requests that purchasing companies mandate offending companies go through a supervised 3rd party audit system with termination of contract as the ultimate penalty if they refuse to fix any issues.

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Areas of Opportunity Retailers have opportunities to reduce waste not only in the back of the store, but at the loading dock, in the warehouse, and throughout the front of the store.

Collaboration with suppliers also offers significant opportunities to reduce waste, as does educating and encouraging consumers to be more thoughtful about recycling and responsible waste disposal.

The motivations that are creating urgency around the need to take action include: • Competitive realities and the need to cut costs to keep pace with competition • Consumer demands for responsible handling of waste across the globe (owing in part to the centrality of the supermarket to every type of community) • Concerns about potential new regulation

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How Retailers Are Reducing Waste Current Retailer Activity

RECYCLING

Currently, retailers are working to reduce direct costs associated with waste that accumulates at the store. They are also investing in ways to reduce the amount of waste in the system -- starting with areas they have the most direct control over, like own-brand packaging. Finally, retailers are working deep within their supply chains to redesign processes and products to eliminate waste before it ever reaches the store or their customers.

improving capture of “traditional” recyclables finding opportunities in unusual places expanding programs to capture new benefits REUSABLE BAGS offering incentives selling reusable sacks educating consumers participating in joint-retailer initiatives PACKAGING (RETAILER-OWN) reducing weight and volume eliminating where possible redesigning store delivery of bulk items SUPPLY CHAIN COLLABORATION partnering to eliminate and reduce product packaging collaborating on shelf-ready displays rethinking interim packaging required for store delivery creating closed-loop systems rethinking product design INDUSTRY AND GOVERNMENT COLLABORATION participating with industry, NGO, and government groups to identify goals and work toward their achievement

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Recycling is one way retailers simultaneously create value and reduce the environmental impact of their products

This signal – W12 – indicates that a CCRRC case study is available. Click on the signal to reach the case study.

Recycling: More opportunities to create value Recycling is one way retailers simultaneously create value and reduce the environmental impact of their products. Most recycle cardboard, shrink-wrap, or pallets; some recycle all of them.

Some are improving the capture of “traditional” recycling materials. Walmart partnered with one of their recycling providers to design a “Sandwich Bale” that traps hard-to-handle plastic waste between layers of cardboard before compacting W1. Others are finding opportunities in unusual places.

A progressive grocery wholesaler in the Southeastern US generated annual labor savings of $11,000, reduced yearly landfill fees by approximately $6,000, and increased recycling income by $12,000 per year just by figuring out how to better recycle and reuse the corner boards that separate banana pallets W2.

Some are expanding programs to capture expanded benefits. Backhauling and five waste-processing service centers are the backbone of ASDA’s Zero Waste to Landfill strategy; so far 65% of waste is being diverted, saving landfill taxes, energy consumption, and transport costs totaling more than £23 million W4. Marks and Spencer has analyzed their total waste stream – and then waste streams by type – in preparation for setting reduction targets.

Certain waste creates special challenges. Food waste can be shared with shelters, charities, or livestock farmers, but liability concerns can constrain such practices.

Ukrop’s is among the few who are composting food waste rather than sending it to landfills. Their partnership with a landscaper diverts 3 million pounds of fruit and vegetable trimmings to create compost sold in the community W6. For Kroger and Whole Foods in Ohio, food composting is revenue neutral.

Retailer — supplier recycling collaboration is creating jobs in South America, in addition to returning waste to productive use and encouraging shoppers to recycle. Walmart and Coca-Cola are partnering on one such project W11, Pao de Acucar (Casino Group) and Unilever are partnering on another W10.

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Bags: Moving toward reusable sacks Public sentiment on plastic bags can be intense, and retailers are using a variety of means to encourage customers to switch to reusable sacks. Ukrop’s was one of the first to offer credits to customers for reusing bags; one year into their current program the company expects to have eliminated the need for 3 million bags W12. Reusable bags are a top seller for H-E-B, where

they are displayed in full view of the checkstands W13. Wellcome stores in Hong Kong educate consumers by holding weekly “No Plastic Bag” days and working with area schools and green groups W14. Australia has taken a joint-retailer approach. The Australian Retailers Association has gained industry commitments to a 3-phase, 3-year plan to reduce plastic bag use by 50% W15.

Many jurisdictions in the world are trying to limit plastic bag use. China banned free plastic bags effective January 2008; San Francisco, California, banned them in 2007; and Ireland’s famous “plastax,” instituted in 2002, reduced plastic bag usage in that country by 90% within one year by collecting tax from customers for each bag they used. Retailers, however, are finding ways to turn such taxes into

business benefits. Superquinn, for example, responded to the “plastax” by improving its reusable bags and revising its bagging process providing customers with a much improved solution. These eco-friendly changes delivered an estimated payroll savings of €750,000 per annum for the Irish retailer W16.

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Packaging: Designing away waste Some retailers are taking action to reduce the amount of packaging that customers throw away when they unpack their purchases at home. This impacts items like the shrink-wrapped foam tray with 4 apples in it, or the plastic containers used to carry out ready meals.

Pollution Prevention Hierarchy

Retailer-own packaging. Packaging that is directly under retailer control offers the most accessible opportunities. ASDA redesigned packaging of store brands to (1) eliminate wrappings entirely and sell products loose where possible, (2) minimize the weight and volume of necessary packaging, and (3) use recycled and recyclable materials as much as possible. In 12 months, ASDA cut the weight of the packaging carried home by customers by 25% W20. Hy-Vee redesigned delivery packaging for its bulk ready-to-eat salads. Switching from single-use plastic tubs to reusable cardboard boxes lined with plastic bags reduced disposal volume and saved approximately $150,000 in transportation costs in the first year W23.

Recycle Reuse Reduce Redesign

Suppliers: Collaborating to find new answers Some retailers are building partnerships with suppliers in order to rethink the amount of waste designed into products and processes. Ultimately, the goal of this strategy is to increase efficiency throughout the entire supply chain.

Shelf-ready displays are one example of how packaging has been reimagined to both reduce waste and enable retailers to gain substantial advantages. In 2000, Tesco pioneered the use of reusable green trays to replace other packaging. This system has since been adopted by retailers all over the world. In 2007, green trays made 222 million trips, saving over 130,000 metric tons of cardboard.

Chiquita eliminated the banana box entirely by setting up a closed-loop system with Migros based on reusable, returnable bulk packaging; others have also switched to reusable crates for produce.

Target has achieved an 80% trashless packaging level in soft goods and labor cost savings estimated at $4.5 million by changing the specifications for vendor packaging to eliminate individual item packing used during transportation to stores.

Rethinking product design can reduce environmental impact substantially, and retailer support for these products can have a significant influence on their success. A prime example comes from laundry detergents. Proctor & Gamble began to develop super-concentrated detergents when analysis indicated how much the net profitability of the product could be raised by producing it more efficiently (less water, less weight, less packaging). Unilever followed suit. When Walmart decided to sell only concentrated laundry detergent to its customers, it influenced both upstream and downstream behavior. The suppliers’ decision to produce a more environmentally efficient product was rewarded, and consumers learned that the smaller container delivered as much value as the old, larger container. In fact, designing efficiency into the process is one of the most powerful ways to compound benefits. (See sidebar, “The Multiplier Effect” on next page)

Reimagine

The traditional priorities for responsible waste disposal have been “reduce, reuse, and recycle.” Now companies are learning that eliminating waste by redesigning and reimagining products and processes is even more profitable.

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The Multiplier Effect Redesigning products and processes to eliminate or reduce waste has a multiplier effect on environmental impact that goes far beyond the definition of waste as “trash.” Here’s how it applies to some of the examples cited in this chapter: • In 2000, Tesco pioneered the use of reusable green trays to replace other packaging. This system has since been adopted by retailers all over the world. In 2007, green trays made 222 million trips, saving over 130,000 metric tons of cardboard.

• ASDA reduced the amount of fuel needed to transport products to its stores when they reduced the weight of the packaging sent home with customers.

• Walmart’s decision to sell only concentrated detergent saved 400 million gallons of water, and 95 million pounds of plastic and 125 million pounds of cardboard.

Each of these changes also reduced the carbon footprints of the respective organizations by preventing the emission of many, many tons of greenhouse gases that would have been emitted during production or transportation.

Regulation: Becoming part of the solution Businesses are increasingly partnering with government agencies and NGOs to create effective solutions for achieving environmental objectives in advance of regulation. Australia’s National Packaging covenant is one such collaboration W22.

The covenant was developed by the Australian Packaging Industry in response to a challenge from the Australian government. The initiative enrolls voluntary participants in an Environmental Code of Practice for Packaging and assists them in developing individual action plans. It has reduced landfill from warehouse and retail levels by encouraging use of more environmentally friendly packaging materials and by improving waste recovery and recycling systems nationally. © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Engaging Key Stakeholders Assigning internal responsibilities Who should own responsibility for sustainability-related waste reduction within retail organizations? Is it an environmental team? The procurement division? A business unit? Regardless of where primary responsibility is assigned, however, retailers in Beijing were adamant that active and visible support from the CEO and top management would be required to get the rest of the organization to pay serious attention to the issue.

Many also suggested that in order to drive the issue through their organization effectively a culture change is needed. More in-depth education may be needed to help executives and managers understand what is being asked of them and how the issue relates to the business’s sustainability. Said one participant, “Once I understand what the problem is, I can solve it. But I don’t understand the problems when they are described at the headline level, I need one level deeper.”

Engaging shoppers Shoppers may be willing partners on this issue in many places. The trend toward engagement is measurable, even though there is always a difference between what people say and what they do. “Concern around packaging waste is increasing at a higher rate than any other environmental issue,” Nielsen wrote in the introduction to its 2008 Packaging and the Environment survey. The survey polled more than 26,000 shoppers in 47 markets from Europe, Asia Pacific, the Americas, the Middle East, and Africa. Of those who said that a store’s environmental friendliness was important to their choice of where to shop, nearly half claim they would give up all forms of packaging provided for convenience purposes if it would benefit the environment.

Nielson Global Packaging Report Which of these aspects of packaging would you be prepared to give up if it meant that it would benefit the environment?

Global Average

Packaging in a shape that makes it easier to stack and store at home 49% Packing for convenience, such as packs that can be cooked in or kept at home as a resealable container 48% Packaging for ease of transport which means they can be carried home easily 47% Pakaging for preserving which will make products last longer at home after being purchased 34% Packaging information, including cooking and usage instructions 33% Packaging for protection which keep products in good condition 30% Packaging for hygene which keeps products clean and untouched by other shoppers 27% None of these

10%

Base: Those rated “Uses recycleble bags and packaging” as very or quite important when deciding where to do grocery shopping © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Open Issues Understanding trade-offs Trade-offs exist with most opportunities, so retailers need to understand the full range of costs involved. Reusable produce containers may eliminate disposable boxes, but they require the extra expense of washing. Eliminating packaging lowers costs in one way, but may mean greater exposure to shoplifting or an increase in damaged goods. In some instances, eliminating packaging can even create concerns about food safety. Even compostable packaging isn’t “free” environmentally; it too carries a manufacturing cost in financial terms and an environmental cost in resources. Cost-benefit analysis and life cycle assessment are common practice though, and the good news about trade-offs is that the environmental sustainability component in many projects often proves itself capable of generating significant financial benefits when it is considered. Getting consideration is sometimes the hard part, because it involves doing something differently.

Managing the supply chain During a discussion about building upstream partnerships within the supply chain, someone suggested, “We shouldn’t be negotiating on our own all the time.” The idea provoked a number of new questions.

Large retailers like Walmart are already negotiating deep into their supply chains to make changes in packaging and distribution that are producing bottom-line benefits and building the company’s reputation as an environmental leader.

Will smaller retailers lose customers to larger, “greener” retailers if they don’t have enough influence to negotiate similar changes with suppliers? Would it be better to negotiate together, thereby raising industry standards instead of individual chain standards?

What would competitive advantage look like in this kind of environment?

Is it possible to negotiate successfully with small suppliers? There was also discussion on the importance of large retailers leading the way on these issues to help push suppliers to make environmentally sensitive changes.

Smaller retailers said the clout of the large, power players was necessary to bring about real change.

Evaluating cooperation vs. competition Repeatedly in these meetings, retailers expressed the desire to be able to share information on sustainability issues easily. One person suggested the retail industry develop an electronic social networking site similar to Facebook or Wikipedia that would allow retailers to both keep up with and vet the information they encountered, and to access best practices across the industry.

This desire to share information has some interesting implications for how we think about cooperation and competitive advantage. It echoes the dilemma expressed above in the discussion about how to handle the supply chain: On what basis do we compete if we are sharing information?

Ultimately, retailers may need to

consider whether environmental responsibility is a competitive selling proposition or something to which everyone subscribes, like food safety.

“We all need to be thinking like this,” said one retailer. “It’s going to be a way of life, not a point of competition.”

Expanding reverse distribution Who is responsible for the waste left over from a manufactured product?

Is it the manufacturer who made the product, the retailer who sold it, or the consumer who bought and used it? The issue of accountability is still being debated. Reverse distribution – the idea that waste should be returned to the entity that generated it – is one idea of how to deal with this question.

If reverse distribution did gain traction as a more common means of dealing with waste, to what degree might retailers become a collection point for the goods that they sell? Today a store in Indonesia is practicing reverse distribution when it offers customers a free packet of detergent in return for every 5 empty detergent bottles they bring back to the store—and then returns the empty bottles to Unilever to process into fashionable bags. A store in India offers credits to customers who bring materials back to the store for reuse or reselling—another form of reverse distribution. Walmart has begun collecting electronics for recycling W8. What would it look like if retailers were responsible for passing more waste back up the supply chain in the future?

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Marketing from a perspective other than abundance The figures concerning how much fresh food waste occurs in the system were staggering. By some estimates 40% of agricultural produce is wasted before it ever gets to the consumer; Swedes throw away 10 to 15% of the food they buy; and Britons are estimated to throw away as much as 30%, nearly 20% of it in the packaging in which it was purchased. While not an authoritative survey, such figures are indicative of what is happening in developed countries.

In the future, might the way that people think about waste change so much that retailers would consider altering the practice of marketing from the perspective of abundance? Today, it’s common practice to use products as wallpaper – to put more inventory on shelves than required in order to offer the most attractive displays. In the future, will shoppers demand only white, unblemished mushrooms or will they be willing to purchase ones that have slightly browned, perhaps at a lower price point (goods that might have been discarded as imperfect today)? Do retailers need to rethink expiration and sell-by dates that are not based on spoilage? What might this look like?

Measuring success Retailers do not have a common language for talking about waste or measuring progress on the issue at this time.

A variety of yardsticks are in use, among them the following.

• Cubic feet of waste recycled • Waste recycled per sales area • Percent of waste diverted from landfill • Absolute weight of waste • Waste per unit of product • Waste per customer • Absolute levels of waste created, solid and toxic • Cubic cardboard generated at end point • Packaging waste • Percent recycled content • Grams of packaging per unit of sale • Carbon footprint Establishing a common language would make it much easier to share information, compare the effectiveness of initiatives, set goals, and establish incentives.

Retailers expressed concern that if they did not find a way to at least begin to solve this problem, regulators might impose solutions from the outside.

Who should take the lead on such an effort was not clear. Industry groups are one possibility, but ad hoc initiatives may also prove effective. Collaboration between industry and governments has also produced effective results.

The Australia National Packaging Covenant provides a framework for members to consider and measure their environmental impact; it also helps to standardize the measurements being used across the industry, facilitating comparisons between retailers W22.

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H-E-B Mexico increased income from recycling by 200% and substantially decreased its environmental impact

Case Studies and Examples Reducing Waste This collection of retailer activities around waste reduction provides a quick reference to some of the initiatives under way today.

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Click on the signal to reach the case study.

RECYCLING: Finding opportunities W1 Improving plastic capture Walmart’s Plastic Sandwich Bale makes it easier to handle and transport plastic for recycling. The company’s trash recycling service provider helped design the solution: sandwiching plastic between cardboard before compacting.

Centralizing collection Centralizing collection of 8.6m kgs of waste paper and 425m kgs of foil – and compressing these prior to recycling – has significantly reduced A.S. Watson’s need for landfill space.

W2 Finding benefits in unusual places A southeastern wholesaler generated $44,000 in first-year financial benefits by working with its vendor and packaging supplier to improve recycling and handling of the corner boards that separate banana pallets.

RECYCLING: Expanding programs, expanding benefits W3 Expanding programs, expanding benefits H-E-B Mexico increased income from recycling by 200% and substantially decreased its environmental impact when it added plastic, pallets, paper, PET, and aluminum to its recycling program. A culture change within the organization captured commitment from employees at all levels – from the store to regional management.

W4 A “Zero Waste” strategy Backhauling and 5 waste-processing service centers are the backbone of ASDA’s Zero Waste to Landfill strategy. So far, 65% of waste is being diverted, saving £5.3 million per year in landfill taxes, £12.3 in energy consumption, and £6.1 million in transport costs. Next target: the biodegradable waste that makes up the majority of the remaining 35%. The company now views waste as a resource.

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Looking at the forest and the trees

W11 Creating value and jobs II

Marks & Spenser appointed a national waste contractor in 2006, which enabled the company to assess the quantity of waste produced by its stores. Now M&S is auditing waste by type in preparation for targeting reductions of different waste streams.

Walmart and Coca-Cola’s recycling collaboration in Brazil has created jobs in addition to returning waste to productive use and encouraging shoppers to recycle. By the end of 2009, the program will have set up recycling stations at 300 stores, directly benefited 50 collection cooperatives, and generated income for 2,500 collectors.

RECYCLING: Singular challenges

REUSABLE BAGS

W6 Composting food waste Ukrop’s partnership with a landscaper to compost fruit and vegetable trimmings from their central kitchen has diverted 3,000,000 pounds of waste from the landfill and created a new product to sell in the community.

W7 Turning old textiles into a new resource When Walmart decided to phase out associates’ blue vests, their Textile Sustainable Value Network team partnered with Sustainable Solutions, Inc. to reprocess the fabric into fiber that was “recycled up” into new products. Clothing scraps created new raw materials and profit centers.

W8 Recycling electronics As one result of Walmart’s examination of the life-cycle of the electronics it sells, the company has begun promoting electronics recycling at stores and online.

Building customer loyalty by making it easy to do the right thing is one goal of the program, staying ahead of regulation is another.

RECYCLING: Retailer/supplier collaborations W9 Making school furniture from used packaging Tetra Pak, with support from Wong supermarkets and Peru’s Prime Minister Office, designed a recycling program that encourages shoppers to return Tetra Pak packaging to stores for conversion into desks and chairs for community schools.

W10 Creating value and jobs I Unilever and Pão de Açúcar (Casino Group) launched a joint recycling program in 2001 that collects approximately 400 tons of solid residues through 90 locations.

The initiative has created more than 350 jobs and supports more than 19 local collection cooperatives. Collection of cooking oil for conversion to biofuel began in 2007.

W12 Leading the way Ukrop’s has learned a lot since it first offered credits to customers for reusing bags 10 years ago. One year into its current reusable bag program, the store expects to have eliminated the need for 10 truckloads or 3 million paper bags.

W13 Putting reusable sacks up front H-E-B has merchandised its reusable green bags in full view of the checkstands.

Now they are one of the store’s top-selling general merchandise items.

W14 Raising shopper awareness Wellcome was the first retailer to sign Hong Kong’s Voluntary Agreement on Plastic Bag Reduction. “No plastic bag days” and alliances with green groups are two of the ways they are working to raise shopper awareness and change behavior.

Rewarding reuse Tesco has rewarded customers who reuse bags with Green Clubcard points. This cost-neutral initiative saved 1 billion bags by October 2007 and reduced plastic bag use at the grocer 45% to date.

W15 Joining an industry-wide initiative Metcash committed to reduce plastic bag use by joining an industry initiative established by the Australian Retailers Association. The 3-phase plan targets a 50% reduction. Joint campaigns can mean a lower overall cost for individual retailers and increased participation by retailers of all sizes.

W16 Finding value from an imposed governmental regulation Superquinn responded to the Irish plastic bag tax, which caused much consumer dissatisfaction, by improving its reusable bags and revising its bagging process.

The eco-friendly changes delivered an estimated payroll savings of €750,000 per annum and reduced plastic bag usage by 97% and produced a reusable bag that is widely copied and recognized for its practical design.

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CONSERVING WATER W17 Testing strategies Walmart is experimenting with water conservation strategies at stores in Texas and Colorado. Landscaping with native, drought-tolerant plants, drip irrigation, and pervious pavement are being evaluated; so are high-efficiency urinals and sensor-activated sinks and flush valves equipped with water turbines that generate electricity for the sensors.

Reusing condensation H-E-B saved 6.2 million gallons of water in one year by reusing condensation from refrigeration equipment.

W18 Treating wastewater in Mexico Wastewater plants have been included in all Walmart Mexico stores constructed since 2004. The initiative complements government action to clean wastewater where no infrastructure exists and anticipates scarcity of nonrenewable water resources.

Truck washes UPS began saving $1 million per year in materials and water when they introduced an environmentally sound enzyme wash for the company’s vehicles.

RETHINKING PACKAGING: Comprehensive programs W19 The 5 Rs The 5 Rs of ASDA’s strategy for reducing packaging for its food by 25% by the end of 2008 are: Remove, Reduce, Recycle, Renewable, and Revenue. All products are candidates for packaging reduction and the accompanying cost savings. ASDA maintains that sustainability does not necessarily have a financial cost, especially waste reduction and efficiency initiatives.

W20 Re-designing own-brand packaging ASDA redesigned its own-brand packaging to (1) eliminate wrapping entirely and sell products loose where possible, (2) minimize the weight and volume of packaging when it was necessary, and (3) use recycled and recyclable materials as much as possible. Positive environmental and savings opportunities were discovered in helping clients, suppliers, and customers operate more sustainably.

In 2000, Tesco pioneered the use of reusable green trays to replace other packaging. In 2007, green trays made 222 million trips, saving over 130,000 metric tons of cardboard.

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RETHINKING PACKAGING: Comprehensive programs CONTINUED...

RETHINKING PRODUCTS

W21 Scorecards for packaging

Concentrated detergent compounds benefits

Walmart Canada reduced packaging in many categories, using a scorecard to evaluate energy use, potential for elimination, and recyclability. Benefits include less money spent on materials and shipping, increased shelf space, and increased ability to meet rising environmental standards. Partnering with suppliers and a data-driven process were important.

Walmart’s decision to sell only concentrated detergent saved 400 million gallons of water, 95 million pounds of plastic, 125 million pounds of cardboard, in addition to shelf space, transportation fuel, and landfill space.

W22 Industry and government collaborate

Web-based training

The Australia National Packaging Covenant was developed as the result of a government challenge to Australia’s packaging industry. It has resulted in a national approach to reviewing life-cycle analysis of packaging, centralized waste recovery, and improved packaging design. It has also helped to standardize the measurements being used across the industry.

In 2008, ICA is rolling out a web-based training program on energy management and waste for its staff.

RETHINKING PACKAGING: Doing things differently

ENGAGING EMPLOYEES

Store signage Sainsbury’s is using scorecards to highlight the role that employees play in reducing water and energy waste at the store level, and posting information at store entrances where employees and customers can see them easily.

Shelf-ready displays In 2000, Tesco pioneered the use of reusable green trays to replace other packaging. This system has since been adopted by retailers all over the world.

In 2007, green trays made 222 million trips, saving over 130,000 metric tons of cardboard.

LOGISTICS MANAGEMENT For examples that show how retailers are using logistics management to reduce wasted fuel and unnecessary food miles, see the carbon chapter case studies and examples starting on page 51.

Closed-loop systems Chiquita set up a closed-loop packaging system with Migros that eliminated the banana box and replaced it with reusable, returnable bulk packaging.

W23 Ready-to-eat salads travel lighter Hy-Vee’s “Bag in the Box” system for shipping bulk, ready-to-eat salads replaced single-use plastic buckets with recyclable cardboard cartons lined with plastic bags. This created immediate hard savings of $.05 for each pound of product shipped. Suppliers played a key role in designing and implementing the new solution.

“Floor ready” shipping eliminates packaging Target changed the specifications for vendor packaging to eliminate individual item packing used during transportation to stores. Driving towards a “floor ready” policy has resulted in an 80% trashless packaging level in soft goods and generated labor cost savings estimated at $4.5m.

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Reducing Carbon Emissions A significant environmental and financial opportunity

There are clear opportunities for retailers to improve business performance at the same time they reduce carbon footprints, since improving energy efficiency is one of the principal means of reducing greenhouse gas emissions. Lighting and refrigeration upgrades are feasible and effective for retailers of all sizes. New technology and integrated design is creating far more efficient buildings. And transportation opportunities are gaining traction rapidly, thanks to improvements in truck design and logistics management technologies.

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CONTENTS Areas of Opportunity

37

Current Retailer Activity

38

• Assistance and incentives: Finding help

39

• Lighting: Easy, accessible upgrades

40

• Refrigeration: Many opportunities

40

• Tracking peak usage: Energy optimization technology

40

• Maximum gains: Integrated design and new technologies

41

• Fleet upgrades: Improving fuel efficiency

41

• Logistics management: Making every mile count

41

• Alternative power sources

42

Engaging Key Stakeholders

43

• Senior management

43

• Employees

43

• Consumers

43

Open Issues

45

• Carbon embedded in products

45

• Thinking differently

45

• Tighter regulations

45

Case Studies and Examples

46 35

Retailers have found that reducing carbon emissions can generate added value for both the environment as well as their bottom line. When it comes to carbon, doing the right thing for the environment and doing the right thing for business are not conflicting matters. Reducing energy use reduces greenhouse gas emissions, and ensures lower operating costs.

What is a carbon footprint? This informal phrase is applied to businesses, households, buildings, and even individuals and individual products, to refer to the quantity of greenhouse gases their activities, operations, or manufacture generate. Carbon is the most plentiful of the greenhouse gases that are now understood to be playing a significant role in the warming of the climate, so “reducing carbon” has become shorthand for reducing greenhouse gas emissions in general.

How important is reducing carbon, and what role do retailers play? Retailers of all sizes are undertaking a variety of initiatives to increase the energy efficiency of their operations and reduce carbon emissions, especially given the recent volatility of energy prices. While many of these are ad hoc, some retailers are making carbon reduction and energy efficiency a strategic priority that is directly aligned with their core business missions.

They are supporting that commitment actively from the highest levels. They are setting large goals that everyone in the company can understand, and driving execution through to their relationships with suppliers and customers. Those retailers stand to gain significant competitive advantages as a result of lower operating costs.

Dr. Rajendra Pachari Climate change and the role of business • The warming of the climate is unequivocal…and will significantly affect the planet’s ability to sustain life as at present.

• Even if we were able to hold the concentrations of all greenhouse gases and aerosols constant at year 2000 levels, we would still be likely to see a further warming of about 0.1°C per decade.

• Successful companies will start to include climate risk management in overall business strategy and operations and are likely to be encouraged to do so by investors and shareholders.

• Reducing energy consumption, water use, and general environmental footprints will be fundamental to future success.

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Areas of opportunity Areas of Opportunity Retailers have opportunities to reduce carbon throughout the entire retailing value chain. From sourcing and supply chain, to transport and retailing operations, most retailers have found many areas to drive energy efficiency.

Many are seeing significant benefits from these efforts.

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Ways To Reduce Carbon Emissions Current Retailer Activity Activity around carbon reduction today primarily consists of increasing energy efficiency in operations. Specifically, efforts concentrate mainly on three areas: upgrades to existing facilities, more energy efficient new construction, and improved transportation efficiencies. Beyond operations, a few retailers are beginning to engage with consumers and suppliers around the amount of carbon embedded in the products they sell.

IN STORES AND FACILITIES

IN TRANSPORTATION SYSTEMS

Lighting

Fleet Upgrades

High-efficiency fluorescents

On-board computers

LED lighting

Computer-shifted transmissions

Daylighting

Air fairings to reduce wind drag

Motion sensors

Low profile tires

Solar powered skylights

New truck designs Hybrid motors

Refrigeration

New fuels

Mechanical improvements

No idle policies

Fixing refrigerant leaks

Fuel additives

Upgrading components Replacing equipment

Logistics Management

Doors / covers on open faced coolers

Backhauling

Eliminate use of HFC’s

New technology

Energy management systems

Rethinking routes

Tracking Peak Energy Use Energy optimization technology Technologies And Applications To Watch Integrative Design And New Technology Capturing natural advantages – heat, cold, light

Fuel cell applications for fork lift trucks Small scale waste-to-energy plants New insulation materials

Evaporative cooling Radiant flooring Integrated water systems

HFC-free refrigerants Chillers with smart thermostats

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Assistance and incentives: Finding help No-cost energy efficiency audits are offered by many energy providers.

These comprehensive audits identify opportunities for savings and calculate costs and payback periods, making it easier for independent grocers to implement measures on a scale with larger chains. Archie’s participation in an EnergySmart program resulted in projected savings of almost 1 million kilowatts (approximately $62,000) per year for three stores C12.

Incentives can drastically reduce payback periods. PetSmart planned its rollout of a nationwide lighting upgrade to take advantage of utility company and state incentives C4. State power companies covered most of the costs of Green Valley Grocery’s 36-store energy efficiency upgrade C2. And Canadian energy incentives dramatically improved ROI when Sobeys IGA built Canada’s first LEED-certified grocery store C21.

Locating Incentive Programs In the United States, many federal, state, provincial and city governments offer grants and incentives to facilitate the purchase of energy efficient equipment.

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DSIRE (www.dsireusa.org) is a c o m p re h e n s i v e s o u rc e o f information on state, local, utility, and federal incentives that promote renewable energy and energy efficiency.

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Lighting: Easy, accessible upgrades

Refrigeration: Many opportunities

Retailers of all sizes are capturing big returns on lighting investments – from 11-store Amelia’s (C1), whose upgrade cut energy bills by 45% with a payback of 1.8 years, to Kroger, who converted approximately 75,000 individual lighting fixtures to highefficiency fluorescents.

Retailers are retooling existing systems or replacing them with newer, more efficient units. Simple, mechanical improvements increase energy efficiency: replacing gaskets on reachin doors, installing strip curtains on walk-ins, and adding night curtains to open faced cases. Refrigerant leak repairs eliminate a significant source of greenhouse gas emissions and reduce expenses. SuperValu generated $300,000 in maintenance savings and reduced refrigerant use 11% when they made leaks the focus of a major engineering program C8. Upgrading components also pays off. New, variable speed fan motors are reducing electrical usage by as much as a third for Kroger C9.

High intensity fluorescent fixtures not only cut energy use and reduce negative impact on the environment, they often improve the quality of light in stores and reduce maintenance costs due to extended re-lamping cycles LED (light emitting diode) technology is beginning to find practical applications in coolers and freezers (walk-ins and cases), and for signage C6.

Daylighting is returning to use. Festival Foods expects to reduce lighting energy needs 50% to 80% using light pipes C5.

Translucent insulated acrylic panels will help Sobeys light a new super-efficient warehouse C18.

Lighting that throws off less waste heat also cuts costs; Publix calculated that moving to a 33W LED lighting system for walk-in coolers and freezers would reduce energy demand by 24,209,883 kWh and costs by $2.4 million in one year C7.

New equipment can have surprisingly short payback periods. Sainsbury’s new system is expected to pay back a $3.1 million investment in 3.15 years; each of 1,000 units will save $985 per year.

Tracking peak usage: Energy optimization technology Energy optimization technology adjusts energy flow to match peak and offpeak usage times. Giant Eagle’s Kill-A-Watt program monitors critical largeload points and has reduced energy use by an average of 8.8% per store over 120 stores C14. Kroger optimized power supply to more than 16,500 vending machines and expects to save $1 million per year C10.

Dr. Amory Lovins Think big, save big Retailers should understand that big savings cost less than small savings. If you pay to design a lighting system around natural advantages and what you need it to accomplish, you will save far more than if you design it around light fixtures. When you think of a store as a whole system, you can design a far more efficient store than if you think of it as a lot of isolated components.

When people tell me eco-stores cost more, I tell them their designers are not using the best designs. If you optimize a building as a system, you end up with larger savings and lower costs for building and operating.

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Dr. Amory Lovins Keeping up with change Technology is getting better and cheaper so quickly that it is difficult to stay current with what is possible.

Further, new paradigms about when to write off capital investments are emerging. For instance, it can make sense to replace the high-efficiency lighting installed two years ago if an even more efficient system exists today – even if the capital investment has not been fully written down.

Similarly, refrigeration systems and building design are constantly becoming more efficient. For example, Walmart’s Las Vegas store (opened in March 2008) is already 45% more energy efficient than stores the company completed in 2005.

Businesses are not used to thinking about replacing equipment before it has been fully amortized – but they must become more flexible in their approach.

If the marginal cost of operating new equipment saves enough to justify its purchase, companies should not let accounting stand in the way of profitability.

Maximum gains: Integrated design and new technologies

Fleet upgrades: efficiency

fuel

Logistics management: Making every mile count

New technologies and integrated design methods are creating super-efficient buildings that are significantly cheaper to operate. Walmart’s climate-specific prototype store in Las Vegas, Nevada uses 45% less energy than a baseline Supercenter in part due to new evaporative cooling and radiant flooring technology and an integrated water-source format refrigeration system C16. At Sobeys new perishables warehouse in Canada, cold air is captured for the refrigeration system, and heat is reclaimed from compressors for the floor radiant heating system. On-site wastewater treatment also made it possible to locate the facility where logistics dictated and land was less expensive, rather than where municipal water infrastructure was available C18.

Improvements to existing trucks are significantly increasing fuel efficiency.

For Winn-Dixie, these include computershifted transmissions, air fairings that reduce wind drag, and low profile tires C24. SuperValu estimates savings of $9.7 million over 5 years from upgrading on-board computer technology C25. Some modifications may be eligible for incentives: In California, Raley’s received a $500,000 grant to test a multi-stage pollutionreducing filter for older diesel trucks that reduced nitrous oxide emissions by 84% C27.

Collaboration initiated by Carrefour is helping retailers in Europe to reduce the number of empty miles travelled through the Demeter Environment Club.

New logistics technology installed

by Target allows for rapid cost/benefit analysis of vendor pick-up opportunities on return trips to distribution centers.

C30. Rethinking the delivery path of Simply Orange Juice saved Coca-Cola and Walmart 1 million food miles, 144,000 gallons of diesel fuel, 1,465 metric tons of CO2, and added up to 6 days of shelf life to the product. Instead of moving through the Minute Maid distribution center first, the product now ships directly from the factory to Walmart distribution centers. Walmart has set a goal to double fuel economy by 2013.

Some retailers are constructing or retrofitting stores to LEED Green Building Rating System standards.

(LEED stands for Leadership in Energy and Environmental Design.) Among them are Stop & Shop, who achieved LEED Portfolio Volume Certification for 51 existing stores C20; Sobeys, who built Canada’s first LEED-certified grocery C21; and Food Lion, who converted an empty warehouse to LEED-certified office space C22.

Improving

Walmart is rethinking truck design in collaboration with suppliers. Among the ideas they are pursuing are electric-diesel hybrid engines, more aerodynamic truck bodies, and using auxiliary power units to condition air for drivers instead of main tractor engines C29.

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Alternative power sources • Making use of the natural resources at hand (such as sunlight and wind) to produce at least part of the power a facility uses will become far more common in the future.

• A new Gazeley warehouse in Europe uses solar PV, solar thermal, storm water harvesting, and wind power to furnish some of the energy it needs to operate.

• Tesco is installing Vertical Access Wind Turbines across various sites in the UK to supplement power supplies to its stores C33.

• Walmart plans to construct a wind farm in Mexico in 2009 that will supply 34% of the company’s energy needs in that country C34.

• Sobeys new super-efficient warehouse in Canada actually uses the cold outside air to help run its refrigeration system during winter months C18.

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Engaging Key Stakeholders Senior management

Consumers

Educating senior management on sustainability issues and their strategic value to the organization has been essential for taking effective action for organizations of all sizes. Rutter’s, a 50-store convenience chain in Pennsylvania, began its environmental sustainability plan in 2006 with 6 months of strategic discussions by senior management. After that, the group was ready to review a range of options for actions and commit the resources to move forward G1.

Surveys continue to report growing consumer concern about the environment and climate change. A Nielsen survey conducted across 48 countries in March 2008 reported that 79% of consumers polled said they were concerned about the environment and 52% reported that they were very concerned about climate change. These concerns are growing increasingly concrete as well.

A Globe Scan survey of 22,000 people from 21 countries, reported that 74% said climate change “will pose a direct threat to them and their families in the next decade.”

Employees Several of the case studies cite improvements in employee morale as a result of energy efficiency and environmental initiatives. For example, Stop & Shop reported a “significant impact . . . reflected in employee morale and participation” as one consequence of their program to upgrade existing stores to LEED certification C20. Sobeys said that workers in their new perishables facility were enthusiastic about helping to “leverage the warehouse’s capabilities to reduce its carbon footprint and resource use” C17, C18. And Food Lion cited productivity gains among employees in the warehouse space it recycled into LEED-certified offices C22.

The belief that businesses should bear significant responsibility for addressing the issue is also growing. A majority of respondents (51%) to a Nielsen poll of 28,000 internet users in 51 countries said that it was “very important” for businesses to improve the environment; and 40% indicated that government imposition consequences for greenhouse gas emissions by businesses would be the biggest contribution society could make in fighting climate change.

Consumers are clearly moving toward the issue rather than away from it, expecting consequences, and looking for answers.

Publix credits its Green Routine Associate Awareness Program – which encourages employee participation in resource conservation, responsible waste management, and pollution prevention – with saving the company nearly $9 million since it was launched in 2002 G4. © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Notes from Beijing Raising industry awareness

There is a perception that carbon-reduction activities are “expensive” and somehow an “add-on” to regular business activities. One retailer in Beijing expressed his frustration like this: “How do we get the industry to understand that reducing carbon is not a cost, it’s a benefit?”

Education may be needed within the industry in order to correct this perception, and such education may need to start at the top. Nearly all retailers who participated in these discussions felt that CEO-level leadership would be essential in order to drive a culture change about carbon reduction through the organization.

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Open issues Carbon embedded in products

Thinking differently

Tighter regulations

A few retailers are trying to engage around the amount of carbon embedded in the products they sell. Walmart found that the carbon embedded in products was by far the largest part of their total carbon footprint (92%); and ICA found that 40% to 70% of climate impact from products was caused by primary production and less by transportation than previously believed C35.

New collaborations with suppliers are forming. Kroger’s switch to variablespeed fans in refrigerated cases (C9) grew out of discussions with the motor manufacturers about whether the horsepower of the motors could be increased; until now, the manufacturers had sold to only to equipment makers, never to end-users. Ideas like taking advantage of climate-specific conditions to enhance operating efficiency when planning new construction are earning consideration in processes that were systematized for “efficiency” when that word meant standardized production (same shell, same fixtures, same building anywhere). Small ideas – like motion sensors that turn off lights when aisles are empty – are earning respect for the big benefits they can generate.

Most governments in the developed world have accepted that there is a need to reduce greenhouse gas emissions, but they are struggling with how to address this change. The policies and goals under consideration vary significantly, from taxing the emission of carbon and other greenhouse gases to establishing cap-and-trade systems. Some are moving quickly; others are not. Frustrated by the slow pace of comprehensive policy development, smaller regional and local jurisdictions are moving forward to adopt their own goals, restrictions, and implementation plans. These may actually affect retailers before sweeping comprehensive reforms do. Businesses, including retailers, are moving to adopt emission reduction goals in order to be prepared for what they consider to be inevitable restrictions, as well as to reduce operating costs.

To some degree, retailers are being drafted into the effort to communicate about product carbon footprints because shoppers want information that will help them make greener choices.

Communicating with customers around food miles, local sourcing, and product point-of-origin are ways that retailers are attempting to satisfy this desire.

Tesco began testing a carbon label for products in 2008. Developing measures for product carbon footprints will be extremely challenging and will inevitably involve suppliers.

International activity: Updating the Kyoto Protocol The international community agreed in Bali in 2007 to work earnestly toward an agreement that would govern after the Kyoto Protocol expires in 2012. Their goal is to negotiate such an agreement by December 2009 when they meet in Copenhagen. © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Sobeys lowered energy costs 55% at their new 160,000 SF perishables warehouse by using natural advantages and simplifying systems to reduce maintenance and capital costs.

Case Studies and Examples Carbon Reduction This collection of retailer activities around carbon reduction provides a quick reference to some of the initiatives under way today.

This signal – C12 – indicates that a CCRRC case study is available. Click on the signal to reach the case study.

Lighting: Opportunities of all sizes C1 11-store chain cuts energy bills by 45% Amelia’s, an 11-store Pennsylvania chain, reduced energy bills by 45% per year and improved lighting quality when they replaced metal halide and older fluorescents with high-intensity fluorescent fixtures. The payback period is 1.8 years.

C2 36-store chain uses government and provider programs to help underwrite new lights Green Valley Grocery underwrote much of the cost of evaluating and installing more efficient store lighting, cooler lighting, and exterior lighting at its 36 stores through power company and government-funded energy efficiency programs.

Per store, energy usage will go down by more than 40,000 kWh annually, or approximately $3,000.

C3 140 stores cut energy usage by 40% Texas-based H-E-B switched 140 stores from metal-halide to energy efficient fluorescent fixtures. The new fixtures used 40% less electricity, improved the quality of in-store lighting, and extended the re-lamp cycle. Bidding the fixture package and electrical labor saved significant dollars.

C4 Pilot project goes national PetSmart’s pilot project replaced Hi-bay lights with T8 fluorescents in 47 stores in a two-day process, reducing energy demand and extending the relamping cycle with minimal disruption to store operations and the customer shopping experience. Power company rebates further increased ROI. National roll-out is being planned around state and power company incentives.

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Lighting: New technologies find applications

C11 Testing alternative systems

C5 Light pipes furnish electricity-free lighting

Food Lion partnered with a key supplier and the EPA’s GreenChill program to test alternative refrigeration systems in 3 stores: a glycol secondary loop for medium temp cases, CO2 as a secondary refrigerant for low temp cases, and a combination of the two. Metrics were collected for costs, impact on products, skills needed, and effect on the bottom line.

Festival Foods installed 175 Light Pipes in a 70,000 SF grocery in Wisconsin in 2008 to collect and focus daylight with reflective materials. Combined with high intensity fluorescent fixtures via controls that maintain even light levels throughout the day, savings of 50 to 80% per year are expected on electrical lighting.

C6 LED experiments Walmart’s LED experiments have identified many benefits to this next-generation lighting technology: LEDs are sturdy, last 10 years longer, produce less heat, and contain no lead or mercury. Walmart will use them in frozen, refrigerated, and jewelry cases, and in all internally illuminated signage for new construction.

Refrigeration C7 Lighting walk-in coolers and freezers Publix’s Lighting Steering Team evaluated the costs, benefits, and design challenges associated with moving from a 150W incandescent system to a 33W LED system for walk-in coolers and freezers. The following benefits were estimated (annually): a 24,209,883 kWh reduction in energy demand, a $2,410,988 reduction in energy costs, and a $129,534 reduction in maintenance expense.

Storewide Energy Initiatives C12 Providers supply expertise and incentives Archie’s asked its energy provider to evaluate efficiency opportunities for three stores averaging 29,000 SF. As a result, they upgraded interior lights and exterior signage and took a series of steps to significantly improve existing refrigeration efficiency. Projected savings are nearly 1 million kWh (or $62,000) annually.

Provider incentives ranged from 20% to 100% of project costs. Archie’s now plans to retrofit all of its stores.

C13 Including energy efficiency in remodel plans SuperValu included energy efficiency in a major 180-store remodeling project. As part of the planning process, an engineering and maintenance review evaluated existing lighting, refrigeration, and mechanical equipment prior to scoping and design in order to calculate energy savings if replaced.

C8 Reducing refrigerant leaks

C14 Optimizing energy usage

SuperValu’s campaign against refrigerant leaks made a sizable dent in the second highest contributor to the company’s carbon footprint. This major engineering department program reduced refrigerant use 11% year-over-year in the program’s first year (equivalent to 50,000 tons of CO2) and generated maintenance savings of more than $300,000.

Giant Eagle launched a Kill-A-Watt program in more than 120 stores that monitors and optimizes energy usage for 3 types of equipment: refrigeration, lighting, and HVAC. Store energy use was reduced by an average of 8.8%. Standard set points and control algorithms were established for all stores, and monthly reports trigger an exception-driven maintenance program.

C9 Variable speed motors cut energy use

Integrated Design & New Technologies: Learning from laboratory stores

Kroger has installed more than 500,000 variable speed motors in glass-door frozen cases, prep rooms, and other equipment in the past 3 years. The Smart Motors generate less heat and use less electric power, reducing electrical usage by as much as a third and yielding 3-year paybacks.

C15 Testing trade-offs

C10 Vending machine change saves $1 million

Stop & Shop built a “Low Energy Superstore” (LESS) that reduced electrical costs by 27% in the early 2000s. The project allowed the company to evaluate cost savings and trade-offs for new construction and retrofits on a wide variety of techniques, from daylighting to refrigeration, and HVAC systems to reflective roofs.

Kroger is using new technology that allows it to track beverage sales patterns for individual vending machines and to reduce the machine’s energy use during off-peak periods. Changes to 16,500 machines reduced the company’s annual electrical costs by an estimated $1 million per year with no impact on beverage sales or product quality. © and all the other intellectual property rights are reserved by The Coca-Cola Company and/or other proprietary rights owners.

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Integrated Design & New Technologies: Learning from laboratory stores CONTINUED...

C16 Climate-specific store uses 45% less energy Walmart constructed climate-specific prototype store in Las Vegas, Nevada that uses 45% less energy than a baseline Supercenter. New technologies include a new evaporative cooling and radiant flooring system and an integrated watersource format refrigeration system.

C17 Enlarging site selection possibilities Sobeys made its new 160,000 SF perishable warehouse in Canada largely selfsufficient from a storm water/wastewater perspective by “designing with nature.”

Now logistical reasons can determine warehouse location rather than proximity to municipal infrastructure. The project came in under budget by CA $1.5 million.

C18 Using natural advantages to lower costs Sobeys lowered energy costs 55% at their new 160,000 SF perishables warehouse by using natural advantages and simplifying systems to reduce maintenance and capital costs. For example, cold external air is captured for the refrigeration system, acrylic-insulated windows reduce lighting needs, and offices use floor radiant heating reclaimed from compressors.

C19 Reclaiming community land Walmart Mexico created the first ecologically sustainable mall in Mexico on the site of a former dump. The mall substantially reduces greenhouse gas emissions, energy consumption, and water consumption over standard construction, and reclaims land for community use.

Integrated Design & New Technologies: LEED-certified projects

C21 Canada’s first LEED-certified grocery Sobeys IGA built Canada’s first LEED certified grocery. State-of-the-art design and technology helped the store to exceed Canada’s Model National Energy Code for Buildings by 47%. Canadian energy incentives dramatically improved ROI. All equipment was paid back in less than a year.

C22 Idle warehouse becomes LEED office space Food Lion avoided using green space for a new building by converting part of an idle warehouse into LEED-certified office space that has inspired productivity gains among its employees and a greater sense of community, teamwork, and appreciation for sustainable practices.

C23 Reclaiming a brownfield A North American retailer gained valuable experience for other new store projects when it developed a LEED-certified store on a brownfield site formerly used for industrial waste disposal. The store reduces both electricity and water use by 30% compared to other stores in the chain.

Transportation: Fleet upgrades C24 Improving an existing fleet Winn-Dixie is improving its truck fleet efficiency by upgrading to computershifted transmissions, air fairings that reduce wind resistance, low profile tires, and trailer refrigeration units with greater capacity and efficiency. They are also purchasing several multi-temp trailers so they can deliver a mix of products to stores farther from distribution centers.

C25 Upgrading onboard technology

The Leadership in Energy and Environmental Design (LEED) Green Building Rating System, developed by the US Green Building Council (USGBC), provides a suite of standards for environmentally sustainable construction that is used in more than 30 countries.

When SuperValu replaced on-board computer technology in its 515-truck fleet, five-year savings were estimated at $9,700,000. Benefits included educed maintenance and administrative costs, electronic driver logs, improved dispatch efficiency, and better visibility of metrics.

C20 Certifying existing buildings

C26 Going wireless onboard

Stop & Shop achieved LEED Portfolio Volume Certification on 51 stores by committing to an ongoing improvement process that enables owners to integrate LEED standards into existing buildings in a cost effective way. Benefits include a significant reduction in operating costs and a positive impact on employees.

A wireless onboard tracking and communications system that combines GPS satellites, the nationwide cellular network, and the internet is significantly improving the ability of one retailer’s private fleet to monitor performance and fuel costs. Initially skeptical about how E-Log data would be used for performance evaluation, drivers now use the real-time reporting capabilities to optimize their own performance. ROI was less than one year due to lower maintenance costs and elimination of old inefficiencies.

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Transportation: Fleet upgrades CONTINUED...

Consolidating deliveries

C27 Reducing emissions on older trucks

In Denmark, Dagrofa is working with international suppliers to consolidate deliveries into larger central warehouses for greater efficiency.

The Sacramento Metropolitan Air Quality Management District supported Raley’s test of a multi-stage pollution-reducing filter for older diesel trucks with a $500,000 grant. The trucks emitted 84% less nitrous oxide with no reduction in performance and the District was able to verify the filters’ capability to improve air quality.

C28 Alternative fuels Ukrop’s, a 28-store chain based in Virginia, converts the soy oil used to fry chicken at 11 of its stores into biodiesel for its trucks. Partners RECO Biodiesel and Southside Fuel help them produce 50,000 to 65,000 gallons of fuel a year.

C29 Rethinking truck design Walmart is exploring ideas with truck and trailer manufacturers. Their goal is a 100% more energy efficient fleet by 2015. Among the modifications they are testing are an electric-diesel hybrid engine (with Peterbilt), truck bodies that are far more aerodynamic, and using auxiliary power units instead of tractor’s main engines to condition air for drivers.

C32 Low-noise distribution Albert Heijn revised the distribution process to include low-noise trailers in combination with Euro-5 trucks to decrease disturbance caused by inner-city deliveries and increase efficiency.

Rethinking supplier routes Coca-Cola and Walmart changed the delivery path of Simply Orange Juice to eliminate the Minute Maid Distribution Center in Florida. Now the juice moves directly from the factory to Walmart Distribution Centers, saving 1 million food miles, 144,000 gallons of diesel fuel, 1,465 metric tons of CO2, and adding up to 6 days of shelf life to the product.

Alternative transport

Transportation: Logistics management

Carrefour has been using river transport in Belgium since 2004 to move 3,000 containers per year between Anvers and Villvoorde, enabling the company to reduce CO2 emissions by 54 tons. In Spain, they combine river and railroad transport for some European imports.

C30 Using technology to increase backhauling

Alternative Power Sources

In May 2007, Target implemented a new logistics system that improved its ability to identify vendor pick-up opportunities on return trips to its distribution centers. The system rapidly assesses the costs of the detour compared to the costs of stopping at a separate origin point, and if the benefits outweigh the costs, the pick-up is made.

Good partnerships with vendors and open lines of communication are key.

Solar and wind power a European warehouse

Collaborating to cut down on empty miles

A new Gazeley warehouse in Europe uses solar PV, solar thermal, storm water harvesting, and wind power to furnish some of the energy it needs to operate.

C33 UK stores use wind power

In Europe, Carrefour initiated the Demeter Environment Club to facilitate collaboration and coordination among companies on transport optimization, pooling logistics, and backhauling.

Tesco is installing Vertical Axis Wind Turbines (VAWT) across various sites in the UK. The turbines produce sustainable electricity that feeds directly into stores.

Embedded carbon to implement the project thus far: 87 tons; annual carbon savings, 61.5 tons. Carbon payback period, 1.4 years.

C31 Customizing delivery loads

C34 Wind farm in Mexico to supply 348 facilities

Switching from a “one size fits all” approach for store deliveries to a customized approach meant that this retailer’s loads went from an average of 85% to 93% full.

Outbound loads were reduced by more than 10,000, saving more than $4,000,000.

Buy-in at distribution and store levels and strong communication are vital.

Walmart begins construction of a wind farm in Oaxaca in 2009 that will supply 34% of the company’s energy needs in Mexico. Producing 67.5 MWh, the project will supply 348 facilities with clean, renewable energy and prevent emission of 160,000 tons of CO2.

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Carbon in Products

Building engagement and support: With shoppers

C35 Analyzing product footprints

G5 Connecting food with climate impact via the web

ICA analyzed the climate impact 100 of its branded products to better understand potential carbon labeling of products and how the company could collaborate with suppliers to decrease emissions. Benefits have included increased respect and ability to participate in national and international debates on climate impact from food production.

ICA launched a website in September 2008 where Swedish consumers could go to learn about the climate impact from household waste of food. Originally part of a major climate campaign, the website will become a permanent part of ICA’s main site.

Labeling trial under way

Helping shoppers get greener

Tesco measures and publishes its direct carbon footprint each year and has recently launched a trial of carbon footprint labeling for products.

Marks & Spencer has an online carbon calculator, and provides tips on how to reduce carbon. The company has also undertaken a major educational campaign urging British customers to launder clothes at 30 degrees Celsius instead of 40.

Identifying product origins for consumers

Partnering with schools

Tesco identifies which products are flown in, and has targets for the percentage of products that the company will fly in. Whole Foods also communicates information about product origin.

Tesco participates in a government-linked program to educate children on the importance of a low-carbon lifestyle (the UK Government and Royal Society of Arts on Carbon Control at www.carboncontrol.org.uk).

Building engagement and support: Inside the organization G1 Building senior management support Rutter’s, a 50-store convenience chain in Pennsylvania, began its environmental sustainability plan by building support within the senior management team.

After 6 months of strategic discussions in 2006, the group was ready to review a range of options for action and commit the resources to move forward.

G4 Encouraging employee participation Publix’s Green Routine associate awareness program has saved the company nearly $49 million dollars since it was launched in 2002. Spearheaded by a crossfunctional team, the program encourages resource conservation, responsible waste management, and pollution prevention.

Making achievements visible Sainsbury’s makes store-level sustainability achievements visible to shoppers and employees by posting improvements in water and energy usage at store entrances.

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sustainable agriculture Food For The Future

Sustainable agricultural practices are gaining importance as the world tries to meet the growing demand

for

food

and

other

agricultural products in ways that do not deplete soil and water resources. Traditional buyer-seller relationships are changing and smaller, often regional or local producers are being welcomed into the supply chain. Producers are incorporating new methods and new technologies that preserve soil and water and improve traceability.

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CONTENTS The Value Chain

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Current Retailer Activity

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• Setting and achieving sustainability standards

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• Working with local and regional producers

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• Engaging and informing shoppers

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• Driving more efficient practices

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Engaging Key Stakeholders

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• Senior management and employees

59

• Consumers

59

• Governments

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• Nongovernmental organizations and industry experts

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Open Issues

60

• Reducing waste throughout the value chain

60

• Collaboration vs. competitive advantage

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• Sustainablility at what price? The role of new technologies

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• Where from here? Industry leadership opportunities

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Case Studies and Examples

63

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Meetings in Beijing allowed retailers to consider the topic of sustainable agriculture and the impact the issue could have on their businesses going forward.

What is sustainable agriculture? The term describes the process of growing food and other agricultural products in a way that does not deplete or degrade the natural resources (soil and water) that are needed to produce these products. Further, sustainable agriculture is often used to describe healthy farming systems – ones that are capable of producing enough food to feed us now and in the future and doing so in way that is economically viable over the long term. It can be – but is not necessarily – organic agriculture.

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continued... Why is sustainable agriculture important to retailers?

Food scarcity (and accompanying higher prices) is a much more realistic possibility in the future than it has been in the past, making sustainable food supply a primary concern. As China and India continue to develop economically, the growth of middle class consumption patterns is significantly increasing demand for food. At the same time, limits on water and arable land are becoming apparent, caused by population growth, economic development, and poor waste management. Climate change is also adding strain to this already difficult set of conditions, changing arable land patterns and further exacerbating clean water supply problems.

Food scarcity presents two main problems to retailers: Less plentiful food increases prices to both manufacturers and retailers, and also increases the possibility of supply interruptions that can be damaging to sales.

Organic Food – sustainable or not?

The last few decades have seen huge growth in the demand for organics, which continues to accelerate. US sales of organic food and drinks grew from $1 billion in 1990 to an estimated $20 billion in 2007. This growth maps the increasing mistrust among consumers of science and technology; people are concerned about what goes into their food and the organic label helps to allay these concerns. Organic food is often considered by consumers to be more nutritious, safer, and natural.

Organic vs. “sustainable” agriculture Although the detail of organic standards differs between countries and enforcing bodies, organic foods tend to be grown on the same premise – use of minimal off-farm inputs and management practices that restore, maintain, and enhance ecological harmony. In general, organic food does not permit the use of artificial chemical fertilizers and pesticides, GMOs, or modification such as irradiation, and it ensures animals are reared without the routine use of drugs and antibiotics. For example, currently the USDA National Organic Standards Board is developing standards for the humane treatment of animals and sustainability as part of organizational regulations.

However, there are instances in which organic standards are seen to be driven by government policy and as a result can face consumer criticism of being “watered down”. Sustainable agriculture does not proscribe chemical use, but aims to achieve healthy farming systems which are capable of sustaining populations now and into the future.

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The Value Chain Retailers have opportunities to develop more sustainable practices throughout the value chain. From the raw materials that producers use in the growing of products to the food waste that is thrown out by stores and/or consumers, practices can be improved to manage food growth, supply, and consumption more effectively and efficiently.

Adopting increasingly sustainable agricultural practices throughout this value chain will help retailers ensure the success of their business in the future, and building committed relationships with producers who can supply low-cost, higher-quality food can create significant competitive advantage.

What needs to happen to create sustainable agriculture?

By John Gummer • Moving from the niche to the mainstream. Sustainable agriculture has, to date, usually been smallscale niche production, often used as a surrogate for “natural.” This kind of agriculture cannot be expanded on the basis of creating global sustainability – yields are not high enough. Mainstream agriculture has to be made more sustainable instead by working with farmers to support adoption of sustainable farming methods.

• New supply chain standards and collaboration. Retailers will need to cooperate with producers to a greater degree than previously and seek practical solutions to drive efficiencies in the value chain. Collaboration with other retailers may also be necessary, although some retailers may feel that developing sustainable agricultural standards will bring competitive advantage.

• Prices need to signal the real cost of production. Prices need to be able to internalize the environmental/pollution/social costs. Our current prices do not reflect the real costs of production and the degradation that is occurring. Eventually, these costs will have to be paid for somewhere; having systems that tax polluters heavily will encourage more sustainable production.

• Development of practical solutions to drive efficiencies in retail operations. One fifth of the waste produced in Britain is food waste; we are producing more food than we need, putting unnecessary stress on production. Can retailers find a way to deal with this – for example by reassessing use-by dates or by working with authorities to promote sound agricultural practices?

• Customer education. We have educated people to feed themselves in a time of plenty but are moving into a time of shortage. Customer education on how to cook, store, and keep food to reduce waste and inform people of the sustainability/ quality of the food that they are purchasing and eating can help to drive sustainability.

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Activity in Sustainable Agriculture Current Retailer Activity

Upstream, retailers are:

Some retailers have already begun work to develop a sustainable agricultural supply chain. A few large retailers are developing standards and support for suppliers, and sharing the tools and codes of conduct they develop with others.

Both small and large retailers are cultivating connections with regional and local suppliers. Others are working on new ways to appeal to consumers.

setting standards among their own-brand suppliers helping suppliers meet those standards establishing relationships with local and regional producers supporting those relationships by making long-term commitments and guaranteeing markets for products that qualify Downstream, consumers are being engaged and informed: by classification systems and product labeling by online tools by in-store events by new product developments Producers and suppliers are driving more efficient agriculture: using practices that optimize water use, preserve soil fertility, and minimize agri-chemical use introducing new technologies, systems, and processes for monitoring production and tracing products

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Setting and achieving sustainability standards Some retailers are influencing agricultural practices by setting standards that encourage sustainability, and then helping suppliers to meet those standards. For example: • Tesco has developed Nature’s Choice, a code of practice that emphasizes water assessment and management. Helping growers use and understand these standards and tools is a priority. They also maintain a website, www.tescofarming. com, for farmers, producers and suppliers A2.

• Carrefour Quality Line (CQL) products are the result of the company’s collaboration with producers to meet strict product development procedures concer ning environmental conditions, production history, and quality assurance A1.

• Alkosto became the first retailer in Colombia to obtain HACCP certification by collaborating with meat suppliers to raise standards A4.

Working with local and regional producers Retailers are cultivating relationships with local and regional food producers for two main reasons. First, some are recognizing that certain farmers and specific farm lands are different and more productive. They see an advantage in locking in relationships with these more productive farmers, and they are beginning to do this

by offering long-term contracts or guaranteeing markets; Saudi Arabia and certain other Middle Eastern countries are doing similarly on a national level. Second, retailers are increasingly interested in incorporating smaller producers into their supply chains and preserving and sharing local know-how.

Ball’s Hen House is a 30-store retailer that has played a lead role in driving sustainability in the producer distribution system. Ball’s brought farmer’s market products into the store, made weekly bundles of seasonal food products available to customers for the entire growing season at a fixed price, and offered a farm-to-school lunch program to local children. This project has required building relationships with local farmers and finding a practical way to consolidate product delivery; it has also increased sales.

Growers appreciate the season-long commitment; customers are attracted by both the savings that the subscription program offers and the improved shopping experience A6.

• Waitrose has worked with small producers who wanted to supply a large retailer but were unable to support a whole store network. The program ensures the commercial success and sustainability of its producers, provides local and regional farmers with the opportunity to grow, and provides Waitrose with continued, reliable sources of supply A5.

• Carrefour seeks to join forces with small local firms wherever possible, forming relationships based on the

principles of long-term sustainability, transparency, and a fair reward for the goods or services supplied.

Among the 28 small- and mediumsized enterprises (SMEs) that participated in the launch of the store’s own-brand products in 1976, 23 are still supplying Carrefour. In France, SME suppliers manufacture 80% of Carrefour products, and account for some 35% of the hypermarkets’ turnover.

• Sainsbury’s guarantees a market for West Country new-season lamb to suppliers who adhere to traditional farming methods and sustainable practices through its agreement with Randall Parker Foods.

Engaging and informing shoppers The conversation with consumers in certain instances is already under way. Some retailers are using in-store events, product placement, websites, and even product development and concept stores to engage with consumers on the issues of sustainable agriculture.

At the store level, retailers are bringing in local farmers to meet customers.

Some are also mingling products with sustainable attributes among “regular” store assortments, thereby educating shoppers, inviting comparisons, and increasing sales.

Some are launching private label organic and natural brands. Ahold’s strategy is to price their “Nature’s Promise” brand lower than comparable products to appeal to customers who wanted healthy but economical choices. Carrefour’s strategy is to

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Engaging and informing shoppers continued... invite shoppers to make choices that reflect their specific area of interest; four different food and nonfood AGIR product lines are targeted respectively to organics, nutrition, social justice, and ecology.

Certification badges and labels are also being used to signal sustainable practices to shoppers, many of which now have the confidence of consumers. Examples include the Rainforest Alliance symbol on Winn-Dixie’s private label coffee (A8) and the Marine Stewardship Council badge on Young’s Seafood products (A3).

Widening responsibilities John Gummer urged retailers to realize that they have bigger brands and closer relationships to customers than most suppliers, so their reputations are at significant risk for damage if a supply chain quality problem occurs.

The recent contamination of Chinese powdered baby milk with melamine saw Tesco removing Chinese milk sweets from its shelves in the UK to protect its customers. For retailers, knowing what they are selling and how it is being produced is becoming increasingly important to maintaining the trust of their customers.

Driving more efficient practices Suppliers and manufacturers are also working with producers on ways to use sustainable practices to increase yields.

Technologies, systems, and processes for monitoring farm practices, improving traceability, reducing energy and water use and waste exist, all of which can aid the development of more efficient and economical agricultural practices.

Some producers are installing these themselves; others are being aided by suppliers or manufacturers.

For example: • Unilever is working with thousands of small farmers in India on a training and knowledge-sharing program for gherkin production that has increased yields by 78%.

• Nestle has developed milk districts throughout the world where they provide technical assistance to local farmers. Supplies have increased between 2% and 5% in the average district, and as much as 10% in some places.

Genetic modification of crops to improve yields through, for example, increasing pest resistance and improving ability to withstand extreme temperatures, has significant potential to contribute to more sustainable agriculture. However, there is a serious debate over whether or not they are safe and will ever be acceptable to shoppers. (See “Sustainability at what price? The role of new technologies” on page 11 for a more thorough discussion of this issue.)

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Engaging Key Stakeholders Senior management and employees

Senior managers of many of the largest retailers have increased their focus on sustainable agriculture as a way of developing competitive advantage.

More and more, however, retailers will focus on sustainable agriculture because of growing concern for their food supply. As a result, the topic is likely to become much more familiar to management of all retailers in the near future.

At the same time, employees need to be aware of, and trained on, the different agricultural standards and product ranges available, consumer concerns in this area, and the retailer’s strategy on sustainable agriculture.

Consumers Today consumers are much more interested in where their food comes from than they were in the past. For some, this interest originates with environmental concerns; for others it is the result of food safety incidents (like BSE in the UK, spinach in the US, and milk in China) that have lowered consumer confidence in the mass processing of agricultural products.

Although they are still price conscious (one retailer in Beijing suggested that “80% of shopping decisions are based on price and 20% on issues”), consumers are also putting more purchasing decisions through person environmental filters than ever before.

Appealing to them on this basis, especially with affordable products, creates an advantage for many retailers.

Retailers saw raising awareness of sustainability issues among consumers as a key way to help create demand for affordable, sustainable products and therefore drive sustainable practices throughout the supply chain. ‘ Internalizing external environmental costs’ One suggestion that seemed to receive support in Beijing was that environmental costs should be ‘internalized’ into product costs. There are several ways in which this could be done including environmental taxation by governments – on pollution, pesticide use, and other “nonsustainable” practices, coupled with grants and other incentives to promote more sustainable technologies. Once these sorts of incentives are in place it would allow the market to take control; good economic decisions and good environmental decisions would be one and the same. This presents a different view of government intervention from that which was presented at other times during the conference – a resistance and almost fear of government intervention that could make environmental practices costly and cumbersome.

Governments Large scale agricultural policies and subsidies are affecting global food prices and markets: Biofuel incentives changed land use patterns and contributed to rising food costs in

2008, for example. For this reason, retailers have clear interests in influencing trade barriers and subsidies. Over time, engagement and participation of the retail industry at a global level, such as through or with the World Trade Organization, to influence policy will be fundamental.

In addition there may be ways for retailers to collaborate on encouraging policies and incentives to support sustainable practices on national levels.

Nongovernmental organizations and industry experts Developing best practices and achieving a sustainable agricultural supply chain (see “Current sustainability standards” on page 12) will require engagement and partnership with nongovernmental organizations (NGOs) who have developed expertise in specific areas.

NGOs such as the Rainforest Alliance, the Marine Stewardship Council, and the Forestry Stewardship Council are all necessary stakeholders for the retail community. Others such as the World Wildlife Fund and Greenpeace, have moved, to varying degrees, away from their old “opponent” roles and toward working in partnership with businesses to bring together the expertise of both sides to develop workable solutions.

In addition, working with institutions, such as universities responsible for agricultural research, will become increasingly useful.

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Open Issues There is significant waste of food at all stages of the value chain – at the farm, in warehouses, distribution centers, and stores, and finally by consumers. All of this has inevitable consequences on agricultural production; eliminating waste in the system would significantly ease pressures on production, allow more capacity, and potentially strengthen the security of the food supply. Although there are several areas where actions could be taken, few retailers are focused on driving the waste out of the value chain.

• In the agricultural supply chain – through retailers implementing standards and auditing against these.

• In stores. Expiration dates could be revisited to reduce waste or allow food to be given away to other uses like charities. Work could be carried out on the liability issues in this area to extend the useful life of products where possible.

• Consumer waste. It was suggested that 30% of the food bought in the UK is thrown away, 15% in its original packaging – this is likely to be replicated in many other developed countries. More can be done to educate consumers on how to minimize waste through better cooking instructions, cooking demonstrations, and learning how to create value from ”the whole crop.”

More individually wrapped items may help to reduce consumer food waste, but this would also require more packaging. Such a trade-off requires careful consideration.

“ We are bad on this issue as we set shorter expiration dates because we want our produce to be the freshest.”

Retailer in Beijing

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Collaboration vs. competitive advantage Focusing on sustainable agriculture, creating efficiencies in the supply chain, and offering sustainable product lines can clearly bring a competitive advantage. The issue for retailers is therefore to what level they collaborate with other retailers to bring about these changes. It makes sense to work together on some issues through trade bodies and new partnerships (on influencing global agricultural and trade policies and incentives, for example); however, collaboration in other areas could reduce opportunities for competitive advantage. Ultimately, collaboration on setting standards will benefit all retailers by reducing costs, because producers find the expense of certifying products through many different schemes to be significant. At present, many retailers are developing their own standards or using NGOdeveloped standards (see ”Current sustainability standards”).

Sustainability at what price?

The role of new technologies.

There is currently a broad range of new technologies being developed to improve agricultural yields and reduce waste in the value chain.

These vary from scientific irrigation and fertilization systems on the farm to “intelligent” plant breeding and genetically modified organisms (GMOs), to new ways of preserving food such as irradiation, all of which can serve to create a more sustainable farm to fork system.

However, there are often difficulties

with the adoption of new technologies. Some present consumer controversies, GMOs being a good example. These are seen by some as a fundamental necessity to feeding the world and developing a sustainable agricultural system, but not to others.

GMOs, by transferring genes with a specific characteristic from one living organism to another, can improve resistance to insects or viruses, increase tolerance to herbicides and extreme weather conditions, and provide extra nutritional value in the form of vitamins. In doing so, they can lower costs, increase yields, and decrease reliance on pesticides.

However, despite their wide use in the US, NGOs and consumers in Europe have expressed concerns about potential health risks, reduced effectiveness of pesticides as a result of insect acclimation to new traits, and transfer of the genes to nontarget species. Customer perceptions must change before genetical products can be sold on supermarket shelves in certain regions. Similar issues arise from the use of irradiation as a pasteurization/ sterilization technique. Retailers will want to consider carefully their stance on these issues; some may want to rise to the challenge of increasing their acceptability over time through education.

A host of other technologies for sustainable agriculture that could be used on farms to increase yields and reduce costs through more efficient energy and water use already exist.

However, they often require capital investment. Retailers will want to consider whether it is possible for them to partner or co-invest with farmers in

new technologies and reap benefits from reduced production costs and reliable yields over time. A series of new agricultural technologies were showcased in Beijing; details of the products showcased can be seen on the CCRRC website (www.ccrrc.org).

Where from here?

Industry leadership opportunities Much of the work that needs to be carried out to achieve a sustainable agricultural system will require partnerships – with suppliers, farmers, and manufacturers – and it will also involve governments, expert advisers, and research institutions. A number of these are already under way around the world, as the case studies presented here indicate. Retail industry organizations have some interesting opportunities to act in ways that could move the issue forward. Among the possibilities suggested in Beijing were the following: • Create an information base by documenting the best sources of information on sustainable agriculture and publishing this information to the industry.

• Continue to develop case studies like those presented in this report to illustrate practical examples of retail work in the area of sustainable agriculture.

• Construct a campaign for “abundant food for all” using all stakeholders in the retail value chain to raise awareness of the issues around sustainable agriculture, including retailer management.

• Conduct further research to establish the best way to account for environmental costs and to create the most sensible measures and metrics for sustainable agricultural practice.

NGOs, governments, industry groups, and even some retailers have already begun this work, but no central system exists.

• Develop a forum for global retail leaders on sustainable agriculture to encourage continuing work and discussion on the issue. CIES and FMI might be candidates to lead such a group.

• Develop an industry mission for sustainable agriculture to ensure that all retailers are working toward the same goals and aspirations on this topic. Individual retailers could also develop their own corporate mission statements including commitments to agricultural sustainability.

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Current Sustainability Standards Sustainable agriculture standards have been developed by organizations, retailers, and industry groups. Here is a brief survey of some that are currently in use.

Organizations The Marine Stewardship Council (msc.org) has developed standards for sustainable fishing and seafood traceability. Both are based on independent third-party assessments by accredited certifiers.

The Roundtable on Sustainable Palm

Oil (rspo.org) is researching and developing definitions and criteria for the sustainable production and use of palm oil.

avocados, soy, aquaculture, and cotton are currently under development.

The Rainforest Alliance (rainforestalliance.org) sustainable agriculture program certifies bananas, coffee, and cacao among other crops.

Tesco’s Nature’s Choice is a formal code of practice for crop production that sets environmentally sustainable standards for produce growers who supply the company with fresh fruit, vegetables, and salads.

The Forest Stewardship Council (fsc.org) coordinates the development of sustainable forest management standards throughout the world.

(This applies to tissue products and packaging for retailers.)

Standards for commodities such as

Retailer- or supplier-own standards

Unilever has adopted Sustainable Agriculture Guidelines for suppliers of tea, sunflowers, oilseed rape, palm oil, tomatoes, peas, spinach, olives, gherkins, and dairy products. These measure 11 indicators, including water, energy, pesticide use, biodiversity, and social capital.

Marks & Spencer’s Field to Fork standard covers the management of its supply chain for fruit, vegetables, and salads. The scheme goes further than many, covering traceability, pesticide use, ethical trading, use of non-GM ingredients, and food safety.

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Carrefour benefits from local know-how and traceability so that it can provide consumers with fresh, quality, authentic products.

Case Studies and Examples Sustainable Agriculture This collection of retailer activities around sustainable agriculture provides a quick reference to some of the initiatives under way today.

This signal – A12 – indicates that a CCRRC case study is available on this entry.

Click on the signal to reach the case study.

Setting Standards A1 Carrefour’s CQL Carrefour’s Quality Line (CQL) producers adhere to strict procedures that address food safety concerns and environmental benefits. Local suppliers from 22 countries benefit from technical support, improved quality management skills, and expanded sales opportunities through Carrefour’s network. Carrefour benefits from local know-how and traceability so that it can provide consumers with fresh, quality, authentic products.

A2 Tesco’s Code of Practice Tesco’s Code of Practice for suppliers includes standards that require growers to optimize water usage. A risk assessment tool documents potential sources of waterborne contamination, and standards address water storage, planning of water usage, and recirculation as well as consistency of produce supply. Tesco also maintains a webside – www.tescofarming.com - where farmers, producers, and suppliers can go to learn about Tesco standards, increase their knowledge of the supply chain, and find out more about what shoppers want.

A3 Promoting sustainable fisheries Young’s Seafood took part in a collaboration to develop standards and assessment processes for sustainable fisheries that included fisheries, seafood companies, NGOs, and governments. Sales of accredited seafood products have been growing 12% per year in the UK as Young’s has promoted its “Fish for Life” program, and the company and its parent, Foodvest, have earned a leadership position on the issue.

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Setting Standards CONTINUED...

A4 Certified beef in Columbia Alkosto Av.68 worked with meat suppliers to obtain the first Colombian HACCP (Hazard Analysis and Critical Control Point) certification. Now they sell meat only from suppliers who vaccinate livestock in compliance with health authorities and carry out strict disease prevention programs. The certification contributes to the retailer’s reputation for quality you can trust, and it is also perceived as making a significant contribution to conservation of resources and the Colombian community.

Cultivating Local and Regional Suppliers A5 Enlisting small producers Waitrose has cultivated small producers who wanted to supply a multiple retailer but were unable to support a whole store network. Benefits have included being able to supply shopper demand for local produce, ensuring the continued commercial success and sustainability of its producers, and closer relationships with communities.

A6 Bringing local products into the mix Ball’s Hen House brought local products in to the mix, offering farmers’ market products and community supported agriculture subscriptions to customers. Benefits included strong sales increases, improved shopping experiences and relationships with local farmers. Product standards and marketing programs developed for use in farmer’s markets and CSAs can work in retail-based programs.

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Engaging Consumers A7 Concept stores The Dairy Group set up two ThreeSixty stores in Hong Kong to satisfy Asian consumers’ needs for wholesome fresh foods. The stores carry products with internationally recognized certifications (organic, natural, eco-friendly, and fair trade) and aim for an inspirational, educational customer experience. Their vision: “to champion the well-being of people and planet.”

A8 Certified coffee at Winn-Dixie Winn-Dixie’s private label coffee is grown by a Rainforest Alliance certified company. Not only is soil integrity managed carefully, the drying furnaces run on waste residue from the beans, and hydroelectric generators on the plantation supply power for operations.

Investing in Communities A9 Cultivating farming communities in China Carrefour partnered with the World Wildlife Fund on a project that helped to equip farmers in Sichuan Province, China with the knowledge, community infrastructure, and seed stock needed to become successful producers of potatoes and Sichuan peppers.

A10 Teaching about food safety Carrefour created a nonprofit Foundation for Food Safety in China that has organized 20 training programs for 3,125 people in 15 provinces in a bid to take knowledge and skills about food quality and safety to multiple stakeholders-including suppliers, employees, local government officials, shoppers, and consumers--where they live. Benefits include a growing reputation for leadership in food nutrition, quality, and safety in China.

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CASE STUDIES

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Case Studies Case studies introduction This Global Retail Perspective is designed to be both strategic and practical. The following case studies are an integral part of the project. They provide specific and tangible examples of what retailers are doing to reduce waste, reduce carbon emissions, and encourage sustainable agricultural practices. Some represent exciting new ideas; others illustrate more basic approaches. Together, these examples show the range of opportunities available to retailers as they develop their own plans for responding to growing concern for the environment.

CONTENTS Reducing Waste

70

• Recycling

70

• Reusable bags

81

• Conserving water

86

• Rethinking packaging

88

Reducing Carbon

93

• Lighting

93

• Refrigeration

99

• Storewide energy efficiency initiatives

104

• Integrated design and new technologies

107

• Overview: Sets out the specific activities taken by the retailer.

• LEED-certified projects

112

• Fleet upgrades

117

• Objectives: Defines what the retailer was hoping to achieve.

• Logistics management

123

• Alternative power sources

126

• Benefits: OVERVIEWs environmental and financial achievements including metrics such as savings or return on investment where appropriate.

• Carbon in products

128

Sustainable Agriculture

129

Each case following:

study

includes

the

• Setting standards

129

• Key Learnings: Describes what the retailer learned from the project.

• Cultivating local and regional suppliers

133

• Engaging consumers

135

• Application Potential: OVERVIEWs how this activity may apply to other businesses.

• Investing in communities

137

A geographic symbol accompanies each case study indicating the region in which the study was conducted.

Building Engagement and Support

139

• Inside the organization

139

• With shoppers

143

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Reducing Waste Recycling W1 Walmart Rolls Out the Sandwich Bale W2 Large Southeastern Wholesaler Initiates a “Corner Board” Recycling Project W3 Recycling at H-E-B Mexico W4 ASDA: Working towards Zero Waste to Landfill by 2010 W5 AB Vassilopoulos Installs the First Individual Waste Management System in Europe

W21 Walmart Canada Reduces Packaging on Its Products W22 Australia: Adoption of Joint Industry Packaging Waste Initiatives W23 Hy-Vee Shift to “Bag in the Box” System Reduces Waste

Reducing Carbon Lighting C1 Amelia’s Grocery Outlet Saves 45% of Energy Bill with Lighting Change C2 Green Valley Grocery – Reducing Energy Consumption Enterprise-wide

W6 Composting at Ukrop’s – Diverting 3,000,000 lbs. of Waste from Landfill

C3 Reducing Energy Consumption at H-E-B Grocery Retail Facilities

W7 Walmart’s Textile Network Creates New Recycling Opportunities

C4 PetSmart Reduces Energy Use with Shift to Fluorescent Lighting

W8 Walmart Sells Safer Electronics and Encourages Recycling

C5 Festival Foods Using Light Pipes to Capture Daylight to Save Energy

W9 Wong Supports Peruvian Schools through Recycling Program

C6 Walmart Moves to LED Lighting Technology in Stores

W10 Pao de Acucar & Unilever: Joint Recycling Program

Refrigeration

W11 Walmart and Coca-Cola: Joint Recycling Program in Brazil

C7 Publix Study of Energy Efficient Lighting for Walk-in Coolers & Freezers

Reusable bags

C8 SuperValu Reduces Carbon Footprint by Reducing Refrigerant Leaks

W12 Ukrop’s Sustainable Bag Initiatives – Engaging the Customer

C9 Kroger Uses Smart Motors to Generate Large Savings

W13 H-E-B’s Reusable Green Bag Promotion Reduces Plastic Bag Use

C10 Kroger Increases Energy Efficiency of Vending Machines

W14 Wellcome CSR Initiative – Plastic Bag Reduction

C11 Food Lion’s Alternative Refrigeration System Design Initiative

W15 Metcash: Reducing Plastic Bag Litter

Storewide energy efficiency initiatives

W16 Superquinn develops an eco-friendly solution to the Irish plastic bag tax

C12 Attacking Store Energy Costs at Archie’s

Conserving water

C13 SuperValu Improves Energy Efficiency in Store Remodel Projects

W16 Walmart Explores Store Water Conservation Strategies

C14 Energy Monitoring Program – Sustainable Optimization Realized at

Giant Eagle

W18 Walmart Mexico: On-site Wastewater Treatment Plants

Integrated design and new technologies

Rethinking packaging W19 ASDA: Packaging Reduction the ASDA Way W20 ASDA Reduces Packaging Waste for Shoppers

C15 Stop & Shop Learnings from Early Prototype Store C16 Walmart Implements Eco-friendly Refrigeration and Cooling Systems C17 Sobeys Green Warehouse Design Reduces Costs & Engages Employees

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C18 Sobeys Green Warehouse Design Lowers Energy Costs by 55% C19 Walmart Mexico Opens Ecologically Sustainable Mall

Sustainable Agriculture Setting standards

LEED-certified projects The Leadership in Energy and Environmental Design (LEED) Green Building Rating System, developed by the US Green Building Council (USGBC), provides a suite of standards for environmentally sustainable construction that is used in more than 30 countries.

A1 Carrefour: Setting Standards for Food Safety and Quality in China (“Quality Line”)

C20 Stop & Shop Achieves LEED Portfolio Volume Certification

A2 Tesco: Developing Standards for Water Assessment and Management with Growers and Suppliers of Produce

C21 Sobeys IGA Builds Canada’s First LEED-certified Grocery

A3 Young’s Seafood: Fishing for Sustainability

C22 Food Lion, LLC, Recycles Warehouse Space into LEED Office Space

A4 Alkosto Av.68 Store 1st in Columbia to Receive HACCP Certification

C23 North America: Sliver LEED-certified Store Built on Brownfield

Cultivating local and regional suppliers

Fleet upgrades

A5 Waitrose: Developing Local Food Sources

C24 Winn-Dixie Transportation Initiatives Reduce Fuel Use

A6 Ball’s Hen House Market Brings Locally Produced Products into the Mix

C25 SuperValu Upgrading On Board Computer (OBC) Across Truck Fleets

Engaging consumers

C26 North America – Private Fleet Goes Wireless and Reduces Carbon

A7 ThreeSixty: Creating a Greener Store

C27 Raley’s: Reducing Nitrous Oxide Emissions from Big-rig Diesel Engines

A8 Winn-Dixie Initiatives on Recycled Packaging and Sustainable Practices

C28 Making Biodiesel at Ukrop’s – Processing Soy Oil into Biodiesel C29 Walmart Addresses the Trucking Challenge with the Logistics Network

Investing in communities

Logistics management

A9 Carrefour: Empowering Women to Alleviate Poverty and Build a Sustainable Future

C30 Target – Reducing Empty Miles with Return-to-Warehouse Pick-ups

A10 Carrefour China Foundation for Food Safety

C31 North America – Private Fleet Customizes Their Store Delivery

Program, Saving Fuel

Building Engagement and Support Inside the organization

C32 Albert Heijn Executes Low-noise Distribution Alternative power sources

G1 Rutter’s Builds Organizational Support for “Going Green” G2 SuperValu Finds Sustainability Leader Effective in Driving Efforts G3 Carrefour: Sustainability Reporting (KPIs)

C33 Tesco: Creating a Greener Store C34 Alternative Energy Sources with Walmart Mexico: Wind Farm

G4 Publix Green Routine – Associate Awareness Program Saves $48m Since 2002

Carbon in products

Building Engagement and Support With shoppers

C35 ICA: Calculating, Handling, and Reducing GHG Emissions from

ICA-branded Food Products

G5 ICA: Launch of a Climate Website on Reducing Household Waste

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Wal*Mart Rolls Out the Sandwich Bale OVERVIEW

BENEFITS

Key Learnings

• Plastic bags, garment bags from apparel and shrink wrap were difficult to recycle – given the volumes of loose plastic.

• In 11 months, in just 10% of U.S. stores, enough plastic has been recycled to fill a football stadium 38 feet deep.

• Together with its local recycling partner (Rocky Mountain Recycling), Wal*Mart developed the Sandwich Bale, compressing loose plastic into a bale.

• The Plastic Sandwich Bale

• The Program worked well, used existing equipment, and associates could be quickly trained.

• Employees place a layer of cardboard in large trash compactors. Then, shrink wrap, plastic film, apparel bags and loose plastic is loaded in, followed by more cardboard.

• A compactor presses the bale into a sandwich with a goal of 40 inches of recyclable plastic in the middle.

Objectives • To explore ways to increase plastic bag and film recycling.

• Uses existing balers within stores • Promotes recycling of plastic previously difficult to handle • Eliminates 1 in 5 waste compactor hauls per store due reduced waste volume • Allows transportation of plastic on flatbed trailers (cardboard contains the plastic), reducing litter and bale integrity issues • Provides a steady supply of clean, recovered polyethylene for plastic industry

• Wal-Mart developed the Super Sandwich Bale to recycle aluminum cans, plastic hangers, plastic bottles, office paper, paperback books.

• Wal-Mart is developing a closed-loop recycling program that sends recycled materials back to suppliers.

• The Super Sandwich Bale program is now implemented in all stores and Clubs.

• Wal-Mart has diverted from landfill: • 9.1 million lbs of plastic hangers • 5.5 million lbs of office paper • 640,975 lbs of aluminum

Application Potential • It is important to involve trash recycling service providers in designing any solution to the plastic disposal challenge.

• Developing clear instructional procedures and staff training are always important.

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Large Southeastern Wholesaler Initiates a “Corner Board” Recycling Project OVERVIEW

BENEFITS

Key Learnings

• A progressive grocery wholesaler serving retail stores in the Southeastern part of the United States, wanted to simplify the process of handling corner boards resulting from breaking down pallets in their banana ripening rooms.

Financial benefits came from several sources and totaled approximately $44,000 annually.

• Waste recycling can generate dual revenue streams, i.e., less cost for garbage hauling and landfill and revenue from the sale of recyclable products.

• Recycling-related revenue and savings: there was 10 cents per pound generated for the plastic and the corner boards, and a onecent per pound for cardboard, resulting in an additional income of approximately $12,000 annually and a reduced land fill fee of approximately $6,000.

• Vendor/packaging suppliers can provide helpful input to this type of project. In this case they helped with the:

• Handling the corner board, i.e., a combination of corrugated and plastic, was labor- and spaceintensive. This initiative: • Increased labor productivity.

• Reduced work/storage space.

• Generated revenue from recycling.

• Labor savings were estimated at 15 to 22 hours per truckload of corner board shipped, resulting in an annual savings of $11,000.

Objectives • The primary objectives were to reduce labor in handling corner boards; increase the size and reduce the number of truckloads to remove them, and; reduce space required for handling and storing the corner boards.

• Other objectives included finding markets to accept the waste and to increase revenue.

• Space savings valued at $10,000 per year.

• Transportation cost reduction of $5,000 per year.

• Development of the box for separating consolidating corner boards.

• Saw an opportunity for additional savings if some corner boards could be reused.

• Profitable green programs can be put into place with no capital and little expense.

Application Potential • Recognize that there is an environmental sustainability component in many projects to improve operational efficiency that by itself can generate significant financial benefits.

• Recognize that Internet and electronic communications tools can be used effectively to plan, execute, and track projects.

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Recycling at H-E-B Mexico OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•H -E-B Mexico began recycling plastic, boxes, pallets, paper, PET and aluminum, having previously only recycled cardboard.

• Financial benefits: income from recycling increased by 200%.

•A ll initiatives can work, so long as everyone in the organization is involved and there is genuine encouragement to participate in the programs.

•M aterials are collected at store, loaded into H-E-B trucks and shipped to an H-E-B distribution center.

•D istribution center employee vendors handle materials and ship them back to facilities.

• Operational improvements: employees were greatly impacted by the program and found new opportunities to recycle • Strong environmental contribution: H-E-B Mexico contributed to the environment by avoiding: - use of 2,172 m of landfill space -u se of 3,629 barrels of oil

•C ulture and paradigms must be changed to reduce environmental impacts as a company.

Application Potential • Top-level store and commitment is critical.

regional

management

- f elling of 111,159 trees Objectives • To make a major environmental contribution.

• To be an ecological organization that saves trees, oil, resources, water & electricity.

• To gain income from recycling sub-products.

• Other highlights from 2008 include the collection and recycling of: - 6,539 tons of cardboard - 330 tons of polyethylene - 539 tons of fruit and vegetable cartons - 74,927 HEB/IG pallets

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ASDA: Working towards Zero Waste to Landfill by 2010 OVERVIEW •A sda has developed 5 ‘Service Centers’ next to its main distribution centers; 2 more will be operational in Sept. 2008.

•R ecyclables are brought to these centers through back-hauling, which creates zero additional carbon in the transportation of waste.

• I n these, the company bulk packs recyclables/reusables from back and front of store such as plastic and cardboard, washes plastic trays for reuse and repairs clothes rails.

•B ulking allows Asda to minimize costs of disposal and may allow profit on some waste streams.

•T he company diverts paper, cardboard, animal by-products, oils and fats, pharmaceuticals, confidential paper, waste electrical and electronic equipment, hazardous materials and plastic/flowerpots from landfill.

Objectives • To send zero waste to landfill by the end of 2010.

Key Learnings •S ustainability will be mainstream within the next 5 years.

Benefits

•S ustainability does not necessarily have a financial cost – especially waste reduction and efficiency initiatives.

• Asda currently diverts 65% of waste streams from landfill.

•N ot all the answers need to be known at plan setting stage – aspirational goals drive innovation

• Of the 35% left over, 69% is biodegradable; this is a focus for 2009.

•W ork with those in the sector to share information and learnings.

• 157,000 tons of cardboard and 9,000 tons of plastic is now recycled from the back of stores

•D rive plans from the Chief Executive downwards.

• £5.3 million per year saved in landfill tax from recycling of cardboard and plastic • £12.3 million per year saved in energy consumption • £6.1 million saved in transport costs • Bio/bakery trial store process using reverse logistics to ASC has now diverted 90% of material from landfill

•W e no longer view waste as a waste we now view waste as a resource

Application Potential • Reverse logistics and Asda Service Centers will form the backbone of the Zero Waste to Landfill strategy in allowing material to be consolidated in preparation for recycling • Further use of Asda Service Center network to collect all waste streams.

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AB Vassilopoulos Installs the First Individual Waste Management System in Europe OVERVIEW

BENEFITS

Key Learnings

• In 2003 AB installed the 1st Individual Waste Management system utilizing special provision of Greek Law and with the certification of the Greek Ministry of Environment, Planning and Public Works.

• Trends toward environmental measures have made AB the number 1 environmental friendly retailer in Greece.

• Private initiatives can be more effective than public ones and can even set the example to follow.

• This Waste Management System is the 1st Individual system in Europe, as all other Alternative packaging waste management systems are collective (producers, retailers, exporters) and do not offer their customers the ability to directly recycle.

• Brand Image

• It offers the possibility to recycle 7 different materials (e.g: Plastic, glass, tin) • It also offers incentives, such as discount rewards, as well as the option to make an automatic donation of the cash equivalent to Greek Charity organizations

• Benchmark for other companies and institutions (e.g.: Municipality of Athens implemented the same type of system in 2006) • The last 3 years: 700.133,40 kilos of plastic, 614.654,33 kilos of metal, 594.916,70 kilos of glass and 13.641.529 kilos of paper were recycled

• CSR initiatives need commitment to be successful, it is not a once off thing.

Application Potential • AB plans to extend the program to all new stores where space is available • The program is intended to be a key point of AB’s CSR strategy

Objectives • Make a direct contribution to the recycling effort, since the protection of the environment is an issue that concerns us all.

• Increase brand awareness and ensure customers understand that AB is responsible • Increase number of stores with recycling centers 74

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Composting at Ukrop’s – Diverting 3,000,000 lbs of Waste From Landfill OVERVIEW

BENEFITS

Key Learnings

• In 2002, Ukrop’s partnered with a landscaper to compost fruits and vegetable trimmings from their central kitchen.

• Sale of the compost is profitable, and a portion goes to area conservation bodies.

• It is vital to have a written agreement detailing each party’s obligations, definition of services/operations, distribution of profits.

• Landfill costs were exceeding $50 per ton – and Ukrop’s produced 3,000,000 lbs of trimmings each year.

• Trimmings are picked up, hauled to the landscaper, and mixed with leaves to compost for four months.

• The premium compost is then screened, taken to a bagging facility and stored.

• Nearly 3,000,000lbs of trimmings are diverted from landfill each year.

• Shoppers associate Ukrop’s with responsible earth stewardship from its composting programs because • Compost use reduces reliance on chemical fertilizers that can wash into streams, rivers, lakes and bays, affecting water nutrient loads • Compost is considered good for our environment by reducing waste and re-using resources wisely • Compost prolongs landfill life, as it redirects and reuses waste

• Compost is sold by Ukrop’s and by local garden centers and landscapers.

• Compost in 40 lb. bags (Spring Earth) is sold by local garden centers/landscapers. A portion of revenues benefits the Alliance for the Chesapeake Bay.

Objectives

• Compost in 20 lb. bags (Ukrop’s Organic Compost) is sold through Ukrop’s. Part of those revenues is donated to the James River Association.

• To reduce landfill waste from the central kitchen fruit and vegetable cutting operation.

• To recycle this waste into a premium soil component for resale in stores.

• Choose a project leader who is passionate about the effort — partnership arrangements can be challenging.

• Flexibility is important — external factors, like the weather, cannot be controlled.

• Be patient — it takes time and effort for the concept and “brand” to be recognized.

• Be aware composting programs may reduce store contributions to food banks.

Application Potential • This has application for retailers with central kitchen — or logistics management of store pickup will be challenging.

• If a retailer does not have a central kitchen, it may be economically feasible to pick up waste with the right partner and landfill costs.

• Choose a nearby landscaper/composting operation to minimize shipping costs.

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Wal*Mart’s Textile Network Creates New Recycling Opportunities OVERVIEW

BENEFITS

Key Learnings

• Wal-Mart partnered with its own return centers to gather vests from stores across the country and returned them to AR.

• The vest project illustrated how post-industrial fiber can be repurposed. SSI can reengineer and reduce fabric to an assortment of fiber lengths:

• Employees at a non-profit Adult Development Center removed buttons and emptied pockets.

• Long fibers are re-spun into yarn

• The project taught the Textile Sustainable Value Network team how pounds of material convert into other finished product.

• Sustainable Solutions, Inc. (SSI) processed some vests into individual fibers, resulting in 3,000 lbs of fiber that were combined with recycled office paper and water and made into card stock for greeting cards.

• Other vests were recycled and made into lap blankets for returning veterans; still others were converted into wheel chair caddies for patients in veterans and children’s hospitals to carry items.

• Vests not used for other projects were made into shipping boxes and gift boxes for Wal-Mart.com.

• Medium length fibers are used in non-woven applications • Short fibers are used for paper • The vest project helped the textile team solidify the way the supply chain can work for textile recycling and repurpose “waste”; e.g. garments made from cutting pattern pieces out of layers of fabric taken from giant rolls still produce 15% to 20% cutting waste. SSI’s textile regeneration uses the leftover materials as a resource to make new materials.

• Waste in the textile life cycle can be repurposed and create new sources for profit/reduced cost.

• Team learned how to “recycle up” – putting waste material into other useful products.

• W ith enough suppliers participating, clothing scraps can create new raw materials and profit centers.

• There are opportunities to partner with suppliers, nongovernmental agencies and academics to improve efficiencies in textile manufacturing and recycling.

Objectives Application Potential • When Wal-Mart decided to phase out associates’ blue vests, their Textile Sustainable Value Network team determined to avoid having the vests go to landfill.

• Be willing to look at the entire life cycle of products, and reconsider traditional ways of doing things.

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Wal*Mart Sells Safer Electronics and Encourages Recycling OVERVIEW

BENEFITS

Key Learnings

• Wal-Mart examined the entire life-cycle of the electronics it sold.

• The Electronics Scorecard initiative put Wal-Mart ahead of potential legislation.

• Wal-Mart’s Electronics Network determined they should offer electronic products that adhere to the strict standards of the European Restriction on Hazardous Substances. The RoHS directive eliminates the use of six hazardous materials in electronics.

• Many states are developing e-waste policies, making retailers responsible for electronics end of life.

• There are many additional business opportunities if retailers look at the whole life cycle of their products.

• In 2007, Wal-Mart released their Electronics Scorecard rating products on energy efficiency, durability, ease and ability to upgrade, compliance with RoHS, end of life solutions and product size.

• In 2006, Wal-Mart began partnering with manufacturers to host E-waste “Take Back” days across the U.S. More than 1.75 million lbs of unwanted electronics were sent to certified recyclers, not landfills.

• In March, 2008, Sam’s Clubs launched ecoNEW® online electronics recycling service for Sam’s Club members.

Objectives

• Promoting electronics that meet RoHS standards and offering Energy Star products creates an attractive source for consumer electronics.

• Phantom power, the power that electronics use even when they are “off,” accounts for 40% of the electricity used to power home electronics, and is equal to the output of 17 power plants. Wal-Mart is working with suppliers and the EPA to produce Energy Star electronics, and educating consumers to unplug electronics when not in use.

• EcoNEW® service provides a Wal-Mart/Sam’s Club gift card for the recycled value to be sent back to the consumer in the mail. This builds Sam’s store loyalty.

• Wal-Mart’s initiatives are reducing hazardous materials in landfills, and reducing the absolute electronics e-waste overall.

• Consumers want to do the right thing regarding recycling e-waste. Making it more convenient builds loyalty to the store, both for helping the consumer feel good about their actions, and for being the provider of the recycling service.

Application Potential • Study the entire life cycle of the products you carry.

• Partner with suppliers and work on data-supported solutions.

• To improve the safety and recyclability of electronics.

• To make recycling more convenient for the consumer.

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Wong Supports Peruvian Schools Through Recycling Program OVERVIEW

BENEFITS

Key Learnings

•“ De Envase en Envase la escuela se hace” campaign is organized by the Tetra Pak company with the Comite de Damas del Consejo de Ministros and the support of Wong, and has been in effect since March 2007.

The campaign aims to encourage shoppers to collect Tetra Pak packages, which are then converted into desks, chairs, and tiles for schools.

• Approximately 18.45 tons of Tetra Pak packaging were collected, benefiting more than 2,000 Peruvian schoolchildren.

•W ong shoppers were educated and encouraged to participate in this campaign both for the sake of the environment and for their communities and schools.

• Tetra Pak packages, comprised of layers of polyethylene, aluminum, cardboard, are transmitted through the Hidrapulper, a large liquefying machine, which separates the cardboard from polyethylene and aluminum. Then polyethylene and aluminum are dried, crushed, and then pressed at high temperature to form a polyaluminum plate, which can be used to manufacture desks, chairs and tiles, among other products.

Objectives •E ducate consumers on how to separate their Tetra Pak packages and encourage them to deposit at the special containers (made of Tetra Pak as well) allocated in Wong supermarkets.

•P romote the importance of recycling and the use of recyclable products, raise environmental awareness among Peruvian citizens.

• The environmental benefits of recycling Tetra Pak packages included: - I ncreased consumer awareness of environmental care - Conservation resources

of

natural

- Reduced amount of waste disposed in landfills or dumped directly into the environment, thus preventing soil, air, and water contamination - Committed a great service to the community and provided Peruvian schools with much needed furniture

•T he campaign called on the readiness and willingness of consumers, who had to separate the Tetra Pak packaging by carton type (milk, juice, etc.) and then deposit them onto the cream-colored containers (made from the same recycled Tetra Pak material) located in Wong and Metro stores.

Application Potential • Collaborating with packaging suppliers allows both partners to not only reduce packaging waste, but to convert waste materials into valuable products for the communities they serve.

• Promotions and fun, informative flyers such as this one, gained awareness of the program and excited shoppers to take part in the process.

•P rovide desks, chairs, and building structure materials to low income public schools, thus improving the conditions in which today’s Peruvian children study.

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Pão de Açúcar & Unilever: Joint Recycling Program OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

• I n 2001, Pão de Açúcar (Casino Group) & Unilever launched a joint recycling program.

• Cooperatives: initiative has created jobs for more than 350 people from the sorting, recycling and reprocessing of the waste materials and supports more than 19 local scavenger cooperatives.

•A fter 6 years of running the program, soy oil collectors were implemented for biodiesel production. (Biodiesel is now a concern for Brazil’s President Lula and 14 Ministers).

• Consumers: more conscious about recycling and social responsibility.

•A fter only 2 months of installing oil collectors, the program recycled 2,000 liters of cooking oil for Biodiesel production.

•R ecycling stations were set up in supermarkets offer convenient recycling for shoppers.

•E ach month, 90 stations in Pão de Açúcar stores in São Paulo collect about 400 ton of solid residues.

•C ustomers are given color-coded plastic bags which help them sort and carry their waste for recycling: blue bags are used for paper, red for plastics, green for glass and yellow for metal.

Objectives

• Society: benefits from significant waste reduction as well as the reduction of energy used to produce new materials.

• Environment: more than 18,000 tons of plastic materials, papers, metals and glass have been recycled since 2001

•B y the end of 2008, 100% of the Pão de Açúcar stores in São Paulo will receive soy oil collectors.

Application Potential • The critical step in an initiative such as this one is to recruit the cooperatives to collect the recycled materials.

• As with this initiative, the bags for customers can also be used to educate shoppers by listing the types of waste that can be recycled.

• To be recognized as citizen companies by involving customers and communities in building a better future with simple day-to-day actions of recycling.

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Wal-Mart and Coca-Cola : Joint Recycling Program in Brazil OVERVIEW

BENEFITS

Key Learnings

•W al-Mart and Coca-Cola have launched a joint program for the collection and recycling of waste materials in Brazil.

• This initiative helps increase the economic value of the materials collected, returning them to the production chain and protecting the environment in a cycle of sustainability.

•T his reach of this initiative has gone far beyond the environment; collection cooperatives such as Ecological Agents Cooperative in Canabrava (CAEC) have been able to secure financial autonomy in part through the income generated from collecting recyclable material from Wal-Mart stores.

• Shoppers: more conscious about recycling and social responsibility, and given the opportunity to be involved in the recycling process.

• I n order to ensure the appropriate logistics, operational support was required by CEMPRE (Business Commitment to Recycling), a non-governmental organization in Brazil that promotes recycling through the concept of waste integrated management.

CEMPRE assesses the cooperative structure, and then recommends necessary actions to ensure their operation.

•T he Recycling Station Program will have installed collection units for metal, plastic, paper, glass and cooking oil in more than 300 Wal-Mart stores through Brazil by 2009.

• L ocal collection cooperatives pick up the recyclable material from these stations and transport it to the recycling warehouse where they separate, press, and sell the materials.

•R ecycling units were designed with help by the Coca-Cola Brasil Institute and the Wal-Mart Institute, two institutes aimed at social development.

Objectives •W ork collaboratively by developing joint solutions to solid waste management.

•S upport recycling cooperatives not only by creating an opportunity for generating income, but also by offering training.

•E ngage and educate consumers by involving them in the process of recyclable material collection.

• C ommunities: recycling cooperatives generate income from this initiative, and collectors receive jobs and training opportunities.

• Society: benefits from waste reduction and energy reduction by offsetting the production of new materials.

• By the end of 2008, the program will have reached close to 250 stores, and by 2009 will directly benefit 50 cooperatives and generate income for 2,500 collectors.

Application Potential • The critical step of a program such as this one is to recruit the cooperatives to collect the recycled materials. After doing that, most of the investment is in equipping them with capabilities to collect, process, and sell the recycled waste.

• The Recycling Station Program represents a new model for environmental care through the partnership between a retail company and one of its main suppliers, aiming to promote the proper collection and processing of solid waste.

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Ukrop’s Sustainable Bag Initiatives – Engaging the Customer OVERVIEW

BENEFITS

Key Learnings

• Ukrop’s has baled paper and cardboard for 35 years, buying back the result for corrugated boxes (900 bales/month).

• Reduced waste: Since September 2007, customers are recycling more than 55,000 mesh and paper bags per week.

• Stay the course; sometimes you may be a little ahead of the pack; timing is everything.

• 10 years ago, Ukrop’s offered a four cent credit to customers for reusing paper bags.

Credits averaged 12,000/weekk.

• Ukrop’s has sold more than 230,000 polypropylene bags ($0.99 ea)

• In April 2007, Ukrop’s increased the amount of credit to five cents. A mesh bag was introduced in Sept., also eligible for credit.

Ukrop’s customers reused an average of 15,577 bags/week.

• Also in April 2007, Ukrop’s introduced bags made from 100% recycled paper.

• Ukrop’s also collects plastic from its operations and customers to recycle.

Objectives • To increase the reuse and recycling of bags while meeting real customer needs.

• Ukrop’s introduced non–woven polypropylene mesh bags for sale.

• By September 2008 (after a year’s experience with the program), Ukrop’s expects to have eliminated the need for ten truckloads or 3 million paper bags.

• Don’t necessarily follow the pack when looking at trends. Look at customer needs.

• Signage in stores is helpful and engaging associates in the sale and promotion is helpful; mesh bags should be visible throughout the store.

• Create excitement! Ukrop’s offered limited quantities of specially-designed mesh bags.

• C$R: Customers feel good about the program.

• Ukrop’s uses its paper and mesh bags as marketing tools, with environmentally safe inks for printing.

• Specially-themed bags are used for donations, special community events • Ukrop’s marketing department changes bag design monthly, tying in local community/ special events • During December holidays, customers were encouraged to use holiday themed bags as environmentally friendly gift wrap

Application Potential Create a reusable, recyclable bag that appeals to customers. Ukrop’s mesh bag is available in two colors and is: • Water repellent; durable for spot cleaning.

• Holds up to 35 lbs.

• Made from new polypropylene to ensure quality and source safety.

• Compatible with at-home recycling.

• Ukrop’s encourages the use and reuse of paper or mesh bags, but continues to offer plastic, due to consumer benefits.

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H-E-B’s Reusable Green Bag Promotion Reduces Plastic Bag Use OVERVIEW

BENEFITS

Key Learnings

• H-E-B’s plastics recycler and partner provided easily identifiable recycling bins for the front of stores.

• 40% increase in front-end bags recycled.

• Easily identifiable bins are vital – or customers confuse them with trash bins.

• Customers can recycle dry-cleaning bags, newspaper sleeves, product overwrap and plastic bags.

• Revenue opportunity; Reusable green bags are one of the topselling general merchandise items.

• Reusable bags should be merchandised in full view of or near the checkstands.

• CSR: Show customers and partners H-E-B’s concern for the environment.

• The reusable bag give-a-way/exchange programs were very effective.

• Bins and green bags were promoted to employees and customers in Austin, TX on Nov. 15, as a pilot. On Earth Day, 2008, promotions were held at all stores. (e.g. customers got a green bag for five plastic bags deposited in the bins; limit 2 per customer).

• For every green bag sold, 5 cents is donated to Keep Texas Beautiful. (Affiliates may apply for grants for local recycling programs of up to $3,000).

Objectives • To decrease customer use of plastic bags.

• To encourage return of plastic bags for recycling.

• To buy/use H-E-B’s 99 cent green bags.

• Media: Excellent coverage.

• Stakeholders: Very positive feedback from customers, partners, municipalities.

• Special Earth Day displays are effective.

• Partnering with non-profits means they promote bag sales at the grassroots level.

Application Potential • Media don’t always give correct information. (H-E-B had a 4-hour time frame for the give-away promotion; some media outlets implied that the promotion went on all day).

• H-E-B planned to give a green bag for 5 or more plastic bags deposited – but customers wanted one for every 5 bags.

• Education and outreach is key.

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Wellcome CSR initiative – Plastic bag reduction OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•W hile retailers contribute a smaller percentage of plastic bag consumption than generally perceived, Wellcome recognized the benefits of changing shopper behavior.

• Recognition: With green programs and media, Wellcome stands out in the “Green” field and pioneers socially beneficial initiatives.

• Act on facts and execution.

Be first in the industry, react promptly to market dynamics and inject innovation to enhance programs.

•W ellcome was first HK retailer to sign the Voluntary Agreement on Plastic Bag Reduction targeting 15% annual reductions in bag usage.

•R etailer worked with green groups and schools to promote plastic bag reduction (e.g. regular “No Plastic Bag Days”, eco-friendly bag design competition).

•C heck-out staff at all stores have “Say: NO to Plastic Bags!” on their uniforms.

•> 1,300 outlets of Dairy Farm companies hold weekly “No Plastic Bag Days”.

• Government, NGOs, and media cite outstanding eco-practice e.g. Prime Award for Eco-Business, Hong Kong Top Service Brand, Reader’s Digest Trusted Brand, Yahoo Emotional Brand Award.

•F inancial savings from annual plastic bag reductions of 27 million (2006), 36.5 million (2007) and 14 million (2008 to date).

•Q uantity reduction: >100 million plastic bags were saved 2006-2007.

•B ehavioral change: Customers have started to bring bags or buy environmentally-friendly bags. Jan ’07 through May ‘08 260,000 bags were sold.

Objectives •T o enhance public awareness and involvement in recycling.

• Behavioral changes take time.

Launch in phases, keep communications and execution focused and consistent to ensure acceptance: – 1st phase: Awareness building is time-consuming and challenging. Wellcome focused first on customers incentives to minimize obstacles – 2 nd phase: Educational approach by forming strategic alignment with stakeholders – 3 rd phase: Network enhancement to maximize project effectiveness

Application Potential •E ducation and proactive approach take time but pay back in long term gains.

• F orm alignment with stakeholders instead of going against criticism is the key to success.

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Metcash: Reducing Plastic Bag Litter OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•A dopted the Australian Retailers Association (ARA) Code of Practice, and set up a 3 phase plan to achieve the 50% reduction target (joint target with other major retailers) over a 3 year period.

• I ncreased Recycle content of all plastic bags from 0% to 30% (quickly reducing need for 2,400 tons of virgin plastic material for over 1 billion bags over last 3 years).

• Joint Campaigns by smaller and larger retailers in a region is crucial to gain education synergies and shopper, consumer and staff awareness.

•C reated new sales of alternate carry bags generating increased profits for retailers in the order of A$5m.

• Political damage to the retail brand can occur if the anticipated outcomes of such environmental initiatives are not delivered (e.g. if there is inaction on behalf of shoppers and consumers). In some cases, it can prove costly to recover, both from a reputational and financial perspective.

•R educed use of plastic carry bags through: 1. Removing unsuitable bags from range 2. Offering alternate longer life cycle bags (e.g., green polyethylene, calico bags) 3. Educating initiatives at retail and consumer levels (through in-store posters, messages on-bags, and external media campaigns) •C reate culture change by shoppers and consumers while modifying checkouts in a timely and cost effective way for alternates

Objectives •D evelop a solution to address environmental concerns associated with plastic bags (e.g., blowing into waterways, injury to animal life, length of time to degrade).

•R espond to external pressures (e.g., NGOs, governments).

•D evelop and communicate a joint retailer approach to creating a culture change towards re-useable carry bags.

•P rovide customers and staff with a greater awareness of the company’s commitments to reduce the future demand for plastic bags.

•R educed the amount of plastic carry bags being given away by A$700 per store per annum, which helped reduce the amount of litter in waterways (CUA – Clean Up Australia - data).

•E nsured gradual equipment changes at checkouts to maintain productivity during phase down program at a lower cost than immediate bans. Costs ranged between A$100 per checkout to A$1000 for new bag holders and self-loading bag shelf designs.

•G ained public awareness and government acceptance of the joint industry strategy.

They was achieved through a joint Education Campaign costing A$2m over 3 years.

The potential savings run into the A$ millions for companies by joining in a campaign together, rather than individual retailer promotions.

• Developed simple Education messages, consumer reminder tools and posters for staff and consumers along with TV, Radio and Print media materials.

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• B eing proactive on environmental activities can assist in focusing on good community outcomes.

Application Potential •T he standardization of such consumer campaigns (either through a joint industry or regional approach) ensures a lower overall cost for individual retailers.

• I f the consumer buy-in can be achieved, it will lead to significant financial benefits, and successful community and environmental outcomes.

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Superquinn develops an eco-friendly solution to the Irish plastic bag tax OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

• In 2002, the Irish government launched 15c (STG .10p) plastic bag tax

• The new reusable bag was smaller in size, environmentally friendly and well received

Processes needed to be revised as well as bag design

• Estimated 1.2 billion plastic bags were in circulation per annum (325 bags per household) • Objective was to change behavior not to raise tax • Superquinn developed a reusable bag which customers would use • They also revised their packing processes to improve productivity

Objectives To develop a more user friendly reusable bag that improves productivity including:

• Faster service through checkouts • Estimated payroll savings of €750,000 per annum

Training was required for both consumers and staff examples of successful approached include: • Plastic Free Days

• Sustained recognition for developing a more environment-friendly alternative to plastic bags

• In-store Hype

• Plastic bag usage reduced by 97%

• Green Mondays

• Saving from plastic passed on to customers

• ‘Don’t Forget Me’ Campaign

• Wage cost

• Plastic Free Checkouts

• Customers encouraged to put 15c (8p STG) in a tin to come accustomed to tax

• Capital cost (new checkouts) Application Potential

• Space for new checkouts • Turnover in car park

• Any retailer who currently provides plastic bags can use implement a similar reusable plastic bag approach • May require new frame systems on checkouts to hold the bag open to prevent incremental packing time

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Wal*Mart Explores Store Water Conservation Strategies OVERVIEW

BENEFITS

Key Learnings

• Wal-Mart uses experimental stores to explore ways to become more efficient and more sustainable.

• The McKinney store uses 85% less water for irrigation than a conventional Wal-Mart store, due to native, drought-tolerant plants and drip irrigation.

• The landscaping plants have proved hardy, and the trees provide shade.

• At the McKinney, Texas, and Aurora, CO, stores Wal-Mart explored native landscaping, pervious pavement, and in-store water conservation strategies.

Objectives • To reduce water costs.

• To conserve water.

• To mitigate the impact on groundwater replenishment of large store lots.

• Pervious pavement and/or concrete help drain water from parking lots and percolate to the groundwater system.

• Wal-Mart now installs advanced water- and energysaving technologies in bathrooms.

• Restroom sinks contain sensor-activated ½ gallon/minute high efficiency faucets, which reduce water usage by 78 % (compared to 1992 EPA standards.) Water turbines are built into each faucet, generating electricity for the sensors • High-efficiency urinals use 87% less water and low-flow toilets use 20% less • Automatic flush valves on toilets are powered by water turbines. These save energy and eliminate the electrical conduits and wiring required for automatic flush valve sensors

• The pervious concretes are generally performing well – monitoring continues.

• Stores found that high-efficiency urinals are a better option than waterless urinals.

• Turbine-powered sinks in restrooms proved better than countertop photovoltaic panels that charged batteries in sink sensors.

Application Potential • Landscaping should reflect what is native to locations and be tolerant of local conditions.

• If pervious pavement is chosen, environmentally friendly ice melters, etc. should be used in colder climates.

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Wal*Mart Mexico: On-site Wastewater Treatment Plants OVERVIEW

IN TRANSPORTATION SYSTEMS

•W al*Mart de Mexico has installed 236 in-store wastewater treatment plants (WWTP).

• >1 million m3 of wastewater treated in 2007.

•A ll stores constructed since 2004 are equipped with WWTPs.

• Compliance: Complies with legislative standards regarding discharge and reuse.

•W al*Mart de Mexico invested c. US$43 million in WWTPs for stores.

• Government: Supports government action to clean wastewater where no infrastructure is.

•O ther water-saving include:

initiatives

- Rain harvesting

• 10% lower potable water consumption*.

• Employees: Now aware of saving water and reducing organic waste (e.g. cooking oils).

• CSR: Initiative helps to fulfill CSR goals.

Key Learnings •A nticipate scarcity of non-renewables and find solutions now – don’t wait for problem.

•B est practice in water management is needed in all stores to be successful.

•C areful maintenance of oil/grease traps is crucial for the system to be effective.

•E mployee engagement is key (e.g. no disposal of oils via sewage system).

•S uch initiatives can complement government actions.

•S maller business formats need different types of wastewater treatment systems.

- Water saving devices - Waterless urinals

Application Potential

- Re-use of treated wastewater • Involve and encourage all employees to help reach the goals.

Objectives • To help achieve the corporate goal of zero wastewater by 2025.

• Sustainability is a long-term investment -- it can help reduce costs, adding value to shareholders and building reputation.

• To use a vital resource with caution and care.

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ASDA: Packaging Reduction the ASDA way OVERVIEW • Asda’s packaging strategy is based on the 5 Rs: -- Remove: • Layers • Componentry • Do we need it?

-- Reduce • Downgauging • Lightweighting • Rightsizing -- Recycle • Recycled content • Recyclable -- Renewable • No compostables • No biodegradables • No PLA -- Revenue • Making sustainability affordable • Less is more • Actions taken include: reducing sleeves on ready meals, lightweighting glass, changing from glass to plastic in some areas, removing cartons, removing plastic trays and films.

Objectives To reduce packaging by 25% by the end of 2008.

Benefits • Asda will use 25% less packaging on its food by the end of 2008 by reducing packaging on more than 4000 products.

• Has already removed 35,000 tonnes of packaging and will remove 46,000 tonnes less by the end of 2008, an reduction in volume equivalent to 6,600 London buses.

• Reductions include: -- Pizza: 68% less -- Courgettes: 75% less -- Muesli: 80% less -- Bagels: 81% less -- Sweetcorn: 85% less

Key Learnings • Simple changes make a big difference – e.g. changing from glass to plastic olive oil bottles reduced packaging by 32% and saved 988 tonnes of glass, with a 20% better carbon footprint.

• Sustainability will be mainstream within the next 5 years.

• Sustainability does not necessarily have a financial cost – especially waste reduction and efficiency initiatives.

• Not all the answers need to be known at plan setting stage – aspirational goals drive innovation • Work with those in the sector to share information and learnings.

• Drive plans from the Chief Executive downwards.

Application Potential • All products can be reviewed for packaging reduction and therefore cost saving potential.

-- Grapefruit: 95% less • Industry recognition and reputational benefits: Asda chairs Cross Industry Packaging Waste Group.

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ASDA Reduces Packaging Waste for Shoppers OVERVIEW

Benefits

Key Learnings

• ASDA determined the redesign of its own brand packaging as an opportunity to reduce the packaging waste distributed to customers.

• Strategically ASDA sought to gain as much environmental benefit as possible, while delivering cost savings to the bottom line.

• Minimizing packaging can reduce costs and directly use fewer resources.

• Within 12 months, ASDA: -- Redesigned its own brand packaging -- Reduced its own brand food packaging weight by 25% • The strategy was:

• Sample redesigns – which have resulted in direct resource savings – include: -- Cereal packaging reduced

-- Wherever possible, eliminate the retail packaging and sell the product loose. Eliminate unnecessary packaging components.

-- Thickness of glass jars holding coffee, pasta sauces and organic sauces reduced

-- Minimize the packaging weight and volume of the pack.

-- Where possible, plastic exchanged for pulp

-- Packaging should be recyclable and contain recycled material as much as possible

-- Plastic film on organic fruit and vegetables changed to netting

Objectives • ASDA is making progress toward their stores sending Zero Waste to landfill by 2010.

• A concern now is customer waste generated as a result of supermarket shopping.

• Lighter and smaller product packaging means ASDA is using less fuel delivering goods onto shelves.

• It can also lead to supply-chain and operational efficiencies.

• It provides an effective and visible story to tell customers about environmental resource stewardship, leading to reputation benefits.

• For more information, see the IGD website: http://www.igd.com/index. asp?id=1&fid=1&sid=5&tid=49

Application Potential • When looking for opportunities to become a more environmentally sustainable retailer, consider more than just your own operations.

• There can be positive environmental and savings opportunities discovered in helping clients, suppliers and customers operate and live sustainably.

-- Products occupy less shelf space -- Operational efficiencies improved • Making packaging lighter and more environmentally friendly to help customers lead more of a sustainable lifestyle at no extra cost.

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Wal*Mart Canada Reduces Packaging on Its Products OVERVIEW

BENEFITS

Key Learnings

• May 2008: Wal-Mart Canada met its commitment to sell only concentrated products in the liquid laundry detergent category.

• Reducing packaging means less money spent on materials, shipping and less space taken on shelves.

• By reducing materials, increasing efficiency and eliminating unnecessary packaging, WalMart and its suppliers will better meet rising environmental standards.

• Cardboard packaging is replacing all PVC plastic packaging in the energy saving light bulb category.

• Over 65% of the new cardboard packaging is made from 100% recycled material. 30% use vegetable die in the ink process.

• Wal-Mart has a packaging scorecard to help achieve this goal. It looks at factors like: • Energy used in creating the packaging • Whether packaging can be reduced or eliminated.

• Recyclability, and whether materials are renewable, biodegradable or compostable.

Objectives • To reduce packaging on products sold in its stores by 5% by 2013 • To show changes in packaging make both business and environmental sense.

• Partnering closely with its suppliers, Wal-Mart’s decided to offer only concentrated detergent, and leading manufacturers began transforming their facilities, leaving less capacity for old-fashioned detergents with high water content. Other retailers are now moving toward selling only the concentrated version of liquid detergents • Wal-Mart Canada partnered with suppliers to ensure customer acceptance and promote benefits of concentrated detergents – high-lighting the savings in water and packaging raw materials.

• Wal-Mart uses interactive shelf displays, marketing promotions in-store and in ads, and trains associates in the advantages of the change.

• Wal-Mart Canada has also changed some shipping processes to reduce packaging. In 2006, some shipping crates changed from cardboard to plastic boxes that could be used 60 times instead of once. That saved $4.5 million in costs, including waste reduction of 1,400 tons, and carbon emissions reductions of 10,000 tons of cardboard emissions.

• Partnering with suppliers and having a data driven process provides an objective arena for determining strategies to reduce packaging and costs.

• Having benchmarks is important for evaluating the effectiveness of strategies.

• Employees are very receptive to and supportive of Wal-Mart’s green initiatives.

Application Potential • While many of Wal-Mart’s activities already exceeded governmental standards, together with their suppliers it was determined they could do better.

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Australia: Adoption of Joint Industry Packaging Waste Initiatives OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•A ustralia’s Packaging Industry was challenged by Australian Governments on Life Cycle and Waste/ Recycle costs that led to National Packaging Covenant being developed for voluntary industry adoption.

• National Tender process for National Waste and Recovery/Recycling Collection allowed us to remove inefficiencies and data gathering problems.

• C entralized management via tenders is crucial to data gathering, mass balance analysis, gaining control, and assisting with cultural changes.

•M anufacturers, retailers and packaging suppliers identify ways via ECoPP* to improve recycling, reuse and recovery of packaging waste at individual business levels via Annual Action Plans.

•T he business adopted a national approach to a) review Life Cycle Analysis (LCA) of packaging, b) Centralized Waste Recovery, c) improved packaging design selection d) in its Covenant Action Plans. * EDoPP (Environmental Code of Practice for Packaging)

Objectives •T he goal was to reduce waste going to landfill from warehouse and retail levels by improving : – Selection

of more environmentally friendly packaging materials (i.e. remove non recyclables) via decision management practices for our corporate branded goods –P ackaging waste recovery and recycling systems that minimize packaging per kilogram of products.

• Recycling increased dramatically and allowed increased recycle content back in items like plastic carry bags and cartons.

• Recycling became an income stream at A$25 per ton for cardboard and plastic when prior they were a cost to the business via poor site sorting ending up in waste stream at an average cost of A$50 per ton.

• National Packaging Costs Signatory Costs of A$3m per annum were requested for Industry commitment via a Industry Corporate Owner Sales Model Table that requested industry financial commitment, joint campaign support, sharing of ideas and data and was well worth the cost.

• Implementations highlighted dysfunctional behaviors between metropolitan sites and rural sites for viable collections, leading to government and industry project support.

• Created company focus on recycle content use at all levels of packaging systems.

• Joint industry initiatives allows smaller and larger retailers to learn from each other on possible initiatives.

• Developing individual Annual Business Action Plans using ECoPP principles and publicly displaying these plans on NPCC website builds business and brand credibility.

• Knowledge gained on packaging can now flow into LCA, with energy/water demand needed for packaging (under new carbon trading systems) being developed globally or at local levels.

Application Potential

• Increased usage of ‘Recycle’ logo’s on products.

• Reduced cardboard usage by 250 tons per annum in using re-useable Tote Bins.

• Waste into landfill is now 2% of total collections.

• Reduced packaging per kilogram of food by 7% in recent year on year comparison.

•U nderstanding ECoPP principles and reviewing existing waste stream, recycle data and other industry plans with similar businesses can help customise quickly your own individual business Action Plans.

For more information, contact Ed Cordner (NPCC in Australia via npc@ea.gov.au )

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Hy-Vee Shift to “Bag in the Box” System Reduces Waste OVERVIEW

BENEFITS

Key Learnings

Hy-Vee, a grocery chain located in the upper Midwestern United States, operates a central kitchen that produces bulk, ready-to-eat salads. These salads were traditionally shipped to its grocery stores in plastic pails that created certain handling problems as well as disposal costs.

The immediate hard savings was $.05 per pound of product shipped.

At the time the company shipped about three million pounds of salad each year, so the initial harddollar benefits were approximately $150,000 per year.

• Initiatives designed to reduce waste and create savings can also result in significant operational benefits.

There were other benefits that were not directly translated into dollars, that included:

• Suppliers were very helpful and played a key role in both investigating options and implementing the new system.

• Personnel at the central kitchen were exposed to less heavy lifting.

Application Potential

• Packaging problems during shipment to the stores were eliminated.

• Establish the baseline by understanding current challenges and costs in product-handling, shipping, and waste disposal.

• Reduced concern for repetitive motion injuries for store employees because they began handling eight-pound bags versus 32-pound pails.

• Evaluate both new and existing equipment and obtain supplier input.

• Salads were handled more safely and replenished in smaller quantities using the plastic bags.

• Identify potential implementation issues and develop a communications plan to address concerns of those impacted by the change.

The project involved: • Replacing the plastic pails with corrugated boxes containing plastic bags. The stores had cardboard compactors that allowed them to convert a cost (pail disposal) into a revenue stream (recycled cardboard).

• Using new equipment to pump salads into sealable plastic bags that were shipped to stores in corrugated boxes, i.e., these bags were the only source of waste in the new system.

Objectives The goal of the “Bag in the Box” project was to: • Decrease waste disposal and shipping costs.

• Reduce packing waste • Improve operations by making it easier to handle the shipping units at both the central kitchen and in stores.

There were no specific targets set for the project, but the company was facing increasing costs for disposal and shipping and there were logistical and operating problems dealing with the pails.

• Effective communication to stores (one of the biggest challenges associated with the change) went relatively smoothly based largely on Hy-Vee’s culture as an employee-owned company.

• Identify costs/benefits, and impact on operations, logistics, and personnel.

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Amelia’s Grocery Outlet Saves 45% of Energy Bill with Lighting Change OVERVIEW

BENEFITS

Key Learnings

• Amelia’s is an 11 store chain in Pennsylvania. The Pottsville, PA, store was retrofitted.

• Savings: Amelia’s annual energy bill was reduced by 45% ($8,389)

• Changing lighting is one of the fastest ways to cut costs and conserve energy.

• Amelia’s Grocery Outlet replaced lighting with energyefficient fluorescent lighting from Orion Energy Systems.

• HIF lighting operates much cooler than traditional lighting, saving on cooling costs.

• Businesses are changing to more energy efficient equipment, reducing costs and upward pressure on prices.

• Fluorescent and metal halide lights were replaced by high-intensity fluorescent lighting, saving 90,669 kWh annually.

• ROI is 56% and payback period is 1.8 years.

• Amelia’s gained lower operating costs without sacrificing lighting quality.

• The annual 90,669 kilowatthour reduction over the 20-year life of the replacement fixtures translates to preventing 1,236 tons of carbon dioxide

Application Potential

• Fixtures use a special surface reflecting light from all sides of the tube down to aisles.

• Modular fixture chosen was installed with little or no interference in daily operations.

• This is the same as planting a 17 acre forest, removing 15 cars from the road or saving 7,485 gallons of gas each year.

Objectives • To reduce Amelia’s energy costs and carbon footprint.

• To maintain their positioning for clean, bright stores with friendly, helpful service.

• Work closely with suppliers and service providers to make such savings.

• Shopper Impact: The lighting quality and brightness of the store were dramatically improved.

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Green Valley Grocery – Reducing Energy Consumption Enterprise Wide OVERVIEW

BENEFITS

Key Learnings

• Green Valley Grocery operates 36 Shell-branded convenience stores throughout the Las Vegas valley.

• Savings: Store energy use is projected to be reduced by an average of over 40,000 kWh per store for a projected annualized average savings of over $3,000 per store.

• There are so many funded programs available today, it only makes sense to seek out what’s available.

• Green Valley Grocery conducted a review of available energy-reduction programs which revealed many that were Power Company or government funded.

• Interior T-12 fluorescent bulbs were replaced with T8 fluorescent bulbs with reflectors.

• In the coolers, 75w incandescent bulbs were replaced with 15w CFL bulbs.

• Incandescent Exit signs were replaced with LED Combo Exit signs.

Objectives • To operate stores with lower utility expenses

• All costs to replace the inefficient “interior” fluorescent lighting, the ballasts, the exit signs, thermostats, strip curtains and cooler lighting were funded by the state power companies through the Energy Policy Act of 2005.

• All bulbs and ballasts are guaranteed for 5 years. The new LED exit signs are guaranteed for 10 years, as are the thermostats.

• The vendors performed the work during the daylight hours (between rush hours) with the store remaining open. The contractors were extremely cooperative and made the entire experience a positive one.

• Not only can companies upgrade their electrical lighting and equipment, they can also benefit the environment. It’s a win-win for everyone.

Application Potential • Almost every company qualifies for some level of benefit. It is worthwhile to check out the available programs from your power provider.

• To reduce the company’s carbon footprint • To reduce the impact on the environment and become more “Eco-friendly”

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Reducing Energy Consumption at H-E-B Grocery Retail Facilities OVERVIEW

BENEFITS

Key Learnings

• H-E-B Grocery Company is based out of San Antonio, Texas.

• Savings: New light fixtures used > 40% less electricity — reducing store energy consumption by 4-7% and CO2.

• By bidding the light fixture package, H-E-B was able to save a significant amount of capital dollars.

• Lighting comprises 20% of a typical store’s electrical consumption.

H-E-B Grocery

• The Retailer replaced metal-halide light fixtures with energy efficient fluorescent high-bays at approximately 140 stores.

Objectives • To operate stores with lower utility expenses • To reduce the company’s carbon footprint • To reduce the impact on the environment and become more “Eco-friendly”

• Bidding out the labor to electrical contractors substantially beat estimated budget.

• Shopper Impact: The quality of in-store lighting also improved.

Fluorescent lamps have a higher color rendition index (CRI), better displaying the true color of objects.

• While selecting light fixtures and lamp options, H-E-B learned that longer life lamps had been developed.

This increased re-lamp program from every 2 to 3 years.

• The CRI improved from 65 to 86.

Application Potential • The technology has application for retailers who utilize metal-halide high-bay light fixtures.

• More efficient lighting is low hanging fruit, offering energy savings, improved lighting, longer lamp life and reduced maintenance.

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PetSmart Reduces Energy Use with Shift to Fluorescent Lighting BENEFITS

OVERVIEW • PetSmart, Inc of Phoenix, Arizona conducted a one for one retrofit of traditional Hi-bay lights to T-8 fluorescent lights. The pilot demonstration involved 47 stores that were retrofitted in 2005. It was a two day process in each store to convert to fluorescents.

• After the test, PetSmart developed a four-year plan to retrofit all existing stores (approx 200 stores a year) and changed the prototype to include fluorescents in all new stores. At the end of the 2009, all PetSmart stores will have fluorescent lights.

Objectives The goal of the pilot was to verify the energy efficiency claims, reduce initial costs, realize expected twoyear return on investment, extend the re-lamp cycle, determine the impact on store operations, and the customer experience.

Fluorescent lights: • Have an approximately 40% lower initial cost.

• Require 50% less re-lamp expense, e.g., no electrician needed to changes lamps.

• Are 40% more efficient.

• Burn cooler (30 degrees lower), reducing HVAC demand.

Key Learnings • It is possible with this lighting system to significantly reduce the energy demand, extend re-lamp cycle, realize cost savings with negligible impact on store operations or the customer experience.

• Availability of rebates combined with rising energy costs made it even more attractive for PetSmart to take advantage of the significant energy-savings opportunity.

• Are instant “strike and light” versus high bay which requires an eight-minute warm-up.

Application Potential

• Have a better color rendering index and highlight colors of merchandise packaging.

• There can be challenges if there are multiple lighting types in the stores or hanging décor. If this is the case there may be reduced light levels in a one-to-one exchange scenario.

In addition: • The re-lamping cycle was extended from two to three years and requires minimal disruption to store operations, with complete “invisibility” to pet parents.

• Rebates were available in many cases from utility companies and/or the state but were not included in the ROI calculation.

• Consider doing a photometric study to determine light levels at floor as each configuration might be slightly different.

• Understand and plan roll-out to take advantage of states that currently have rebates.

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Festival Foods Using Light Pipes to Capture Daylight to Save Energy OVERVIEW

BENEFITS

• Festival Foods is opening a 78,000 sqft grocery in Manitowoc, WI in October 2008.

• Savings: Based on other facility installations, the Light Pipes should save Festival Foods 50%80% on electrical lighting every year.

• One of the many energy saving strategies in the new store will be the use of 175 Apollo Light Pipes to harvest natural daylight.

• Light pipes work well with white reflective roof membranes.

Objectives • The new store will feature several strategies for reducing utility costs, including Light Pipes for daylight harvesting.

• The light pipes are installed at prescribed intervals throughout the sales floor to maximize natural daylight from above. The Light Pipes collect and focus daylight with reflective materials, consuming no electricity on their own.

• High intensity fluorescent light fixtures and lighting controls are integrated with the light pipes.

• The controls maintain even light levels, shutting down the high intensity fluorescent lighting during the sunniest part of the day, and turns them on gradually as night comes.

Key Learnings

• Wisconsin is a northern state, with northern sun angles.

The acrylic collector dome is an important aspect of light pipe design. Be sure to select one designed to specifically interrupt low sun angles associated with seasonal change and sun rotation.

• Make sure the model chosen ensures as much roof surface integrity as possible. A “heavy commercial” grade product will stand up to harsh climate and weather.

Application Potential • Retail, commercial and industrial application potential.

Work closely with suppliers and service providers to determine quantity, placement and integration options.

• The Light Pipes can take a facility “off grid” for up to ten hours a day at peak times when utility costs are at their highest.

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Wal*Mart moves to LED lighting technology in stores OVERVIEW

BENEFITS

Key Learnings

• Wal-Mart conducted lighting experiments as part of a corporate strategy to reduce energy and natural resources by stores.

• LED technology combined with motion-detecting sensors is 70% more energy-efficient.

• LED lighting in refrigerated and freezer cases (and jewelry cases) worked well.

• The technology is expected to reduce a store’s total energy bill by c. 3%.

• Wal-Mart now use LED lighting in all internally illuminated signage for new construction and are replacing existing signs — a 70% increase in efficiency.

• The Retailer trialed LED lighting in medium temperature refrigerated and freezer cases.

• Wal-Mart also piloted:

• Savings for LED lighting with motion sensors is >120,000 kWh per year, the equivalent amount of energy to power 11.5 single family U.S. homes for an entire year.

• T5HO fluorescent bulbs for stores — coupled with skylights

• LED lights last 10 years longer, reducing re-lamping and maintenance costs.

• clerestories to direct natural light in stores nighttime

• They can be turned off rapidly, saving $2,500 dollars/ year in energy costs. For every minute the LEDs are off, their life cycle is extended a minute.

• focused lights placed at lower heights

• LEDs produce less heat, lowering the cooling load for the refrigeration system.

• dimming controls; reduced light

Objectives • To develop store concepts that reduce the energy and natural resources required by stores — lighting experiments are part of that strategy.

• They are robust and resist vibration from slamming doors or accidental hits.

• LED lights contain no lead, mercury, UV or IR light.

They can be recycled.

• T5HO fluorescent bulbs have less impact than the expected 12% reduction in energy consumption.

• Clerestories, nighttime reduced lighting, and dimming controls are still in testing.

Application Potential Key pre-conditions for success include: • Clear measurement protocols and metrics.

• Ability to work with suppliers to identify promising technologies and develop innovative applications, analyzing results and creating new scenarios for testing.

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Publix Study of Energy Efficient Lighting for Walk-In Coolers & Freezers OVERVIEW

BENEFITS

Key Learnings

• Publix Lighting Steering Team conducted a work study of lighting technology for walk-in coolers and freezers used in retail stores, manufacturing plants and corporate cafeterias.

• Moving from a 150W incandescent system to a 33W LED system delivered:

• Extensive testing required to understand LED technology and the value from a total cost-ofownership perspective. Long-term performance testing by LED manufacturers is limited in retail and supermarket applications.

• Driven by inefficiencies associated with the original 150W incandescent light sources. Alternative technologies evaluated included compact fluorescent, induction lamps, and LED lighting.

• LED technology, product suppliers, and maintenance providers were approved for retro-fitting all applicable walk-in fixtures (approximately 42,000).

Objectives • To find a more energy efficient light source for the walk-in coolers and freezers to enable a reduction in Publix’s energy consumption and carbon emissions.

• The deliverables expected were to achieve a reduction in energy consumption without sacrificing light levels, production or life safety.

• Reduced energy demand – estimated to reduce 24,209,883 kWh annually.

• Reduced energy costs – estimated to reduce energy costs by $2,410,988 annually.

• Reduced maintenance costs – longer life LED systems (greater than 10 years) are expected to save $129,534 maintenance costs annually.

• Improved lighting quality –from a yellowish/orange to a bright white.

Increased light levels on cooler and freezer floor exceeded the minimum foot-candle requirements of the health code by 15-40 foot candles.

• Publix could have reduced energy expenses by using motion sensors with incandescent lights. Moving to LED lighting is more advantageous as it eliminates incandescent use, and keeps Publix ahead of future legislation.

• Energy reduction awareness programs and signage have been implemented, BUT cooler and freezer lights frequently remained on when the cooler was not occupied. Motion sensors were not considered a valid alternative solution due to the following considerations: • The product in the walk-in freezers and coolers can block motion sensor coverage and create hazardous conditions, e.g. lights turning off due to no movement and failing in the “off” position.

• Associates may circumvent the sensors and have lights on continuously. Training is a better solution.

Application Potential • The LED (Light Emitting Diode) industry is emerging with new products and applications. LED lighting standards are being developed and LED product costs are declining, making LED applications more feasible. This light source still has many design challenges. One advantage is that LEDs thrive in cold applications. Each retailer should conduct their own due diligence on internal financial hurdle rates and kWh cost to determine feasibility and value within a reasonable payback period. Environmental impact and sustainability are contributing factors.

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SuperValu Reduces Carbon Footprint by Reducing Refrigerant Leaks OVERVIEW

BENEFITS

Key Learnings

• Leaks of refrigerant gas are 2nd highest contributor to SuperValu’s carbon footprint, after electricity, and ahead of diesel.

• Reducing refrigerant leaks became a major focus in engineering departments.

• Greater scrutiny of refrigerant leaks can have a major impact on reducing leaks and reducing a retailer’s carbon footprint.

• SuperValu developed and distributed reports to all facility maintenance teams identifying and comparing refrigerant leaks on a year over year basis:

• Significant progress was made in many divisions. After implementing the program at the end of the first quarter, there was an 11% overall year over year reduction in refrigerant use over the next 3 quarters -- almost 50,000 tons of CO2.

• Close review of refrigerant leak data provides good insights into the performance of refrigeration technicians and contractors.

• At $7/pound, the reduction of 46,000 pounds of refrigerant, represents maintenance savings of $322,000 -- plus reduced technician time, less product shrink, improved energy efficiency.

Application Potential

• Average refrigerant leak rate for rolling 12 month period • Stores experiencing multiple leaks in 90 day period • Standards for handling refrigerants and repairing leaks were developed; training was implemented for technicians, both in house ad contractor.

• VP of Facilities regularly reviewed reports to demonstrate issue importance.

• All divisions joined US Environmental Protection Agency’s GreenChill Program, an industry alliance.

Objectives • To reduce GHG and CO2 emissions and reduce the Retailer’s overall carbon footprint.

• Greater scrutiny on leak repairs resulted in greater scrutiny in the performance of in-house refrigeration techs and outside contractors. Underperforming contractors were replaced.

• Setting high standards and implementing comprehensive training for contractors and technicians are critical.

• The first step is to require all refrigerant additions to be submitted to a central depository and traced in a database.

• Before using data to compare divisions, it should be scrutinized to be sure that all technicians and contractors are submitting refrigerant data.

• Top management participation is important.

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Kroger Uses Smart Motors to Generate Large Savings OVERVIEW

BENEFITS

Key Learnings

• Kroger operates nearly 2,500 supermarkets and multidepartment stores in 31 states.

• ECMs offer two major benefits.

• Smart Motors use less electricity and generate less “waste” heat, reducing the need for cooling.

• Four years ago, Kroger began to experiment with electronically commutated motors (ECMs) – or Smart Motors – which drive circulating fans in glass-door, reach-in frozen food cases.

• They generate less heat inside the frozen food case, reducing the need for cooling. (Older motors produce significant heat, but ECMs do not.)

• Kroger worked with several ECM suppliers to determine if Smart Motors could increase the energy efficiency of existing cases as well as new cases.

• They use less electric power because a variable-speed control uses only as much electricity as needed at the time.

• Replacing electronic motors in existing frozen food cases is difficult because it is important to maintain product quality during installation.

Objectives

• In the last three years, Kroger installed more than 500,000 ECMs in frozen food cases, service cases, prep rooms, and other equipment.

• Smart Motors can be used effectively in existing and new frozen food cases if store personnel have a process to remove and store frozen food items during installation.

• Retailers can work with ECM manufacturers and other companies that traditionally sell only to original equipment manufacturers (OEMs) to capture the benefits of new technology in existing equipment.

• While ECMs were initially limited to small motors, i.e., ¼ -horse power motors, manufacturers now support developing larger ECMs up to one horsepower. This significantly increases the potential for savings.

• These ECMs or Smart Motors:

• To determine a practical way to realize the energy savings associated with ECMs in existing glass-door frozen cases.

• To demonstrate that we could create a effective process to coordinate ECM installation with store personnel who would move product to other freezer cases to prevent product loss.

• Reduce electrical usage by as much as one-third.

• Yield three-year paybacks and even higher returns in regions with above-average electrical rates.

Application Potential • One key to more quickly capturing the benefits of new technology like ECMs in existing equipment is to develop a project management process that ensures the installation team is coordinated with and supported by store personnel.

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Kroger Increases Energy Efficiency of Vending Machines OVERVIEW

BENEFITS

Key Learnings

• Kroger operates nearly 2,500 supermarkets and multi-department stores in 31 states.

• Changes to 16,500 vending machines reduced the company’s annual electrical costs by an estimated $1 million a year with no impact on beverage sales or product quality.

• Technology today allows us to track beverage sales patterns for individual vending machines and reduce energy use during off-peak periods.

• Kroger has 16,500 beverage vending machines that serve the immediate consumption needs of its customers and employees.

• USA technology developed a monitoring system that tracks the time of purchase from an individual machine for the day and week. After weekly patterns are established, each machine is adjusted to save energy in offpeak hours.

Objectives

• Kroger estimates that its investment in these beverage vending machine upgrades – installed by the vending machine owners – will be recovered in 1 to 1½ years.

• To significantly reduce the energy cost associated with beverage vending machines by: • Controlling the refrigeration system to concentrate cooling during the time of day when most of the product is purchased.

• Collaboration between retailers and beverage vending partners can improve energy efficiency and produce significant savings in electrical costs.

• Changes to break room vending machines result in significant energy savings and are well received when clearly explained with posters or stickers.

Application Potential

• Using timers to reduce unnecessary lighting.

• Disconnecting lights in vending machines in associate break rooms and using stickers and posters to explain the energy-saving benefits.

• We can use available technology to retrofit existing vending machines and significantly improve their energy efficiency instead of buying new machines at this time.

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Food Lion’s Alternative Refrigeration System Design Initiative OVERVIEW

BENEFITS

Key Learnings

• Food Lion, LLC explored alternative refrigeration systems.

• “Store labs” allowed learning and experimentation with technologies the retailer may implement in the future.

• Don’t take things too fast. A phased approach to a new technology builds expertise a step at a time.

• Partnering with a key supplier, they conducted tests in three stores.

• The 1st store tested a glycol secondary loop for medium temperature cases.

• The 2nd tested CO2 as a secondary refrigerant for low temperature cases.

• The 3rd combined both technologies.

• Results were compared with a standard direct expansion store — the traditional style of refrigeration system.

• 3rd store using both systems reduced ozone depleting refrigerants by 60%.

• Provided a framework for testing performance hypotheses in pilot stores. Metrics were collected for: • Costs (equipment, maintenance)

installation,

operation,

energy,

• Impact (on product, shrink) • Skills operating)

needed

(installing,

• Enroll partners, inside and outside, who are excited about the technologies. This helps overcome challenges to ensure success.

• This system can work for future installations.

• Such experimentation helps a business be a learning and growing organization.

• Impact on the bottom line.

Objectives • To explore alternative refrigeration to reduce dependency on ozone depleting refrigerants.

• To gain experience with the technology, and verification of their performance.

• Process allows Food Lion, LLC, to study how to reduce environmental impacts.

• A founding partner of the EPA’s GreenChill program, Food Lion, LLC, underlined their commitment to sustainable refrigeration technologies.

Application Potential • Develop a objectives.

plan

with

clear

• There will be setbacks and obstacles - be willing to work through them.

• Work with knowledgeable and willing suppliers and partners (e.g. EPA’s GreenChill program).

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Attacking Store Energy Costs at Archie’s OVERVIEW

BENEFITS

Key Learnings

• Archie’s approached its provider to evaluate store energy efficiency opportunities for three stores, averaging 29,000 sqft.

• Savings: Projected savings are almost one million kWh annually (>$62,000 in savings).

• Energy providers can be effective partners in identifying ways to manage energy use and realize significant savings.

• Archie’s upgraded interior lights from T12 to T8. Glassdoored, reach-in, low-temp cases with T8 fluorescent lighting and electronic ballasts replaced the older freezer cases.

• Lower maintenance costs - longer bulb life.

• Providers may offer incentives to offset costs of implementing measures - Archie’s was offered incentives ranging from 20 to 100% of project costs.

• Additional steps included: • replacing gaskets on reach-in doors • installing strip curtains for walk-ins • anti-sweat heater controls in refrigerated cases • night curtains to vertical cases

• Exterior signage was upgraded to energy-efficient LED lighting.

• Archie’s joined provider’s nocost program EnergySmart including an energy analysis of store refrigeration and lighting and identified other savings.

• Provider offered customized energy savings reports with information on energy savings, incentives, retrofit costs and simple paybacks.

• CSR: Plans in place for upgrades at all stores.

Objectives • To lower store energy costs without sacrificing retail presentation • To improve exterior signage economically.

• Setting a goal to reduce energy costs by a specific amount keeps operations on target.

• Relationships with providers help keep abreast of new programs and technology.

Application Potential • Know energy providers and their programs.

• Opportunities may exist for independent grocers to implement energy efficiency measures on scale with larger outfits.

• Implement energy savings measures in stages — to minimize customer interruptions while capturing immediate cost savings and facilitating further investment.

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SuperValu Improves Energy Efficiency in Store Remodel Projects OVERVIEW

BENEFITS

Key Learnings

• A major remodel of 180 stores a year included energy efficiency programs.

• Deferred maintenance, energy efficiency items and merchandising improvements were included in remodels.

• Lighting designers can be more interested in look and effect than efficiency; as a result, often there are opportunities to include more efficient fixtures.

• Standard lighting designs were reviewed and fixtures replaced with ceramic metal halide and fluorescent fixtures.

• Prior to scoping and design, an engineering and maintenance review evaluates existing equipment and energy saved if replaced.

• When complete, an outside consultant commissions the mechanical systems: ensuring they operate to specifications and refrigeration and management systems are programmed properly and operate to standards.

Objectives

• 15% lower energy use in projects that included increased deferred maintenance compared to other projects.

• Energy efficient lighting has longer bulb life and requires less maintenance.

• Quality of work by mechanical and refrigeration contractors improved greatly due to consultant commissioning process.

• Refrigeration and mechanical systems are complicated - may change during project.

• A separate commissioning contractor can ensure systems operate properly when turned over to Operations and Facility Maintenance.

Application Potential • Using a qualified commissioning contractor who becomes familiar with the retailer’s standards and design is critical for success.

• To improve store energy efficiency as part of a major store remodeling initiative.

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Energy Monitoring Program - Sustainable Optimization Realized at Giant Eagle OVERVIEW

BENEFITS

Key Learnings

• Giant Eagle launched an energy monitoring program in its stores.

• Savings: Store energy use was reduced by 8.8% on average (range from 1.4% to 15.9%).

• Store Managers receive reports projecting energy savings.

• The Kill-A-Watt program combines power monitoring and optimization to ensure equipment is operated efficiently, maximizing energy savings and enhancing food integrity.

• Power monitoring equipment is installed at critical loads in stores: main feed, refrigeration, lighting, and HVAC circuits.

• An optimized base model is created.

• 119 corporate and 4 independent stores have been optimized to date.

• Stores are optimized by critical load: • Refrigeration — set-points and temperatures are as specified; equipment is verified and calibrated.

Objectives

• Lighting — set to cycle at night; occupancy and light level sensors are verified operational.

• To operate store equipment at a high level of energy efficiency.

• HVAC — temperature, night, and dehumidification set-points are as specified; equipment is checked, verified, and calibrated.

• To maximize energy savings.

• To enhance food integrity.

• Continuous monitoring of critical loads is compared to this model.

• Monthly exception reports trigger an exception-driven maintenance program.

Application Potential • Establishing standard set-points and control algorithms for all stores.

• A training maintenance group should diagnose and correct energy over-usage exceptions.

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Stop & Shop Learnings From Early Prototype Store OVERVIEW

BENEFITS

Key Learnings

• Stop & Shop, a New-England based supermarket chain set out in 1999, to design and build a new superstore that would consume far less energy than existing stores and at the same time be more environmentally friendly.

It was called, “Low Energy Super Store” (LESS).

• The estimated cost savings were surpassed but the investment was higher than expected. The major benefit was an annual 27% reduction in electrical costs for the store due primarily to:

• A more attractive shopping environment can be created with a combination of natural and electric lighting.

• This three-year project began in 1999; the first step was to build a multifunctional team made up of retailers, staff, and equipment vendors. The next step involved extensively researching and documenting advanced energy reduction techniques. The final step included designing and building a new LESS store for review and evaluation of the new approach by senior management.

Objectives

• Increased use of natural light through the installation of skylights • Enhanced design of refrigeration systems which included • Low wattage heaters in reach-in frozen cases.

• Energy efficient fan motors.

• Primary objective was to design a store that used 30% less energy by applying state-of-the-art design and thinking. The project was motivated by: • A 17% over year electrical rate increase • Volatile gas markets • High cost of many traditional higher-energy use stores

• State of the art Energy Management System to monitor & control the refrigeration, lighting and mechanical systems

• A more efficient heating and air conditioning systems supplemented by:

• The LESS store also provided a useful cost model for identifying trade-offs at other stores and new construction cost-savings opportunities.

• Equipment vendor/retailer collaboration is essential for the best results.

• Even though renewable energy was not used in the prototype store, the company is now more aware of the potential of use of solar, wind and geothermal energy.

• Realization of the growing future energy cost/green company requirements

• A shift from two to one HVAC units for the store

Application Potential

• The store had to provide a superior customer shopping experience and be made up of features that could easily be incorporated into existing as well as new stores.

• White reflective roof to reduce heat gain in the store

• Building a new LESS store from the bottom up is a significant commitment and best done in stages.

• A set of energy-lowering practices that could be used immediately in other stores

• Brainstorming with the Rocky Mountain Institute produced a list of high-potential energy conservation ideas for use in the future.

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• Third-party help will probably be needed to support retailers and equipment vendors in the task.

• Easy-to-track-and-audit energysavings targets provide the best guidance.

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Wal*Mart Implements Eco-friendly Refrigeration and Cooling Systems OVERVIEW • March 2008 - Wal-Mart Stores opened an advanced prototype store in Las Vegas.

• This store is western climate specific, and up to 45% more energy efficient than a baseline Supercenter.

• The store includes: • new evaporative cooling and radiant flooring technology • integrated water-source format refrigeration system - reduced refrigerant charge by 90%

Objectives • Wal-Mart is working toward its goal to open a viable store prototype that is 25-30% more efficient by 2009.

BENEFITS • Indirect evaporative cooling with radiant floor.

• Water travels through cooling towers on the roof, lowering its temperature as some evaporates.

• Remaining water can supply 80% of cooling needs and is more efficient than electrical.

• Once cooled, water is circulated to water-source format refrigeration system to chill grocery and freezer cases, and to radiant floor to cool the store.

• Cold water is circulated under sales floor, cooling ambient air.

• Radiant floor is efficient, requiring less maintenance.

• Integrated, water-source format heating, cooling and refrigeration systems - reclaim waste energy from refrigeration units.

• Medium temperature, secondary loop system driven by a modular chiller concept - improves system efficiency and reduces refrigerant charge.

Key Learnings • A typical store needs up to 40 Roof Top Units to heat and cool the building — this store uses only 10 Air Handling Units to bring in fresh air to maintain air quality.

• The common refrigerant loop low temperature system reduces installed copper and total installation charges.

Application Potential • Retailers can take advantage of the climate specifics in a store location.

• Close coordination with ever-more-sophisticated suppliers is important.

• System has electronic valves and variable speed drives on compressors.

• Waste heat from refrigeration is used to heat hot water for restrooms, kitchen areas.

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Sobeys Green Warehouse Design Reduces Costs & Engages Employees OVERVIEW

BENEFITS

Key Learnings

• Sobeys designed a new 160,000 sqft perishable warehouse in Canada.

• Landscaping construction costs were minimized — no outside soils were needed; the “cut and fill” building footprint was minimized (reducing landscaping and preserving trees).

• Sobeys is saving money. The warehouse was CA$1,500,000 under budget.

• Excavated dirt was used for foundations and lot leveling on other parts of the site — no outside excavation materials used.

• The excavated area became a storm water retentionslow release pond. Roof and parking lot runoff is collected, filtered and released to groundwater.

• The office area has a low/no-maintenance rooftop garden. Water retention capacity is recorded by drain flowmeters for potential store application instead of storm-water catch basins.

• Wastewater is treated in a reedbed facility. Reeds (phragmite communis) eat biological waste and the water meets legislative standards.

• Landscaping includes natural vegetation, rather than lawn, eliminating irrigation.

• Paving is rolled, compacted concrete (RCC). Light color reduces heat absorption; water percolates to storm-water collection system.

• No dolly pad was required for trucks. RCC is low maintenance, does not deteriorate in summer like asphalt.

• Parking spaces are minimized and car-pooling is encouraged (Spaces reserved for car poolers; 15 minute window between shifts).

• Employees are engaged (e.g. independently petitioned public transport for bus route).

Objectives

• Parking lot lights are dark-sky friendly, reducing energy use and light pollution.

To make the new warehouse: • Highly energy efficient.

• Largely self-sufficient from a storm water /waste water treatment perspective.

• Warehouse location can be decided for logistical reasons — they can be largely independent of municipal infrastructures.

• Employees are supportive, helping to leverage warehouse’s capabilities to reduce its carbon footprint and resource use.

Application Potential • Challenge design consultants and architects to consider alternative technology and natural options – sometimes they stay with what they know.

• Bathrooms use low-water flush toilets, waterless urinals, low-flow faucets, showers.

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Sobeys Green Warehouse Design Lowers Energy Costs By 55% OVERVIEW

BENEFITS

Key Learnings

• Sobeys designed a new 160,000 sqft perishable warehouse in Canada.

• Cost savings: 55% lower energy costs.

(Using thermal mass calculations, compared with similar distribution centers).

• Using natural advantages and simplifying systems can reduce maintenance and capital costs, and save energy.

• Venting the mechanical room restores safety from any ammonia leaks, allowing repairs. Plant evacuation is not required.

• Workers are enthused to work in a facility that is environmentally efficient.

• DC uses only 250 tons of refrigeration (vs.

600 tons recommended original design).

The plant has 400 tons, meaning expansion will not require more refrigeration investment.

• Land acquisition costs were reduced because the site is further from metropolitan areas and largely self sufficient.

• The refrigeration system captures cold external air through a plate exchange for at least half the year, saving energy.

• The DC roof is a white membrane, reflecting sunlight rather than absorbing it.

• The mechanical room is simple, using ammonia as the coolant.

Glycol is the refrigerant that circulates in the plant.

• Product refrigeration calculations take into account product arriving at “correct” temperature, using their thermal mass to help the building maintain its temperature.

• Translucent acrylic-insulated prefab panel provides “windows,” reducing lighting needs. Windows are 80% light efficient.

• DC has movement detectors in aisles. If no activity for 5 minutes, T-5 lights turn off.

• Acrylic-insulated panel “windows” mean artificial lighting is not needed in summer.

• In winter, offices use floor radiant heating reclaimed from compressors.

• The docking area faces prevailing winds, reducing snow drifts and dock plowing.

Objectives To make the new warehouse: • Highly energy efficient.

• Largely self-sufficient from a storm water /waste water treatment perspective.

• Fork lifts use fast charge technology, with workers recharging every break Ni-cad Batteries are never removed and last longer. System reduces labor and maintenance, no special exhaust system is required, and battery investment per unit is reduced to 1.1.

• Certification: Eligible for gold certification from Canadian Green Building Council.

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• Performance monitored in various areas - can determine what approaches are applicable to store locations.

Application Potential • It is important to identify all the ways nature can help improve operations.

• Like total quality and lean manufacturing, designing with nature requires clear goals and willingness to re-examine assumptions.

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Wal*Mart Mexico Opens Ecologically Sustainable Mall OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•W al-Mart Mexico invested $640 million pesos to open the first ecologically sustainable mall in Mexico, Plaza Ecológica Ciudad Jardin, including Wal-Mart Supercenter and Sam’s Club stores and Vips and El Porton restaurants.

• Reduction of green house gas emissions: Plaza Ecológica Ciudad Jardin will avoid the emission of 238 metric tons of CO2 per year.

•A pplication of the sustainability concept at its best in a very though environment achieving the objectives of social responsibility and profitable growth for the company.

•T he mall was built on the former 109-hectare Neza 1 dump, which had previously stored over 15 meters of garbage.

•R eduction of energy consumption by 450 Mega Watts per hour: installation of energy savings lamps on sales floors and on Sam’s and Wal*Mart exterior systems, thermic barriers on all refrigerated display units, and fiber optic and LED systems optimize lighting in order to save energy and reuse refrigeration heat.

•O ver 208,000 cubic meters of garbage were extracted and moved to Tultitlan sanitary fill to be used to create energy using the bio-gas burning process. Also, some three tons of ashes and lime were injected to stop the decomposing process and the generation of methane gas to create a more stable surface for the units.

Objectives • I ncorporate new technologies and innovative systems in order to turn an ecological liability (the former Neza dump) into a social, urban and economic asset whose benefits are enjoyed by Ciudad Netzahualcoyotl families.

•W al-Mart Mexico has specific goals for its overall energy, water, and waste reduction; the objective for Plaza Ecológica Ciudad Jardin was to apply and test certain technologies and initiatives which will ensure that we reach those goals and then roll out the initiatives in subsequent stores.

•R eduction of water consumption by roughly 9,000 m3 per year, and use 10% less potable water than 2006 with water saving systems such as Rainwater Harvesting Plants, Rainwater Storage Tanks and waterless ecologic urinals*.

•T he use of mulch (composed of tree bark and coconut shells) in flower-boxes and landscaping and of recycled water for irrigation, cuts back on water use outside of the mall as well.

• I t is necessary to have a well coordinated work team, including external and internal members, i.e. designers, contractors, suppliers and Wal-Mart’s involved areas.

•C onsider specific technology.

supplier

options

for

each

• L earned how to accurately assess the results of the initiatives taken with Plaza Ecológica Ciudad Jardin studies in order to determine the best options for these particular projects.

•T he set of technologies and environmental initiatives applied verified the achievement of both sustainability and profitable growth.

Application Potential • Seek the consultation of specialists in order to efficiently execute projects in this type of field.

• Consider specific suppliers for each technology.

• Establish particular design specifications for this kind of project.

•3 ,500 permanent jobs created. * Signage above the waterless ecological urinals: “These urinals do not use water”

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Stop & Shop Achieves LEED Portfolio Volume Certification OVERVIEW

BENEFITS

Key Learnings

• Old buildings can attain LEED Certification, due to the LEED-Existing Building (EB) program of the US Green Building Council.

• LEED Portfolio Volume Certification enables building owners to integrate the LEED green building rating system into existing buildings in a cost effective way, without sacrificing the technical rigors and integrity of LEED.

• Use of a strong project management team can be a great help for complex projects.

• 51 existing Stop & Shop stores – almost 3.4 million sqft – have met LEEDEB criteria.

• To achieve this, Stop & Shop committed to an ongoing improvement process, and: • Updated obsolete energy management systems to state of the art • Incorporated new recycling, solid waste management, water conservation measures and cleaning procedures • Installed white reflective TPO membrane on store roof topst • Used natural daylight as much as possible and replaced lighting fixtures with more efficientT5 fluorescent systems and dimmable ballasts • Converted refrigeration systems

Objectives • Stop & Shop believes it is important to embed sustainability in every part of the company. Striving for the LEED Portfolio Volume certification furthers its commitment to being environmentally responsible and having energy efficient operations and buildings.

• Stop & Shop is benefiting from a significant reduction in energy costs, refrigeration expense, waste costs and water costs.

Stop & Shop supermarkets use at least 40% less energy than the average supermarket.

• Since 2001, Stop & Shop has spent close to $100 million to upgrade both new and existing stores with environmentally sound improvements.

• The positive impact on Stop & Shop associates is significant.

The company’s strong commitment to reducing its environmental footprint is reflected in employee morale and participation in suggestions for further improvements.

• Government and Certification partnerships are proving to be worthwhile in terms of industry environmental practice transfer and benchmarking.

Application Potential • The LEED-EB certification would not be possible without top level company commitment and investment.

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Stop & Shop Achieves LEED Portfolio Volume Certification OVERVIEW

BENEFITS

Key Learnings

• Leaks of refrigerant gas are 2nd highest contributor to SuperValu’s carbon footprint, after electricity, and ahead of diesel.

• Reducing refrigerant leaks became a major focus in engineering departments.

• Greater scrutiny of refrigerant leaks can have a major impact on reducing leaks and reducing a retailer’s carbon footprint.

• SuperValu developed and distributed reports to all facility maintenance teams identifying and comparing refrigerant leaks on a year over year basis:

• Significant progress was made in many divisions. After implementing the program at the end of the first quarter, there was an 11% overall year over year reduction in refrigerant use over the next 3 quarters — almost 50,000 tons of CO2.

• Close review of refrigerant leak data provides good insights into the performance of refrigeration technicians and contractors.

• At $7/pound, the reduction of 46,000 pounds of refrigerant, represents maintenance savings of $322,000 — plus reduced technician time, less product shrink, improved energy efficiency.

Application Potential

• Average refrigerant leak rate for rolling 12 month period • Stores experiencing multiple leaks in 90 day period

• Standards for handling refrigerants and repairing leaks were developed; training was implemented for technicians, both in house ad contractor.

• VP of Facilities regularly reviewed reports to demonstrate issue importance.

• All divisions joined US Environmental Protection Agency’s GreenChill Program, an industry alliance.

Objectives • To reduce GHG and CO2 emissions and reduce the Retailer’s overall carbon footprint.

• Greater scrutiny on leak repairs resulted in greater scrutiny in the performance of in-house refrigeration techs and outside contractors. Underperforming contractors were replaced.

• Setting high standards and implementing comprehensive training for contractors and technicians are critical.

• The first step is to require all refrigerant additions to be submitted to a central depository and traced in a database.

• Before using data to compare divisions, it should be scrutinized to be sure that all technicians and contractors are submitting refrigerant data.

• Top management participation is important.

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Sobeys IGA Builds Canada’s First LEEDs Certified Grocery OVERVIEW • Sobeys St. Pascal IGA features: • High efficiency T-5 fluorescent lighting • Parking lot catch-basin system separating automotive oils from rainwater • Dual flush high efficiency toilets and ultra low-flow faucets reducing indoor potable water use by almost 48%.

• Wall-mounted solar thermal Technologies) for store heating

system

(Enerconcept

• Heat recovery via SmartRef Compressor Systems Control system • DuctSox fabric duct system • Refrigeration system with oil-free, magnetic compressors, operating at 48,000 rpm • Refrigeration provided by a secondary cooling loop using glycol as the refrigerant. Environmentally friendly R-134a and R-507 present only in the mechanical room to cool the glycol

Objectives • To develop a LEED accredited supermarket.

• Over the last 5 years, Sobeys has undertaken over 30 projects per year – remodels, additions, new construction, R&D projects – to develop more efficient, more environmentally sustainable operations. This store reflects that commitment.

BENEFITS

Key Learnings

• ROI: All equipment paid back in less than a year.

Canadian energy incentives reduced the payback period to zero.

• Partner with suppliers. Sobeys engineering department requested refrigerated cases allow a rear energy recovery system to capture escaped cooled air. This will help with future store designs.

• Store exceeded Model National Energy Code for Buildings (MNECB) standards by 47%.

• Practically no fossil fuels used for heating. The space heating solar thermal system is a 6 inch wide, 1800 sqft black metal box mounted to the store’s southwest wall that heats outside air as much as 54oF above the outdoor ambient temperature. The solar system draws the outside air in through the bottom, and the heated air ascends through a patented baffle system prior to delivery to air handling system. That, coupled with compressor heat recovery provides all the heating needed. A few small hp fans draw some electricity.

• Shopper Impact: fabric duct system improves shopper comfort with even air disbursement. Made from recycled material, it contains no VOCs, requires 40% to 60% less installation labor, is 90% lighter than metal, and the even air dispersal reduces air handler run times.

• Store features a “green wall,” - growing vines that enhance the view for neighbors – and the parking lot is cooler through a combination approach of planted shade trees and light colored asphalt coating.

• Store energy efficiencies are very attractive to prospective franchisees.

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• Approach every development as an opportunity to test ‘experiments’ - create continual learning and deliver an inspirational place to work.

• Developing a track record of responsible, environmentally innovative construction practice helps streamline permitting and approval processes.

• Keep current with governmental incentives and trends - can dramatically improve ROI of stores.

Application Potential • Encourage engineering in your company to accept responsibility for introducing/ implementing environmentally sound and effective technologies to their management as a basic part of their responsibility.

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Food Lion, LLC, Recycles Warehouse Space into LEED Office Space OVERVIEW

BENEFITS

Key Learnings

• Food Lion, LLC, converted part of an idle warehouse into LEED-certified office space.

• Food Lion, LLC, was able to bring an unused asset back into productive use.

• Don’t underestimate the value, productivity gains and excitement of an inspiring work environment.

• Major renovation included: replacing concrete walls with glass, creating a second floor, reworking the surrounding site to provide parking and circulation.

• Avoided using green space for a new building.

• An architect and contractor guided Food Lion, LLC, through the design, value engineering, and LEED requirements.

• Reusing an existing structure avoided sending much waste to landfill.

Objectives

• Employees: A greater sense of community, teamwork and appreciation for sustainable practices.

• The objectives were: • To maximize an underutilized asset.

• To create an environment.

engaging

and

inspiring

work

• CSR: The office is a tangible commitment to sustainable building and business practices.

• Don’t underestimate employee interest in participating in a sustainability project.

• Partner with knowledgeable firms to help accomplish goals.

• With commitment and creativity, LEED certification can be gained in a renovation.

Application Potential • Don’t try to do it alone. Enlist the help of knowledgeable partners.

• Have a vision.

• Manage costs carefully.

• To gain LEED certification for the office.

• Engage employees in the planning process.

• To demonstrate commitment to sustainable use of assets and construction materials.

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North America: Silver L.E.E.D Certified Store Built on Brownfield OVERVIEW

BENEFITS

Key Learnings

• Retailer developed a new store on land previously used as an industrial waste disposal site.

Land filling operations had been stopped many years earlier, and the area capped with a state approved barrier.

• Community: Provided area with a commercially viable asset on otherwise un-usable site. Community pride.

• Retailer gained experience on environmentally and geologically challenging site.

• Employees: Proud of the store’s environmental significance – especially of LEED efforts.

• The prior experience of LEED accredited professionals helped save costs and time.

• LEED store uses 30% less water and 30% less electricity compared with other stores in the chain.

• The store and parking lot function well over landfill cap, serving as an added barrier.

• Other LEED attributes include:

• Tackling brownfield development – especially with LEED objectives - can gain goodwill from authorities, even “fast track” cooperation* and tax incentives.

• An experienced design and construction team was selected.

• The store was successfully and economically developed and achieved LEED Silver certification levels.

Objectives • To develop a commercial site in an urban area where market attractive store sites are at a premium.

• To be the retailer’s first significant effort to design and build a green project.

• T-8 lighting offering 0.95 watts/sqft • distributed heat and cooling system - for efficient, comfortable shopping • fog-free glass doors on refrigerated and frozen cases with thin film lining to prevent moisture

• Once a LEED compatible building program is undertaken, design and construction modifications can be rolled into other new store projects without major alteration of budgets or schedules.

• Construction building components used high recycled content, and featured low emissions carpets, paint and adhesives

Application Potential

• Added cost to achieve LEED certification was <1% of overall project cost of similar stores (not including Brownfield site considerations).

• A thorough due diligence investigation should be done to ensure no surprises.

• Expertise gained — Design and Construction teams understand and support LEED concepts.

• Geological and environmental issues of brownfields can usually be resolved by engineering; but can pose future problems if not done correctly.

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Winn-Dixie Transportation Initiatives Reduces Fuel Use OVERVIEW

BENEFITS

Key Learnings

• Winn-Dixie upgraded fleet from manual transmissions to a computer shifted 10 speed transmission.

• With the Eaton Auto Shift Transmission, truck shift patterns are controlled by the computer. Since getting optimal fuel mileage is affected by many factors – aerodynamics, torque range, rpm, driving habits, shift patterns, driveline and tire resistance – controlling the shift patterns controls rpm and torque range, improving mileage.

• Develop good databases on mpg and fuel use, so that opportunities for savings can be identified and savings verified.

• They have added air fairings to the cab roofs of its trucks to be more aerodynamic.

• Tire sizes on all trucks have been changed to 275/80R 22.5 low profile.

• Trailer refrigeration units have been upgraded to a unit with greater BTU’s for cooling capacity and efficiency.

• Significant energy is used overcoming vehicle air resistance. Air fairings make the trucks more aerodynamic, improving mileage per gallon.

• Winn-Dixie has purchased several multi-temp trailers to combine different commodities on one trailer for stores farther from the Distribution Centers.

• Changing to the 275/80R 22.5 low profile tires reduced tire rolling resistance. These tires generate less heat and have a reduced tread depth to further decrease the resistance factor.

• They proactively analyze store delivery frequency, ensuring deliveries match store sales volume requirements.

• Upgrading the refrigeration units saves in the fuel per hour rate of use.

• Servicing distant stores with multi temperature trailers will reduce the number of loads delivered, thus reducing mileage and fuel used.

Objectives • Winn-Dixie’s brand position is “Getting better all the time.” This includes increasing the efficiency in their use of resources. The transportation team is constantly analyzing operations to improve performance and reduce costs.

• Have clear objectives for your efficiency initiatives, and don’t try to do too many things at once.

Understand the contribution each will make to savings.

Application Potential • Communicate with employees why the changes are necessary and their benefits to the organization.

• Continue to monitor and report findings.

• By reviewing store sales, tonnage and percent trailer utilization, Winn-Dixie maximizes the trailer loads, matching full trailers to the stores to optimize sales, while reducing the number of deliveries.

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SuperValu Upgrading On Board Computer (OBC) Across Truck Fleets OVERVIEW

BENEFITS

Key Learnings

• SuperValu replaced obsolete On Board Computer technology in its fleet with Qualcomm FleetAdvisor v7.2 system.

• Five year savings were estimated at $9,700,000 for 515 trucks; and fuel costs have increased 42% since ROI calculated.

• Phased approach was not ideal — lowered project ROI and increased training costs.

• The project undertaken as:

• Specific benefits include:

• There are limitations to the data:

• The technology was several generations old and the hardware unreliable; subject to failure, and no longer vendor supported

• Reduced costs (maintenance and admin).

• There were incompatibilities with dispatch software and maintenance of regulatory record accuracy required manual editing of reports and logs

• Higher US Dept. compliance.

• Fuel consumption data from Electronic Control Modules uses an algorithm — not usable for some tax calculations (e.g. must track gallons pumped for fuel taxes).

• Preferred cost and safety metrics were not available, and visibility to key fuel cost drivers was unreliable at best, unavailable at worst

• Conversion to electronic driver logs. of

Transportation

regulatory

• Interface with TMW® software dispatch system improved dispatch efficiency.

• Standard network-wide procedures.

dispatch

operating

• Standard reports across network.

Objectives

• Visibility of metrics:

To standardize the OBC system enabling:

• Idling time and percent

• Improved reporting accuracy.

• Excess speed activity • Empty miles

• Common metric reporting.

• Improved documentation and sharing of best practices.

• Reduced costs (maintenance and administrative).

• MPG calculations by the OBC are less accurate — instead divide recorded miles by gallons pumped

• Truck MPG • Driver safety variables, e.g. rapid braking

Application Potential • A thorough enterprise systems impact analysis should identify all data feeds from OBC to other operating or reporting systems.

• Rebuilding these should be included into project cost and time estimates.

• Improved customer service: On time delivery and near real time data.

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North America - Private Fleet Goes Wireless and Reduces Carbon OVERVIEW

BENEFITS

Key Learnings

• Retailer’s Private Fleet upgraded its onboard tracking and communications.

• ROI was less than one year due to lower maintenance costs and elimination of old system inefficiencies.

• PeopleNet Wireless Fleet System is a mobile computer system that delivers low-cost transmission of physical location data and real time messaging.

• Costs were 75% below the original cost of the old system.

• With good support from IT, installation and changeovers went quickly and well.

• It combines Global Positioning System (GPS) satellites, the nationwide cellular network, and the internet.

• This provides precise nationwide fleet locating, twoway messaging and real time reporting capabilities on demand.

Objectives

• Electronic Driver Logs saved $50,000 in administrative costs for Dept. of Transportation (DOT) compliance.

• 18% less idling and 12% increase in fuel economy - Reduction in idling and improved fuel economy due to real-time monitoring of driver and vehicle performance, and web-reporting of different driver performance in the same truck using the Engine Control Module (ECM).

• Governors on engines are set at 60 MPH.

• To improve accuracy of driver logs.

• To collect data on driver and vehicle performance.

• To improve service.

• E-Driver Log “Smart Mode” option won DOT commendation. When vehicle stops, it automatically switches driver’s status using ECM data, eliminating manual logs.

• PerformX tools track fleet operating costs:

• To reduce costs.

• Gather vehicle performance data at set intervals to gauge optimum efficiencies

• To eliminate deadhead miles.

• To monitor performance and fuel costs.

• Develop fleet performance indicators.

• Send alarms when vehicle performs outside parameters (e.g. speed)* • Run reports on fleet performance

• Initial driver resistance to tracking and E-Log - concerns how data would be used and accountability for performance.

Now drivers use system to optimize own performance.

• Drivers view their PerformX information – speed, idling, moving and over-RPM times– improving performance in real time.

• System calculates Activity Standards based on driving behavior - allows exceptionbased analysis of driving times and miles, stop times and total times.

Application Potential • Suggest testing system with most vocal drivers – helps overcome driver concerns.

• Training is important.

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Raley’s: Reducing Nitrous Oxide Emissions from Big-Rig Diesel Engines OVERVIEW

BENEFITS

Key Learnings

• Raley’s operates 129 stores in Northern California and Nevada.

• Emissions: 84% less nitrous oxide – with no reduction in performance.

• State and Local Air Quality Districts can be financial partners in testing new technology. This project received a $500,000 grant.

• Costs: Buying and installing technology costs $25,000 – up to $100,000 less than a ‘big-rig engine and cab’.

• This technology can significantly reduce diesel emissions of nitrous oxide.

• Raley’s retrofitted older diesel trucks with a multi-stage pollution reducing filter.

• They partnered with their Air Quality Management District (Sacramento Metropolitan Air Quality Management District).

• The project tested 16 “big rigs” for 1,000 hours over a five-month period.

• Trucks were equipped with a pollution reader that electronically relayed results for Air Board review.

• CSR: Raley’s demonstrate their environmental commitment by: • Identifying test vehicles “clean air machine” decals.

with

• Such projects can provide data for verification of technology to meet more stringent environmental standards.

• Allowed Raley’s to give a new lease of life to older trucks.

• Media coverage.

Application Potential Objectives • Verify the filter’s ability to reduce smog-forming nitrous oxide and particulates.

• The technology may have application for retailers in areas where smog is a concern and government is implementing standards to reduce emission levels.

• Determine the system’s impact on the truck’s normal operating performance.

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Making Biodiesel at Ukrop’s – Processing Soy Oil into Biodiesel OVERVIEW

BENEFITS

Key Learnings

• Ukrop’s is a 28 store chain in based in Virginia. It collects soy oil from 11 of its stores for conversion to biodiesel.

• Savings: Avoid disposal of chicken cooking oil.

• Know your truck equipment warranties: While B100 has successfully been used to power tractors, the equipment industry warranty threshold is currently B15.

• Its trucks use about 275,000 gallons of diesel fuel.

• Ukrop’s expects to locally produce 50,000 to 65,000 gallons of biodiesel this year.

• Partner RECO Biodiesel picks up the chicken-fryer oil, and makes B100 biodiesel.

• Southside Fuel “splash blends” the B100 to make an industry standard 15 percent blend of B15 biodiesel.

• Recycling story is effective to share with shoppers.

• Collection containers transporting the soy oil are reused from stores with lids made from old cutting boards and backsplashes made from damaged food totes.

• Ukrop’s uses it oil three times: • Once for cooking

Objectives

• Have good partners. Ukrop’s is fortunate.

Application Potential • Have good partners, clear objectives and reasonable expectations.

• With new processes and technologies, be prepared to problem solve.

• Once for partially powering truck fleet

• Recycle chicken-frying oil to partially fuel its trucks.

• Reduce fuel costs, while meeting truck warranty requirements.

• Once as a case study for those who wish to try something similar

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Wal*Mart Addresses the Trucking Challenge with the Logistics Network OVERVIEW

BENEFITS

Key Learnings

• Wal-Mart has one of the largest private trucking fleets — trucks rely on diesel.

• Fuel efficiency innovations will avoid 26 billion lbs of CO2 emissions by 2020.

• While all the data is not in, hybrid technology has the potential of delivering up to a 30 percent gain in efficiency.

• Wal-Mart worked with suppliers to develop • an electric-diesel hybrid engine (e.g., from Peterbilt.)

• an experimental aerodynamic trailer

Objectives • Wal-Mart’s goal is to make its fleet 100 percent more energy efficient by 2015.

• To reduce fuel used and greenhouse emissions released.

• To save money.

• To seek innovative ways to reduce dependence on fossil fuels.

• The trailer has deployable trailer side skirts that reduce wind resistance and airflow—a large fuel economy benefit • Wal-Mart combined two wheels on rear axle into one wheel (that is narrower than ther previous two), giving a smoother ride and better fuel economy - from the reduced surface area and improved tire wall stiffness • Being more aerodynamic radically reduces fuel use.

About 2/3 of all fuel burned by trucks goes to overcoming aerodynamic resistance • A tag axle which reduced weight led to increased efficiency. By eliminating internal drive train, this type of rear axle is lighter, requiring less fuel • Auxiliary Power Units replace tractor’s main engine for keeping drivers warm or cool at night – saves 100,000 metric tons of CO2 and >$20 million in diesel

• Wal-Mart is also exploring Alternative Fuels, but this is more complex.

• Bio-fuels — Ethanol poses challenges but breakthroughs such as cellulose ethanol production and bio butanol offer promise.

• Future technology, such as PetroAlgae, in which algae is grown and harvested, also shows promise in mitigating greenhouse gases and creating bio diesel on a greater scale.

Application Potential • Explore ideas with truck and trailer manufacturers – they are interested in improving product lines and their efficiency. If retailers have a great idea, their size doesn’t matter.

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Target – Reducing Empty Miles with Return to Warehouse Pick-ups OVERVIEW

BENEFITS

Key Learnings

• Target operates more than 1,600 stores in 49 states in the U.S.

• Target has seen a reduction of more than 2.1 million over-the-road truck miles (Fiscal June 2008 YTD) by eliminating one way vendor to DC trips

• Good partnerships and flexibility are essential with all parties involved (i.e. - Vendors, DCs, Merchants, Carriers, Stores)

• Target operates 26 Distribution Centers (DC). It owns its own trailers but contracts tractors and drivers.

• To eliminate empty miles for trailers returning to the warehouse, Target began picking up inbound vendor freight on return trips to the DC. • In 2007, Target developed a proprietary software program to identify these loads with greater ease.

• Reduces roadway congestion and slows the need for improved infrastructure • Decreased fuel consumption as a result of fewer miles traveled

• Coordination can be challenging because each piece of the supply chain depends on the previous piece

• System implementation has allowed Target to locate more opportunities to fill empty miles

• A software system is needed to take process to the next level

• Increased capacity utilization on company owned trailers

Objectives • To reduce the cost of transportation • To save fuel; to reduce carbon emissions • To better utilize equipment and personnel

• Overall transportation costs and carbon emissions have been significantly reduced • Target now moves more tonnage of direct-fromvendor freight via return trips versus one way to DC trips

Application Potential • Open lines of communication are key • Flexibility and willingness of partners to approach problems in new ways

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North America - Private Fleet Customizes Their Store Delivery Program, Saving Fuel OVERVIEW

BENEFITS

• Retailer switched from a “one size fits all” approach for store deliveries — matched sales to delivery frequency – Customized Delivery.

• Retailer saved significant SG&A on the outbound end – moving the trailer load from the mid 80’s % capacity to 93%.

• New business rules ensure all stores are reviewed frequently.

• No negative impact to the service level.

• Reduced labor: fewer deliveries for same number of cases made unloading more efficient.

Objectives

• Environmental benefit: >10,000 outbound loads were reduced in Y1, saving >$4,000,000.

• To optimize filling trailers to reduce delivery and store costs without impacting product service levels.

• As fuel costs have risen, the savings have increased.

• By reducing costs, retailer could pass savings on to the customer, reducing SG&A and making them more competitive.

• Recognition: Environmental Protection Agency (EPA) SmartWay Partner award.

• Coordination: Rules and rapid response to changing sales patterns improved coordination among store, distribution, buyers.

Key Learnings • Strong communications are vital across organization to ensure buy-in and support.

the

• Sales patterns change quickly — all stores must be reviewed frequently; distribution must respond quickly.

• Stay true and consistent to business rules to ensure credibility in the organization.

• Distribution Center buy-in is key — need to see overall corporate savings as they spend more labor to more completely fill trailers.

Application Potential • Buy-in at distribution and store level is critical.

Upfront communications and transparency of rules is essential.

• Supply chain replenishment system must have flexibility to accommodate different levels of delivery.

• Strong service level support is needed — this change affects many areas.

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Albert Heijn Executes Low-noise Distribution OVERVIEW

BENEFITS

• To revise distribution process to Albert Heijn stores to include low noise trailers in combination with Euro-5 trucks.

• Less noise

• Goal was to ensure that by 2010:

• Road safety

• all store deliveries used Euro 5 & low-noise trucks

• Less congestion

• at least 20 % of stores used early or late-deliveries

• Max. capacity

• Less emission

• Improvement air quality • Time-saving

Objectives • To ensure a sustainable distribution process through reducing noise and emissions and increasing road safety.

• To increase efficiency by ensuring maximum capacity in every load and reduce congestion

• Fuel-saving • Cost-saving • Nomination for European • Green Fleet and Logistic Award

Key Learnings • Higher investment for equipment at least break even with cost-savings • Combining sustainability, efficiency & capacity has great benefits • Co-operation necessary with: local councils; equipment suppliers and services companies as well as carrier

Application Potential • All retailers with inter city locations especially in neighborhoods that where customers could be inconvenienced by noise especially at unusual times.

• All retailers that want to save fuel and drive greater energy efficiency

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Tesco: Creating a Greener Store OVERVIEW

Objectives

Key Learnings

• Installation of 27 Vertical Axis Wind Turbines (VAWT) across 19 sites in the UK. VAWTs have unique characteristics (e.g., production of noise free energy) that enable them to be installed in the vicinity of supermarkets and in urban environments.

• Tesco has made a public commitment to halve their carbon footprint by 2020. This is one of a range of investments in renewable energy technologies that can enable them to reach this target and reduce store energy bills.

• Site suitability should be assessed by considering (amongst other factors), wind speeds at the site, visual and landscape impacts, impact on local wildlife, proximity to local residents, noise impacts.

• This project will provide customers with a greater awareness of Tesco’s commitment to renewable energy. A small in store education display will be introduced in each store.

• Check local / regional guidelines regarding the potential from renewable grants.

• This project will ultimately represent the single largest rollout of micro wind installations in the UK retail sector so far.

• A wide range of turbines will be installed; from 1kW roofmounted turbines to 2,000kW (2MW) freestanding models.

• Benefits are best tracked by sub-metering the electrical production of the wind turbine.

Benefits • Total project investment: approx £1,000,000; average cost per VAWT of approx £37,000 -- Each turbine generates £610 of electricity in its first year, or 5,300kWh (the average electricity use of 1.5 UK homes).

-- Payback: 60 years (probably much less with the cost of electricity set to increase).

-- Embodied carbon of 87 tonnes to implement project; annual carbon saving of 61.5 tons.

Application Potential • The VAWT has application for any retailer looking to utilize wind power. A VAWT can operate in all weather conditions (starting with a very light breeze), and were especially designed to cope with turbulent conditions, which is a primary factor limiting the output of any normal 3 blade design.

-- Carbon payback: 1.4 years.

-- Turbines continuously rotate in all adverse wind conditions, and are safe at wind speeds in excess of 200 mph -- Produce sustainable electricity (regardless of wind direction) that feeds directly into store -- Machines are totally maintenance free, and begin to spin in very low wind speed

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Alternative Energy Sources with Wal-Mart Mexico: Wind Farm OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•S tarting in Q3 2009, Wal-Mart Mexico will begin construction of a wind turbine farm in Oaxaca, Mexico.

• The wind farm will produce 67.5 MWh of energy, free of CO2 emissions

•W orking now with strategies for renewable energy will ensure viable alternatives during future oil scarcity.

• 27 millions kwh will be saved

• I nnovation of electrical power projects in order to anticipate solutions against potential crises.

•T he wind turbines will supply energy to 348 Wal-Mart facilities, representing 34% of Wal-Mart Mexico’s total energy consumption.

• 3.3 million dollars will be saved in energy bills • Clean, renewable energy will be supplied 348 Wal-Mart Mexico’s facilities.

• 160 thousand tons of CO2 emissions will be kept from the atmosphere per year.

•T he success of this project, as well as the continuous search of similar projects, will help us reach the 2025 goal of 100% renewable energy.

Application Potential

Objectives • To have clean energy for 350 facilities in 2010.

• To supply 100% renewable energy by 2025.

• Sustainability is a long term investment that can help to reduce costs, thus adding value to shareholders.

• The initiative will help build reputation as carbonreducing company.

• To be a pioneer in using wind power generation in Mexico.

• To secure priority in alternative energy in a market where this type of technology is in high demand on a global scale.

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ICA: Calculating, handling and reducing GHG emissions from ICA branded food products OVERVIEW

Benefits

Key Learnings

• In the work of setting down a climate strategy for ICA AB in 2007 and calculating the company’s carbon footprint, it became obvious that there was a lack of knowledge on climate impact from the assortment.

• Rise in knowledge on how to handle climate impact from private label food products. Better possibilities to prioritize actions within the value chain, and reduce the footprint of assortments with a high climate impact.

• Climate impact from food is extremely complicated.

More research is needed.

• 100 ICA branded food products were analyzed on their individual climate impact. Boundaries of the calculations were from primary production or fishery to sale of product in an ICA store. All green house gases were included and recalculated to CO2.

• Ability to receive unbiased results as the analysis was undertaken by experts on the active assortment.

• Increased possibilities to participate in the national and international debates on climate impact from food production and climate labeling. Has provided significant PR opportunities for ICA. • The strategic and accurate way of working with this issue has resulted in increased respect from stakeholders, such as NGOs, authorities and owners.

• There’s a big lack of climate data on food production which makes it difficult to calculate climate impact of food on a broad basis. Therefore, any climate labeling scheme set up today will be based on several assumptions.

• Most of the climate impact is caused by the primary production (40 – 70 %) and less by transportation than earlier believed. The production method is of greater importance than distance traveled from “farm to store”.

• Mainly due to lower productivity, organic products are not automatically better from a climate perspective.

But, organic production has other environmental advantages such as no use of pesticides and increased biodiversity.

Objectives

Application Potential

• To increase knowledge on the climate impact from the assortment in order to be more specific on what actions are needed in cooperation with suppliers to decrease the emissions.

• The possibility to calculate the “carbon footprint” of products is limited to products where data from primary production is available and of good enough quality.

• To actively, and with knowledge, act in the national and international debates on climate or carbon labeling of products. Also to better meet increased consumer awareness.

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Carrefour: Setting Standards for Food Safety and Quality in China (“Quality Line”) OVERVIEW

BENEFITS

Key Learnings

•C arrefour Quality Line (CQL) products were launched in France in 1992 and use rigorous traceability to guarantee fresh, quality, authentic products for consumers. They are the fruit of work upstream with suppliers who are rewarded for their effort on quality and encourage environmental protection and the preservation of local know-how.

• The ‘pyramid’ of base development addresses food / safety concerns, achieving benefits across environment, planting and product:

• By explaining why you are asking suppliers to work differently (and emphasizing that you will work closely with them), the relationship fundamentally changes – moves from a buyer/ seller relationship to more of a partnership.

•S trict Product Development Procedures are put in place with suppliers, including: - Supplier Competency Validation – Pre-audit & 3rd party audit - Product Analysis – legislative & CQL product standard - Specification Book – standardized cultivation & product (including details of each farm, and annual fertilization plans) - Quality Contract Annex – Quality Plan

Objectives

– Environment: farming plots selected far away from pollution areas; water/soil content is analyzed; no herbicides used; climate (history/forecast) is checked as part of supplier due diligence – Planting: controls enabling the tracking of product growth history (eg fertilizers/pesticides used), individual product traceability (via traceability codes), and an audit report of a supplier’s safety and quality performance

• There is an increased level of confidence in ‘Quality Lines’ even though shoppers might not know exactly what it stands for.

– Product: random analysis of products (before and after launch) acts as a final check for quality assurance

Application Potential

• Suppliers benefit from technical support and exchange of know-how, improved quality management skills, and the opportunity to sell quality product to other countries through Carrefour’s network.

• Provide safe and good quality products.

•H elp suppliers to become planting leader.

•D evelop Win-Win partnerships with farms on food safety.

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• Have clear specifications that can be controlled, measured and monitored (eg 3rd party audit) on an ongoing basis.

• Shopper needs to perceive product benefits (in order to sell in the price differential).

• Make sure to go above and beyond the legal food Health & Safety requirements.

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Tesco: Developing standards for Water Assessment and Management with growers and suppliers of Produce* OVERVIEW

Benefits

Key Learnings

• Suppliers and producers must comply with a number of standards that ensure their production and produce handling systems are sustainable and environmentally sound and responsible. These standards are set within Nature’s Choice (‘Code of Practice’).

• Risk Assessment tool addresses food safety concerns (e.g. contamination).

• Code of Practice puts farmers in the right frame of mind (i.e. water is not an inexhaustible commodity).

• Improved water storage (standards facilitate better management of winter rainfall, reduce salinity issues, and allows for greater biodiversity within surrounding area).

• Need to leverage the latest technologies (e.g. would be difficult to deliver consistency in Spain without maximizing technological advances).

• Water management and assessment standards (one of the focus areas with the Code of Practice) require growers and suppliers to optimize water and energy usage, and reduce waste within their farm management procedures.

• Proprietary online Risk Assessment tool developed for growers and suppliers to document the potential microbial, chemical and physical pollutants of all water sources.

• Procedures are required for water supply and maintenance of irrigation systems. Water extraction permits should also be documented.

Objectives • The water management and assessment standards within the Code of Practice ensure that the production processes adopted by Tesco’s Producers and Suppliers of fresh fruit, vegetables and salads are sustainable and protect (and where possible enhance) the well being and biodiversity of the environment.

• Better planning of water usage from linking reservoirs (optimizes water allocation).

• Consistency of produce supply (provides greater certainty for farmers in terms of future income, enabling continued use of land for agricultural purposes).

• Allows for greater investment in R&D (new product range, alternate crops, and infrastructure), e.g. Paloma (Spain) – invested in desalination plant.

• Moving forward, food safety is likely to be the biggest risk to consumer confidence.

Application Potential • Retailers will need to address food safety concerns by focusing more on water standards at the farm level.

• Any standards (or tools) should be made easy for growers to use and understand.

• Tesco is committed to addressing this key issue and has offered its Risk Assessment tool to the FSA and the Assured Produce scheme (part of the Assured Food Standards in the UK).

• Recirculation / re-use of water run-off (applies to closed crop systems).

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Young’s Seafood: Fishing for Sustainability OVERVIEW

Objectives

Key Learnings

• Young’s is the UK’s leading name in fish and is part of Foodvest, which also includes Findus in Scandinavia and France. Foodvest is one of the world’s biggest buyers of fish.

• Young’s developed the Fish for Life program to encourage proper fisheries management for securing future supplies of wild-caught fish. The Fish for Life program also influences consumer demand for sustainable fish and encourages trial of new sustainable species.

• Taking on a major issue like fish sustainability present many, many changes. The issues are complex.

• The Foodvest Group began a Sustainability Group, which brought together fisheries, buying, technical, product development, marketing and communications specialists from across group companies, including two outside advisors.

Benefits

• Foodvest implemented a rigorous approach to sustainable sourcing, applying stringent best practice standards for suppliers, complete with an assessment process.

• The assessment process is audited with the “Fisheries Healthcheck” process, independently verified

by Lawcred.

• Young’s actively markets and communicates the Fish for Life program, increasing demand for sustainable seafood.

• Fish for Life encouraged Young’s and Foodvest to actively engage other organizations such as fisheries management groups, scientists, governments and NGOs to advocate for improvement. The result is active and vocal collaborations to lobby internationally on key issues.

• Fish for Life has effected change and improvement both within Foodvest and its businesses. It has also increased industry and consumer awareness of some of the key issues.

• Through regular interaction with industry, NGO’s and regulatory bodies, Foodvest is adding momentum to debate and genuine change – such as the introduction of tighter EU controls on illegal, unregulated and unrecorded fishing.

• Largely due to the Young’s brand’s influence, sales of Marine Stewardship Council accredited products in the UK market have been growing at around 12% per year.

• Investment in research to develop better understanding of fisheries and to improve techniques have benefited both Young’s and its supplier.

• Best of all, Young’s/Foodvest has developed a leadership position making valuable long term contributions toward sustainable practice in the fish industry, both in the UK and internationally.

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• A company must be willing to share and speak openly, and to be more transparent about its business practices to develop partnerships with NGO’s and governments.

• Without such partnerships, chances for a successful program are very slight.

• For more information, see: http://www.igd.com/index. asp?id=1&fid=1&sid=5&tid=49

Application Potential • Companies must have a genuine commitment to improve before undertaking any program similar to this.

• For the list of Young’s Ten Principles for Sustainability, see: www.youngsseafood.co.uk/web/ principle01.asp

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Alkosto Av.68 Store -1st in Colombia to receive HACCP Certification OVERVIEW

IN TRANSPORTATION SYSTEMS

Key Learnings

•A lkosto Av.68 Store worked with meat suppliers to be the first retailer in Colombia to obtain HACCP certification.

• Significantly reduces risk of exposing consumers to contaminated food and disease.

•T he project was not only beneficial for the retailer but was viewed as a significant contribution to conservation of resources and the Colombian community.

•A lkosto now acquires meat only from recognized suppliers of livestock that are vaccinated in compliance with health authorities and subject to strict disease prevention programs.

•F lyers inform shoppers of certification and guarantees, and how the meat was produced and its environmental impacts.

Objectives • To be seen as the retailer with highest quality meat, that is safe, free of chemicals and from ecocertified processes.

• Contributed to the retailer’s image of quality that shoppers recognize and trust.

• Reduced risk of product loss due to continuous monitoring of buildings, equipment, employees, and raw materials.

• The first Colombian Retailer to achieve HACCP certification for meat.

• Offer Colombian consumers a healthy diet free of chemical residues.

Application Potential • Work carefully with livestock suppliers so they understand this is not for economic gain but rather to benefit the environment.

• Consider the elements and policies needed to maintain the success of this initiative over time.

• Created consumer awareness about production process – human health and environment.

• Because of animals’ all-natural and enriched diet, meat is not only more eco-friendly but more nutritious and tender.

• To work with producers who comply with quality protocols for livestock handling, ensuring meat is free of toxic chemicals.

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Waitrose: Developing Local Food Sources OVERVIEW

Objectives

Key Learnings

• Waitrose searched for excellent small producers who wished to supply a multiple retailer, but were unable to support a whole store network.

• To sell the best quality range of local and regional food, Waitrose recruits, nurtures and develops smaller suppliers, thereby strengthening the Waitrose relationship within communities.

• The shopper is the key to working with the farmers and producers to get the right product to the right place at the right time.

• “Regional” food was defined as products made in, specific to, or perceived to be from a particular region or tradition; “local” is defined as products originating or associated with a tradition in a local area, or made by small-scale producers with strong specific community links or made from local ingredients and sold close to point of origin.

• Shelf talkers help the shopper to find products from their local area; product “stamps” identify the origins of regional and local items.

• Promotions highlighted seasonal British farming foods, and made connections with the food farmers or preparers.

• Waitrose initiated “Meet the Buyer” and “Meet the Farmer” campaigns, which give small suppliers the chance to present their products in an informal setting; and introduce customers to local producers.

Benefits • The program meets Waitrose shoppers demand for local produce, building consumer confidence, ensuring full traceability and celebrating British variety. Supply lines are also shorter for many of Waitrose’s offerings.

• Farmers and producers are proud of the quality of their products sold to their friends and neighbors.

• With Country Living Magazine, Waitrose launched the “Made in Britain Awards” which reward the best independent artisan food production in Britain.

• The program has been warmly received by customers.

• Local producers learn a lot about what’s involved in sourcing a multiple retailer. A number of Local and Regional suppliers have gone on to become National suppliers to Waitrose.

• Sourcing locally helps customers put a local face on the food they purchase, and helps keep a connection with their neighbors and the land.

• Program ensures the continued commercial success and sustainability of its producers, regardless of their size. It provides local/regional farmers and producers with the opportunity to grow, and provides Waitrose with continued, reliable sources of supply.

• For more information, go to: http://www.igd.com/index. asp?id=1&fid=1&sid=5&tid=49

• The program boosts local economies; and helps ensure continued market growth for Waitrose stores.

Application Potential

• Local and regional sourcing demonstrates the Waitrose partnership’s long term commitment to supporting the suppliers, producers and communities around its stores and other operations.

• The program was a winner of a Business in the Community Award for Excellence 2003-2005 and 2007. It received a Grocer Gold Award in 2007.

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• Retailers initiating this type of program must have the capability for seeking out the small, quality farmer and processor.

• Flexibility is the key; and a willingness and patience to work out the best arrangements for all parties concerned.

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Ball’s Hen House Market Brings Locally Produced Products into the Mix OVERVIEW

BENEFITS

Key Learnings

Ball Foods has built a long-standing commitment to selling locally produced agricultural products into a multi-part program that connects their customers and the community to locally produced agricultural and other products. This includes:

• One is additional sales. From the beginning the program has generated strong, double-digit sales increases, and this has continued even as the base of business has grown. Part of this is due to the strong value proposition. For example, there are typical savings of 20% each week in the products bundled in the CSA program. But it also reflects an improved shopping experience for customers which is a major point of differentiation, contributing to shopper loyalty.

• These farmer’s market and community-supported agricultural programs cannot only coexist but can actually add value when brought into a retail food store.

• Bringing products that are typically available only through farmers markets into their stores through the Buy Fresh Buy Local program.

• Sponsoring a community supported agricultural (CSA) unit through which their customers can “subscribe” to receive a weekly bundle of locally produced food products at a fixed price for the entire production season.

• Supplying an innovative farm-to-school healthier lunch program called Bistro Kids™ that combines healthy meals made with locally produced products, combined with an educational curriculum that gives the students the opportunity to learn more about the advantages of these foods.

• The other benefit is related to an improved shopping experience which includes: • Convenient access to an expanded range of products including meat and dairy, as well as produce.

• The opportunity to meet with and talk to farmers who produce the products.

• Availability of product promotions targeted specifically at this set of customers.

• The satisfaction of knowing that unique products are being used in innovative school lunch programs to give children a healthier meal.

• Additional information like recipes, storage tips, nutrition information, and even crop-production forecasts is provided.

Objectives To offer Hen House customers the opportunity to conveniently buy healthier, locally produced food products at the same time they’re doing their regular grocery shopping. This helps customers and their families more fully appreciate the flavor, environmental, and health benefits of locally produced food products.

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• There’s a lot of positive energy associated with “locally produced products,” i.e., the term evokes several different positive images for shoppers.

• There’s an opportunity to partner with schools by serving as a distributor of locally produced healthy foods for their farm-toschool lunch programs.

Application Potential • It takes time to build the necessary relationships with local farmers and to find a practical way to consolidate locally produced products.

• There’s an opportunity to use the product standards and marketing programs developed for use in farmer’s markets and CSA’s in retail-based programs.

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ThreeSixty Creating a Greener Store OVERVIEW

BENEFITS

Key Learnings

•D airy Farm Group set up two ThreeSixty stores in HK, offering organic and natural alternatives to conventional product choices.

• Environment: Used sustainable, renewable and re-cyclable materials where possible in buildings, and recyclable, biodegradable, and soybased ink for packaging and communication materials.

• I dentify market potential and trends before commitment -- Developed integral components of business strategy to gain market advantages.

•W ith no local organic certifications, ThreeSixty set up its own quality standards and only carries products with internationally recognised organic certifications.

•T he brand and store format aim for a total customer experience and an inspirational, educational store environment.

• Customers: Education and engagement to encourage healthier and environmentally conscious lifestyles.

•S uppliers: Only partners with organizations with similar values.

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•A dvisory Board of opinion leaders from business and NGOs review performance.

Objectives • T o satisfy Asian consumers’ needs for wholesome fresh foods, and durable goods.

• Recognition: Won three prestigious awards in 2007 – HKRMA awards for best customer service, EFFIE Silver Award and HK Emerging Service Brand Award.

•M odify product mix for different store profile – e.g. organic, natural, functional eco-friendly and fair trade products together with familiar brands for wellness and daily needs.

• S tart with education - Current international wellness trends, product knowledge, green concepts and environmental concerns -- yet easily understood and accepted by consumers.

Application Potential • ThreeSixty vision “to champion the well-being of people and planet” can be applied to any sector when the demographics and geography are developed financially and well-educated.

• Dedicated team members with advance training, an open mind and passion for green are needed to lead such a project successfully.

•T o complete the wellness aspects of the Dairy Farm Group business model and further expand leadership role in the retail market.

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Winn-Dixie Initiatives on Recycled Packaging and Sustainable Practices OVERVIEW

BENEFITS

Key Learnings

• Winn-Dixie’s private label coffee is grown by a Rainforest Alliance certified company.

• It is a benefit to the stores and to the company to be able to assure customers that the coffee products are grown sustainably and workers are paid fairly.

• Many companies and vendor partners see the benefits of sustainability.

• For recycled/recyclable materials, the benefits include lower costs to the suppliers and Winn-Dixie.

This can mean a better value to the consumer.

• Develop plans that are simple and execute on them.

• The plantations developed coffee drying furnaces using a state of the art Biomass Furnace which runs on the waste residue of the bean • The plantations are also equipped with hydroelectric generators producing energy from nearby water sources.

Local electricity companies use the excess energy generated • Plantation soil integrity is managed by testing and comparing the soil on the plantation with nearby virgin soil from old-growth woodlands

• Winn-Dixie is committing its private label products to use less packaging (e.g. bath tissue), less plastic with recyclable caps (New Orlean’s Niagara Water), 30% recycled plastic (Organic ready-to-drink Tea) and 100% recycled packaging (P.L. cereals).

• In addition, Winn-Dixie gallon water from Southeast Dairy ships in reusable plastic crates, rather than cardboard boxes. This also eliminates excess waste and reduces costs.

• Communicate the Company’s vision with vendor partners brings others along on this important cause.

Application Potential • Many companies and vendor partners see the benefits of sustainability.

• Communicate the Company’s vision with vendor partners brings others along on this important cause.

• Develop plans that are simple and execute on them.

Objectives • Winn-Dixie’s brand position is “Getting better all the time.” Increasing the use of recycled materials and reducing the amount of raw materials used are corporate objectives, as is offering products grown via sound agricultural practices.

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Carrefour: Empowering Women to Alleviate Poverty and Build a Sustainable Future OVERVIEW

Objectives

•C arrefour partnered with WWF to provide conservation and community support in Minshan, Sichuan Province.

• Improve local communities living conditions.

•K ey local community challenges included limited incomes, heavy dependence on fuel wood, inadequate education infrastructure, and poor health care.

• Reduce threats on the nature reserve (Giant Panda’s last natural habitat).

•C arrefour developed an integrated program to address the shortcomings of traditional agricultural techniques, and provide a platform for sustainable growth through: •C apacity building and training (specifically around potato & Sichuan pepper cultivation) •H ealthcare (free healthcare and education) •B uilt farmers association (worked with local government to get financial and policy support) •E ducation and infrastructure (school improvement, environmental education, construction of fuel-wood saving stoves)

• Build women and farmers capacity.

BENEFITS • Fuel-wood saving stoves: improved hygiene condition, reduced 40% fuel usage per household, considerable time saving.

• Free Healthcare: improved fundamental healthcare knowledge, provided ‘doctors’ with professional healthcare training.

• Sustainable agriculture: – t echnical assistance provided platform to ensure potato quality and improved yield (12,000 kg of seeds were provided by Carrefour to villagers for the pilot); – Sichuan pepper plantation training led to a 50% increase in income in 2007*

Key Learnings • Such projects require the retailer to act as Project Manager (ie identify key requirements and bring in resources / professional team accordingly, rather than have someone else drive the project on your behalf).

• The primary focus on such projects should always be on ensuring quality and food safety of products.

Application Potential • There is a need to demonstrate to the senior management team the benefits of such projects, remembering that there are essentially two parts: philanthropy and sustainable development (there is little business rationale in the former without achieving the latter).

• Successful Sichuan Pepper fair: sold over 15,000 kg of pepper with a profit of over 20,000 RMB. • Certification: will apply for green food certificate.

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Carrefour China Foundation for Food Safety OVERVIEW

BENEFITS

Key Learnings

• The Carrefour (China) Foundation for Food Safety is a non-for-profit organization aimed at broadening education and awareness of food quality, safety and nutrition issues.

• Transfer of knowledge and skills to multiple stakeholders (suppliers, employees, local government representatives, shoppers, and consumers).

• Develop multi-stakeholder teams and share responsibility of the program.

• Since 2005, they have organized 20 training programs (for 3,125 people in 15 provinces of mid western China), overseas training courses (to acquire modern day supply chain knowledge and improve managerial competence), and international seminars (providing opportunities for knowledge exchange).

• Theme of ‘Smart Shopping, Healthy Life’, Nutrition Week looks to:

• Training is provided to Carrefour staff to standardize food operation processes and ensure food safety in store.

– involve more food suppliers in promoting nutrition and healthy lifestyle

• Education programs are initiated in store around food safety and nutrition (‘Food Safety Week’ and ‘Nutrition Week’).

– educate the next generation of shoppers (e.g., kid’s hygiene training)

• Co-operation with Food Fortification Office (‘FFO’) of Chinese Center for Disease Control and Prevention.

Objectives

– improve knowledge of Chinese consumers about food nutrition and food balance, developing sound consumption habits

• Joint promotion with FFO has helped to promote awareness of, and accelerate progress of fortified foods in China.

• Carrefour has been recognized by the media for taking the lead in food nutrition, quality and safety.

• To train and inform players in the food sector (including farmers and government representatives) on food quality and safety.

• To address the growth in diet-related diseases associated with changes in lifecycle (China facing the duel challenge of nutrition deficiency and nutrition imbalance).

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• Use concrete examples from markets (creates greater impact for suppliers, staff and public authorities).

• ‘Go to the people’: conduct training in the regions where it is required rather than asking participants to come to a central location.

Application Potential • Need to align with core strategy to ensure credibility.

• Identify core stakeholders (including farmers, suppliers, shoppers and consumers) and engage with them accordingly.

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Rutters Builds Organizational Support for “Going Green” OVERVIEW

BENEFITS

Key Learnings

• Given the growing importance of the environment, Rutters—a 50store convenience chain located in Central Pennsylvania—wanted to begin to build environmental sustainability into the way the company does business.

There were more than a dozen specific actions, including:

• This experience showed that there were more environmentally friendly actions available than had been expected and that senior management became more engaged with “going green” as they worked to identify and implement them.

• A key to this involved engaging and building the support of the senior management team.

• This began during a strategic discussion in late 2006 when the environment was not yet a highpriority topic but it was clear that it should be incorporated into the company’s overall strategy.

• About six months later, senior management reviewed a range of options for action and committed the focus and resources to move forward.

Objectives To help personnel and customers see the company’s commitment by taking a number of actions that were good for the environment and the business.

• Reducing energy use by installing: • Motion controlled lighting in backrooms and restrooms • Energy-efficient LED and T5 lights • Tankless water heaters • Backdoor air curtains • Computer-controlled energy management systems • Solar-reflective roofs to reduce heat build-up.

• Reducing waste by: • Cardboard recycling • Recycling lighting ballasts and florescent light bulbs • Converting frying oil to bio fuels

• Offering customers environmentally friendly choices including: • Recycling centers for bottles, cans, and newsprint • Ethanol-enhanced gasoline • Rainforest coffee

• While there’s not yet a measure available of the financial benefits of Rutters’ commitment and the range of initiatives to the program, results to date indicate a positive effect on: • Employee morale and enthusiasm, many of whom are proud to work for a company that’s helping the environment.

• The perception of Rutters’ brand, which has increased customer loyalty as a result of doing a lot for the community.

• The company also learned that it was already doing a lot in the area of “localization” and that this made a strong story to share with customers. For example: • 90% of all salty snacks sold were produced within 30 miles of the stores.

• Deli meats and salads were all manufactured within one and one-half hours or less from the stores.

• Artificial hormone-free milk was all produced by farmers within one hour’s drive of the dairy.

Application Potential • To build organizational support for “going green” it’s important that management buy in to the idea and be involved in making the necessary changes and investment.

• The impact of offering customer more environmentally friendly options is determined by the quality of communications, and staff plays a key role in telling this story.

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SuperValu Finds Sustainability Leader Effective in Driving Efforts OVERVIEW SuperValu’s Sustainability VP • Compiled a complete list of the company’s environmental accomplishments to date.

• Corporate Communications used this list to increase internal awareness and to promote green activities throughout the company.

• Launched Webpage dedicated to environmental stewardship activities.

• Held formal sourcing events to maximize pricing for cardboard and plastic recycling.

• Compiled recycling and waste metrics for each division.

Internal Six Sigma process improvement teams drove increased recycling along with Store Operations.

• Expanded sale of re-useable shopping bags as a major focus for each division. Some added re-useable wine totes and thermal bags.

BENEFITS

Key Learnings

• Implementation of enterprise wide plastic recycling program increased recycling revenue by 51% and reduced waste tonnage by 6.4%

• Point person facilitated sharing of best practices already a part of many divisions.

• Recycling and waste reduction metrics, combined with carbon footprint scorecards established company “Green Report.”

• Sustainability leader effectively drives corporate-wide program implementation; provides a clear point of communication and coordination.

• “Green Report” metrics compared divisions against previous year performance and against each other.

• A SUPERVALU environmental stewardship logo was created and trademarked. The logo is used in all communications of all environmentally associated programs.

• Company experienced an immediate impact in both economic and environmental benefits of rolling out successful initiatives across enterprise.

• Logo helps build awareness and culture of green.

• Re-useable bags were retailed in every banner by end of 2008. Company sold 2 million bags, an 800% increase in calendar 2007.

Objectives To create a position to:

Application Potential • The greater the corporate executive leadership around environmental stewardship initiatives and the greater the corporate manpower dedicated to them, the more successful they will be.

• Coordinate efforts • Drive company efforts around environmental stewardship.

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Carrefour: Sustainability Reporting (KPIs) OVERVIEW

Benefits

Application Potential

• Development of sustainability performance measures applied across the Carrefour Group, and the ongoing reporting across the organization against these metrics.

• The system of monitoring indicators (which has been in place for the last 6 years) provides an opportunity on three fronts: for commercial growth, for cost reduction, and for risk management.

• KPIs need to be clearly defined and understood by management teams (measuring the KPIs locally), otherwise terms may be interpreted differently (e.g., water usage, manager).

• The KPIs are measured against 4 key areas:

• Setting up of good practice audits and controls.

-- Products: e.g., purchase amount of controlled organic products, Quality Lines, and Fair Trade

• Countries need to audit the data before submission (‘sense check’).

-- Logistics: e.g., CO2 emissions (kg) per transport unit Objectives • To enable Carrefour group’s stakeholders to evaluate the overall sustainability performance based on 22 KPIs. • Forms part of the Carrefour group’s commitments towards establishing a fully transparent dialogue with the Socially Responsible Investment (SRI) world.

-- Stores: e.g., (all per sq/m) – energy / water / plastic bag consumption, and waste recycled

• Need for supporting software that is user friendly (eg compare YOY performance).

• Need to clearly link environmental KPIs to operational KPIs.

-- HR: e.g., number of training hrs

Key Learnings • Need to continuously track indicators and address any variances accordingly (ie this should be treated as a performance management tool rather than an accounting tool).

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Publix Green Routine – Associate Awareness Program saves $48m since 2002 OVERVIEW

BENEFITS

Key Learnings

• In 2002, Publix launched “Get into a Green Routine” to all associates to encourage resource conservation, responsible waste management, and pollution prevention through behavioral change.

• Employees: Increased environmental awareness with all associates:

• For little or no capital expense there is tremendous opportunity to promote and deliver sustainable behavior change.

• Energy conservation measures • Use of energy efficient equipment/ designs

• A cross functional Green Routine Team (GRT) spearheaded efforts and ensured continuity.

• Waste reduction and waste recycling

• The GRT is responsible for engaging associates and educating them in ways to increase recycling, reduce energy, and reduce water consumption in their every day activities.

• Prudent use of utilities

• Communications: Posters, stickers, videos, newsletters & training – get out the message.

• Publix holds periodic contests - comparing yearly periods (quarter to quarter) and recognizing top stores. The contests “refresh” the Green Routine practices by spotlighting top performers.

Objectives • To increase Publix’s efforts toward social and environmental responsibility through communications, education and enlisting the participation of all Publix employees in sustainable activities everyday.

• Water conservation • Pollution prevention

• Winning stores are recognized and asked to discuss their results- successful practices are shared throughout the enterprise.

• Savings: Green Routine efforts to date have saved Publix $48,934,533 or 783,501,489 kWh, reducing energy consumption by 7.0% and CO2 by 6.2%. This is like powering 43,527 homes for a year (assuming 1500 kWh/mo).

• CSR: Reinforced Publix’s recycling program (begun in the 1970’s). Today, Publix recycles traditional materials like cardboard, plastics, pallets, damaged plastic containers, paper crates, scrap metal, as well as nontraditional materials such as end-of-life electronics and ceiling tiles. In 2007 the recycling rate was 42% (by weight), which included 212,159 tons of cardboard and 7,057 tons of plastic.

• The effort continues to evolve and mature. Regular strategies to refresh and refocus efforts are required to keep the program on track and producing optimum benefits.

• Education and training are key elements for capturing positive results.

Application Potential • The Green Routine program is successful because of Publix’s dedication to continuous improvement and education, and because of the top-down commitment to environmental sustainability from the CEO and Leadership.

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ICA: Launch of a climate website on reducing household waste OVERVIEW

Benefits

Key Learnings

• In September 2008, ICA had a major climate campaign in Sweden. Part of the campaign was a launch of a website where the climate impact from household waste of food was made clear.

• A very appreciated website that can live longer than just during a campaign. Not only is it used by individuals, but also by NGOs, schools and authorities.

• The consumer is eager to increase their knowledge on how to be more ‘climate smart’, but lacks much of the basic knowledge.

• The design and content of the website was simple and logical. Did not complicate the climate issue.

• The website was maybe too heavy (ie too much data content) which hindered visits from computers with a slow modem.

www.ica.se/klimat

• Examples of food’s climate impact was calculated by external experts which increased the trust in the advice provided.

• The site was linked to the climate campaign, but still able to stand alone on the ICA website all year around.

Objectives

Application Potential

• To educate consumers on how to help decrease the climate impact from food production by throwing away less at home, as Swedes throw away 10-15 % of bought food.

• Well documented facts are needed as a basis for embarking on any such consumer engagement / education program. These facts should then be translated into clear advice and examples for consumers.

• Also, educating consumers on how to be more environmentally conscious in their consumption of food by buying seasonally, and advising on how to make food stay fresh for longer at home (and how to best use leftovers).

• Increase awareness on ICA as a climate engaged company.

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Acknowledgements The following groups and individuals have been instrumental in developing this Global Retail Perspective:

CCRRC Members All past and present members of each of the Coca-Cola Retailing Research Councils have been integral in developing this Global Retail Perspective. Special thanks to those who helped review this document during development.

Industry Groups The partnership of the following industry groups has been critical to this work and specifically to development of the case studies: • CIES – The Food Business Forum • The Food Marketing Institute • IGD – The Food and Grocery Experts • The National Association of Convenience Stores The Global CCRRC Team A final, acknowledgement goes to the extended members of the Global CCRRC Team who helped deliver this project and this Perspective, especially Mary Page Platerink, Project Director.

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The Coca-Cola Retailing Research Councils The North America Coca-Cola Retailing Research Council was founded in 1978

by Donald R. Keough, who was then Executive Vice President of the Coca-Cola Company and President of the Americas Group, and Michael J. O’Connor, who was then President Emeritus of the Super Market Institute. The Council was designed to be a forum for retailers to explore the most compelling topics in their industry in a noncompetitive environment. Retailers soon came to cherish the opportunity to get to know their peers at one of the biannual meetings the council held to further their research.

The North American Council was such a success that a European Council was formed in 1987, followed by the Latin American and the NACS/Coca-Cola Retailing Research Councils in 2000. Asia set up its first council in 2003. All councils are focused on the same guiding principles: • Council members are chosen and invited to join by the Coca-Cola Company based on demonstrated leadership and willingness to participate actively outside their own companies.

• Council members are asked to commit to full participation during their approximately four-year tenure, i.e., two regular meetings per year and the review of work in progress.

Key studies from each of the Councils include: • North America Council (total of 20 studies published): -- “Social Trends in Food Retailing” -- “Connecting the Dots between Food and Health”.

• NACS Council (total of 3 studies published): -- “Redefining Convenience…Successfully Marketing to 21st Century Consumers”.

-- “Emerging Opportunities in Convenience Retailing” • European Council (total of 5 studies published): -- “Responding to Discount: A New Business Model for Food Retailers?”

-- “The Inflection Point: Critical Pathways in Food Retailing”.

• Latin America Council (total of 4 studies published):

• Council meetings are nontransactional.

-- “Creating Value for Emerging Consumers”

• Council members define the objective and scope of each study following the guidelines in the Council Charter, with no influence from the Coca-Cola System, i.e., the retail council members are totally responsible for the study topic.

-- “Unleashing Latin America Shopper Needs”

• A third-party consultant facilitates the work of the Council to provide staff support and to serve as an independent influence, ensuring that the council members operate under their charter and the Coca-Cola executives follow the guidelines.

• Asia Council (total of 2 studies published): -- “The Fresh Imperative – Creating Excellence in Fresh Food Retailing” -- “Food Retail Formats in Asia – Understanding Format Success”.

The Global Coca-Cola Retailing Research Council Forum was the first time all five councils met to discuss the same topic.

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