Issuu on Google+

CASE STUDY: Marks & Spencer: Sustainability and a Living Wage     Background Marks   &   Spencer   is   a   leading   UK-­‐based   retailer,   principally   in   food   and   clothing.   It   employs   75,000   people   in   30   countries,   has   more   than   600   stores   in   the   UK   and   300   overseas,  and  around  25  million  customers.  In  2007,  the  then  chief  executive  of  Marks  &   Spencer,  Sir  Stuart  Rose,  launched  ‘Plan  A’  (because  there  is  no  Plan  B  for  the  one  planet   we   have),   an   ambitious   sustainability   programme   for   the   retailer,   covering   environmental   protection,   eco-­‐efficiency   and   support   for   the   communities   in   which   it   operates.   It   established   100   initiatives   as   part   of   the   plan,   which   it   aimed   to   fulfil   by   2012.       By  March  2010,  the  company  was  able  to  report  that  Plan  A  had  delivered  on  46  of  the   100  goals,  and  could  report  notable  achievements,  including  the  following  in  2009-­‐10:     • Cost  savings  of  around  £50m  for  M&S,   • New  products  and  services,  including  250,000  customers  from  M&S  Energy;   • Cut  CO2  emissions  by  40,000  tonnes;   • Recycled  2  million  used  garments  via  Oxfam;   • Reduced  10,000  tonnes  of  packaging;   • Diverted  20,000  tonnes  of  waste  from  landfill;   • Saved  387  million  food  carrier  bags;   • Used  1,500  tonnes  of  recycled  polyester  (equivalent  to  37  million  bottles);   • Saved  100  million  litres  of  water;   • Recycled  or  re-­‐used  over  130  million  clothing  hangers;   • Raised  £15m  for  charities.     At   the   same   time,   the   firm   announced   a   further   80   initiatives,   designed   to   ensure   the   company   becomes   ‘the   world’s   most   sustainable   major   retailer   by   2015’.   The   new   ambitions  included:     • Working   with   suppliers   to   provide   training   and   education   programmes   –   including   in   basic   healthcare   and   workers’   rights   -­‐   for   500,000   workers   in   their   factories;   • Helping   suppliers   create   200   ‘Plan   A’   factories   with   either   ethical   or   environmental  features,  or  both,  and  encouraging  10,000  farmers  who  produce   fresh  foods  for  M&S  to  join  the  company’s  sustainable  agriculture  programme;   ©  Neela  Bettridge  and  Philip  Whiteley  2011   New  Normal,  Radical  Shift  


  Becoming   the   first   major   retailer   to   ensure   that   six   key   raw   materials   it   uses   -­‐   palm  oil,  soya,  cocoa,  beef,  leather,  coffee  -­‐  come  from  sustainable  sources  that   do  not  contribute  to  deforestation,  one  of  the  biggest  causes  of  climate  change;     Increasing   the   number   of   clothing   garments   our   customers   recycle   every   year   from   two   million   to   20   million,   including   via   the   partnership   with   Oxfam,   significantly  reducing  the  tonnage  of  clothing  sent  to  landfill.  

  (More   details   are   available   on   the   M&S   website,   in   the   press   announcement   1   March   2010:  http://corporate.marksandspencer.com/media/press_releases)       Mike  Barry,  Head  of  Sustainable  Business  for  Marks  &  Spencer,  says  that  Plan  A  sprang   initially  from  a  ‘moral  imperative’,  but  that  the  company  has  been  pleasantly  surprised   by  some  of  the  business  benefits.  ‘We  felt  that  big  business  needed  to  be  tackling  the   enormous  social  and  environmental  challenges.  We  are  a  values-­‐driven  business;  but  we   are   also   aware   that   there   is   a   business   case.   We   had   suspected   that   there   might   be   [business  benefits]  we  have  been  pleasantly  surprised  –  it  has  been  even  better  than  we   expected.   The   business   case   has   been   several-­‐fold:   eco-­‐efficiency,   less   waste,   lower   energy,  less  packaging.  There  have  been  benefits  on  the  productivity  side,  and  there  is  a   reputational  benefit  to  the  customer.’     M&S   is   a   commercial   entity;   it   cannot   jeopardise   its   viability   by   over-­‐extending   itself   with   social   or   environmental   commitments.   However,   by   intelligently   identifying   the   overlapping  concerns  of  employees,  suppliers,  shareholders,  executives  and  customers,   it  has  developed  some  innovative  approaches  which  benefit  all  stakeholders.     With   customers,   for   example,   questions   of   convenience,   cost   and   quality   are   not   the   only   factors.   Indeed,   the   extent   to   which   M&S   customers   are   green   and   ethical   may   surprise   some   observers.   The   company   has   found   that   this   does   extend   to   purchasing   behaviour;  it  is  not  simply  a  case  of  claiming  to  be  ethical  in  questionnaires.   In   M&S   customer   surveys,   the   company   segments   its   25   million   customers   into   four   groups:     1) About   ten   per   cent   of   its   customers,   and   9   percent   of   the   UK   population,   are   passionately  interested  –  they  are  very  ethical,  buy  fair-­‐trade,  and  so  on.     2) About   35   per   cent   of   M&S   customers,   and   28   per   cent   of   UK   population,   are   ‘light   green’.   They   are   concerned   about   these   issues,   but   they   don’t   want   to   pay   more   or   sacrifice   quality.   They   effectively   say   ‘If   you   can   do   good   stuff   for   no   extra  cost,  we  will  prefer  you  to  your  competitors.’     3) The   third   group,   about   35   per   cent   of   M&S   customers,   and   38   per   cent   of   UK   general   population,   are   saying   that   they   understand   the   green   and   social   ©  Neela  Bettridge  and  Philip  Whiteley  2011   New  Normal,  Radical  Shift  


dimension,  but  they  feel  intimidated  by  the  amount  of  change  that’s  needed  and   feel  they  don’t  know  where  to  start.  They  want  to  do  one  small  thing  a  week,  on   the  basis  that  everyone  else  does,  so  it  makes  a  difference.  So  there  is  a  kind  of   ‘sustainable  tribalism’.  An  example  is  plastic  carrier  bags:  they  are  keen  to  stop   using  them  if  everyone  else  does.     4) Around   20   per   cent   of   M&S   customers,   and   25   per   cent   of   the   general   population,   are   not   interested   in   this   agenda.   They   are   driven   by   income.   Typically  they  are  the  poorest  sections  of  society  and  they  have  not  surprisingly   other  priorities  in  their  lives.    

  The   tendency   to   emphasise   these   concerns   has   dipped   during   the   recession,   but   only   slightly,   Mr   Barry   reports.   He   says:   ‘The   biggest   priority   for   a   lot   of   people   is   the   economy  and  jobs,  but  people  still  define  themselves  in  those  four  groups.  They  say  that   they   expect   the   government   and   big   business   to   pick   up   the   slack   on   environmental   action   in   a   recession,   when   ordinary   citizens   may   have   more   pressing   concerns.   But   it   still   means   that   80   per   cent   of   our   customers,   in   some   shape   or   form,   want   us   to   be   green,  and  that  10  per  cent  of  them  will  push  us  to  be  even  more  so.  The  vast  majority   want  us  to  make  a  difference.’     Has   there   been   resistance   or   scepticism   from   shareholders   and   financial   journalists?   ‘Interestingly,  when  we  launched  Plan  A  four  years  ago  –  so  named  because  there  is  no   Plan  B  –  Stuart  Rose  spoke  with  leading  shareholders  and  said  that  it  was  the  right  thing   to  do  and  asked:  “Are  you  with  me?”  They  were  not  against  it.  They  see  it  as  a  proxy  for   good  management  in  the  real  world.  Now,  we  have  gone  back  and  could  demonstrate   that  last  year  the  policy  made  a  £50  million  contribution  to  profits.  It  is  not  a  huge  issue   for  the  investment  community,  though  to  be  fair  to  them  they  need  companies  to  prove   there  is  a  business  case.’     ‘We   have   a   very   sophisticated   mode   for   the   business   case;   a   monthly   dashboard,   showing  savings  from  less  packaging,  less  waste,  less  energy.  We  provide  green  energy   service  to  customers.  And  we  are  able  to  drive  the  business  case.’     In   terms   of   internal   management,   non-­‐financial   indicators   have   equal   status   to   the   finances,   he   adds.   ‘To   take   the   example   of   the   Food   division.   Our   suppliers   have   several   hundred  factories.  For  these  we  have  a  balanced  scorecard:  Commercial  performance  of   the  supplier;  Quality;  Innovation  capacity;  and  sustainability  –  social  and  environmental   performance.    

©  Neela  Bettridge  and  Philip  Whiteley  2011   New  Normal,  Radical  Shift  


CASE STUDY: Marks & Spencer: Sustainability and a Living Wage