Retailers Calendar

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Retailers Calendar
Exploring New Horizons in 12 Steps
towards Long-term Market Success
A Guidelines Manual for Retailers towards
Sustainable Consumption & Production
prepared by
UNEP/Wuppertal Institute Collaborating Centre
on Sustainable Consumption and Production
in collaboration with the
United Nations Environment Programme
1

About this Guideline and Acknowledgements
This Guidelines Manual was prepared by the UNEP/Wuppertal Institute Collaborating Centre on Sustainable
Consumption and Production (CSCP) in collaboration with the United Nations Environment Programme (UNEP)
within the scope of the Sustainability in the Retailer Sector Project of the CSCP. This document reveals a
systematic process to locate value creation opportunities on the shop floor, within supply chains and consumer
relations from the sustainability and product life-cycle perspective. It is also accompanied with a separate study
identifying options for retailers to inform consumers by means of modern information technologies.
The CSCP would like to acknowledge the high-street retailers that have taken part in the project survey. Their
contribution has enriched the Manual. We do hope that their input to this project will especially help inspire others
to enhance the sustainability performance of the retail industry.
Thanks go as well to Wendy Wallace, Tomasz Muchorowski, and Daria Karetnikov for their support in the
background research work. Last but not least, the CSCP is grateful to the colleagues at UNEP for their
continuous collaboration and feedback.
2

Table of Contents
To start with
Month 1: Understanding your risks and opportunities from a sustainability perspective . 4
Month 2: Scoping for performance improvements within and beyond your store .............. 9
Enhance efficiency of your in-store operations
Month 3: Ready – Planning and pre-assessment....................................................................... 17
Month 4: Steady – Detailed assessment, target setting and option identification......................25
Month 5: Go – Feasibility analysis, implementation and follow-up ............................................30
Capture real supply chain performance
Month 6: Ready – Planning and pre-assessment........................................................................36
Month 7: Steady – Detailed assessment and option identification..............................................43
Month 8: Go – Feasibility analysis, implementation and follow-up .............................................49
Discover new grounds in marketing & consumer relations
Month 9: Ready – Planning and pre-assessment........................................................................53
Month 10: Steady – Detailed assessment and option identification ...........................................61
Month 11: Go – Feasibility analysis, implementation and follow-up ...........................................71
Disclose performance
Month 12: Communication of your achievements .......................................................................77
3

Month
1
Understanding your risks and
opportunities from a
sustainability perspective
You might have a significant potential to affect change in society like no other industry, as you are located in a
key position between your suppliers and customers. On the one hand, you are in direct contact with customers,
and exert a significant influence on what products they want to buy, and how they use and dispose them. On the
other hand, you reach out to suppliers worldwide. In a way, you are acting as a gatekeeper determining which
goods and services to be offered.
This position does not only create a responsibility, it also opens up new business horizons and opportunities. This
chapter introduces five key sustainability issues to which you might have to pay attention for long-term business
success. The first three areas are concerned with newly arising opportunities, like the growth in markets for
sustainable products. The two last ones show how sustainability can help to react to business ‘challenges’, like
environmental risks, pressure from non-governmental organisations or upcoming environmental and social
legislation.
Figure 1.1: An overview of market opportunities and risks for long term business success of retail companies.
4

Save costs by increasing energy and resource efficiency
The most direct effect from addressing sustainability in your operations will be reduced
costs through improving energy and resource efficiency in the shop. These savings
can occur in the following areas:
• Energy: Energy for heating and lighting might be one of the largest cost centres
in the shop. If your store has open refrigerators and freezers, then this cost will be
even higher. 1
• Waste: Waste is a major cost factor for retailers. For
example, retailers are responsible for about 12% of
all industrial and commercial waste in the UK.
Producing an estimated 12 million tonnes of solid
waste each year costs the retail industry around £300
million 2 .
• Construction: If you are planning to construct a new shop or are retrofitting the
old one, you should consider using sustainable architectural practices, use of
renewable energy resources and construction materials.
Experiences…
Through lighting and
energy retrofits, Rabba, a
small chain of stores in
Toronto, has decreased
energy consumption by
over 60,000 kWh and
saved the company
$7586 3 .
Starbucks Japan set up a
special task force to
implement the Japanese
government requirement
mandating a 20 %
reduction in food waste,
which became active in
April 2006. They hope to
implement this approach
in their shops worldwide 4 .
Improving resource efficiency can also increase overall efficiency and minimise
operational costs. Conserving capital by recovering and re-using assets, minimising
waste and obsolesce enhances your asset utilisation. All in all, your profitability will
increase.
1 http://www.envirowise.gov.uk/168990
2
http://www.envirowise.gov.uk/page.aspx?o=168964
3
http://www.trca.on.ca/living_city/retail/Greening_Retail_Program_Description-Mar06.pdf
4 http://www.starbucks.com/aboutus/csrannualreport.asp?cookie%5Ftest=1 In their CSR
5

Expand into new markets and respond to customer trends
Rising sales of organic food products, organic cotton, energy efficient
devices and similar products show how customers increasingly consider
aspects related to sustainability in their shopping decisions. The
motivations behind this trend are manifold:
Experiences…
As the example of Coop Schweiz
shows, targeted advertising of socially
responsible and environmentally
friendly products can stimulate market
growth even further.
As the world’s largest retailer, Wal-
Mart has decided in May 2006 that
offering more organic food will help
modernize its image and broaden its
appeal to urban and other upscale
consumers. It has asked its large
suppliers to assist in achieving this
goal. 5
• A growing number of customers are willing to pay a premium for
socially responsible and environmentally friendly products due to
ethical considerations.
• Customers might value buying national brands for after-sales service
benefits or local produce for taste and quality.
• Consumers look increasingly for healthier, safer and less fattening
foods, especially with increased concerns about obesity, pesticides,
GMOs and diseases such as e-coli.
• Customers also increasingly pay attention to the energy and resource
efficiency of products. Rising energy prices, use-phase consumption
and life cycle costs have become sales arguments.
By offering and promoting ‘sustainable products’, you can reply to these
consumer trends to access new customer groups, increase your sales and
create a new ‘high-end’ segment in your markets.
Companies in the WWF Wood Group
Switzerland attained sales for FSCcertified
products in 2004 of about 40
percent higher than the year before.
Increases were observed particularly
with garden furniture and in the “do-ityourself”
sector. 6
Grocery retailer Whole Foods Inc. has
become the largest retailer of its kind
and the fourth largest in the US. By
selling only organic products, and
attempting to do it in a new and
dynamic way, it has become trusted
and well-valued among consumers.
The company’s stock prices increased
62% in 2005 and store sales increased
13% for three years in a row! 7
5
http://www.nytimes.com/2006/05/12/business/12organic.html?ex=1147752000&en=af030dc9161b4f9f&ei=5087%0A
6
http://photos.panda.org/about_wwf/what_we_do/forests/news/successes/index.cfm?uNewsID=66741
7 Zimbalist, Kristina. (2006) “Green Giant.” From Green Living. Time Style and Design Summer 2006 Supplement to Time.
6

Improve reputation and community relations
The relationship with the community in which you are located is
very important as at least some of suppliers, customers and
employees are part of it. Your location also affects public
transport routes and local transport patterns, and it has multiplier
effects on local economic activity.
As the community impacts your business, you in turn impact their daily lives. Retailers
can be a place where people meet and interact.
Your shop can be the perfect location for hosting and supporting social and
environmental community initiatives. Such activities would not only contribute to social
change in your community, but also improve your reputation leading to increased
customer loyalty and employee happiness.
Experiences…
Taking part in the actions
of “Agenda 21” Plans is
not an unusual activity for
most of the Western high
street retailers. Local
governments urge them to
be partners for “Agenda
21” actions such as
community education and
awareness raising
campaigns.
Prepare for more stringent legislation
Actively implementing sustainable consumption and production can help to
prepare for upcoming, possibly more stringent, legislation on environmental
and social issues driven by the current concerns about these issues. As an
example, energy labelling is already mandatory on all appliances in the EU.
Furthermore, the EU Commission, with the new REACH legislation on
chemicals, is considering substitution of hazardous chemicals, possibly
even from clothing! 8
By anticipating these trends, you can be proactive and address
sustainability issues holistically rather then having to respond to new
legalisation in a piecemeal fashion. You can also avoid adaptation costs,
by making sustainable investments in the first place, and demonstrate your
responsibility beyond legal requirements.
Experiences…
Fujitsu Siemens Computers has
chosen to market their SCENIC
professional PC as a green product,
which has resulted in a large reduction
in the use of chemicals. Fujitsu
Siemens Computers is aiming at 100%
recyclable components in the future’ is
better. This effort has resulted in the
award of the Nordic Swan Ecolabel, in
2001. Fujitsu Siemens was at that time
the only PC Company that has
achieved the Nordic Swan label. 9
8
Green Peace Website http://www.greenpeace.org/international/news/toxicfreefashion190606 Last Accessed: June 29, 2006.
9 http://www.ecocouncil.dk/download/REACH-M.pdf
7

Respond to consumers and NGO complaints
Consumers are becoming increasingly aware of environmental and
social issues, and at the same time, sceptical of businesses. 11% of
consumers in the US boycott the products of suspected polluters and
buy from those they trust instead. 10 In the US many school districts
are banning foods with low nutritional value, such as soft drinks and
candy. These products are coming under fire from politicians and
consumers alike that are trying to halt the obesity crisis. 11
The discovery of abuses in the supply chain by increasingly active
pressure groups and media could result in damage to a company’s
public image. In the UK and US, there is huge pressure on the
supermarkets to act on sustainability issues. Many watchdog groups,
such as tescopoly.org and walmartwatch.org work to protect workers
rights at home and abroad. Others, such as the UK Consumer
Council, issue benchmarking studies to compare performances and
push for higher standards.
Experience of some retailers:
B&Q, a major DIY retailer in the United
Kingdom was targeted in the early 1990s
for not having assurances that its products
were not being harvested from endangered
forests. This hurt its business, but in the
long-run, it was able to create a supplychain
management scheme. Now B&Q
assures that all of its wood is sustainably
forested with the FSC label, as does the
Home Depot, to ensure that they are not
targeted.
You may like to follow the example of the
textile industry and introduce ethical and
environmental codes of conduct in order to
reduce supply chain risks. This type of code
sets down minimum standards for working
conditions and in most cases description of
environmental management systems for
supplier companies. (See Month 7 for a list
of retailers’ initiatives and codes of
conducts towards sustainability)
References
Toronto and Region Conservation. (n.d.). Greening Retailer – A Programme of the Living City. Available at:
http://www.trca.on.ca/living_city/retail/Greening_Retail_Program_Description-Mar06.pdf
McIntosh, Jay and Julie Kunkel. (2005). Consumer Trends Report. Ernst & Young LLP. Available at:
http://www.ey.com/us/consumertrendscenter.
European Environmental Agency. (2004). Household Consumption and the Environment.
Sarasin. (2006). Buying into Sustainability: Environmental and Social challenge in Trading, Distribution, and
Retailing.
10
Ottman, Jacquelyn. (1998) Green Marketing: Opportunity for Innovation. Chicago: NTC Business Books.
11 Egan, Timothy. (2002) “In Bid to Improve Nutrition, Schools Expel Soda and Chips.” New York Times. June 20, 2002.
8

Month
2
Scoping for performance
improvements within and
beyond your store
In the first Chapter you were introduced the key sustainability issues that you might need to pay attention to for
long-term business success. The second Chapter focuses on how you can define the boundaries of your future
actions to address them.
The core question for this step would be: “Having recognised limited resource availability, where should be the
boundaries of actions to create the highest value?”
To set your boundaries for action you might like to look into the following dimensions:
Dimensions for boundary
setting
Where are our boundaries for the most value creation?
In-shop focus
Supply chain focus
Marketing and consumer
relations focus
Combined focus on the value
chains
Product category focus
Geographic area and entity
focus
• Have we improved resource efficiency of in-store operations to the maximum extent
possible?
• Are there more possibilities to enhance eco-efficiency and reduce environmental
impacts of in-house activities?
• Is there already an internal environmental management system in place?
• Are we aware of all environmental and social opportunities linked to our supply chain
operations?
• Have we optimized our supply chain functions, namely planning, sourcing, producing,
storing, transporting, and reverse logistics?
• Can we reduce life-cycle costs of products? Can we ultimately reduce costs for our
customers and us?
• Is there a potential to reduce cost of ownership to customers?
• Are we following the latest lifestyle trends? Can we expand our portfolio of products with
improved environmental and social attributes?
• Are we already encouraging safe and effective disposal of products to show
responsibility through the product life?
• Do we have the capacity to work on multiple focus areas along our value chains?
• Can we set up a management team for our value chains?
• If we are to look for opportunities in our value chains, which product categories should
be our focus?
• Which locations and selling points are relevant sources of opportunity for value
creation?
• Can we have flagship sites for performance improvements?
Table 2.1: Looking at your boundaries of action to create the highest value with limited resources
9

Life-Cycle Perspective to Create the Highest Value for Your Business
As mentioned in Month 1, retailers PS: replace ‘sit’ with ‘are located’ in a unique position between the suppliers
and consumers. From this unique position, how far are the opportunities for value creation located? Are the
sources for value creation on the shop floor, at the production site of the suppliers or in the hands of the
consumer?
For retailers of consumer goods, major opportunities for value creation through environmental, health and safety
performance improvements can be located upstream and downstream of the product chains within which they are
located. Figure 2.1 illustrates this point. The x-axis denotes the scale of the environmental footprint (upper curve)
and business efforts (lower curve), whilst the y-axis describes the key stages from production involving raw
material extraction through disposal at the end of use. Even though manufacturing creates the smallest
environmental impact, it has been the most direct relevance for companies and policy makers. In this respect,
there could be many upstream and downstream environmental improvement opportunities, which can add value
to a retailer’s operations.
This
Guideline is
divided into
three pieces:
enhancing
efficiency of
in-shop
operations,
supply chain
performance
improvement,
and
discovering
new grounds
on customer
relations.
Figure 2.1: The mismatch between the opportunities for value creation and management efforts for environmental improvements (Adapted
from WWF-UK, 2003).
For instance, the most significant environmental impact related to food consumption comes from food production
(agriculture) and processing. These include the effects of emissions from livestock, agriculture, and industry on
water, soil, and air; overuse of fish resources and increased transport of food; but also waste from production
processes, in particular organic and packaging waste. (See Box 2.1 below for a concrete example)
10

Chapters
6,7 and 8 deal
with finding
focus areas in
your supply
chains and
ways of
improving
your
performance
Environmental focus areas - recognise the priorities in product chain
In order to improve your performance in terms of resource efficiency and ecological/social concerns it might be necessary to
have a look at the entire supply chain. Obviously, there are certain areas where resource use as well as social or
environmental impact is particularly significant. You might look upstream at your supply chain to find out - for instance - how
resource- or environmentally-intensive the production of goods you offer is. This process of screening of different stages of
the supply chain might be performed with different instruments, e.g. life-cycle assessment methodology.
The resource use and environmental impact can be explained as a matrix showing how these two perspectives can be
integrated into one model (see figure 2.2).
Figure 2.2: Priority areas with high environmental impact and resource use (Source: Wuppertal Institute)
For example, a study conducted by the Wuppertal Institute for Climate, Environment and Energy about the coffee chain has
shown coffee cultivation (agriculture-part of supply chain) to be the largest contributor to the overall environmental impact of
the coffee chain. Thus, this part of the supply chain was marked ‘3’ in the chart, as there are certain areas of intensive
resource use and high environmental impact. For instance, producing coffee requires high level of land and energy use
(resource-side) and significant effluents to water (environmental-side). Consequently, increased shares of shade grown
coffee and less intensive farming techniques, including reduced levels of agrochemicals, may help reduce the two-fold
impact.
Source: Wuppertal Institute for Climate, Environment and Energy (own studies, 2002)
Box 2.1: Environmental Focus Areas
Life-cycle perspective can provide you with a more effective understanding of your opportunities. A cradle-tograve
assessment of your operations can show on the one hand problems with asset utilization, cost reduction,
risk management, and on the other hand prospects for improving your relationship with your customers or your
community in which you are operating and enhancing your brand value by influencing operations beyond your
shop floor. For more information on life-cycle analysis see Box 2.2 below.
Did you know that…
almost 80% of environmental impacts of products sold by the retailers usually occurs beyond the shop floor while
only 20% can be attributed to the in-shop activities?
• A life-cycle analysis of a pair of trousers sold at Marks and Spencer stores found that 76% of the energy consumed in
connection with the trousers was from the customer’s washing, drying, and ironing them.
• IKEA is a global home furnishings retailer with more than 160 stores in over 33 countries. Customer travel to IKEA stores
accounts for 82% of its total Green House Gas emissions. IKEA has found out that it could have a lot of influence over
this source of emissions when selecting sites for new stores.
Source: WRI, Hot Climate Cool Commerce
Box 2.2: Environmental Impact of Products throughout the Life-Cycle
11

Products with Highest Value Creation Potential
Once you
select the
relevant
product
categories for
value
creation, the
next issue is
to select the
material,
environmental
and social
issues within
these product
categories.
Month 6
tackles with
this task!
Products are at the core of your business. In your
retailer store, there might be a wide array of product
categories. For example, IKEA cites more than 50
product categories on its online retailer stores. The
question is whether it is reasonable to concentrate on
all or to focus on some (See Figure 2.3).
Some product categories might have more strategic
value for your business, promise more potential for
market expansion, and/or are more likely to contribute
to your current environmental and social efforts. It
makes perfect business sense to focus only on these
product categories. This would also allow you to utilize
your limited resources effectively.
Figure 2.3: IKEA has more than 50 product categories
cited on its online stores. (Source: IKEA Singapore)
website)
Regions with the Highest Value Creation Potential
In parallel to product chain and product category related scoping, you can also decide on the relevant
geographical areas, selling points or entities (such as suppliers) to concentrate your environmental and social
improvement efforts.
The level of significance of a geographical
area or suppliers depends directly on the
scale of environmental and social impacts.
The higher the level of impact, the higher
the possibility for cost reductions, waste
minimization, reduction of downtime,
decreasing risks of interruption, enhancing
product and process safety, etc., and
hence, the higher the strength of
profitability and asset utilization linkage.
Figure 2.4: Identification of the geographical focus based on risk classification at
High social and environmental impacts H&M. (Source: H&M Corporate Social Responsibility Report 2005)
can be identified by risk assessments. For
example, H&M divides the countries in which its suppliers’ factories are located into risk categories. Based on this
classification, factories in high-risk countries are then subject to more comprehensive audits (see Figure 2.4).
Another example is how IKEA is monitoring the performance of its suppliers based on “The IKEA Way on
Purchasing Home Furnishing Products” (IWAY). IWAY auditors screen regional differences in compliance with
the company code of conduct and this allows IKEA to locate a geographical focus for performance improvements
(See Figure 2.5).
12

Figure 2.5: Identification of geographical priorities based on the IKEA Way on Purchasing Home Furnishing Products (IWAY) fulfilment
rates. (Source: IKEA Social and Environmental responsibility Report 2005).
How to?
Three major selection criteria can be helpful for your boundary setting exercise: (1) Level of significance in
relation to potential risk or value creation, (2) Degree of control and/or influence by your retail company, and (3)
Degree of improvement potential in relation to potential risk or value creation. These can be applied for each
boundary setting dimension i.e. product chain phase, product group, entity or geographical area.
• Relevance for your business – Which areas are likely to crate value for your business from
environmental and social perspective?
You can compare whether a certain area can contribute more directly to your financial performance than
others. Focusing on environmental and social aspects of particular product groups or brands might bring
more value to your business. For example, in some product chains, environmental and social issues might
be more relevant for revenue growth, asset utilization, and/or service quality. Recent feedback from your
customers or a talk with your suppliers might have signalled that health and safety improvements in particular
product lines can enhance customer satisfaction and guarantee business continuity. These products can be
your focus. On the other hand, in particular regions your shops might particularly have environmental
conscious customer profile. You might like to scope down only to those shops from the consumer relations
perspective.
Months
3, 4 and 5 deal
with internal
environmental
management
opportunities.
• Improvement potential – Though this area is potentially interesting, is room for improvement in that
particular area eventually high enough?
Another criterion can be how much of room for improvement a certain area has compared to others. For
example, environmental improvements such as energy savings in the shop can help to cut costs. Reduction
of costs has direct affects on profitability. However, if your retail company has already been commencing
some initiatives for decreasing energy use, the room for improvement may not be as significant. Instead you
might locate more significant opportunities related to the products that you are selling; hence, investigating
opportunities in your product chains might make more sense. On the other hand, if your retailer company has
13

not yet systematically searched for the opportunities for environmental and social improvements in the shop,
the least resource intensive effort can be to start with your own shop floor. Immediate benefits can be located
and realized.
• Ability to effectively control or influence – Are you able to apply improvements effectively in this
particular area or region?
For an effective improvement of your environmental, social and economic performance, a good influence on
the network of entities in your value chain is needed. You might like to judge between entities, which are
wholly or partially owned by your retailer company. It should also be considered which entities’ sustainability
performance can be tracked and in what manner. Hence, you might like to include regions or shops, which
are under your direct management control.
You might like to map various areas (such as product groups, entities, geographical areas, phases of product
chains) on a chart and discuss the results with a strategic team to set your boundaries for conducting
environmental and social improvements. The following chart could be helpful for this exercise. You might focus on
the areas falling into the upper right hand side of the chart, where potential for all dimensions would be high.
Figure 2.6: Three dimensions of boundary setting.
14

Month 12
deals with
communication
of your
performance to
various
stakeholders.
Alternatively, the following matrix might also help you to define your boundaries or scope for conducting
environmental and social improvements:
Dimensions for boundary setting
Product chain phases
In-shop focus
Supply chain focus
Marketing and consumer relations focus
Product category focus
Product group X
Product group Y
Product group Z
…
Geographic area / entity focus
Store X
Store Y
…
Region X
Region X
Relevance
(1=low, 2=medium,
3=low)
Table 2.2: Defining boundaries for conducting environmental and social improvements
…
Improvement
(1=low, 2=medium,
3=low)
Ability to
control/influence
(1=low, 2=medium,
3=low)
Sum
Global Reporting Initiative (GRI)’s Boundary Protocol also intends to provide guidance on how to set the
boundary for reporting and how to describe the chosen boundary to report users. This Guidelines Manual
eventually leads to communication of your performance improvement; hence it might be already useful to get
some inspiration from GRI’s reporting framework.
References
EEA. (2005). “Household consumption and the environment”. European Environment Agency. EEA Report. No
11/2005.
GRI. (2005). GRI Boundary Protocol.
www.globalreporting.org/ReportingFramework/G3Online/SettingReportBoundary/
WWF-UK. (2003). “To Whose Profit? (ii): Evolution. Building Sustainable Corporate Strategy”.
WRI. (2006). Hot Climate Cool Commerce. A Service Sector Guide to Greenhouse Gas Management.
15

Enhance efficiency of your instore
operations
Ready Planning and
pre-assessment
Steady Detailed assessment, target setting and option identification
Go Feasibility analysis, implementation and follow-up
16

Month
Enhance efficiency of your in-store operations
3 Planning and pre-assessment
In the coming three chapters the guide will assist you to identify opportunities and implement concrete
performance enhancing projects to increase efficiency and reduce environmental impact from the perspective of
your in-store operations. This chapter focuses on developing an understanding of trends and challenges and
suggests an easy to use methodology to scope priority areas for detailed review and action in retail operation.
Trends & issues
As discussed in Chapter 2, ‘in house’ activities may not represent the majority of overall life-cycle impacts.
Improving in-store performance nevertheless offers benefits that are directly perceived by retailers through
reduced operating cost, improved asset utilisation and greater profitability. For this reason, addressing in-store
issues is a good first step for retailers to contribute to sustainability while reducing cost at the same time.
Addressing in-house environmental issues can be an important intangible value driver because improved inhouse
performance can be easily communicated to management, staff, consumers and other stakeholders, which
will serve to enhance your corporate image. Furthermore, there already exist well-established Cleaner Production
Methodologies originating from the manufacturing sector that can be directly applied to retail operations.
An often neglected opportunity area for the retail sector is that of the building and surrounding landscape. Vehicle
parking facilities, for instance, are often sources of significant oil contamination in urban rainwater runoff. Green
building design has been gathering momentum for some time in the office building sector due to reduced
operating costs and enhanced working environment for staff. Similar opportunities are available in the retail sector
in terms of reduced energy and operating costs in addition to making for a more inviting customer shopping
experience. For more information on energy efficiency and waste prevention see Box 3.1 below
17

The 2006
UNEP
publication
‘Greening
Shops and
Saving Costs’
outlines many
benefits and
opportunities
for ecoefficiency
in
retail settings
http://www.un
ep.fr/pc/retail
Opportunities in energy efficiency and waste prevention
Energy for heating and lighting represents on average the third largest cost to retail stores and much more so in operations
with freezing and refrigeration. The UK Carbon Trust indicates that a 20% reduction in energy use typically represents the
same benefit to bottom lines as a 5% increase in sales turnover. Unnecessary disposal of solid wastes, costs associated
with inefficient water use and wastewater discharges as well as staff motivation issues connected to perceptions about
environmental sustainability of the retail operation all influence retail bottom lines.
Box 3.1: Opportunities in energy efficiency and waste prevention
Planning and pre-assessment
Critical to the success of any business project is management endorsement to proceed. An environmental
program in a retail environment is no different and this should be the first priority. Management should clearly
communicate and demonstrate their support in addition to providing financial necessary resources for the
program. Once receiving management endorsement, you will need to build a team to undertake the project. Team
members should be open minded, possess creativity, drive, and have expertise in operational management of the
facility. Importantly, the team should be empowered to effectively conduct the project (e.g. concerning access to
information) and implement improvements.
In some instances staff may need to be recruited to provide advice and input for specific phases of the project.
Involving non-core team members in the project offers the opportunity to build ‘ownership’ and support for the
initiative from front-line workers, which can be a critical success factor for the overall success of the project.
Some additional issues to consider at this stage:
• Responsibilities of each team member should be clear and agreed on to avoid confusion.
• A work plan and deadlines should be developed. Dates for periodic meetings for progress reporting and
feedback should be established.
• The form and frequency of communication with staff, management, suppliers and customers, where
appropriate, should be decided.
Facility review
The objective of this phase of the project is to identify key areas for action by understanding baseline conditions
in your operation. Based on this understanding you should focus on the areas where the greatest gains can be
achieved. The project team should familiarise itself with the facility, areas of water use, waste disposal, and
transportation practices. In particular, you should focus on areas where energy is used such as coolers, freezers,
boilers and heating and air conditioning units. The team should prepare a map and process flow for the facility
identifying areas of interest for efficiency improvements. For an example of energy conservation see Box 3.2
below.
The table included at the end of this chapter provides an example of how a retail facility might be evaluated by
ranking performance of each area as ‘Optimal’, ‘Average’ or ‘Improvement needed’. The tips and questions
provided in the table can be used directly or can serve as input to a customised document you develop for your
specific needs. Regardless of how you proceed, the end result should be an overview of improvement
opportunities and their root causes within the facility.
18

Energy conservation and internal environmental management - Coop Italy
A number of branches of Coop Italy, an Italian grocery chain, decided to become members of the European Commission
sponsored GreenLight programme. As a members under the GreenLight programme, the Coop branches committed
themselves to implement lighting upgrades and document progress.
Between 2001 and 2005 Coop Italy implemented 135 lighting efficiency improvement projects that reduced electricity
consumption by 20,405 MWh of electricity over a retail floor space of 444,028 square metres ( 474,000 square ft). In
recognition of their outstanding achievements, Coop was awarded the 2006 GreenLight Award for improved lighting
efficiency.
Source: www.eu-greenlight.org
Box 3.2: An Example of Energy Conservation and internal environmental management
Cause and effect analysis
The objective of this phase is to undertake a cause and effect analysis to understand the root cause of the issues
as well as determine what other related undesirable effects might be occurring as a result of the root problems.
You should undertake the analysis as soon as possible following the initial review as problems and issues will be
fresh in the minds of the review team, which will enable a more informed analysis and will lead to better results.
Key tools for
assessing
retail
operations are
described in
detail in the
2006 UNEP
publication
‘Greening
Shops and
Saving Costs’
http://www.un
ep.fr/pc/retail
To understand the areas of your operation that need improvement in detail, a number of tools are available to
assist with determining the root causes of problems and their true effects. These include brainstorming exercises,
process flow diagrams identifying process inputs and outputs, layout maps, material and energy balance
exercises, and Ishikawa diagrams, also known as a fishbone or cause-effect diagrams originally designed for
quality management purposes. Selecting the appropriate tool for your project will depend on your preferences
and needs and there is no hard and fast rule concerning which tool is most appropriate. Wherever possible,
actual costs for aspects such as water and energy consumption, waste and sewage disposal, recycling and other
cost items should be compiled. Having these costs at hand will enable the team to more completely understand
the full scope of the problem and will assist with the coming stages of the process described in the next chapters.
References
Envirowise: Energy and Your Store
http://www.envirowise.gov.uk/page.aspx?o=168990
Carbon Trust: Retail Sector Overview. Publication ID CTV001
www.carbontrust.co.uk/Publications/publicationdetail.htm?productid=CTV001&metaNoCache=1
BREEAM Retail Design & Pre-Assessment Estimator
www.breeam.org/retail.html
19

How to?
Energy
While the absolute energy consumption of your facility will depend to a large degree on your sector, energy is
usually among the top operating costs for retailers. Since even small improvements in energy efficiency can make
a big difference to operating costs and environmental impacts, this section of the evaluation is of particular
importance.
Internal environmental issue – Energy
Freezers and coolers
• Placement near heat sources?
• Overcooling?
• Properly installed and maintained?
• High efficiency?
• Energy loss minimisation through doors & covers?
• Electrical metering of large freezers?
• Ozone friendly refrigerants?
Air conditioning
• Overcooling?
• Off or reduced cooling after hours?
• Optimisation efforts, such as switching off in unused
areas?
• Automatic shut down of air conditioning when
doors/windows open?
• Ventilation by opening windows instead of full airconditioning?
• Heat exchanger to reduce costs resulting from ventilation
system?
Heating
• Reduced heating after hours?
• High efficiency boiler or heater?
• Properly insulated building?
• Modern thermal windows?
• Doors kept open in winter months?
• Heat exchanger to reduce costs resulting from ventilation
system?
• Solar water heaters, geothermal heat potential?
Lighting
• Use of natural lighting where possible?
• High efficiency lighting?
• Lights off where not needed?
• Timers/motion sensors to shut lights off in infrequently
used areas?
Electronic Equipment
• Cash registers & other equipment switched off after
hours?
• Cash registers and other equipment standby power
Performance Evaluation
Optimal Average Improvement needed
Root
causes
20

Internal environmental issue – Energy
consumption?
• Office/administration ICT equipment shut off when not in
use?
• Power consumption of electronic vending machines
(especially with coolers)
• High efficiency lighting for marketing displays?
Lifts/Escalators/Elevators
• Operational only when needed or always operating?
• High efficiency motors?
Renewable energy
• Renewable energy available from your electrical
company?
• Solar water heaters?
• Photovoltaic cells for roof of facility?
• Passive heating and Green Building Design?
Table 3.1: Performance Evaluation of Energy use
Performance Evaluation
Optimal Average Improvement needed
Root
causes
Water
Water use is an area that is often overlooked. Not only do you pay for water you use, but also for sewage
discharges, hence you are paying twice. Consequently, efficient use of water offers retailers opportunities for
significant improvements in environmental performance and cost savings. Is your facility wasting water? Do you
monitor water use and how much it is costing you? Which areas of your store consume the most water? The
following provides a guideline for reviewing water use in your store.
Internal environmental issue - Water
General
• Regular monitoring of water meter to check for unexplained
increases in usage?
• Separate metering of major water consuming areas?
• Dripping taps?
• Leak testing?
• ‘Self closing’ push taps?
• Overflow prevention in sinks/tanks?
Sanitation facilities
• Water efficient toilets/taps?
• Motion sensor flush systems?
• Leaking sanitation equipment?
Product washing
• Efficient water use for washing facilities (e.g. vegetable
washing)?
• Low flow nozzles/dispensers?
• Automatic shut off for taps?
• Reuse of ‘grey’ water (e.g. for irrigation)?
Performance Evaluation
Optimal Average Improvement
needed
Root
causes
21

Drains
• Sources of leaks leading to drains identified?
• Location of all drains known (to prevent risk of discharge of
high risk substances to drains)?
Table 3.2: Performance Evaluation of Water use
Waste
The cost of waste is not just that of disposal. The true cost of waste is 5 to 20 times the disposal cost when
considering the value of returns and damaged stock, discarded packaging, inefficient use of water and energy,
and the time and effort spent handling and managing waste.
Internal environmental issue - Waste
General
• Waste sorting facilities provided & used?
• Donation policy for outdated or non-saleable (but functional)
products?
• Employee training on effective waste management
practices?
Packaging waste
• Packaging waste composition monitored?
• Shipping packaging (especially cardboard & shrink wrap)
recycling?
• Reusable freight containers & trays?
• Agreements with suppliers to reduce packaging waste?
Food & organic waste
• Food waste composting or sale as animal feed?
• Program to minimise food waste?
Advertising & promotional materials
• Outdated/Expired advertising materials recycling?
• Non-toxic ink & dye in promotional materials?
• PVC free customer appreciation cards?
• Reusable shopping bags on offer?
Promotional equipment/materials
• Recycling/reuse of unwanted promotional equipment?
Business machines & equipment
• Management for defective & outdated electronic business
machines and equipment?
• Sound disposal of expired fluorescent light tubes?
Table 3.3: Performance Evaluation of Waste: Advertising and Machine Equipment
Performance Evaluation
Optimal Average Improvement
needed
Root
causes
22

Facility
Green building design is becoming increasingly common in the commercial sector because of significant savings
in operating costs as well as supporting enhanced staff productivity due to improved working environments.
Leading retailers are also beginning to consider the advantages of green buildings for their operations. Even if
you are not in a position to start a new green building from scratch, there are many opportunities for you to
improve the environmental performance and increase efficiency of your building facility.
Internal environmental issue - Facility
Transportation
• Availability of public transport for staff & customers?
• Vehicle traffic problems?
• Optimised goods delivery?
• Goods being damaged/wasted during delivery?
Safety
• Fire & emergency exits unobstructed?
• Fire extinguishers in place and properly maintained?
• Emergency procedures in place and staff trained?
Neighbours perception of facility
• Noise levels?
• Lighting disturbance?
• Vehicle traffic issues/concerns?
• Waste storage odours?
Green & sustainable building design
• Roofing colour to absorb/reflect heat?
• Low emission green flooring & interior architectural coatings?
• Passive heating, cooling, daylight use, rainwater use, use of
grey water?
• Onsite biological wastewater treatment & reuse?
• Locally sourced building construction materials?
Building maintenance
• Green contract services (cleaning, catering, maintenance)?
• Low water temperature and water conserving cleaning
practices?
Landscaping
• Rainwater and/or grey water collection for irrigation?
• Native plant and/or low water consumption landscaping?
• Environmentally friendly landscaping practices (e.g. Integrated
Pest Management, native plant species, drought resistant
plants)
Table 3.4: Internal Performance Evaluation of Facilities
Performance Evaluation
Optimal Average Improvement
needed
Root
causes
Staff relations and training
Competition for market share in the retail sector is intense and consumers are as a rule extremely price sensitive.
For this reason, retailers can face significant pressures to keep salary costs to a minimum. As a consequence,
23

staff incomes are often low and more and more retailers are relying on part time and casual on-demand workers
to remain competitive. Many retail workers are unable to earn a living by working in retail alone. Nonetheless,
while companies may face cost barriers to increasing salary levels, there are real opportunities to improve
conditions for workers and in return win greater loyalty and dedication from your staff. Furthermore, due to
increasing consumer and civil society attention, issues such as labour conditions in retail environments and in
your supply chains might pose a priority.
Internal environmental issue – Staff relations and
training
Working conditions
• Staff exposed to temperature or noise extremes?
• Poor air quality & dust/vapours?
• Staff understanding on how to do their jobs safely?
• Policies on sick leave and/or maternity leave?
Training & development
• Staff training and updating of training?
• Reinforcement of environmentally responsible behaviours
among staff?
• Regular performance reviews?
• Rewards program for good performance?
• Staff development and promotion system?
Engagement
• Internal communication system?
• Input for decisions affecting daily work (e.g. restructuring,
recruitment)?
Table 3.5: Internal Performance Evaluation of staff relations and training
Performance Evaluation
Optimal Average Improvement
needed
Root
causes
24

Month
Enhance efficiency of your in-store operations
4 Detailed assessment,
target setting and option
identification
In the previous month you identified aspects of your retail operation where opportunities for improvement are
greatest. Based on these identified priorities you can focus this month’s activities on examining the priority areas
in detail and develop options to address the root causes of problems.
When identifying options to address the problems, you should utilise all possible means to identify possible
solutions. In particular, engaging front line staff in the detailed assessments can prove a valuable and useful
means of option identification because of their first hand knowledge of the equipment and processes. Following
the detailed assessment you should be well prepared to develop options to address your priorities and evaluate
those options with respect to their capacity to achieve your objectives.
Detailed assessment
During the pre-assessment phase you identified priority focus areas for more detailed evaluation. It is likely that
you identified some obvious areas for improvement and these areas should be the first focus of the detailed
assessment. For each identified priority area the table presented at the end of this chapter provides a suggested
format for evaluating the different areas of your operation. However, because every operation is unique you may
wish to develop customised tables to examine your specific circumstances. Figure illustrates a typical procedure
for the assessment phase.
Figure 4.1: Procedure for assessment phase
The most direct way to measure performance of your facility is through documents such as energy and utility bills
and invoices for waste disposal. If data exists for several years, examining trends over a period of time will enable
you to better identify priorities, for instance by identifying areas where costs or impacts are increasing more
25

apidly than others. You may also wish to consider comparing different aspects of your facility among similar units
or activities at different locations to determine those with the lowest impact within the overall organisation. Such
comparative data can be very useful in setting targets for less well performing sites or units within your facility. In
addition, relating the costs of various aspects of your operation to retail floor space and/or in relation to your
overall operating expenditure will enable you to assess different efficiency enhancing options in relation to your
overall business.
Target setting
Once you have determined the performance levels of your areas of interest (e.g. energy, water or waste
production), the next phase is to establish clear achievable targets for improving performance. The targets should
also serve as indicators that can be used to measure progress toward meeting your goals. When setting targets,
you may wish to consider striving for a phased approach to improving performance and establish targets over two
or more years. Importantly, targets should be SMART – Specific, preferably quantitative, Measurable, relying on
indicators that can be directly measured, Attainable, aiming for realistic achievements, Relevant, indicating root
causes of problems, and Timely, by establishing defined time limits. When allocating responsibilities for achieving
targets, care should be taken to ensure that responsible persons have sufficient authority to undertake the
required changes and/or make necessary investments.
The enclosed Target Setting table provided at the end of this chapter suggests a format for establishing targets.
The operational aspects included in the table are provided as suggestions and you are free to modify and include
only those which were identified as priorities in your pre-assessment. For an example in Internal Environmental
Management see Box 4.1 below
Internal Environmental Management – Metro Group, Germany
Germany’s Metro Group systematically monitors energy consumption at its stores in Germany. Locations with unusually
high energy consumption and corresponding energy costs are examined in detail on the ground. At one location in
Ludwigshafen, Germany, energy consumption was reduced drastically by conversion of the site’s air conditioning system,
thereby reducing carbon dioxide emissions by nearly 800 tons per year. Energy consumption per square meter of retail
floor space in Germany was reduced by nearly 10 percent in the year 2005 alone.
At Metro’s Cash and Carry Wholesale store in Hai Phong, Vietnam, energy consumption has been drastically reduced by
installing high tech solar water heaters which are capable of serving the shop’s entire demand for hot water. Three solar
collectors on the roof of the store provide energy to heat 16,000 litres of water daily in an ecologically efficient and
inexpensive manner every day.
Box 4.1: An example of Internal Environmental Management
Source: Metro Group
Option generation
The tables 3.1 to 3.10 in the pre-assessment phase of the guide provide a good deal of suggested improvement
measures for increasing efficiency and reducing costs and can be a useful starting point for brainstorming options
to meet your targets. There are many other resources and sources of information for tips and options for
improving performance of various aspects of retail operations. Be creative in this phase; examine all possible
options to meet your targets and include technical, managerial and operational solutions. Most importantly, try to
develop options that address root causes of problems.
26

When generating options, it may be worthwhile to document preliminary estimates of likely costs and potential
savings from each option to serve as starting points of the detailed evaluation to come in the next phase of the
process during the coming month. The Option Generation table at the end of this chapter provides a suggested
format for generating options.
How to?
Detailed assessment
The objective of the form below is to provide a structured analysis of environmental impacts and costs to your
business for each internal aspect in focus. You might complete this form for each priority aspect of your
operation. Relating the costs of various aspects of your operation to retail floor space and/or in relation to your
overall operating expenditure will enable you to assess different efficiency enhancing options in relation to your
overall business.
Aspect of
retail
operation
Quantity
(e.g. kWh
electricity, m 3
water, tons waste)
Quantity per unit of
retail floor space
(square feet or m 2 )
Cost relative to
operating cost
(percentage %)
Expected future
cost or impact
trend
(significant
increase or
decrease)
Notes and
observations
Table 4.1: Detailed Assessment
27

Target setting
The operational aspects included in this table are provided as suggestions and you are free to modify and include
only those aspects, which were identified as priorities in your pre-assessment.
Operational
aspect
Your current
performance
Root cause of
poor
performance
Your
targets
Year 1
Your
targets
Year 2
Tips for target setting
Electricity
Electricity
consumption
(kWh)
Energy
Fuel
consumption
(litres/gallons)
Water
(litres/gallons)
Waste
Disposal (tons)
Facility issues
(e.g. neighbour
perception,
safety)
Specific
Measurable
Attainable
Relevant
Timely
Preferably quantitative,
otherwise clear
description
Rely on indicators that can
be measured directly
where possible
Aim for realistic
achievements rather than
unattainable targets
Measure or provide an
indication of the root
causes of problems
Aim at compliance within
defined time limits
Staff relations
and training
(e.g. staff
engagement,
safety and
environmental
training)
Table 4.2: Target Setting
When allocating responsibilities for
achieving targets, care should be taken to
ensure that responsible persons have
sufficient authority to undertake the
required changes and/or make necessary
investments.
28

Option generation
The tables in the pre-assessment phase of your in-store operations provide a good deal of suggested
improvement measures for increasing efficiency and reducing costs and can be a useful starting point for a
brainstorming of options to meet your targets. You can use the following table to organize possible options to
reach your targets.
Operational aspect in
focus
Target performance level
Option
Likely
cost
Potential savings
estimate
Other expected
outcomes or benefits
Comments
Table 4.3: Option generation
29

Month
Enhance efficiency of your in-store operations
5 Feasibility analysis,
implementation and follow-up
In the previous month you set targets to achieve your efficiency objectives and identified options with potential to
meet those targets. This third and final month of the internal ‘in-house’ section of the guideline guides you through
the process of evaluating identified options to meet your targets and provides advice on implementing and
following-up actions over time.
Feasibility analysis
Choosing from a
number of
options...
The identified options to achieve your targets should be sorted according to their need for detailed evaluation. As
a rule of thumb, the greater the investment required or the greater the change that will be required in how you
operate your business, the more detailed your evaluation should be. To critically assess the proposed measures
it will be useful to evaluate each option with respect to environmental, technical and economic criteria.
Try to consider issues with all potential impacts and effects in a holistic manner. For instance, disposing of food
waste in a manner where it eventually ends up in landfill not only poses a waste issue but may also contribute to
greenhouse gas emissions due to anaerobic decomposition of the organic materials in food. Similarly, more
effective heating and ventilation systems will likely not only reduce direct operating costs but will also likely result
in a more pleasant working environment for staff as well as an enhanced shopping experience for customers. For
an example in Water savings see Box 5.1 below. When your evaluation is completed you should select the
options that are technically feasible and offer the greatest environmental and financial benefits to your retail
operation.
Water savings and rainwater recovery – Tesco, United Kingdom
Each of Tesco`s international businesses are required to report quarterly on energy, water and waste within a corporate
responsibility program. Corporate responsibility strategies aimed at identifying priority areas for action are developed within
Tesco through a number of stakeholder and employee consultation processes.
One priority area for Tesco has been water use. Tesco has identified staff toilets as their single largest water consumption
area and invested some £500,000 to install urinal controls and automatic shut off taps in addition to investing over
£800,000 to install rainwater recovery systems. Overall water consumption over the period 2000/01 – 2005/06 has been
reduced by more than 29 percent.
Box 5.1 : An example of water savings and rainwater recovery
Source: http://www.tescocorporate.com
The forms provided at the end of this chapter provide a suggested means to undertake a simple comparative
feasibility analysis of your options. For larger investments or operational changes you may wish to engage
30

external expertise and/or apply more elaborate analytical tools such as detailed technical assessments, costbenefit
analysis or profitability analysis.
Environmental evaluation
Because retailers are a part of an overall production and consumption system you should consider each
proposed option from a life-cycle perspective. This can include reduced greenhouse gas emissions by utilities
resulting from energy efficiency and more efficient transport practices, reduced demand on water resources due
to more efficient use of water and reduced sewage discharges, reduced landfill or waste incinerator emissions
due to reduced waste disposal. For an example of environmental management and evaluation see Box 5.2
below.
Importantly, try to consider if proposed options serve to merely shift environmental burdens from one area to
another. For instance, with the aim of reducing food waste, products can be packed into smaller food units.
However, this might lead to intensive packaging efforts hence the problem might be shifted from one aspect to
another. A further important consideration for the environmental evaluation are the spin off benefits from
improved environmental performance, which can often be translated into increased staff commitment and trust
resulting from pride in working for a sustainable organisation.
Technical evaluation
Technical evaluation is a critical component of the analysis and may require the input of outside experts. Being
confident that an option is technically feasible should be a high priority as technical solutions that do not work will
likely result in making a poor situation even worse. Key issues to be considered in the technical evaluation
include availability of space, equipment, staff training needs, maintenance requirements, but most importantly the
potential effects for your customers.
Impact on existing business processes, for instance timing of certain activities and procedures, as well as effects
on customers and product sales should also be carefully considered and evaluated. A key resource for the
technical evaluation might be manufacturers and suppliers of equipment who will often provide details of
equipment or assistance with the evaluation process at no or little cost.
Implementation of Environmental Initiatives – Metro Group, Germany
The Metro Group’s cross-divisional service company METRO Group Asset Management coordinates environmental and
infrastructure needs for the many Metro Group stores and divisions. Having as its primary task the continuous improvement
in environmentally friendly business practices and reduced consumption of energy and resources, METRO Group Asset
Management coordinates energy and waste management, facility cleaning and pest control at all European locations.
To ensure leadership in its own facilities Metro compiles internationally comparable key figures for energy consumption,
water consumption and waste disposal. Using these figures as a basis, Metro has been able to document internationally
benchmarked improvement in its operations globally.
Box 5.2: An example of Environmental Initiatives
Economic evaluation
Source: Metro Group AG Sustainability Report, 2006
Economic evaluation is critical to guarantee business success as well as ensure that you are optimising the
environmental benefits achieved with your investments. This evaluation step compares anticipated savings
31

against costs of implementing the measure or change. It will be important to have a good understanding of the
baseline conditions for existing equipment and infrastructure and be sure not to forget to consider potential future
increases in prices for key inputs. For instance, in regions experiencing rapid growth, such as rapidly developing
suburbs of large urban areas, prices for water and waste disposal are likely to increase substantially in the future.
In a retail setting, it will also be important to consider issues such as potential sales impacts due to an enhanced
shopping experience for customers that may result from measures such as improved image and more
comfortable retail premises. Also, some energy efficiency options, closed-door freezers for instance, may result in
reduced sales due to decreased customer access. On the other hand, reduced operating costs may enable you
to achieve greater sales volumes because you are able to offer lower prices. These, and many other issues, need
to be carefully assessed when undertaking your analysis.
For large or complex investments, analytical tools such as Net Present Value calculations, Internal Rate of Return
or Total Cost Accounting exercises may be necessary. Applying these tools may require you to engage external
expertise, however, a more formal cost analysis may be necessary when negotiating financing with banks or
other lenders. A simple but useful economic evaluation method is to calculate project payback periods based on
the required investment in equipment and implementation costs such as staff training and other costs to
implement the project divided by the projected annual savings that the project will realise. While this approach
does not consider the time value of money, it provides a straightforward and useful measure of the relative
financial merits of different options.
Figure 5.1: Projected payback period
Implementation and follow-up
To develop an implementation plan you may wish to break down required tasks into clear steps or phases and
clearly allocate responsibility for implementation to different team members or departments. A role for the team
leader could be to ensure that each team member is delivering their respective component of the implementation
plan and ensure that all tasks are implemented in a coordinated and timely fashion. Starting with the simplest
options to achieve ‘early wins’ can build confidence of the team for later challenges and enable the team to
demonstrate its capabilities to management and staff.
Ensure the plan
is implemented
according to
plan...
Check that the plan is being implemented
Particularly for management and procedural changes it is important to ensure that employees are properly trained
and that they understand the reasons for the changes to ensure the desired improvements are achieved. In some
cases it may be important for management to take steps to ensure that new procedures are being followed and
that equipment and infrastructure is being properly used over time. An investment is of little benefit if employees
do not or cannot properly use equipment and efforts at improving internal procedures are of little value if they are
not correctly followed. To maximise the chances of staff cooperation and support is important to provide as much
32

information as possible, in the right way and to the right people regarding the changes and the reasons for the
new approaches. The support and involvement of front line staff is critical and the success of the project is very
unlikely without it. This is particularly the case for procedural or management solutions but also for technical or
equipment solutions.
Evaluate your
performance...
Monitor results over time and strive for continuous improvement
Monitoring results of your efforts is an important component of the overall process. You may even be surprised to
learn that you are realising greater that anticipated benefits for your organisation. Not only will you be able to
determine whether your efforts and investments have proven effective but you will be able to clearly demonstrate
how environmentally responsible business methods contribute to a more profitable enterprise. Where results
have been less than anticipated, you should make note of reasons for poor performance and consider means to
improve performance to the desired level. As with any continuous improvement management system, results
should form a basis for target setting in the coming year when the process could be repeated. For an example of
Internal Environmental Management see Box 5.3 below.
Internal Environmental Management – Kesko Finland
Kesko Finland, a diversified retail and service firm, has in recent years undertaken systematic and target-oriented
programmes to improve environmental performance. The ‘K-environmental store’ operating model is incorporated into
Kesko Food’s K-citymarkets, K-supermarkets, and K-markets. Independent audits are carried out when a store introduces
the K-environmental store concept and follow-up audits are carried out periodically in randomly selected shops.
All staff employed in the K-environmental stores receive training on environmental issues and follow-up training is arranged
annually on a variety of themes. Training topics include product selection and labelling, prevention of in-store waste and
promotion of recycling, in-store energy management and cleaning practices and consumption-related environmental
information for customers. In December 2005, there were 343 K-environmental stores in the Kesko Group.
What has Kesko achieved?
Kesko’s energy efficiency program has realised significant savings largely through day-to-day procedures and operations.
Air conditioning and interior lighting have been programmed to coordinate with opening hours, spot lighting has been
reduced and the brightness of space lighting has been reduced after hours. Lighting is on in storage and staff areas only
when the areas are actually in use.
Observing maximum fill levels in frozen food cabinets and cleaning and defrosting this equipment have been underlined as
priorities. Other energy-saving practices include eliminating unnecessary cold drink displays, more appropriate night lighting
of exterior areas, reducing unnecessarily high water temperatures in hot water systems, turning off computer displays at
night, and using automatic lighting in toilets. Altogether, Kesco has achieved an average annual electrical consumption of
270 kWh per square metre and has established a future reduction target to reach 250 kWh per square metre. On average,
Kesco’s energy savings investments achieve a payback period of 6 months or less.
Box 5.3: An example of Internal Environmental Management
Source: Kesco Corporation
33

How to?
The following table might be helpful in finding technically feasible option(s) that offer the greatest environmental
and financial benefits.
Operational aspect in focus
Target performance level
(e.g. kWh electricity, m 3 water, tons
waste reduced)
Option
Environmental
Evaluation – A
Effects
(Positive,
negative, more
info needed)
Technical
Viability – B
Yes, no,
potentially/more
info needed
Financial Evaluation – C
Amortised
annual
cost
Projected
annual
saving
Projected
payback
(months/years)
Comment
(availability of
equipment/materials,
potential side benefits or
risks)
Table 5.1: Feasibility Analysis
34

Capture real supply chain
performance
Ready Planning and
pre-assessment
Steady Detailed assessment and option identification
Go Feasibility analysis, implementation and follow-up
35

Month
Capture real supply chain performance
6 Planning and pre-assessment
One of your daily strives is to get your goods and services to the right place, at the right time, and in the right
condition. Your supply chain functions involve several or all of the following activities: planning, sourcing,
producing, storing, transporting, and reverse logistics. The following three chapters will focus on identification and
management of environmental and social opportunities and risks linked to your supply chain functions. For this,
we use the term sustainable supply chain management (sustainable SCM).
By this we refer to a variety of approaches for the management of natural and human resources from the supplier
to your retailer’s shelves. Sustainable SCM emphasizes communication, collaboration, and coordination between
your retailer company’s supply chain functions and those of your suppliers, customers, and other service
providers. A high performing supply chain contributes to the bottom line through increased revenue, reduced
costs, improved asset utilization and enhanced customer service. You may also build critical intangible assets
such as product and service innovation, risk and opportunity management, alliances and networks, brand equity
and reputation.
Table 6.1 gives some general hints on where to start in your retailer’s case. Which supply chain functions are the
most relevant for your retailer? By working on which issues, can you create the most value for your retailer?
Your supply chain functions
Plan:
• Forecast supply/demand
• Design logistics network
Source:
• Source and procure
• Manage suppliers
Produce:
• Design and engineer
• Manufacture or convert
• Package
Store:
• Manage warehouse
• Receive, pick, pack
• Manage inventory
Are there any environmental and social actions that can potentially add value to
my supply chain performance?
• Can we increase the supply/demand forecast accuracy?
• Can we consider full life-cycle management of our products?
• Can we optimize supply chain network design?
• Do we source from the regions/networks/areas/ wherein sustainability considerations
are taken into account?
• Do we have a code of conduct presenting our social and environmental standards and
principles?
• How can we persuade and better monitor the compliance with our code of conduct on
the side of the suppliers and/or contractors?
• Can we design more environmentally-friendly products in our company?
• Can we reduce the ecological footprint of our production methods?
• Can we introduce packaging that is easier reusable and recyclable?
• Do we incorporate sustainability factors in warehouse development?
• Do we have storage systems in place assuring the proper storage life?
• Do we assess the energy consumption in our stores?
36

Your supply chain functions
Transport:
• Inbound/outbound
transportation
• Manage delivery fleet
Reverse Logistics (generic
questions):
• Manage product returns
• Reuse
• Recondition
• Recycle
• Dispose
Table 6.1: Scoping for sustainable supply chain management.
Are there any environmental and social actions that can potentially add value to
my supply chain performance?
• Can we reduce product miles?
• Can we optimize transportation routes and loads?
• Can we reduce environmental load of transport routes?
• What is our environmental impact in terms of traffic congestion, noise and accidents?
• Can we reduce waste from packaging or shipping containers?
• Do we have high-value, low-disposition strategies?
• Do we have systems in place enabling our clients the disposal of the used
products/packaging?
• Do we have refurbishment practices in place enabling resale of the returned/unwanted
products or recondition of the used products?
The following business trends suggest a growing need for your retailer to consider the environmental and social
impacts of your supply chain activities.
Reckoning upstream risks and opportunities
Low cost
strategies
might bring
high risk with
it.
A major trend linking to upstream risks of retail business is the attempt to use cost reduction benefits and price
cuts in order to win market share especially in mature markets. In line with this, outsourcing supply chains to
sensitive countries or operating in emerging markets can help to keep costs down and stay competitive. Global
sourcing also allows ordering of products from manufacturers overseas without owning or being involved in their
operations.
However, this strategy is not without risks. Mismanagements in the supply chain have become the target of
intense public pressure as consumer concerns and media coverage reinforce one another. It is not possible to
use the argument that it is the supplier, not the retailer itself that is responsible from social and environmental
abuses. The public essentially asks for accountability and transparency in the supply chains. This pressure might
even result with seeking regulatory frameworks for disclosing on abroad operations such as the “International
Right to Know”-Campaign 12 .
While pressure groups are more active and better researched in the West and the North, their way of operation is
disseminating fast to the East and the South. Especially NGOs, which are able to take advantage of their
geographical position, language and access to information, are able to monitor the behaviour of corporations. For
example, a Hong Kong-based coalition of labour organizations, namely Labour Rights in China (LARIC),
continually exposes violations of worker and human rights as well as criticizing the corporations for not
implementing even their own Codes of Conduct. Moreover, campaigns of western NGOs might be run globally,
hence these might affect developing and emerging market operations of retailers. (See Box 6.1 for an example)
12 www.ikrt.org
37

Labour Behind the Label – Campaigning to release the pressure low-cost retailers applying on their suppliers
Labour Behind the Label (LBL) is a campaign that supports garment workers’ efforts
worldwide to improve working conditions. They educate consumers, lobby companies and
government, raise awareness, and encourage international solidarity with workers. Its
members include trade unions and their local branches.
One of their latest publications, namely ‘Who pays for Cheap Clothes?’ questions the new fad
‘Fast fashion’, i.e. giving shoppers the latest styles just six weeks after they first appeared on
the cat walk at extreme low prices, and consequently, the pressure created on suppliers in the
developing world.
Source: http://www.cleanclothes.nl/ftp/06-07-who_pays_for_cheap_clothes.pdf
Box 6.1: An example of NGO pressure on low-cost retailer strategies.
Other parties performing analysis of the retailer sector such as investment bankers and insurers do also indicate
concentration of risks in the supplier operations. As they more and more understand the vulnerability of modern
supply chain operations, new tools of risk assessment are being used. For example, Bank Sarasin mentions that
retailer sector’s main impact areas on society and the environment can be found in the pre-production (Sarasin,
2006). (See Box 6.2 for more information)
Retailer sector’s main impacts on the society and environment occur in upstream supply chains
Sarasin Bank examines sectors based on an aggregated assessment of the extent to which a particular industry creates
environmental and social risks. Within this industry rating, a total of four risk categories are examined: consumption of
resources (e.g. fossil fuels, water), emissions (e.g. air
pollutants, creation of waste), potential internal (influence
on employment and work conditions) as well as external
sources of social conflict (impact on society as a whole).
The figure shows a rating for trading, distribution, and
retailing industries.
In this industry, main social and environmental impacts
occur in the upstream supply chain when sourcing from
countries with poor working conditions (e.g. health and
safety), vulnerable institutional framework (e.g. corruption)
and low environmental standards (e.g. lack of control). Additionally, the industries’ internal conflict potential stems from risks
presented by working conditions in shops and logistical facilities (e.g. low wages). Finally, the industry is particularly exposed
to a number of external conflicts, which result from its business operations (e.g. food safety, local communities).
This risk is proportional to the size and public profile of the retail company. The risks in the pre-production obviously depend
on the product range and type of manufacturing sector they relate.
Box 6.2: Bank Sarasin’s sector-wide rating for the retailer industry.
Hence, keeping good track of environmental and social risks in relation to the operations of your suppliers is
crucial for maintaining brand equity and reputation of your retail business. There are various multi-stakeholder
initiatives, which might aid in locating sensitive regions or aspects along your supply chains. For example, Global
Reporting Initiative (GRI) has published sector supplements that pinpoint major environmental and social aspects
38

in several manufacturing and service sectors 13 . Another source is the ‘A Geography of Corporate Risk’
publications, which show where human rights abuses and violations exist. (See Box 6.3 for more information)
‘Business and Human rights: A Geography of Corporate Risk’ published by International Business Leaders Forum
(IBLF) and Amnesty International (AI)
In order to understand aspects and geographical distribution of human rights risks, you may refer to a tool developed by
Amnesty International and International Business Leaders Forum (IBLF).
Both NGOs have collaborated to produce a series of seven detailed world maps, which depict where human rights abuses
and violations exist and where leading North American and European multinational companies are at risk of being associated
with them.
As already indicated in Chapter 2, retailers such as H&M use this generic tool to assess the countries with high social and
environmental impacts. This helps H&M to detect all compliance issues as early as possible in order to rationalise and
manage their monitoring and remediation efforts.
Source: http://www.iblf.org/resources/general.jsp?id=69 “Business and Human rights: A geography of Corporate Risk”
published by International Business Leaders Forum (IBLF) and Amnesty International (AI)
Box 6.3: Mapping risks along supply chains.
As discussed in Chapter 2 of this Guidelines Manual, for almost all retailers of consumer goods, major
opportunities regarding environmental and social issues occur beyond the gates of the retailer shop. Almost 80%
of environmental impacts of products sold by retailers usually occur beyond the shop floor while only 20% can be
attributed to the in-shop activities. Hence, sustainable supply chain activities can help to achieve reductions in the
13
For more information: http://www.globalreporting.org/InDevelopment/SectorSupplements/
Please note that there is currently no ‘retailer’ sector supplement working group established by the GRI.
39

amount of raw materials used. Efforts to increase eco-efficiency or cleaner production efforts can lead to
reduction of operational costs and better asset utilization.
Transport and Logistics Efficiency
Chapters 3,4
and 5 on
‘Enhance
Efficiency of
In-Store
Operations’
also deal
briefly with
transport
issues.
However, it is
limited to
optimized
employee
commuting
and goods
delivery. In
relation to
sustainable
supply chain
management,
we look at
trends and
opportunities
beyond
optimization.
Transport might be one of the major activities contributing to the carbon footprint of products that you sell in your
retail outlet. Some modes and routes of transportation could be adding to the energy intensity of the products. For
example, water is the most energy-efficient mode to transport goods, followed by rail, truck and airplane. (See
Box 6.4 for food miles discussion on foodstuffs)
Hence, the transport link in the supply chain involves fleet vehicle management and inbound and outbound
transportation of goods. Whether operated in-house or by third parties, the way that a delivery fleet is managed
contributes significantly to the cost and environmental impacts of transporting goods. Effective fleet management
can reduce fuel use and vehicle emissions, reduce maintenance costs and enhance customer service.
Food miles: to make the load less travelled
Food miles are the distance food travels from where it was grown to where it is purchased or consumed. The concept of food
miles implies that fuel use and CO2 emissions will be lower for food that is transported shorter rather than longer distances. It
is an attractive approach to promote local food systems because it’s easy to grasp and there is enough information to
estimate the food miles.
But would there actually be transportation fuel savings and a reduction in CO2 emissions if more food were produced and
distributed locally/regionally? The surveys point out significant savings resulting from the usage of local food systems.
Example: Food miles of apples for Des Moins supermarket (Iowa, USA)
Apples grown in Iowa and transported by truck (60 miles)- minor food miles
Apples grown in Washington (state) and transported by truck (1,722 miles)- significant food miles
Consequently, the introduction of eco-label information taking into account CO2 emissions and fuel use would provide the
consumer with a relative indicator about the transport-related environmental impact of their purchase. Still, mode of
transportation must be taken into account before assuming that fuel use and CO2 emissions will be lower for food that is
transported for shorter rather than longer distances. Thus water is the most energy-efficient mode to transport food or
other goods, followed by rail, truck and airplane. It is also vital that the Life Cycle Assessment (LCA) should be used for
holistic assessment of fuel use and CO2 emissions generated for food products from farm production through consumer
purchase and use. Locally produced food might not necessarily imply lower CO2 emissions…
Example: LCA- fuel use and CO2 emissions of tomatoes consumed in Sweden
Product: tomatoes grown in Denmark, the Netherlands, Sweden and other countries
Consumption point: Sweden
Method: LCA – carbon dioxide equivalents per kg. of tomato compared over 20-year period
Result: Spanish tomatoes consumed in Sweden proved to have lower CO2 equivalents than those produced in Denmark, the
Netherlands, and Sweden, despite the transportation distance from Spain.
Reason: Spanish tomatoes were raised in open ground while the Swedish, Dutch, and Danish tomatoes were raised in
heated greenhouses, which expended more fossil fuel energy in crop production.
Lessons learned: need for a holistic view while assessing the food miles
Source: Piroog, Rich; Schuh, Pat: ‘The load less travelled: Examining the potential of using food miles and CO2 emissions in Eco-labels. Prepared for the
Conference on Eco-labels and the Greening of the Food Market, November 7-9, 2002
Box 6.4: Food miles discussion with regards to eco-efficiency improvements in product transport.
40

How to?
In order to identify major risks and opportunities regarding environmental and social issues along your supply
chains, you might perform a check over your major supply chain functions. Looking from the life-cycle
perspective, on the one hand, you might scan your stakeholders’ environmental and social concerns, which
constitute a risk to your reputation. On the other hand, you can try to list down opportunities for more efficient use
of raw materials or better asset utilization. The following chart (Table 6.2) might help you to draw your supply
chain opportunities and risks map.
SCOPE
Risks &
Opportunities
Product
Categories /
Major
Product
Chains
Risk or Opportunity related to the Life-
Cycle Stage:
Primary
Production
Manufacturing/
Processing
Transport
Env.’tal
issues
Social
Issues
&
Related
Supply
Chain
Function
Relevant
Suppliers
Stakeholder
concerns
NGO or third-party
concerns (such as
campaigns,
protests,
declarations)
Governmental
pressure (such as
forthcoming
legislation, political
speeches)
Customer concerns
(such as recent
complaints)
Potential for cost
structure
improvement
Potential for
increase in asset
utilization
Potential
improvement
service level
for
of
Potential for
enhancement of
brand equity and
reputation
Table 6.2: Identifying risks and opportunities regarding environmental and social issues
41

References
Holliday, C. O., Schmidheiny, S., Watts, P. (2002). Walking the Talk – The Business Case for Sustainable
Development. Greenleaf Publishing.
Kuhndt, et al. (2004). Responsible Corporate Governance - An Overview of Trends, Initiatives and State-of-theart
Elements. Wuppertal Papers. No. 139 . ISSN 0949-5266. Available at
http://www.wupperinst.org/Publikationen/WP/WP139.pdf
Labour Behind the Label. (2006). Who Pays for Cheap Clothes? 5 questions the low-cost retailers must answer.
Available at http://www.cleanclothes.nl/ftp/06-07-who_pays_for_cheap_clothes.pdf
Penny, M. N. (2006). Greater Vancouver Regional District – Sustainable Supply Chain Logistics Guide.
Sarasin. (2006). Buying into Sustainability: Environmental and Social challenge in Trading, Distribution and
Retailing.
42

Month
Capture real supply chain performance
7 Detailed assessment and
option identification
In the previous chapter, we touched upon the business trends pointing at the growing need for your retailers to
consider the environmental and social impacts of your supply chain activities. You identified the most pressing
issues for sustainable SCM. In this Chapter, we will look into available tools and approaches to manage these
issues.
Utilize Tools for Product Life-Cycle Management
Life-cycle management tools help to identify what options for improvement are available in the supply chain. For
example, life-cycle costing allocates total costs – including those traditionally grouped as “overhead” such as
waste disposal, training, environmental permitting, and waste and water treatment – to the products and
processes responsible for generating the costs. This allows decisions about product design, purchasing and
manufacturing to be based on a truer picture of costs over a product’s life-cycle. Life-cycle design is another life
cycle management tool, which can help to reduce the life-cycle costs by changing the design of products or their
packaging.
Source Sustainably for Resource Efficiency
To read
more on
“setting up
purchasing
criteria”, see
UNEP’s
Greening
Shops and
Saving Costs
Guide, pg. 36.
http://www.un
ep.fr/pc/retail
A variety of management options are available to work on reducing risks and utilizing opportunities concerning
your sourcing and/or production operations. These approaches might be differentiated according to the extend
you engage with your suppliers. If your retailer company does not have resources to invest in full engagement or
does not like to involve directly with supplier operations, development of a sustainable purchasing criteria might
be a good option to start with.
Sustainable purchasing practices refer to selecting products and services that have lesser or reduced effect on
human health and the environment when compared with competing product or service that serve the same
purpose. The decision on the scope and ambition level of the sustainability criteria is important. Based on your
risks and opportunities assessment, you can identify the environmental and social issues you would like to
include in your criteria list.
When developing the sustainability criteria, you might like to differentiate between indirect and direct goods. In
order to keep your store or warehouse running, most probably you buy the indirect goods (also called C-goods)
that do take part in the production process but do not flow into the final product and serve the Maintenance,
Repair and Operations (also called MRO – goods). These products stand for your store equipment (e.g.
43

computer, pencil, telephone). Many retail companies have systems in place enabling sustainable sourcing of
these indirect goods. (See Box 7.1)
Sustainable purchasing of indirect goods: H&M
H&M established minimum standards when purchasing store equipment. Beyond the legal requirements specific H&M rules
on sustainable purchasing were introduced. These refer to certain materials (e.g. PVC), metals (e.g. lead) and chemicals
(e.g. PBB) that should be avoided in manufacturing of store equipment or in the finished products. In certain fields of
application the use of the mentioned materials, metals and chemicals was banned. Furthermore, a list with more
environmentally-friendly materials, metals and chemicals was established as to provide an overview on first-best purchasing
decisions.
Similarly, with regard to IT products, H&M require IT Eco Declaration from their suppliers. The Declaration includes
information on the environmental practices of the manufacturer as well as environmental features of their products. H&M has
developed an evaluation model for assessing the information from the declarations and taking into account legal standards
as well as specific H&M purchasing rules.
H&M: CSR 2005- Our environmental responsibility:
http://www.hm.com/filearea/corporate/fileobjects/pdf/common/COMMON_CSRREPORT_PART2_ENVIRONMENT_PDF_1157098080307.pdf
Box 7.1: An example of sustainable purchasing of indirect goods
Praiseworthy as procuring environmentally friendly furniture or fair-trade coffee might be, these initiatives might
divert the attention from more significant areas, and oversee that fact that the retailers’ own sourcing (and/or
production) processes might have serious environmental or social ramifications. Thus, there is a very strong
case for sustainable purchasing of the so called direct goods (also called A-goods) that constitute the core
business of the retailer (and/or flow into the final product- when a retailer is also engaged in the actual production
of the goods, e.g. clothes- H&M, furniture- IKEA, etc.). These goods include the retailer’s product assortment but
sometimes also raw materials and components. Many retailers have already established sustainable sourcing of
such goods. Hence, these retailers aim at minimising the risks that may arise from, for instance depletion of the
natural resources but on the other side also endeavour to secure the quality of the product flow.
Sustainable purchasing of direct goods: long-term business strategy
• Marks and Spencer (M&S) purchases fish exclusively from sustainable fisheries- as to prevent the depletion of
certain fish stocks in Europe
• IKEA does not purchase timber, veneer, plywood or layer-glued wood from intact natural forests or from forests
with a clearly defined high conservation value.
• METRO imposes strict social rules on their suppliers in Asia and Eastern Europe in the sectors of textiles, sports
and toys
• B&Q does not buy or sell peat extracted from peat land sites of recognised ecological, archaeological or other
conservation value
Box 7.2: Examples of sustainable purchasing of direct goods
44

Sustainable purchasing at small-scale retailer: MEC’s ‘green’ Winnipeg store
Canadian Mountain Equipment CO-OP (MEC) chose a site for its Winnipeg store in the area of several old, condemned
buildings. Although the city officials offered to pull these buildings down, MEC’s designers decided to keep one of them,
which was structurally sound enough to re-adapt and re-use the materials from other two. As a result the existing buildings
were redeveloped, which reduced the environmental impact of the new construction (the construction material used
contained 96% reused and recycled materials). Beyond significant resource savings the redevelopment provided value
added to the society by revitalizing an abandoned site in the downtown core. Strikingly, the customer response has also
been extremely positive. MEC’s approach towards green building
together with other initiatives demonstrating its values enhanced
MEC’s image as a responsible corporate citizen. Finally, the
extensive media coverage afforded extra publicity for MEC, what
may serve as a good example for other companies that do little
advertising.
Greater Vancouver Regional District (GVRD): Sustainable Purchasing Guide, 2006
(http://www.fivewinds.com/uploadedfiles_shared/SustainablePurchasingGuide.pdf)
Box 7.3: An example of sustainable purchasing at small-scale retailer
Development of code of conducts can also be done in collaboration with third parties. In this way, the credibility of
the initiative can be enhanced. A sample list of initiatives is given at the end of this Chapter under the heading
‘How to?’. Follow-up with the codes of conduct can be done in a whole variety of ways: monitoring by the retailer
itself, monitoring by third parties, and training of suppliers based on the monitoring results.
Enhance Eco-efficiency of Transport Activities
Regarding the transport function, you might increase the efficiency by managing the life-cycle performance of
delivery fleet. Specifying fuel-efficient fleet technologies, performing regular preventative fleet maintenance,
providing driver training and reducing unnecessary idling of delivery vehicles are among the best practice
applications.
Carrefour: Alternative transport methods
Carrefour is experimenting alternative transport methods to develop sustainable logistics. In France, the company is using
river transport (textile products along the Seine between Le Havre and Genevilliers, and along the Rhone between Fos and
Lyons) and combined rail-road transport (textile products from the Vert-Saint-Denis warehouse to the Paca stores and
Languedoc-Roussillon, and fruit and vegetables from the Perpignan platform to the Ile-de-France and Northwest platforms).
Carrefour is also testing clean-functioning natural gas vehicles (NGVs) for urban deliveries in the Paris area.
• In Belgium, the company has been using river transport between Anvers and Villvoorde (Brussels) since 2004,
shipping 3,000 containers per year and reducing CO2 emissions by 54 tonnes.
• In Spain, Carrefour has been using sea transport and combined rail-road transport for certain imports from
Europe since 2003.
Source: GroupeCarrefour, Sustainability Report 2005
Box 7.4: An example of alternative transport methods
45

Marks & Spencer: launches "Plan A"- £200m 'eco-plan'
In January 2007, Marks & Spencer launched their "Plan A", a business-wide
£200m "eco-plan" which will have an impact on every part of M&S'
operations over the next five years. Within the Climate Change area, M&S
will make their local operations carbon neutral by minimising energy use,
maximising the use of renewables and using offsetting as a last resort.
Food miles reduction at M&S
In order to achieve the above mentioned goals the M&S intends to (among
others):
• Switching to local sourcing: buy as much food from the UK/Ireland as possible, double regional food sourcing
within 12 months and grow the existing local supply networks, minimise the amount of the air freighted food as well
as label the food imported by air as 'flown'
• Research and development: initiate 5 new R&D projects with their UK growers to develop production techniques
and varieties to reduce the amount of imported food
• Carbon offsetting as a last resort- where there is no short to medium term prospect of green technology being
developed. When using offsetting, M&S will allocate the cost of doing so to individual business units, as a
commercial incentive to minimise CO2 emissions
• Cleaner fuel: use 50% bio-diesel in all M&S lorries
Source: Marks & Spencer launches "Plan A"- £200m 'eco-plan’, 17 January 2007 (Press release)
Box 7.5: An example of an “eco plan” in order to minimising energy use
How to?
Retailer’s initiatives or codes of conducts towards sustainability stem from diverse consultation processes and are
often driven by actors from one sector only or present initiatives binding retailers from various industries. Others
emerge from the multi-stakeholder discussions, frequently driven by the NGOs.
Below is a list of examples of various codes of conducts and retailers initiatives with a focus on environmental
and/or social aspects within supply chains of retailers. This list is by no means exhaustive.
Business-driven cooperation
Ethical Trading Initiative (ETI)
Country
Established 1998
Description
Info
United Kingdom (UK)
Initiative Clause Sociale (ICS)
Country France
Code of conduct for suppliers including monitoring, improvement plans and progress reports. The
minimum recommended standard is the ETI Base Code. A range of practical training courses is offered.
Persistent failures to meet the relevant standards in the supply chain may lead to the member being
asked to leave the ETI. Additionally, a database for supplier audits (Sedex) was established.
http://www.ethicaltrade.org/
Established
1998 by the French association of retailers (Federation du commerce et de la distribution)
46

Description
Info
All members agree to abide by the ICS Code of Conduct, which is based on the US SA8000 standard.
Implementation is conducted by independent accredited inspectors as per phased plan. There is an
obligation to refrain from competition with measures for checking social conditions at suppliers.
http://www.ics-asso.org/doc4/page1.htm
Business Social Compliance Initiative (BSCI)
Country
Established
Description
Info
Belgium/EU
2003 by the European Foreign Trade Association, based on earlier initiatives of the German foreign trade
association
All members commit to implement the BSCI code of conduct for suppliers, which is carried out deleted:
conducted in a phased plan. Independent inspectors perform regular checks. A shared database with list
of supplier audits was established. Collective training and research projects are organised.
http://www.bsci-eu.org/content.php
Electronics Industry Code of Conduct (EICC)
Country
Established
Description
Info
USA
Prepared between June and October 2004 by HP, IBM, Dell, Celestica, Flextronics, Jabil, Sanmina SCI &
Solectron
The Electronics Industry Code of Conduct is an industry-wide code covering both social and
environmental issues. The majority of the sector’s leading companies apply the code. It stipulates that its
provisions shall bind retailers and their direct suppliers. Still it acknowledges that, in order to be
successful, it would need to be applied to the whole supply chain.
http://www.eicc.info/
Table 7.1: Business-driven cooperation
NGO-driven cooperation
Social Accountability International (SAI)
Country
Established
USA
Drafting of SA8000 standard 1997. Non-profit-making institution.
Description
SA8000 is based on relevant UN and ILO conventions and has a reputation of a strict benchmark.
Standards refer to respecting local employment and health & safety laws, as well as human rights,
freedom of assembly and negotiation, a living wage and commensurate rest periods. SAI updates the
standard, provides information and training, offers accredited inspectors and collaborates with a network
of researchers, economists, charities and trade unions.
Info
http://www.sa-intl.org/
Table 7.2: NGO-driven cooperation
Multi-stakeholder initiatives
The Common Code for the Coffee Community (4C)
Country
Germany/Holland
Established 2003
Description
Info
The Common Code for the Coffee Community Association (4C Association) is an organisation in which all
relevant stakeholders from the coffee sector follow one common goal: continuously improving the level of
sustainability in the production, processing and trading of all green coffee. Its tripartite membership
structure represents the equitable groups of industry & trade representatives, coffee producers, and
NGOs and trade unions. Its code of conduct sets environmental and social standards that help to improve
both the farmers' situation and the coffee quality.
http://www.sustainable-coffee.net/
47

The Forest Stewardship Council (FSC)
Country
Established
Description
Mexico/Germany
Since 1990- consultation process. 1993 FSC Founding Assembly in Toronto, Canada. 1994 FSC
Secretariat Office was opened in Oaxaca, Mexico. 2003 Re-location of the FSC Secretariat from Oaxaca,
Mexico to the FSC International Center in Bonn, Germany
The Forest Stewardship Council (FSC) is an international network that promotes sustainable forest
management. The FSC labels products that meet stringent social and environmental standards through
accredited, third party certification bodies. Companies (manufacturers, traders, retailers) can apply for the
“Forest Management” label that guarantees the compliance with responsible forest management practices
and three “Chain of Custody” labels for wood products.
Info
http://www.fsc.org/en/
Roundtable on Sustainable Palm Oil (RSPO)
Country
Established 2004
Seat of the association is in Zurich, Switzerland/the secretariat is currently based in Kuala Lumpur,
Malaysia
Description
Info
The principal objective of the “Roundtable on Sustainable Palm Oil” (RSPO) is “to promote the growth and
use of sustainable palm oil through co-operation within the supply chain and open dialogue between its
stakeholders”. The RSPO has members representing major players along the palm oil supply chain: the
oil palm growers, palm oil processors and traders, consumer goods manufacturers, retailers, banks and
investors, environmental/nature conservation NGOs and social/development NGOs. The RSPO is a
platform for pragmatic co-operation to contribute to the expansion of sustainable palm oil and its uses.
http://www.rspo.org/
The Round Table Codes of Conduct
Country Germany
Established 2001
Description
The objective of the Round Table Codes of Conduct is to improve the implementation of labour and social
standards in developing countries through corporate codes of conduct. To achieve this aim, Round Table
participant groups are setting out to develop a common understanding of how voluntary codes of conduct
can be introduced and applied - effectively, transparently and in a spirit of participation. The Round Table
comprises representatives of the private-sector, trade unions, non-governmental organisations and
government.
Info
http://www.coc-runder-tisch.de/
Table 7.3: Multi-stakeholder Initiatives
48

Month
Capture real supply chain performance
8 Feasibility analysis,
implementation and follow-up
In the previous Chapters, you looked into opportunities for improvement along your supply chains. Among options
possible for product planning and design, sourcing, transport and logistics, which options are the most feasible
ones to implement?
This chapter now aims to help you identify which options are right for your business: prioritizing options,
implementing your highest priorities, measuring success and following through with continuous improvement, as
shown in Figure 8.1.
Step 1
Step 2
Step 3
Step 4
Prioritize
Options
Implement Project
Measurement
Improvement
Figure 8.1: Steps required in the project for success
Prioritization of Supply Chain Performance Improvement Options
Once your major goals are aligned and you have highlighted several options, you will want to decide which option
would be the most appropriate for your business. There are three major factors that will help you to decide:
Operational analysis
Examine your business, including your organisational capacities and staff competencies. Review your corporate
strengths, weaknesses, and potential project barriers. It may help to review the necessities needed for a potential
project, and evaluate if your company has the matching resources to plan and successfully execute the project in
mind. Is this project a strategic alignment? For example, do you have the capacity to conduct regular monitoring
of your supply chain operations?
49

Financial analysis
A classic financial evaluation is warranted even for ideas that aim to create environmental improvements. You
may use several financial indicators to compare the feasibility. At the very least, a simple cost-benefit analysis
can be used.
Potential for intangible value creation
Intangible benefits can often draw in revenues not quantifiable in a rough financial analysis. Improving customer
side environmental issues can improve customer relationships, brand equity and reputation, business continuity,
and even strategic alliances. Customer relationships and increased brand reputation attract revenue and also
decrease the likelihood that your company could be attacked from negative press. Intangible value can be
measured through an expanded cost-benefit analysis, by assigning these intangibles a monetary value. A pilot
project can be helpful to evaluate the intangible value of a proposed action.
Implementation of Options
Once you have prioritized your options, you will want to implement your key improvement technique. This stage
might include several procedures, such as the following:
• Establish employee and partnership roles and responsibilities;
• Develop a plan for the project, including necessary resources, implementation of deliverable deadlines, and
schedules;
• Establish coordination points among processes and people;
• Reach out to various stakeholders in the process;
• Prepare schedules to ensure that all the team members are aware of when certain tasks need to be
accomplished.
Performance Follow-up by Indicators
Indicators can help to follow-up whether the options that you have selected for performance improvement of each
supply chain function is running successfully. You may like to monitor two major issues, namely the effect on
your business success and the impact on the environment and social parties. For example, Schenker uses an
emissions calculator to analyse the success of environmental impact reduction with respect to eco-efficiency
improvements in the transport function.
50

Schenker’s Online Emission Calculator
When analysing the supply chain network efficiency it
is useful to consider some of the best practices
towards supply chain optimization, e.g. software that considers distance, weight, and cube
volume, asset mix, location, and customer service variables. Newest tools of this kind, such as
Schenker’s Online Emission Calculator also take into account fuel and energy consumption and
emissions in supply chain network design with respect to goods being transported via land
(and some ferry connections) in Europe. Thus, the interested shippers are able to assess
online the environmental impact of their transportation of goods.
Source: http://www.schenker.com/english/services/environmentalServices/emissionCalculationOnline.html
Box 8.1 : The Online Emission Calculator
In order to measure the business value creation potential by supply chain initiatives, you might like to check
whether the initially identified (see Chapter 6) risks and opportunities have already been tackled.
51

Discover new grounds in
marketing and consumer
relations
Ready Planning and
pre-assessment
Steady Detailed assessment, target setting and option identification
Go Feasibility analysis, implementation and follow-up
52

Month
Discover new grounds in marketing &
consumer relations
9 Planning and pre-assessment
To better
understand
the retail role
in the full lifecycle
of a
product, see
UNEP’s
Greening
Shops and
Saving Costs
Guide, pg. 18.
http://www.un
ep.fr/pc/retail
In the remaining three chapters, issues regarding the consumer side of your product chains will be explored.
These issues, when they are well addressed, can increase stakeholder value for your company. It might translate
into direct financial revenue growth through market innovation and expansion, and enhance customer equity
through building better relationships with customers, suppliers, and NGO’s. Retailers in developing countries will
especially learn tips on how to open into new markets and create innovative marketing techniques.
As a retailer, you provide customers with the products and services they want and need. How can you add even
more value to your products and services through enhancement of their environmental and social attributes?
What opportunities lie along the product life-cycles? Location of these opportunities will be the focus of this
section.
Table 9.1 describes the three main areas of the consumer phase of your environmental and social work. The
second column shows questions that can be asked to scope the areas that can create the most value for
company.
Main Scope Areas
Product Sales: More
sustainable products
Customer use of
products: Reduce
use impacts
Product Disposal:
Decrease waste and
improve recycling &
reuse
What environmental and social topics can create the most value for my company and
customers?
• What products and services can help create value for our company through increasing
consumer trust?
• Can we reduce life-cycle costs of products? Can we ultimately reduce costs for our customers
and us?
• Can we extend into untapped areas to become a market leader and increase our profitability?
• How can we build customer relationships by improving the quality of products and services
addressed, for example, to support safe and effective use of products?
• Is there a potential to reduce cost of ownership to customers and improve our service offerings
to keep customers returning to us and not to our competitors?
• Can we encourage safe and effective disposal of products to show responsibility through the
product life?
• Can we prolong asset life and increase material productivity by recovering some raw materials
in partnership with our suppliers or producers?
• In what ways can we assist our customers with product disposal to improve our customer
relationships?
Table 9.1: Scoping questions to decide what areas of the consumer side to focus on in your business.
53

Exploring Stakeholder Trends for Sustainable Products
Products with improved environmental and social attributes have a lot of potential for revenue growth. They
provide serious opportunities for expansion into new markets. These markets are attracting more and more
consumers and are growing fast.
These product portfolios also constitute a good value to your brand equity and reputation. They associate well
with developing solutions for latest consumer concerns such as safe foods free from foot and mouth disease
(FMD), e-coli, carcinogenic chemicals, etc. Latest lifestyle trends such as more climate friendly consumption, less
fattening food consumption, comfortable clothing, etc. go also hand in hand with the concepts behind sustainable
products.
Avoid
Risks! Do not
overlook
consumer
product
issues!
Did you know that…
Ethically produced product demand is likely to have the greatest positive impact on shareholder value for
companies over the next five years.
Source: McKinsey Quarterly, 2006
• In 2004, the world market value of organic foods hit 23.5$ billion. In the US, the organic market is expected to have a 20%
annual growth rate, compared to 3% for the rest of the industry (Pas, 2005).
• In North America (Can/US/Mex) retail sales estimates for Fair Trade products increased from $US 125 million in 2001 to
$US 472 million in 2004, an increase of 187%. In the Pacific Rim (JP/AUS/NZ) retail sales between 2001 and 2004
increased from $US 10.57 million to $US 17.51 million, an increase of 66%. In both regions, coffee plays the dominant
role although tea plays an important role in Japan (Fair Trade Trends in North America and the Pacific Rim, 2005).
• When considering non-labelled and labelled products together, total annual Fair Trade retail sales in 2005 are estimated at
660 million Euro, a 154% increase over the year 2000 (Fair Trade in Europe, 2005).
• Whole Foods, the largest retailer of organic / natural food products, has seen a staggering increase in sales in 2006, with a
net profit increase of 5.3% from 2004-2005, with individual store sales increasing 13% three years in a row!
(Datamonitor, 2005).
Box 9.1: The increase in ethically produced products.
Take
advantage of
opportunities!
Can your store
break into new
markets?
If you are located in a developing country, you can increase store value through educating your consumers on
sustainable products, use, and recycling issues. You might also have financial power and large customer base to
help improve the economy for locally produced products. Working within the local market and local environmental
and social NGOs, you can strengthen your customer base and as well improve the economic atmosphere for your
retail shops.
Consumer issues are an important retail value driver!
• Marks and Spencer uses consumer surveys to measure the consumer trust levels of their Free Range Egg
Advertisements. They have found that these advertisements have helped increase consumer trust levels (Almaani et al,
2006). M&S tries to find the most important environmental and social issues that are guaranteed to build consumer
trust, to create value and eventually to increase sales.
• Sainsbury’s listens to consumer issues: "Our customers expect us to have a decent supply chain, where suppliers are paid
properly and their workers get a decent living wage." "Customers fall ‘along a spectrum’: some ‘have zero interest’ in
green issues, but others are already using their purchasing power, and that's increasingly reflected on the shelves.
There's a much greater appetite [within Sainsbury's] now to offer customers something other than strict end
performance and price... We want to move them along the spectrum, so more are asking questions of us, and
challenging us too." Source: Quote from Ms. Austin, Sainsbury’s Environmental Manager
Box 9.2: Consumer Issues as a retail value driver
54

Value Hidden in Product Use Phase
Product use phase of consumer products is the phase where the highest cost of ownership and the most
environmental responsibility are located. Hence, in this phase lie many opportunities to enhance consumer
satisfaction by enhancing your service levels.
Especially when purchasing products to be used for long periods of lifetime, consumers look for high service
levels at low cost. Environmental aspects well relate to the reduction of the cost of ownership of your products.
For example, studies have shown that during the lifecycle of a washing machine, the use-phase, compared to
production and disposal, has the greatest amount of energy consumption, air pollution, water pollution, solid
waste, and water consumption (Ottman, 1998).
You might educate your consumers about the real cost of ownership. This cost obviously extends beyond the
initial purchase price and corresponds to the expenditure over the lifetime of a product. Your customers need to
consider the cost of repairs and maintenance, and if relevant also the cost of operating. For instance, in the case
of a refrigerator, different models with the same capacity can vary dramatically in the amount of electricity they
use. An A-class model can lead to 20% annual savings compared to an average efficient model. As a result, you
might help your consumer save money by buying the more expensive, more energy-efficient model. Scientists are
also claiming that a growing number of consumers are claiming that environmental performance measures of
products affect their purchasing behaviour (Sammer and Wüstenhagen, 2006).
Have you
considered
making your
consumers
aware of the
real cost of
product
ownership?
Communication of real cost of ownership may increase service value.
Cost of ownership is an issue in sales of many more product groups. For example, a life-cycle analysis of a pair of trousers
sold at Marks and Spencer stores found that 76% of the energy consumed in connection with the trousers was from the
customer’s washing, drying, and ironing them. The One Planet Business Flagship Document states that 81% of the product
emissions and material use for a car stem from the use phase.
Box 9.3: Increasing the service value through communication of real cost of ownership
An opportunity might definitely be to educate consumers about the cost of ownership and make them aware of
their increasing environmental responsibilities during product use. Guidance in reduction of cost of ownership,
technical assistance for decrease of environmental load during use phase will increase service level and will lead
to increased stakeholder value.
55

Product use often causes the most environmental damage throughout product lifecycle: A look at the ICT sector.
With the growth in the IT sector, consumers have a larger role in the influence of environmental impacts. In the case of digital
distribution of music, consumers have a greater responsibility for the environmental impacts compared to other means of
sales of music. This means that consumers would need to invest more energy and material (such as computers and CDs to
burn) in order to extract the actual function from the system in comparison to the producer and the retailer (Kuhndt et al.,
2003).
Although policy makers have not yet officially recognised these impacts, there is an approaching discussion in the
sustainable consumption arena among NGOs and consumers. For example, telecommunication companies invite suppliers
to discuss the shifting of burden issues. Those retailers who can work with these issues can avoid risk and build relationships
with customers and stakeholders.
Figure 9.1: Material intensity in different types of purchasing
Box 9.4: Environmental impacts in the ICT sector during consumer use
Understanding Stakeholder Concerns in Disposal
For more
about
disposal
liability and
responsibility
issues, see
Greening
Shops and
Saving Costs,
pg. 42.
http://www.un
ep.fr/pc/retail
In the final phase of the product life-cycle, disposal, governments and consumers are more interested in retail
involvement. The idea of “extended producer responsibility”, lengthening a producers’ responsibility until the
products end of life, is increasing. For example, retailers collaborate with producers for the collection of wastes,
from bottles to batteries. Also, with growing concern over e-waste, represented by Waste Electrical and
Electronic Equipment (WEEE) in the EU, retailers may be forced to pro-actively work with these issues.
By improving networking and partnering with producers and other stakeholder groups, retailers can increase
resource efficiency, decrease costs, and have an added bonus of cutting raw material use. For example, in the
developing world, retailers are often the most convenient outlets for consumers. As such, their participation in
waste programs, by providing consumer services for the repair and recycling/waste collection, could greatly
improve recycling and reuse in these countries. Furthermore, these retailers would be able to take great
advantage of improved customer relationships through servicing their continued use of products and by reaping
the profits of reusing waste (See also Box 9.5 below).
Turning Waste Electronics into Revenues to Create Added Value….
Electronic waste is being strongly targeted by law markers and NGOs alike. NGOs such as the Basel Action Network (BAN)
and Greenpeace have recently exposed several electronics and waste corporations for improper recycling of materials,
including sending them to foreign countries, where they pollute the environment and endanger many lives. Policy makers
are responding. The EU recently passed the WEEE initiative, which charges the manufacturers with being responsible for
their products until end of life.
Retailers like R.U.S.Z., short for Repair and Service Centre in Austria, are responding. R.U.C.Z. collects used electronics
from waste dumps to salvage their spare parts to rebuild and resell old electronics. Furthermore, they also employ locals
56

over the age of forty-five, who were thought of as unemployable.
Their system has had a great impact on the community:
• The reuse of 2000 tons of waste (including 1500 tons of electronic waste)
• The re-instatement of elderly into the work-force
• Providing the community with DIY lessons
Furthermore, this impressive response has aided R.U.S.Z to:
• Have low overhead costs: by using waste products, they have little materials cost
• Gain community and local support
• Become part of a larger network of reparations professionals
• Operate ahead of legislation and thus not be worried about its affects on them
R.U.S.Z has been able to reap the benefits of added value through incorporating environmental and social practices in to
their business model. Furthermore, with increased stakeholder interest in waste, they are ahead of the game.
Box 9.5: Turning Waste Electronics into Revenue
Source: www.treehugger.com
57

How to?
There are several ways to locate opportunities whether in sales, use, or disposal. The following tables will help
you recognize what issues are the most important to your retailer. Table 9.2 focuses on how to find what
sustainable product options you can offer, while Table 9.3 focuses on how to understand what issues you can
deal with for the use and disposal phases of your products.
Tools to Understand Consumer Wants and Needs for Sustainable Products
Tool How Example/ Further Information
Market
Survey
Market
Research
Marketing
Theory
Create your own survey to ask your consumers
their opinions on sustainable products
Take advantage of others’ consumer research on
consumer behaviour and sustainable products.
While marketing research is normally thought to be
expensive, the internet can provide great
resources, at little or no cost.
New theories about selling and marketing
sustainable products and what opportunities are
available for business are researched. They
usually include examples of “how to do it” in
practice.
Several non-profit and research based
organizations have also popped up on the web,
offering services to companies and to the average
person who want to make a difference.
• M&S survey of their consumer trust levels: read
more about it on their CSR report
downloadable at:
www2.marksandspencer.com/thecompany/inve
storrelations
• Ernst and Young: Consumer Trend Center:
www.ey.com/us/consumertrendcenter
• Meyer, Arnt. (2001) “What’s in it for consumers?
Successfully Marketing Green Clothes.”
Business Strategy and the Environment.
• Carrigan, Marylyn and Ahmad Attalla. (2005)
“The Myth of the Ethical Consumer-Do Ethics
Matter in Purchase Behavior?” Journal of
Consumer Marketing.
• Jensen et al. Consumer Opportunities and
Interest in Purchasing Green Electronic
Products. Danish Ministry of Environment.
www.mst.dk
• McKenzie-Mohr, Doug and William Smith. (1999)
Fostering Sustainable Behavior: An
introduction to Community-Based Social
Marketing. Book.
• Belz and Karstens. (2005) Strategic and
Instrumental Sustainability Marketing in the
Western European Food Processing Industry:
Conceptual Framework and Hypothesis.
http://www.food.wi.tum.de
• The social marketing institute, a non-profit
dedicated to creating more sustainable
behaviours: http://www.social-marketing.org/
• The sustainable marketing knowledge network. A
consortium of researcher groups offering a web
based resource. http://www.cfsd.org.uk/smartknow-net/
58

Stakeholder
Meetings
Involve your local stakeholders, including
customers, community members, suppliers,
employees, government, listen to their interest and
find out about various perspectives on sustainable
products. Stakeholders can be involved via
consultations (meetings) or even partnerships.
• From Words to Action: Stakeholder Engagement
Manual.
http://www.greenbiz.com/toolbox/reports_third.
cfm?LinkAdvID=65028
Table 9.2: Tools to understand consumers’ wants and needs on sustainable products
Sustainable Products
Use
Disposal
CHECKLIST OF QUESTIONS
How to target life-cycle phases of my products and decide what is most important for my business and the environment?
1. Have you conducted studies or seen any life-cycle evaluations on the major product
categories in your store?
2. Have you received negative consumer feedback about a product that you carry that is not
sustainable where you can source a more sustainable option?
3. Can you better inform consumers about the sustainable options you do carry?
4. Have you received producer feedback regarding potential for improved product use
through product improvement?
5. Are you aware of potential legislation that may outlaw certain products that you carry?
6. Are you aware of life-cycle cost structure of your products?
7. Are there areas that you could more proactively inform consumers of how to reduce lifecycle
costs of products (e.g. energy, material)?
8. Does your company have expertise in use of its products that it could offer customers as
an added service?
9. Are you aware of possible legislation requiring changes to use of products?
10. Are you aware of any products that you carry that causes your consumer particular
difficulty to dispose of?
11. Does your company have particular expertise in disposal of its products that it could offer
customers as an added service?
12. Are there areas where you could more proactively inform consumers of how to dispose of
products?
13. Are you aware of possible legislation requiring changes to the disposal of products?
Table 9.3: Checklist of Questions to target the improvement of use and disposal phases of products
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
59

References
Almaani, Mutaz, Patricio Aylwinblanco, Candida Barbato, Diego Benavides, Maloy Burman, Philip Cacouris,
Carlos Palacios, Jan Sorensen, Tomas Sorgeloose, Christophe Vanier, Gourishankar Vemali. (2003)
“Retailer’s Communication to Promote Sustainable Consumption.” Paris: UNEP-HEC School of
Management.
BBC. The World Challenge. http://www.theworldchallenge.co.uk/sunny.php
Birchard, Bill. (2005) Nonprofit Muscle. Chief Executive. No. 205.
CSCP, Policy Reinforcement for Environmentally Sound and Socially Responsible Economic Development in
China (PRODEV). Training Slides on Think 2 'Setting the Stage: Thinking Circular Economy - Concepts and
Principles'. 2006.
Datamonitor. (2005). Organic Food in Europe: Industry Profile. London: Datamonitor.
European Environmental Agency. (2005) Household Consumption and the Environment. Copenhagen.
Fair Trade Advocacy Office, 2005. Fair Trade in Europe 2005. Facts and Figures on Flair Trade in 25 European
Countries
Green Futures (2006) Number 60 September/October Issue. Published by the Forum for the Future.
Greenpeace. http://www.greenpeace.org/international/news/kfc-180506 Last Accessed: 28. June 2006.
Kuhndt, Michael, Burcu Tuncer, and Christa Liedtke. (2003) “Life Cycle Approaches to Sustainable Consumption.
Product-Service Systems: Matching Consumer Acceptance and Business Preparedness.” Final Report.
Wuppertal; Wuppertal Institute for Climate, Environment and Energry; Triple Innova.
McIntosh, Jay. (2004) 2005 Consumer Trends Report. Ernst and Young LLP. [online] Available:
http://www.ey.com/us/consumertrendscenter
McKinsey Quarterly. (2006) Global Survey of Business Executies. McKinsey Quarterly. No. 2; pp 33-39.
Pas, Renee. (2005) “Meeting Demand for Organics.” Beverage Industry. Vol. 96 Iss. 10; pp. 47-50.
Reynolds, Michael. (2006) “Remaking Modernism.” Time Magazine: Style and Design. Summer 2006.
Supplement to Time.
Sammer, Katharina and Rolf Wüstenhagen. (2006) “The Influence of Eco-Labeling on Consumer Behavior-
Results of a Discrete Choice analysis for Washing Machines.” Business Strategy and the Environment. pp.
185-199.
UNEP, The Global Compact and Utopies. (2005) Talk the Walk: Advancing Sustainable Lifestyle through
Marketing and Communications. UNEP.
UNEP. (2005) Asian Retail Sector and Sustainability.
60

Month
10
Discover new grounds in marketing &
consumer relations
Detailed assessment
and option identification
The previous chapter tried to introduce you to some of the stakeholder demands and opportunities related to your
products’ specifications, their use, and disposal. Once you identify these, the question is how to tackle them. In
this chapter, we will introduce various options ranging from sustainable lifestyles marketing techniques, choice
editing to product service systems (PSS).
Marketing for Sustainable Lifestyles
and Increasing Sales of Sustainable
Products
To read
about the
importance of
marketing,
see Greening
Shops and
Saving Costs,
pg. 48.
http://www.un
ep.fr/pc/retail
As explained in Chapter 9, sustainability issues linked to
the sales side have the potential to create opportunities
for your business. As shown in Figure 10.1, “sustainable
lifestyles marketing” includes selling environmentally and
ethically sound products, encouraging sustainable
Figure 10.1: Sustainable Lifestyles Marketing
behaviours, and marketing responsibly. This type of
(Source: UNEP, 2005)
marketing can be perfect for changing attitudes towards
sustainable consumption and encouraging people to act based on sustainability principles.
Sustainable lifestyles marketing can especially provide solutions to expand your customer base for sustainable
and ethical products. It can help to analyze product innovations, open new markets and expand your revenues.
In fact sustainability issues closely link with many product quality aspects such as healthfulness, safety,
functionality, ease and cost of use, durability, packaging, etc. Sustainable lifestyles marketing might be an
effective tool to better position the attributes of your products and create the market differential you seek.
61

To learn
other
methods on
how to market
sustainable
products see
Greening
Shops and
Saving Costs,
pg. 46
http://www.un
ep.fr/pc/retail.
There are different techniques that you might use for applying sustainable lifestyles marketing. For example,
unique advertising proposition technique, which concentrates on a specific benefit the consumer can get by
using your product, might be a good way of reaching reach out to consumers beyond the store. Co-op and
Waitrose have been recognized for their efforts to inform consumers about sustainability issues. Co-op Sweden
incorporated sustainable lifestyles marketing in their ethically harvested egg campaign: they used green products
to incite consumer ethical consciousness in a thought provoking, emotional, and non-imposing manner. One of
the ads, shown in Figure 10.2, won a CRESTA award in 2004 for creative excellence in a poster campaign. Coop
also uses the slogans, “better for me and tastes better” to show consumers that sustainable products have
added benefits for them personally. Slogans like these that show consumers they can make a difference by
choosing sustainable products, can improve consumer behaviour.
Figure 10.2: CO-OP Sweden for Sustainable Eggs; caption reads: “We’ve stopped selling eggs from cages hens. Take 219 people with
you into this bus and you’ll understand why.”
Source: UNEP. Creative Gallery on Sustainable Communications.
To learn
more about
Eroski’s
campaign
efforts, see
UNEP
“Greening
Shops and
Saving
Costs”, pg.
47.
http://www.un
ep.fr/pc/retail
Another very popular use of sustainable lifestyles marketing is in-store techniques to incite consumer
awareness. Eroski, a Spanish retailer, has tried to take advantage of the growing Fair Trade market, applying instore
promotions and customer awareness-raising sessions. In-store techniques, including placement for
visibility, shelf tags, and other prompts, ensure that customers are aware that the products exist and are
accessible. Studies have shown that one of the main reasons that consumers do not buy products is because
they do not know they are sold at their local stores (Vermeir and Verbeke, 2006). Eroski’s campaigns were
successful: Eroski’s sales of Fair Trade products have increased four fold compared to a national two-fold
increase. Other retailers’ campaigns include taste testing and inviting the local farmer to talk about his products.
One retailer in Sweden that brought in a local farmer to promote his organic products saw a 100% increase in
sales of organics (Ekologiskt marknadscentrum, 2006). Since 40-50% of shoppers make unplanned purchases,
presenting new options for consumers in a fun way can largely increase your sales too (Gagnon and Chu, 2006).
These retailers have improved their efforts by working with local NGOs, such as Fair Tade and other ethical
product organisations, which can provide them with added product expertise and knowledge, in the form of
information package or employee training.
A third, and possibly more effective approach to improve the way your store handles sustainability is not to stock
unnecessarily damaging products. This initiative, coined “choice editing”, takes the burden off of consumers
and gives them only sustainable options. For example, leading world retailers such as Carrefour, the Warehouse
and the Home Depot have policies to only source wood from sustainably managed forests. Also, Sainsbury’s and
Safeway Market have developed policies to only source seafood from sustainable fisheries, such as that certified
62

y the Marine Stewardship Council (MSC) (Storebrand Retail Investments, 2003). Comet has made the
commitment not to stock any appliances below the C level energy rating (SCR, 2006). Many retailers have been
able to drive the market for these sustainable products through a combination of choice editing and marketing.
Retailers are being recognized for their work, which helps to increase their brand value and reputation. For further
information on driving the market for sustainability see Box 10.1 below
Leasing
products can
provide added
services and
sustainable
development
benefits,
especially in
the
developing
world.
Did you know that new technologies are driving marketing and consumer shopping?
• Today, among TiVo users (a digital TV satellite service), over 77% are fast forwarding through commercials
during prime time television. Novel and innovative means of advertising are being developed to draw
attentions of consumers.
• By 2010 over a billion people will be online globally; the internet is becoming the standard of the global
shopping experience.
Source: Gagnon and Chu. Retail 2010. 2006
Waitrose, a major food retailer in the UK, has made a concerted
marketing effort about sustainability on their website, just as
consumers use websites more often for shopping. Consumers can
use the website to make informed decisions about their product
purchases, understand organic and Fair Trade, and virtually
“meet” the producers among others. The site works to portray
Waitrose’s sustainable options, and display their importance in a
non-imposing way. Waitrose has found that the information on
their website “helps build trust in the brand and with it, customer
loyalty.” Furthermore, their overall dedication to sustainability and
sustainable lifestyles has put them on the top of the National
Consumer Council’s list of green supermarkets in the UK.
Source: Interview with Michael Simpson-Jones, Waitrose Buyer and
Waitrose website: www.waitrose.com.
Box 10.1: New Technologies are driving marketing and consumer shopping
A fourth way of creating revenues through resource efficient business models can be the application of the
concept of product service systems (PSS). A product service system is similar to leasing and renting products.
Instead of concentrating on unit sales of products, service-oriented solutions can be offered (Mont, 2004). This
system might be more affordable for local communities while providing environmental benefits. For example,
Sunlabob Rural Energy Ltd in Laos leases normally expensive solar energy equipment to rural communities that
cannot afford energy and have poor connections to the urban centres. The residents receive a viable energy
source at low cost and Sunlabob is a thriving business: it took advantage of this untapped market (BBC, 2006).
Similar companies such as SUNEdison operate in the US. As long as the client purchases the energy,
SUNEdison will install solar panels on the client’s roof. For another example on PSS see Box 10.2 below.
63

Car-Sharing schemes as a new product service system
Car-sharing schemes, a quintessential example of a PSS, has strongly taken hold worldwide. It has started with Sefage in
Switzerland in the 1940s and now includes schemes such as Flexcar and Zipcar in North America, GoGet in Australia and
Streetcar in England. Over 330,000 people in the world use car-sharing schemes, sharing 10, 500 vehicles (Shaheen,
2006). The idea of car sharing is that individuals gain the freedom of car access, by joining an organization that maintains a
fleet of cars, without the burden that comes with owning a car. For the user, car sharing is more cost effective for the first
10,000-16,000 miles. Furthermore, businesses have a strong advantage with more governments offering grants and
favouring car-sharing programs, as car-sharing schemes are becoming more integrated into urban transport schemes and
zoning restrictions. Also expected is a strong growth among business, fleet, transit, university and household markets for
car-sharing (Shaheen, 2006).
Source: Worldwatch Institute: Vital Signs. 2006.
Box 10.2: Car sharing schemes as a new product service system
Communication of Sustainable Product Use
In the product use phase, you may tap enhanced service levels opportunities. As mentioned in Chapter 9,
indicating opportunities for reducing the cost of ownership or giving technical assistance for reducing
environmental damage during use, you can better communicate quality attributes of your products and enhance
customer relationships.
To indicate life-cycle cost of products, in-shop campaigns can be effective. For example, OBI in Germany has
initiated a campaign 'Aktion No Energy', with which they raise awareness among their customers on the use of
electricity by different electrical appliances. They used a mix of marketing techniques along with added services.
For the deposit of EUR20, interested individuals are able to borrow a tool for measuring energy consumption of
their electrical appliances at home and to assess the savings potential. In addition, OBI provides brochures on
energy savings at home, addressing issues like lighting and stand-by electricity consumption directly on their
website. In a pilot program, OBI placed the most energy efficient items in locations where they were easy for
consumers to find. For another example on awareness raising on energy efficiency see Box 10.3 below.
To learn
more about
labelling and
partnerships,
see Greening
Shops and
Saving Costs,
pg. 43
http://www.un
ep.fr/pc/retail
Another example for awareness raising on use phase impacts is the Washright
campaign. It aims to inform consumers about how to wash more efficiently. It is
also a good example of this industry coming together to meet the demands of
consumers and NGOs alike. The campaign is run by A.I.S.E, who represents
soap, detergent, and maintenance industries, and has reached over 70% of the
European population through its TV commercials and other advertisement to
promote proper use of detergents and machinery for doing laundry. Remarkably,
over 50% of consumers surveyed in a study remembered the ads! Its outreach has
encouraged the detergent industry to even put Washright’s message on detergent
packaging.
Figure 10.3: Washright
Campaign logo-applied to
packaging of companies in the
campaign.
64

Home Depot expands their customer relationships through extended value and services.
As the third largest retailer, The Home Depot, a DIY, understands that value and reputation are created through increased
customer service and satisfaction. They extend their services to include environmentally friendly use of their products, by not
only showing consumers energy efficient products on their website, and pointing them out in the store, but also explaining
energy efficiency issues and helping them to save money in their home by being more energy savvy. Home Depot teams up
with the US Environmental Protection Agency for this information. They also give consumer tips on design and installation,
and other home improvement know-how, which can cut unnecessary wastes and expand their outreach to consumers and
the community. They also rent tools to customers.
Box 10.3: Home Depot expands their customer relationships through extended value and services
BP, in conjunction with UK non-profit Targetneutral, allows customers to calculate their car’s emissions via the
web, find out how to reduce their emissions and learn more about projects to minimize CO 2. The program is part
of a push to make BP’s UK fuel tankers carbon neutral. As part of the program, they will make a contribution to
the fund for customers using their Nectar cards. The Nectar card is a loyalty card used by a consortium of UK
retailers, including Sainsbury’s, Debenhams, Barclaycard, and BP. Roughly half of the UK population has a
Nectar card. Under the current scheme, consumers can pay only £6 to reduce one tonne of CO 2 EUR20 per year.
Ensuring Proper Consumer Disposal
In the final phase of the product life-cycle, retailers can encourage proper disposal, recycling or even decrease
the need for material use (for example see Box 10.4 below).
Australian retailer Paddy Pallin lengthens the life of their clothing through take-back systems. This
outdoor gear retailer offers $50 AUD to customers towards the purchase of shoes when they return
their old shoes. These shoes are then donated to Porters Progress an organisation that lends and
leases essential outdoor gear to porters in Nepal. Trekking companies make a fully refundable
deposit on the gear to provide safety and comfort for the porters and then receive all of the money
back when they return from their trip to the Himalayas. Porters Progress can now provide clothing
for up to 500 porters at once and Paddy Pallin shops improve their customer relationships through essentially
offering discounts on shoes and brand reputation through showing that they care for the environment and society
(www.portersprogress.org and treehugger.com).
65

Can your
company
open new
markets
through takeback
schemes?
Vodafone opens new business opportunities: recycling phones for emerging markets…
• Americans discard 130 million cellular phones annually, creating 65,000 tons of toxic trash, from PVCs, to
brominated flame retardants
• In 2006, Vodafone collected 1.37 million phones for reuse and recycling
Vodafone is heavily involved in the recycling and reuse of their mobile phones, which can create large amounts of waste, but
also increase telephony in developing countries. After a thorough investigation of the most important consumer sustainability
issues, which could have the greatest positive financial impact, Vodafone launched initiatives to raise awareness and
encourage recycling. They collect used handsets in their retail stores and have introduced incentives to stimulate the
recycling rates. The phones are then sold on developing country markets at a price roughly 62% cheaper than new phones.
• In October 2005, Vodafone Italy piloted a programme at retailers offering free air time or points if they returned
their old phone. 9,400 handsets have been collected and the program will be extended.
• In the developing countries they are also supporting a handset-recycling programme to resell old phones and
breakdown phones into their component parts for reuse. Programs in Egypt and Albania already exist and they are
working on a program in Romania.
• Vodafone established new partnerships for this project. They commissioned the NGO Forum for the Future to
research recycling and reuse possibilities. They are also participating in the Mobile Phone Partnership Initiative, as
part of the Basel Convention on Waste.
• These efforts, as well as others have helped Vodafone become #1 among Fortune 500 companies in
Accountability, a rating done by CSRnetwork and AccountAbility. They also highlight that the recycling programs
have been great for building new markets, as well as customer loyalty and satisfaction in both new and current
markets.
Figure 10.4: Destination of reused mobile phones
Box 10.4: New business opportunities through recycling phones
Source: Vodafone.com
In some countries where retailers face pressure regarding environmental performance from politicians and their
peers, they can turn to opportunities on the product disposal side. Finch and Smithers of the Guardian (2006)
noted that packaging in British grocery stores has increased 12% from 1999 to 2005, which the environmental
minister finds unacceptable. He is urging consumers to take action and encourages them to throw the packaging
away at the checkout till. Tesco, in an effort to appease consumers is encouraging them to bring their own bags
by giving them one point on their customer loyalty card every time they are able to replace a plastic bag with their
own bag. This incentive is part of their commitment to decrease carrier bags by 25% over the next two years, but
also to improve Tesco’s image among consumers. Similar schemes exist at other retailers, like Paddy Pallin,
who donate 20 cents to an environmental cause every time a customer does not have to use a plastic carrier bag
at one of their stores.
66

How to?
The following technique charts might help you to develop some options to improve sales of sustainable products,
to enhance visibility of use phase improvements and/or to encourage proper disposal.
Technique Chart 1: Improving Sales of Sustainable Products
Technique Benefits Example
Exposure
Demonstration
Prompts and
Packaging
Information
Employee
Training
Website
Emotional
Advertising
• Raise product awareness
• Increase unplanned consumer purchases
• Improve customer relationships
• Add human touch to sales
• Answer questions and tell more about the
product
• Increase unexpected purchase
• Reduce harmful product myths
• Draw attention to the product
• Add valuable easy-to-read information
• Allows employees to answer customer
questions
• Provide greater understanding among
employees about a product’s importance
and its accurate placement
• Motivate your workforce
• Add more information than you can do instore
• Increase use by customers for shopping
• Draw an emotional affiliation between you
and the consumer
• Improve consumer relationships
• Help to explain the added value
• Special and noticeable placement in the store
• Good shelf placement: eye level
• TransfairUSA holds a shelf contest year at retailers for
Fair Trade product displays. To see examples, visit
www.transfairusa.org
• Allow the consumer to experience the product
• Give recipes
• Provide accurate use tips
• Home Depot provides in-store training to their DIY
consumers. Visit www.homedepot.com for more
information
• Use shelf tags
• Provide signs at point of purchase
• Show environmental and social impacts on packaging,
Timberland sets a good example:
www.timberland.com: look up any shoe & click
“nutritional label
• Explain what the product means
• Allow them to think of new solutions
• Add sustainability with other product information
• Explain the added value in the price sheet
• Waitrose provides excellent information to consumers
on their website. Visit www.waitrose.com.
• Inform consumers of what you are doing and why
• Show the consumer that they can make a difference
• Use original techniques that draw attention: Stonyfield
Farm example from UNEP “Talk the Walk”
(www.unep.fr/sustain, “Advertising” section)
Choice Editing
• Increase customer value and confidence
• Be a market leader: don’t get caught by
new legislation
• Get rid of unsustainable products and offer more
sustainable versions
• Marks and Spencer only carries Fair Trade coffee at
their stores: visit www.marksandspencer.com
• Read more about choice editing in the “I Will If You
Will” Document (http://www.sd-
67

commission.org.uk/publications/downloads/I_Will_If_Y
ou_Will.pdf) or in the ‘Looking Back, Looking Forward
Lessons in Choice Editing for Sustainability - 19 Case
Studies into drivers and barriers to mainstreaming
more sustainable products’
(http://www.ncc.org.uk/nccpdf/poldocs/NCC124_lookin
g_back.pdf May 2006) Both documents are published
by the Sustainable Development Commission of the
UK
Product
Service
Systems
• Open new markets and become a leader in
that new market
• Reach out to customers who need a
different alternative
• Invest in people, rather than materials
Table 10.1: Improving sales of sustainable products
• Allow leasing and renting of low-use products
• Expand expensive products to low-income markets
through service systems
Technique Chart 2: Enhance Visibility of Use Phase Performance Enhancements
Technique Benefits Example
Website
Packaging
information
Partner with
others
• Increase customer knowledge of product
use at home
• Expand customer relationships and
increase customer life-cycle value
• Customer can bring information home
and read while using product
• Adds greater total value to customer
purchase
• Increases employee knowledge base
• Increases consumer trust and
stakeholder value
• Improves relationships with
stakeholders, such as suppliers, NGOs
and local community
• Add proper/efficient use examples, like H&M:
http://www.hm.com/us/abouthm/quality
• Show environmental use impact
• Tips on proper use, such as saving energy,
decreasing chemical usage
• Create fun and memorable information for children
about the environment
• Partner with NGOs to increase knowledge of use
options, through leaflets, in-store displays, and crossadvertising
• Work with suppliers to improve product use
performance
• Cooperate with the community on a plan to improve
local energy use
• B&Q has worked with a number of partners on various
environmental issues. For more information see:
www.diy.com
Contact
consumers postpurchase
• Expands personal relationship beyond
the store
• Improves customer loyalty
• Encourages repeat purchase
Table 10.2: Enhancing Visibility of Use Phase Performance Enhancements
Technique Chart 3: Encourage Proper Disposal
Technique Benefits Example
• Contact customers via e-mail, phone, or text-message
with tips on proper use
• Add information to customer magazines about
sustainable product use and cost savings tips
Website
• Increase customer knowledge of proper
disposal
• Expand customer relationships and increase
customer life-cycle value
• Tigerdirect Electronics allows consumers to return
their used electronics for proper disposal. See:
http://www.tigerdirect.com/sectors/recycle/index.asp
In-store • Increase store traffic • Add collection depots for batteries and other small
68

disposal
Partner with
others
• Adds greater total value to customer
purchase
• Improves social responsibility profile
• Decreases your environmental footprint and
potential for item reuse
• Increases preparedness for legislation
• Increases employee knowledge base
• Increases consumer trust and stakeholder
value
• Improves relationships with stakeholders,
such as suppliers, NGOs and local
community
electronics
• Collect carrier bags and product packaging
• Incorporate disposal pick-up in delivery routes for
larger items
• Partner with waste management companies to
improve product disposal awareness
• Cooperate with the community on a take-back scheme
Product
Service
Systems
• Expand personal relationship beyond the
store
• Create new markets for your products
• Encourage repeat purchase
• Add increased consumer services and instore
contact
• Provide potential for material re-use
Table 10.3: Encouraging proper disposal
• Improve leasing of expensive systems in low-income
areas, i.e. energy materials
• Lease low-selling / low-use items
• Read more about PSS on SusProNet:
http://www.suspronet.org/
69

References
OBI. http://www.obi.de/de/company/de/Umwelt_und_Soziales/Energie_sparen/Aktion_No-Energy_1.html
Paddy Pallin. www.paddypallin.com.au
www.portersprogress.org
www.treehugger.org
Shaheen, Susan. Car-Sharing Continues to Gain Momentum. Vital Signs 2006-2007. Worldwatch Institute, New
York. 2006.
Storebrand Retailer Investments, 2006
Sustainable Consumption Roundtable. I Will If You Will. 2006.
Julia Finch and Rebecca Smithers. “Too much packaging? Dump it at the checkout, urges minister.” The
Guardian, 2006.
70

Month
Discover new grounds in marketing &
consumer relations
11 Feasibility analysis,
implementation and follow-up
In Chapter 9 and Chapter 10 you explored issues regarding the consumer side of your product chains. You now
have many options in hand that you might implement. How can you choose the most cost effective options?
Which option might bring the highest stakeholder value? How to measure success rate for these actions?
This chapter now aims to help you identify which options are right for your business: prioritizing options,
implementing your highest priorities, measuring success and following through with continuous improvement, as
shown in Figure 11.1.
Step 1
Step 2
Step 3
Step 4
Prioritize
Options
Implement Project
Measurement
Improvement
Figure 11.1: Steps required in the project for success
71

Prioritization of Options
To read
more about
potential
barriers to
implementing
consumerside
improvement,
see UNEP’s
Greening
Shops and
Saving Costs
Guide, pg. 46.
http://www.un
ep.fr/pc/retail
Once your major goals are aligned and you have highlighted several options, you will want to decide which option
would be the most appropriate for your business. There are three major factors that will help you to decide:
Operational analysis
Examine your business, including your product offerings, staff competencies, and business capabilities. Review
your corporate strengths, weaknesses, and potential project barriers. You may also want to review current news
and “hot” topics: where can your business fit? It may help to review the necessities needed for a potential project,
and evaluate if your company has the matching resources to plan and successfully execute the project in mind.
Is this project a strategic alignment? For example, do you have the corporate knowledge to create a sustainable
lifestyles marketing scheme or would your company be better off creating a take-back scheme?
Financial analysis
A classic financial evaluation is warranted even for ideas that aim to create environmental improvements. A
discounted cash flow (DCF) is probably the most widely used tool to understand financial payback. A DCF
determines the present value of future cash flows using the appropriate discount rate. A DCF may be able to
show you that investing in a project now could save you big money (or not) in the future. At the very least, a
simply cost-benefit analysis can also be used.
Potential for intangible value creation
Intangible benefits can often draw in revenues not quantifiable in a rough financial analysis. Improving customer
side environmental issues can improve customer relationships, brand equity and reputation, business continuity,
and even strategic alliances. Customer relationships and increased brand reputation attract revenue and also
decrease the likelihood that your company could be attacked from negative press. Many companies, even Wal-
Mart, are trying to improve their reputation by adding to their environmental portfolio. Improving customer
relationships also helps to gain repeat and loyal customers. Business continuity and strategic alliances can be
created through improving your products, via supply chain improvements, and reaching out to new partners, such
as NGOs and even policy makers. Retailers such as Kesko and Co-op in Europe are creating partnerships with
NGOs, such as Fair Trade and organic organizations, to improve sustainable product marketing. A project’s
potential for intangible value creation can be a large bonus for your organization.
Intangible value can be measured through an expanded cost-benefit analysis, by assigning these intangibles a
monetary value. A pilot project can also help evaluate the intangible value of your proposed project. For an
example of improving consumer relationships through improving environmental issues see Box 11.1 below
72

Canon has improved consumer relationships by showing them that more energy efficient products save them
money!
• Canon initiated a study (see figure 11.2) that shows consumers that they actually save money when Canon produces
energy efficient products. As shown in the diagram below, the costs of switching to environmentally friendly products
and total environmental protection are lower than the benefits on the consumer side: compare 16.1 to 35.8 Yen.
• Large benefits to the consumer often mean greater benefits for the retailer and producer of the product. They are
translated through higher sales, customer loyalty and improved customer relationships by giving them more energy
efficient products, and thus saving them money.
• This study helped them to realize the overall benefits of environmental improvements on the consumer side.
Along the Chain: Eco-Efficiency Pays
Costs
Benefits
Figure 11.2: Canon shows that eco-efficiency pays in the consumer side
Box 11.1: An example of improving consumer relationships through energy efficient products
Source: Canon sustainability report
Implementation
To read
more on project
implementation
processes, see
UNEP’s
Greening Shops
and Saving
Costs Guide,
pages. 19-25
http//:www.unep.
fr/pc/retail.
Once you have prioritized your options, you will want to implement your key improvement technique. This stage
might include several procedures, such as the following:
• Establish employee and partnership roles and responsibilities;
• Develop a plan for the project, including resources necessary, implementation deliverable deadlines, and
schedules;
• Establish coordination points among processes and people;
• Reach out to various stakeholders in the process;
Each part of the process will be important. For example, if using choice editing of some of your less-sustainable
products, it will be important to coordinate with suppliers to find appropriate product substitutions, find a way of
informing your customers of your project, and phasing out the product in a suitable manner. Such a project will
require: working with various departments, like purchasing, merchandising, and marketing; ensuring employees
73

are aware of the project and business shift; and coordinating with appropriate suppliers. Schedules will also be
needed, to ensure that all the team members are aware of when certain tasks need to be accomplished.
Measurement of Indicators
To read
more in-depth
on financial
measure
indicators,
see UNEP’s
Greening
Shops and
Saving Costs
Guide, pg. 23
http://www.un
ep.fr/pc/retail .
When performing any project, it is important to know the success of your project, to judge whether you need to
revise your strategies and to be able to report in a concrete manner to your stakeholders (See the following
Chapter on Communication). Therefore, indicators will be crucial for understanding if your project is functioning
and performing as intended. Two types of indicators will be especially important:
1) How is the program improving your business value?
2) Is the program having the expected environmental and social impacts?
For example, Marks and Spencer uses customer trust surveys to measure the value and performance
improvement options of various CSR programs. For perhaps a more precise measurement, The Ecological
Marketing Center in Sweden measures performance of its marketing campaigns in terms of total amount of
organic products sold compared to prior the campaign, and number of organic product lines it brought into the
store.
You will want to know if what you are doing has an effect on sustainability, which was also a major reason for
implementing your project. For example, investigate how much pesticide your company saves by sourcing
organic. Or, if you are interested in use issues, you could poll your customers to see if they are heeding your
advice.
Measuring your projects will help you understand the success rate of the project, but could also show signs of
how your project can be improved. For example, do you need more marketing associated with the project?
Could a partner be of use? Finally, measurement will also help you work with future improvement projects.
How to?
The following tables provide practical procedures for evaluating which options you should implement and then
following implementation, how to measure the success of your program. These tables are merely guidelines to
follow, and can be used as inspiration for your own program.
74

Operational
aspect in focus
(e.g. sales, use or
disposal consumer
phase)
Target
performance level
Example 1: Sales
Example 1: Increase sales of organics, thus decreasing pesticide use
Operation Analysis - A Financial Analysis - B Potential for
Intangible
Value Creation
- C
Option Resources Barriers Discounted
Cash Flow
Payback
Cost/
Benefit
Customer
Relationships
Implementation
Potential (good,
more work
needed, poor)
Example 1:
Marketing
program for
organics
Close contact
with supplier
and NGO;
funding
available
Low
employee
knowledge
Positive 5
year
payback on
total
marketing
project
investment
Costs of
marketing
vs.
expected
sales
Improved
customer trust
through
knowledge of
safe and
healthy food
More work
needed to
assess
possibility of
increasing
supply
Table 11.1: Assessment of Options
Table 11.1 above utilizes a matrix to help you solve the problem of which program to implement. The first step is
to choose which side you want to look at, be it sales, use or disposal. Second, review the targeted impact you
would like to have through your program, such as decrease in waste, increase in organics sold etc. Third, list
potential options for achieving your goals. Fourth, review the issues listed in a comprehensive, holistic approach.
You may want to gather a group of employees together and ask them to review the feasibility issues, for example,
while the buyer talks to your suppliers to discuss potential barriers, such as a short supply. Finally, based on your
assessment, in the last column, mark the implementation possibility of your options and either choose the most
feasible option or take further steps for review.
Table 11.2 provides examples of ways to measure the success of projects. Start with the objective, then think
about the target, the target measurement method, and finally, how to follow-up and improve your measurement
result. This table will help to guide you, but as every situation is unique, it is important to implement your own
studies.
75

Program Measurement: Possible ways to measure impacts of your project
Objective Target Measurement Tool Follow-Up (dependent
upon measure result)
Increase consumer
use knowledge
Decrease Consumer
Electricity Use
Increase consumer
trust
X% people know about proper use
of products
X% decrease in consumer home
electricity use
X% increase in trust in the store
X% increase in consumer store
recognition
• Measure campaign
recognition
Example:
• Website hits
• Consumer survey
Conduct LCA to understand
where the life-cycle impacts
occur
• Increase in storefront traffic:
count number of people in
store daily
• Consumer survey
• Change info content on
site
• Conduct same research
later
• Take necessary
measures to improve
campaign
• Continue campaign and
increase products within
scope
• Reflect information in
survey
• Increase targets
• Expand project to more
stores
Decrease waste
going to landfill or as
litter
Decrease amount of
pesticides used
Table 11.2: Project Measurement Examples
X% of consumer used materials
collected in take-back scheme
Decrease amount of pesticides used
by XX litres each year by increasing
sales of organics
• Conduct waste audit
following inception of takeback
scheme
• Measure amount of
pesticides used in normal
farming for product
• Review product sales
• Review program
credentials
• Think of reuse options
for the waste
• Review supplier and
goods targeted for
farming practices
• Review sales tactics
References
Ekologiskt Marknadscentrum. www.ekologisktmarknadscentrum.se
Global Environmental Management Initiative. (GEMI) Forging New Links. 2004
Gunther, Marc. “The Green Machine.” Fortune Magazine. 2006.
Marks and Spencer. Corporate Social Responsibiltiy Report, 2006.
76

Month
12
Communication of your
achievements
Reporting on environmental, social issues in the form of sustainability reporting has become integral to annual
reports for many companies in many different sectors. The purpose of reporting on sustainability matters is to
create transparency and to provide information to key stakeholders about the sustainability performance of the
retail operation, which can have important impacts on financial performance of the organisation and are of
interest to customers and business partners, such as financial institutions and suppliers, alike.
Over the past year you have worked to improve sustainability performance within your retail premises, in your
supply chain and in your relations with customers. Communicating the progress you have made completes the
management cycle and is vital to fully realising the enhanced value, in all its forms, that you have created for your
retail operation.
Some benefits of sustainability reporting for your business are purely financial while others are connected to
employee and customer satisfaction. As customers and key stakeholders become aware of your improved
performance, your credibility as a business will increase while at the same time the process of examining your
retail operation in detail will enable you to discover new business opportunities. Further, retail operations are
unique in the business world as they interact with consumers directly and projecting a positive environmentally
friendly image can have important spill over effects that encourage consumers to make sustainable purchasing
choices. For examples of important benefits for your business, see Box 12.1 below
Benefits of Reporting
Some important benefits that can be achieved through sustainability reporting:
• Help identify and address current and potential risks, saving time and money in the short and long term
• As the public becomes more aware of your efforts, customer loyalty and the creditability of your business will be enhanced
• Taking a deeper look into your daily business operations through sustainability reporting might reveal new opportunities
• Motivate employees who are committed to work towards attaining your business goals
• Reduced cost of compliance with new environmental regulations
• A sound understanding of your customers needs and increased customer loyalty to your retail brand
Box 12.1: Benefits of Reporting
How to report?
There is no standard method to compile a sustainability report, however, it is good practice to rely on some key
principles for guidance to ensure completeness and credibility. A report of questionable quality is likely worse
than no report at all as some stakeholders may call your credibility into question. Sound reporting principles you
use as guidance in preparing your report could include transparency and inclusiveness of information as
overarching principles for all aspects of the report.
77

Other principles of importance will include completeness in terms of activities and entities within the scope of your
report, and relevance to the needs of your business and that of your stakeholders. Furthermore, information in
your report should be presented in a neutral, comparable manner and should be of sufficient accuracy and
reliability to be used for decision-making purposes. The overall purpose of applying these basic principles is to
ensure that your sustainability report meets both your needs and those of your stakeholders in an open and clear
manner.
Some key steps to follow to draft your report include setting up your team and agreeing on a coordinator,
mapping out the needs of the people or organisations affected by your business –your stakeholders, deciding on
the indicators to report and the means of communication to meet the needs of the different stakeholders that
matter to your retail operation.
Set Up the Reporting Team
Your first step should be to arrange your team and develop a timeline for completing the reporting process. Team
members can be drawn from the staff you have worked with over the past year to implement sustainability
initiatives in your ‘in house’, supply chain and customer relations activities. The team members that participated in
these processes will have access to the required information (e.g. emissions, waste or energy consumption) and
knowledge to compile your report. As with other phases of this process, the team should agree on a coordinator
who will have overall responsibility for the report and document the results in the form of a final report.
Draw Your Stakeholder Value Map
You need to understand who it is you are trying to reach in your communications efforts and what their interests
are. Your stakeholders are people or organisations that influence or are affected by your business. They can
include external parties such as customers, suppliers, regulatory officials and financial institutions. A stakeholder
group that is often overlooked is internal stakeholders such as employees, management and owners of the
business, who are in positions to take positive actions that enhance the sustainability of your retail operation.
Knowing who your stakeholders are and what aspects of your retail operation are of interest to them will provide
important guidance on what you report and the means by which you communicate. The following table will assist
you in identifying what information is of interest to different stakeholders. List your stakeholders in the following
table and rank their likely interest in in-store issues, supply chain issues and customer relations.
What issues interest your stakeholders?
Likely area of interest
Rank 1 (low interest) to 5 (high interest)
Stakeholder group In-Shop Supply Chain Customer
Relations
Internal stakeholders
78

External stakeholders
Table 12.1: Issues of interest to stakeholders
To further focus your reporting efforts you may wish to analyse the importance of each stakeholder group with
respect to their influence on key priorities for your operation. Your key priorities might include community
reputation, access to capital, staff motivation, new market opportunities or access to information. You will need to
determine the priorities of your retail operation based on your unique circumstances.
Rank the influence of each stakeholder on your key business priorities. The sum of your rankings will provide you
an indication of the relative importance of each stakeholder group to your organisation and can assist you with
prioritising reporting and communication efforts.
What influence do different stakeholders hold over my business?
Stakeholder Key Priority 1 Key priority 2 Key Priority 3 Key priority 4 Sum of
rankings
Stakeholder 1
…
Stakeholder 2
…
Stakeholder 3
…
Stakeholder 4
…
Table 12.2: Stakeholder influence over businesses
Finally, once you have an understanding of who your key stakeholders are and what issues are of interest to
them, it will be important to set your reporting scope and boundaries. This includes setting the reporting period,
how frequently you want to report, and which divisions, subsidiaries, products and facilities should be included in
the report.
Compile Your Data and Select Your Communication Methods
Based on your understanding of your key stakeholders and their interests, you will need to compile the
information gathered in the previous phases of this guideline. Use the stakeholder map above as guidance to
identify the most important and relevant performance indicators for each stakeholder group.
79

You may wish to communicate your achievements differently to various stakeholders groups. For instance,
customers may be more effectively reached through supplements to conventional advertising or in-store
information while a more formal report might be more appropriate for suppliers or financial institutions.
The following table can help you decide which communication medium might be the most suitable for your needs.
Across the top row you list your most important stakeholders and in the left column list the methods you are
considering. Check off which stakeholders you can reach using each method.
How can your stakeholders be reached most effectively?
Means to report
Formal sustainability report
Newsletter
Press release
Conference
Meetings
Conventional advertising
supplement
Other(s)
Table 12.3: Reaching stakeholders efficiently
Get Recognition for Your Efforts
In-Store Issues Supply Chain Issues Customer
Relations Issues
Stakeholder Stakeholder Stakeholder Stakeholder Stakeholder Stakeholder
Getting external recognition for your efforts can be an important part of communicating your green credentials to
your stakeholders. Many non-government and government organisations acknowledge outstanding performance
with awards of various kinds. Seek out different award schemes that are appropriate for your organisation and
apply for them. Receiving a sustainability award can add considerable exposure to your retail operation and will
enhance the profile of your sustainability program among top management.
Achieve Continuous Improvement
Striving for continuous improvement is clearly an important goal, however to fully realise the value of your efforts
you should also strive to continuously improve the means by which you communicate your achievements. The
final step in this section of the Retail Guidelines is to collect feedback from your internal and external
stakeholders on how to better meet their information needs in terms of structure, content and scope of your
communication efforts.
80

Publishing Details
Authors & Editors
UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production
Burcu Tunçer, Greg Tyson, Wendy Wallace, Tomasz Muchorowski, Daria Karetnikov & Patrick Schroeder
Project Management
UNEP/Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production
Burcu Tunçer, Michael Kuhndt
United Nations Environment Programme, Division of Technology, Industry & Economics, Sustainable
Consumption & Production Branch
Solange Montillaud-Joyel
Layout
Martin Herrndorf
August 2007
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