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BY KATIE - MYGREENPOD, 20 Nov'14
SUSTAINABILITY: A RISK OR AN OPPORTUNITY IN THE CONSUMER INDUSTRY?
In June, the board of The Consumer Goods Forum called on heads of state across the world to engage and act with determination, leadership and ambition to secure an ambitious and legally binding global climate deal, one year ahead of the UN Climate Summit in Paris.
The Forum also urged governments to make the UN REDD+ (Reducing Emissions from Deforestation and forest Degradation) climate change mitigation plan a priority, supporting it with local and national policies that can protect forests and support livelihoods.
At the time, Marc Bolland, co-sponsor of The Forum’s Sustainability Pillar and CEO of Marks & Spencer Group plc, added, ‘The latest report from the UN’s Intergovernmental Panel on Climate Change leaves little doubt as to the future disruption that climate change will bring to bear. It is clear that there is still a great deal that needs to be done to protect livelihoods, individual businesses and our industry as a whole from the impacts of climate change.’ He said that resolutions made by The Forum will help ‘address key areas within our industry that are contributing to climate change on a global scale.’
The consumer goods industry has a unique role in enabling and empowering consumers to make sustainable changes in their purchasing and in their lives, if it innovates, communicates and partners up properly.
Risks and opportunities
The Consumer Goods Forum has four ‘pillars’, or services, that address ‘some of the most important opportunities and risks’ that face companies in the global consumer industry. One of those pillars is sustainability; it’s connected to — and, according to the managing director, just as important as — the others: product safety, health and wellness and end-to-end value chain.
Members of The Forum are encouraged to act together to protect against climate change, reduce waste and promote and comply with good environmental practices. They can adopt The Forum’s proposals and suggestions voluntarily, and many are quick to adopt them. It’s not all entirely selfless; sustainable business practices often also offer economic opportunities, and still apply — in some cases even more significantly — in tougher financial climates.
The bundling of transport streams to save carbon and reduce empty trucks is just one example of how sustainable practices make good business sense; transport costs and packaging are reduced, and both have a positive impact on the bottom line.
Two of The Forum’s sustainability resolutions were announced at the Cancun Climate Change Conference in November 2010. The first was a pledge to mobilise resources within The Forum’s respective businesses in a bid to achieve zero net deforestation by 2020. The commitment will be achieved through the individual members’ company initiatives, and by working in partnership with governments and NGOs. The Forum’s collaborative approach has helped it to develop specific, time-bound and cost-effective action plans, each based on the different challenges in sourcing commodities like palm oil, soya, beef, paper and board in a sustainable way.
Deforestation accounts for approximately 15% of all greenhouse gas emissions, a larger net impact than the entire transport sector globally. The biggest drivers for deforestation are the cultivation of soya, oil palm, logging for the production of paper and board and the rearing of cattle.
All of these commodities are major ingredients in the supply chains of most consumer goods companies. The Consumer Goods Forum’s members drive the demand for these commodities and have an opportunity to ensure that the sourcing of these ingredients does not contribute to deforestation.
Greenhouse gas emissions
The second pledge to come out of Cancun was that members would start phasing out hydrofluorocarbon (HFC) refrigerants in new refrigeration installations from 2015, in recognition of the major — and increasing — contribution of HFCs and derivative chemical refrigerants to total greenhouse gas emissions. Where legally allowed and available, HFCs will be replaced with natural refrigerant alternatives.
Refrigeration is a significant and growing source of greenhouse gas emissions; HFC, the dominant technology, is 1,400 times more potent than carbon dioxide as a greenhouse gas. HFCs represent 1.5% of total warming potential today and, unless action is taken, are expected to increase to 6-9% of total greenhouse gases by 2050. HCFCs and HFCs are fluorinated gases (F-gases) that are widely used in the consumer goods sector, in anything from drinks coolers and vending machines to ice cream freezers and the freezers used in supermarkets.
However, there are barriers to wide-scale adoption of more climate-friendly refrigeration, mainly availability, cost, safety, maintenance, servicing and, in some markets, legislative restrictions. The Consumer Goods Forum is working to overcome those barriers through collaboration; it’s using its collective influence to encourage its supply base to develop natural refrigerants technologies that meet business demand under commercially viable conditions.
Since The Forum’s resolutions were announced, its role has been to encourage and inspire members to take action and find ways to realise the commitments within their respective supply chains. The Forum has been raising awareness of the link between commodities — such as soy, beef, palm oil and paper — and deforestation, and developing ways to help members achieve the targets.
But ultimately, as The Forum’s advice is voluntary and members’ activities aren’t policed or judged, there’s no guarantee that The Forum’s commitments on sustainability will be received and implemented with equal enthusiasm by all members. In fact, there’s no guarantee members will adopt any of its proposed measures at all. The Forum is currently trying to develop some way of understanding the impact and implementation of strategies devised to deliver on the pledges, but as yet there’s no way of knowing or measuring direct impact.
However, early adopters are given additional support and, perhaps more importantly, The Forum has a major role in knowledge sharing and collaboration across its membership. This is perhaps its most powerful function. Mike Barry, director of sustainable business at Marks & Spencer, said, ‘M&S can’t change the world of palm oil on its own. We use a fraction of the world’s supply. By teaming up with other big players in the industry through The Forum, we have additional leverage and can share best practice. Very simply, together we are stronger and can move faster to help create a more sustainable approach to production and consumption.’
A member-only online platform helps to boost collaboration between members by driving communication and knowledge sharing. This ‘Knowledge Navigator’ is a private space that allows teams to share documents and information on work they’re doing prior to any wider release. Individuals can connect with each other, view and download presentations and other useful material and share latest news and updates. Similarly, the content produced by The Forum is open source and available to all its members.
A lot of The Forum’s work relates to pre-competitive business practices, with the goal of harmonising the good ones and developing new improved ones. For this reason, successful strategies made by one company in the area of sustainability could be directly transferred and applied to a company in a completely different corner of the consumer market. The Forum organises summits to help with the exchange of knowledge and encourage discussions on how to overcome any barriers that members may be facing.
When The Forum announced its commitments around zero net deforestation and HFCs back in 2010, it knew that it could only ever achieve its goals by working collectively in partnership with governments, development banks and NGOs. Together with the US government, it founded the Tropical Forest Alliance in Rio, 2012, following a series of dialogues and partnerships with key stakeholders.
The alliance is a public-private partnership in which partners take voluntary actions to reduce the tropical deforestation caused when commodities such as palm oil, soy, beef, paper and pulp are sourced. The Forum’s partners now include governments in the UK, Norway, the Netherlands, Indonesia and Liberia, as well as a large group of civil society partners. A workshop in Jakarta was held in June 2013, with the aim of identifying challenges and realistic solutions to removing deforestation and rights violations from the palm oil and pulp and paper value chains, while also increasing production.
The Forum is also working to create funding and other practical schemes that will incentivise and assist forested countries to conserve their natural assets and enable them to achieve the goal of zero net deforestation, while at the same time meeting their goals for economic development.
Tackling climate change and today’s other big sustainability issues requires a multi-stakeholder approach, and The Forum acknowledges that it is ‘just one piece of the pie’ that can help the industry to discover and implement better practices — and also be more transparent about the actions being taken.
This focus on transparency and sustainability isn’t entirely driven by consumer demand or the products that are selling in the highest number. While consumers are increasingly requesting products that are more sustainable and safe, when it comes to the crunch they’re not always buying those products or choosing them over cheaper alternatives.
So where does all this leave the smaller, independent brands that are jumping out of the mainstream and going it alone? Many key innovations in sustainability have been launched by these smaller companies, and they often pave the way for an industry approach by the bigger players.
The Forum believes that significant change, or the power to transform a market, can only be achieved by a broader group of stakeholders, and that the opportunity lies within every company, irrespective of its size, geography or sector. The goal must be to help catalyse that action, and The Forum hopes to be able to help with implementing the new approaches that will make sustainable practice in the consumer industry a reality.
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