Water and extreme weather crises are among the greatest risks the world currently faces.

This is according to the 2015 edition of the WEF's "Global Risk" report, published ahead of the organization’s annual gathering of international business and political leaders in Davos. Businesses recognize these emerging risks and many are thinking about how to manage them. Justin Smith, Woolworths Head of Sustainability on how to push the environment and social development agenda to the fore of business strategy.

 

Q: How did you incorporate environmental and social concerns into Woolworths business strategy?

Woolworths corporate culture has always been based on a set of values, one of which is sustainability. We realised quite early on that being a successful business also depends on protecting the environment and supporting the people impacted by our business.

When it comes to driving sustainability in the business, a few critical issues work in our favour:

  • We have support for our programme at Board and executive level which means there is a serious and consistent commitment to doing business more sustainably.
  • Secondly, we have targets that we measure regularly and incorporate in our company balanced scorecard.
  • Thirdly, we have focused on sustainability issues that are not only important for Woolworth and our suppliers, but for the entire country. These include, for instance, water, energy, transformation and social development. Finally, we could not have done this without the support of our customers.

 

Q: With your expansion across the continent and in Australia, are you driving the Good Business Journey Plan across the Group?   

We are the process of extending our programme to 2020 at a Group level, making sure we do so in a way that drives consistency of approach, but allows for recognition and consideration of local issues and standards too. These are exciting opportunities as it means we can almost ‘export’ our sustainability capital to other territories in the southern hemisphere where we have an interest. Some of our successful learnings on sustainability can be applied, for example in David Jones. Because of the scale of the expanded business we have greater opportunity to support and drive sustainability issues across the supply chain. Here we can look at issues such as developing sustainable fibres, water saving in the manufacture and use of fashion, ensuring water is not contaminated by dyes and ensuring stringent commitments to labour standards.

 

Q: What challenges have you faced in your sustainability journey?

We’ve realised that sustainability is somewhat of a moving target, and is a constant learning process. That’s why we refer to it as a journey.  Initially we had a five year programme launched in 2007. Four years into the programme we revised our targets and priority areas as much had changed and some of the assumptions we made did not apply any longer. We realised, for instance, that energy savings should be given greater priority.

We also assumed that reducing packing was the trick to managing waste and reducing landfill sites. We soon learned that reducing packing often results in food waste and that using recycled material in packing and making the packaging itself recyclable was a better option most of the time.

We had committed to only selling free range eggs and later to also using only free range eggs in prepared means. We set ourselves challenging targets which we sometimes couldn’t meet as customers and suppliers could not afford the additional costs of the initial phase of developing a free range industry. We persevered; the costs are now affordable for customers and currently about 90% of our prepared food is made with free range eggs.

We’re also committed to selling only sow friendly pork. We’ve met our own deadline to sell sow friendly fresh pork by December 2014 ahead of the industry target of 2020. But our plan to roll out sow friendly pork to prepared meals is proving more challenging than initially thought due to the costs and time required for farms to change infrastructure.  What you have to do is keep the commitment and try and find a different way to get there. We were committed to free range eggs and we got there.  We’re committed to sow friendly pork meals, and we’ll get there.


Q: How do you measure/drive sustainability performance?

One the things we realised in 2007 when we started the programme was that measurement was critical. It’s an essential part of addressing the challenges.  This helped us identify current use of resources such as water and energy. We could then set reduction targets which we measure every six months. If we’re not hitting them, we can see it, interrogate why, and keep focussed on the underlying commitment. And if we’re ahead of the target then that throws up the prospect that we might be able to do more.  Interestingly, one thing we didn’t fully realise at the time was the substantial cost savings as a result of our commitment to reducing our use of resources. We now know if a store is leaving the lights on unnecessarily since we can now measure use from head office.


Q: It’s often said that environmentally and socially progressive business practices are more expensive? Is this the case?

Sustainability is not necessarily a business expense if done correctly. We have realised a cost saving in the last financial year of approximately R80m. Cumulatively, since the programme began in 2007, we have realised a saving of approximately R300m.

Energy has become expensive and rolling out energy savings through the supply chain has reduced costs for suppliers and also reduced the pressure, somewhat marginally, on Eskom. But every little bit counts.

Socially we have given back R52m through the MySchool programme in the last financial year. We don’t see this as a business expense but an investment in our own future, and that of our country.

Water and extreme weather crises are among the greatest risks the world currently faces.