Circular Economy: What can manufacturers learn from Sainsbury’s approach?

Mike Coupe, CEO of J Sainsbury PLC, discusses Corporate Social Responsibility and a sustainable future with Paul Stead.

The Circular Economy, according to Sir David Attenborough, Greta Thunberg, politicians, activists, and many eminent scientists, is fundamental to the future of human life on planet earth.

WRAP - Circular EconomyClearly this is a very complex issue and I fully acknowledge one interview, with one CEO, of one UK-centric retailer is a drop in the ocean.

However, what I find reassuring is that Mike Coupe and Sainsbury’s are putting this front and centre of their Corporate Social Responsibility (CSR) and are making the multiple changes that many would do well to consider.

How does the industry define this topic area?

Historically, retail businesses, like many others, had little interest once the product left our doors; but in my working lifetime there has been a massive shift where we all now understand we are responsible for the whole product lifecycle.

In fact, it’s now a critical part of our brand promise. So much so that our aspiration is to have net zero impact on the planet, so we become carbon neutral.

Unfortunately, however, there are no simple answers, no magic wand, and as a business we continually have to make a series of trade-offs, whilst also accepting we are the lightning rod for many public issues.

One such trade-off is the use of plastics in packaging versus shelf life. Clearly we can always do more, and technology continues to evolve. However, there are products like cucumbers that unwrapped will last three or four days, but wrapped in a plastic film will last 10 or more.

The same applies to fresh meats where the packaging is flushed with an inert gas to extend shelf life. So yes, we could remove plastic but the trade-off often means considerably more waste, higher costs and a greater carbon footprint!

Mike Coupe - CEO J Sainsbury’s PLC

What about the use of bulk dispensers, reusable containers, paper packaging?

Yes, we and others have trialled and continue to trial alternative approaches. The issues with these are often where human contamination and legislation collide, as packaging protects, sizes, labels, therefore making shopping easier; no-one wants bulk goods where lots of fingers have been touching the product.

The issue of paper packaging and paper bags is also interesting. Yes, paper is readily recycled, as long as it’s not contaminated, but overall, in terms of carbon footprint, plastic bags are circa 10-times more energy efficient if re-cycled.

A similar series of trade-offs have to be made for glass packaging. While everyone has the notion that the old glass milk bottle is reusable, what’s not taken into account is the overall energy used (in cleaning), nor the breakages or that most glass isn’t recycled.

Therefore once again plastics, specified correctly and recycled, are almost always are the preferred environmental option by a factor of 10!

What about UK government involvement/legislation, given all the recent media coverage?

Unfortunately, central government has been very slow to set overall policy in the area of recycling. We’ve been lobbying for the past 10 years that there should be an overall UK-wide framework, as currently it’s devolved to local councils, and that inevitably means different recycling schemes.

Also, there isn’t legislation (or tax) on bad plastic packaging versus packaging that’s easy to recycle, and the UK has only sufficient resources to recycle about 50% of the current waste, which means we end up exporting the problem elsewhere.

Having said that, in 2010 we did sign up to the Courtauld Commitment which means we are committed to reducing packaging/waste by 50% by 2025 and we are well on our way to meeting that target.

We also pay circa £15m a year to the government via PRNs (Packaging Recovering Notes) which often goes unmentioned and does provide funding – a framework for packaging recycling.

UntitledSolar panels covering many of Sainsbury’s stores

Beyond packaging what other initiatives have you in place to reduce your carbon footprint?

Lots! Do you know we consume circa 0.5% of all electricity generated in the UK? However, we also have the largest array of solar panels in Europe on top of our stores aiming to reduce our energy consumption by 30% by 2020.

Also, we’ve redesigned our fridges with an innovative aerofoil to capture the cold air and recirculate it to save on energy consumption (using our Innovation Fund and help from Lancaster University).

We’re using IoT to monitor all our fridges to ensure the compressors run at off-peak times, deploy preventative maintenance to minimise downtime, and we’re in the process of changing our lighting in stores to LEDs.

We closely monitor our baking ovens, and are looking at artificial intelligence to make improvements across the board, but we need the industry to work on open standards to make it easier.

Sainsbury’s delivery vehicleWe also run a fleet of thousands of delivery and online order vehicles, and use specialist software to ensure journeys are kept to a minimum and fuel consumption is optimised.

Just think about the home delivery service: each van can hold 15 weekly shops, delivered in a ‘bus route’ that saves 15 car journeys! But this is rapidly changing as well, as we move from diesel to electricification, and from vans to drones.

What about food miles flying in food from around the world?

Again, there’s a series of trade-offs we have to make as a brand. You’d think flying flowers in from Kenya, or strawberries from California is bad environmentally, and yes it would be if we had to charter an aircraft.

However, given that the aircraft is flying anyway, we use its excess cargo capacity, and when all the individual carbon debits are added up, it’s far more environmentally responsible to source locally grown produce where the weather and rainfall are suitable, rather than products force-grown under glass in, say, Holland.

And what about food waste?

We made a decision in 2011, that no food waste should go into landfill, and we hit that target in 2013. So we have a hierarchy as to how to deal with this issue.

First, food going out of date should be reduced in price, and sold to customers/colleagues. Second, it’s given to food charities (over 1,000 of our stores work with Trussell Trust ). Third, it goes to animal feed, and as a last resort we use anaerobic digesters to produce bio-gas, and bio-fertiliser.

So, stepping back and looking at the issues on a global perspective, are others following your lead?

That’s a difficult question. As the global brands often take global decisions, and given that the UK market accounts for <1% of world output, then we sometimes have very little influence. That said, circa 50% of all our products are own brand, so there we can make a big difference.

The positive news, however, is I sit on a number of industry bodies – the British Retail Consortium, the IDG (a research and training charity), and the Consumer Goods Forum, which brings together global players. So, many of the issues highlighted, especially the use (or misuse) of plastics is starting to be addressed on a global scale.

As you can see it’s a very complex issue and as a designer/communicator you know there’s only so many messages a brand can differentiate itself with, so we are often judged as an industry, the lightning rod for issues that the government, brands or manufacturers haven’t resolved.

So, yes we can and are doing more. But fundamentally the circular economy is now in our DNA, written into our CSR promise, to reduce the environmental impact of our organisation, and it’s something we’re very proud to be driving forward.

KEY TAKEAWAYS

The agriculture/food chain in the UK is worth circa £113bn. With total UK consumer spending of £219bn, there’s a very big addressable market.

What the conversation with Mike has highlighted is that there’s an innovation appetite within retailers for industry to provide new, cost-effective energy.

Carbon footprint-efficient solutions can range from new fridges, ovens, packaging, recycling, storage, and transportation. And little incremental improvements can and do make a big big difference.

What I do find particularly amazing is that Sainsbury’s has used its own innovation fund to develop an energy-efficient fridge with a university.

Perhaps the single most important take-away for manufacturers should be to get closer to your customers. To find out about their business imperatives, and jointly innovate to create a win-win situation, and along the way make sure you respect the planet’s finite resources.

Dr Paul Stead - Brewery Group - Design Matters