By Al McClain
Sustainability has risen to the top of the heap in business discussions over the past several years, perhaps due to the fact that many industries are realizing that political and consumer pressure are driving them to work towards this concept, like it or not.
Meanwhile, companies such as Migros in Switzerland, long ago embraced the concept and are pushing the envelope even further now. Claude Hauser, Chairman of the Board of Migros, detailed some of his company’s efforts at the just-concluded FMI Midwinter Conference. Here are a few highlights:
Background
Migros is the largest retailer in Switzerland, a country with a population of 7 million whose people speak four languages, have a high standard of living, and are environmentally aware. Consequently, discounters have been a small factor so far in this nation, and consumers are willing to pay higher prices than in other countries.
Migros is a federation of 10 cooperatives with 80,000 employees. Ninety percent of the items carried are private label and the company is highly integrated – operating 600 supermarkets and 15 manufacturing plants, along with a bank, gas stations, department stores and a travel agency. The company mission includes cultural, social and ecological commitments. They treat their employees well (i.e. providing each a minimum of five-weeks vacation) and seek to establish long-term relationships with suppliers.
Some of Migros’ sustainability initiatives include:
- Transportation
– 35 percent of their goods are shipped by railroad, which they say pollutes
at one-third the rate of trucks. - Shipping – cardboard boxes have been replaced
with reusable plastic shipping trays – now 8.3MM in circulation. - Store design
– some stores are heated using warmth generated from freezers, lighting,
and computers. - Health – sell “Actilife” products, which include dietary supplements,
help their customers get involved with sports/active lifestyles, and consult
consumers on nutrition. - Labeling – a wide variety of products now have special
logos indicating whether the paper comes from sustainable wood sources;
whether items are environmentally friendly; whether seafood comes from sustainable
sources, etc.
In addition to Migros’ internal efforts, they work with a private sector body called “EUREGAP” (www.euregap.org) that certifies agricultural products in terms of social and environmental compliance. The organization currently has 30,000 certified producers. And, Migros is part of BSCI – the Business Social Compliance Initiative (www.bsci-eu.org), an organization that works with European retailers and suppliers to monitor social standards – setting a common standard for employment practices on issues like child labor.
Discussion Questions: Based on Mr. Hauser’s presentation, it would seem that Migros, in particular, and Europe, in general, is ahead of most U.S. retailers on sustainability. Will Wal-Mart’s efforts lead other retailers to address sustainability issues in a comprehensive way? What retailers in the U.S. are working in this area and what are they doing?
BrainTrust
Discussion Questions
Poll
Loading …
True, the Swiss are cool and their reputation for a healthy-eating, active outdoor lifestyle has appeal.
Not so sure they’re that far ahead of us though on going green.
Adding two old, but simple examples to Mark’s comments above, and referencing Wal-Mart specifically, there has been a multi-decade initiative in place in that company to Reduce/Reuse/Recycle.
1) Cartons used for warehouse-to-store replenishment are designed to be re-used many times and are boldly printed to remind associates of box cost and instructions to reuse for a minimum number of times.
2) Wal-Mart was a logistics innovator with sophisticated route planning to optimize lowest mileage between DC-to-store replenishment then using the return trip to pick up freight from suppliers to eliminate empty miles.
I could go on with dozens of examples, but the point is that early on, Sam Walton lead the company to go green years before green was cool. He knew that it’s not only the right thing to do, it also eliminates waste which lowers costs, which could be passed on to customers in the form of low prices. Win, win, win.
This is just Socialism dressed up in a different outfit. When market forces and influences are taken out of the market, what is left?
Sustainability can be popular when it’s profitable. It’s profitable when the alternative becomes more expensive. Almost all supermarkets have been recycling cardboard for many years. Compared to the spiraling price for trash removal, it’s a winner. Wal-Mart wants to generate solar electricity using its Sunbelt stores’ roofs. They’ll probably do it if energy prices are strong. Yes, they’ll get some nice pr, but 99.9% of the driving force is the return on investment.
Stores in Germany reduced their packaging waste because the government makes them pay for it and Germany’s running out of landfill space, so trash removal is ultra-expensive. Swiss retailers use railroads because they’re subsidized and reliable. Who thinks that German and Swiss retailers would emphasize sustainability if it wasn’t profitable?
It is not surprising to see Europe’s lead on sustainability. Europe has always been ahead of the U.S. when it comes to issues like the environment and workers’ rights. Sustainability is a real issue that currently exists in the U.S. as a fringe concern.
American consumers need to be educated as to the advantages/consequences of sustainability. Like trans-fats, Omega 3, and other top of mind subjects, education needs to take place, such that shoppers will vote with their dollars and feet.
I hate to point fingers, but one of the primary reasons the U.S. is behind Europe on sustainability issues is the current administration. Sure, there are other factors that have caused Europe to take the lead, including a limited area for landfills and more congested industrial areas. But the Bush administration has pushed back the clock on almost every environment effort started by both President Clinton and the first President Bush. This is why Christie Whitman left the EPA post after two and a half frustrating years, and why there has been a lapdog in that position ever since.
It had better be this year because it’s just taking advantage of current spin by the big institutional story tellers. Hot stuff has to be used quickly or it evaporates.
Environmental style is in now, but as soon as really big companies stop paying for its publicity, it’s gone. Like kids who jump up and hang on to the back of slow moving city buses, it’s a free ride, but it doesn’t last long and the destination can’t be controlled.