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Retail Technology, Retail technology News

Report identifies post-recession FMCG sustainability agenda

Tuesday May 4 2010

GS1 UK/Deloitte survey reveals sustainability still key priority for FMCG sector  

GS1 UK/Deloitte survey reveals sustainability still key priority for FMCG sector

 

GS1 UK, the not-for-profit supply chain standards and solutions organisation, today releases the ‘Beyond the Downturn’ report, which looks into the impact the recession has had on the UK fast-moving consumer goods (FMCG) industry’s sustainability efforts, and how companies see these initiatives continuing in the future.

 

To compile the report, GS1 UK and Deloitte surveyed over 750 FMCG companies on two occasions, in May 2008 and April 2009, to find out how their approach to sustainability had changed over the course of the year. It found that, contrary to expectations, sustainability continues to remain a top priority for businesses, with 51% of those questioned in 2009 seeing the issue as being ‘more important than ever’, and 26% reporting that their plans had not been affected by the credit crunch.

 

With the economic downturn putting budgets under pressure, the need to cut costs was the most commonly reported reason for companies to focus on sustainability. A quarter of those surveyed by GS1 UK and Deloitte cited cost pressures as a driving factor, ahead of improved brand image (22%) and ethical reasons (20%). Customer demand plays a comparatively minor role, with only 14% of respondents listing this as a factor influencing their sustainability initiatives.

 

Industry divided over who should take the lead

 

When GS1 UK and Deloitte examined the issue of consumer demand further, it found the industry was divided on the issue of whether customers or business are responsible for leading the sustainability agenda. Fifty-three percent of businesses see their sustainability activities as addressing consumer demand for greener products and practices, compared to 47 percent who see themselves as leading their customers in this area. Two-thirds believe the environmental information currently included on product packaging is confusing shoppers, meaning customers will often choose to ignore the information provided and remain unaware of the environmental impact of their purchases.

 

Following the research, GS1 UK and Deloitte have identified four key action areas that companies should address in order to drive their sustainability agendas forward through the current downturn and beyond, with the goal of maintaining a competitive advantage and preventing against marginalisation. These include: product and process innovation; informing and engaging with the consumer; organisation and accountability; and external collaboration between companies.

 

Almost nine out of ten respondents (88%) agreed that innovation is key to successful sustainability initiatives. Improvements to products and the processes involved in their production and delivery provide opportunities for the industry to reduce its environmental impact in terms of reducing wasted resources and unnecessary spend. Conveying green credentials and product processes to the consumer in a clear manner is also crucial in maintaining momentum. The research identified a need for companies to improve the environmental labelling currently used on products in order to gain wider recognition and support for greener processes.

 

Looking to leaders and collaboration

 

With half of the respondents to the 2009 survey reporting that ownership of the sustainability agenda lies with the chief executive, the report recommends that responsibility for sustainability programs needs to be clearly outlined, and that initiatives that are led from the top stand the best chance of succeeding. The report also highlights how greater collaboration between suppliers, retailers and even competitors, as demonstrated by suppliers sharing distribution networks, can cut the industry’s environmental impact and accelerate innovation.

 

Commenting on the report’s findings, Gary Lynch, GS1 UK chief executive said: “The Beyond the Downturn report shows that, despite earlier concerns, the recession has not led FMCG companies to abandon efforts towards making their businesses more sustainable – in fact, the truth is quite the opposite. Firms have seen sustainable initiatives as an opportunity to drive inefficiency and cost out of the business. And essential ingredients for any efficient business are standardised business processes and accurate product information.”

 

To download the full GS1 UK and Deloitte ‘Beyond the downturn’ report, please visit http://www.gs1uk.org/webinar/sustainability/sustainability.asp