Deloitte's Joe Solly on where to start with sustainability
Sustainability is a massive topic that touches several areas of a grocer’s business and, because of this, the challenge can lie in knowing how to transition from commitment to action, and when and where to capture strategic and financial opportunities.
We asked Joe Solly, partner, consumer sustainability and climate leader at Deloitte in Toronto, to shed light on some of these key areas. This interview has been edited for clarity and length.
When it comes to sustainability, how should grocers prioritize their efforts?
In terms of priorities, there’s a methodology to look at upwards of 200 topics across all the facets of sustainability. Understand them, define them, interpret them for your business and then prioritize. Get it down to a shorter list of maybe five things you want to double down on and improve, and then you drive hard at those with governance management systems, KPIs [key performance indicators], investment business cases, all that.
How should a company decide which five topics to focus on?
You can only achieve so much. So, when you do that prioritization process, you have to consider all your internal and external stakeholders—customers, suppliers, staff, government, NGOs, various stakeholders and investors that have an interest in your business. You consult and interact with them and you run a process to get to [those topics.] And that should be updated annually. Those topics can change over time because you only have so much capital to put at something. Then, you get to the ones that allow you to reduce any negative impacts or harm from what your business is doing, but also think about where you can grow value. And value is anything from increased sales, increased shelf space, increased margin, while also reducing environmental factors.
READ: Greening the supply chain
How can grocers maintain momentum on this journey?
You cannot achieve momentum and scale and pace unless you have the full management team and a board aligned with the importance of sustainability, because that’s when things get understood. That’s when metrics matter. That’s when executive teams get compensated on their performance, accordingly, by their contributions to priority topics like climate. When you have the right governance, education, reporting and business case, you quickly get conviction to act, and especially when it also hits variable executive pay compensation.
With that in mind, who within the company should anchor these efforts?
Generally, you should have a leader of sustainability and that person should be very highly situated in the rank of the enterprise. Ideally, it's a chief sustainability officer [CSO] reporting either directly into the CEO, or somebody reporting into one level below the CEO, so your EVP level. If you think of this person, they're the champion that educates the business on what sustainability is, how it applies to the organization, what it means for each department, whether it’s legal, procurement, finance, HR, supply chain or logistics. Those people need to know how sustainability impacts their functional area. And then [the CSO’s] job is to help them understand and work with them to set priorities, objectives, targets and performance aspects, and harness the data to drive better reporting for internal and external purposes. So, they are a change agent, a catalyst to get this done. And frankly, our view, is the chief sustainability officer's role is one where it is arguably a temporary role, meaning maybe it's five years, seven years, eight years until the business starts applying the fundamentals of sustainability and you don't need that CSO anymore. It's akin to the digital revolution. Back 10 years ago, 15 years ago, when everybody was saying, "Hey, go digital or your business is going to suffer," everybody hired a chief digital officer. Then everybody digitized their business, and you don't see those roles that much anymore. The same thing with sustainability.
How can a company ensure sustainability ties into its wider business purpose?
The secret recipe is you have to integrate the sustainability strategy and the business strategy. Some companies are doing a good job at that. Others are trying hard. If the plan is to double your sales in five years, how can you start thinking about things like offering broader low-carbon products to the market and to your assortment? You can charge more for that, you can seek out new customers, you can grow your sales. So, that’s an example of how sustainability should integrate with a business strategy.
Is greenwashing a concern for grocers?
The risk, from a business perspective, is consumers don’t know enough about what a sustainable product is. So, you put these products out there, but you don’t have a strong education campaign that supports the uptake of it. [Grocers] must educate their customers through engagement, through campaigns, through all their digital apps and their social media. Drive incentives toward these products so consumers can do their part. Certainly, younger generations are passionate about climate. Start educating young people in a more effective way on social media and all the apps they’re using and make them feel compelled to buy these products—that’s a great winning strategy.
READ: Canadians' food habits change amid climate concerns
How can grocers balance sustainability with the bottom line?
You have to price it into all your decisions. For example, you can implement what’s called an internal cost of carbon and you can use that to make various business decisions. So, every time you look at renovating a store, building a store, changing suppliers, you should be factoring carbon into that equation and the cost of carbon, because it’s priced.
How does placing sustainability at the forefront give a grocer a leg up on the competition?
Because it will help you be seen as a trusted, responsible brand that is looking out for society and the environment and doing their part to contribute towards the overall sustainability and the climate problem that we see.
How should companies keep up to date with the ever-changing landscape of sustainability and regulations?
There's a lot of good information sources out there. So, you got to leverage your industry networks and associations. You have to pay attention to the government, new programs and incentives that are coming out. You have to look at where might you need various partners. As we look at dealing with issues of circularity and food waste, we have to look at logistics differently and the handling of food and food waste. And you need a lot of alliances in places that are going to help you.
This article was first published in Canadian Grocer’s August issue.
