Shortly before personally launching the recent update to Sainsbury’s ambitious 20x20 sustainability targets chief executive Justin King spoke to Ethical Corporation
In the two years since Sainsbury’s launched its 20x20 sustainability plan, the UK retail sector has had to deal with the horsemeat scandal and come to terms with ever-more engaged and informed consumers, armed with Twitter accounts. How much progress has the UK’s second largest retailer made in those two years, and what are the highlights of the 20x20 plan’s latest update? We ask the man at the top.
Ethical Corporation: Recently there seems to have been a continuous catalogue of scandals affecting the food retail sector. Do you feel you always have to be on your guard?
Justin King: It’s never been any different. Social media means things happen more quickly now. But we can react more quickly too – and we are kept in touch with customers better. A few years ago we’d hear about a developing problem once we’d had a few letters about it. But now people can react to a Twitter feed, and we can respond and solve the problem.
EC: Having customers with Twitter accounts must have radically changed your communications strategy. How do you keep up?
JK: We had a coffee machine blow up in a store – from a manufacturing error. I happened to be in a board meeting at the time and I received a message from my son saying he’d heard about an explosion at one of our stores. Then as I put my phone down, the news came to us from a colleague, and I was able to say that I already knew! Someone in the store had seen what had happened, tweeted it, and then it had been re-tweeted until my son had spotted it. Luckily no one was seriously hurt but this shows how quickly we need to react to these things.
EC: Talking of quick reactions, when the horsemeat scandal broke did you know that there was none in your supply chain?
JK: Well, you can’t test every beef burger. I look at it this way: you live in a street, and one of your neighbours gets burgled. You then say to yourself, have I taken adequate security provisions? And our answer in the horsemeat problem was yes. Then, as you find out how that house was broken into, you begin to ask questions to make sure that your arrangements are as good as they can be. But as we’ve been testing for DNA and for country of origin for several years, we could be confident that we were in as strong a position as we could be.
A second point is that the problem was in a raw material – recovered meat – that we don’t use as we don’t think our customers would think it was acceptable in a beef burger.
Thirdly – and this was the area where no one could be 100% confident – is the problem of potential cross-contamination. If your products are coming from a factory where someone else’s contaminated products have been processed then cleaning regimes may not necessarily save you. There is always the possibility of microscopic levels of cross-contamination. But consumers are more concerned about the actual ingredients in products [than microscopic levels of DNA].
In the end none of our products were affected.
EC: What do your customers want you to do now?
JK: For us, it’s pleasing that our systems have proved robust and that our supply choices have been validated. Our suppliers should be congratulated that there was no cross-contamination into our products.
We need to be able to show our customers that we have been asking the right questions before an issue becomes a problem for them. It’s the actions you take when they are not forced upon you that most give customers confidence. So our customers asked us “you were checking, weren’t you?” and we were able to say “yes, we’ve been doing so for 10 years”.
EC: Your sustainability targets are ambitious. What was the reasoning behind them?
JK: The reason we created the 20x20 targets is that we felt as a business that we were doing quite a lot in terms of sustainability but that we needed a clearer destination in mind.
If targets are too far off then they don’t galvanise you into action now. Or they are so big that they seem impossible to achieve. On the other hand, if you can plan out how you are going to get there then they can’t be that stretching. We have given ourselves time to develop new ways of working – simply doing more of the same wasn’t going to be enough.
EC: You are now developing your own certified sustainability standards. Why do you feel you have to do this?
JK: One of our commitments – sourcing with integrity – is that all of our major raw materials will be sourced to an independently verifiable standard on sustainability.
There are a number of standards that are well recognised by consumers that work well in certain product areas – good examples are Fairtrade for coffee, tea and bananas, or Marine Stewardship Council for fish. And we’ve taken leadership positions – we are already the biggest Fairtrade retailer in the world, and the biggest MSC retailer in the UK.
But the existing standards don’t cover all the bases. If we wait until 2020, many of the materials we source still won’t have an independent verified standard.
EC: So what you are doing is filling in the gaps?
JK: Yes, but we also want to challenge the existing standards. As a participant in so many, we think that they can go further. Fairtrade, for example, has an opportunity to be about more than just a fair price. In fact, it is already. But consumers don’t yet fully understand that it’s about more than just a fair price – there are wider issues about ethical treatment of employees around safety, for example.
The principle means that we need to work with other parties to develop the standards – something we will announce over the coming months.
EC: Is this about bringing certification to scale? A big problem for some other standards is that there isn’t enough certified produce to meet demand.
JK: Our starting point is scale. When we decided to go to 100% Fairtrade bananas in 2007, we realised that it would require 70% of all bananas certified as Fairtrade at that time. So we worked with partners to convert the entire crop from the Windward Islands to Fairtrade. It changed the system – meaning that the incremental cost of being Fairtrade came down.
EC: What about 2050? Given the climate predictions – not least from the Intergovernmental Panel on Climate Change – for later in the century, how are you securing your supply chain beyond 2020?
JK: There isn’t anything that we will do differently in the next five to 10 years that would change on the basis of thinking about 40 years ahead. We believe that, in the foreseeable future, supply chains will not continue automatically to present to us products of the quality, sustainability and affordability that the consumer demands today. And we need to make the right investments now. It’s no good arriving at 2025 and saying, if only we’d thought to start the journey back in 2013. None of the big issues are necessarily imminent, but there are reminders of how close they are.
For example, in 2008 Thailand and India temporarily banned the export of basmati rice, for domestic reasons, so there was none coming from these countries to the UK. Because we had a tight supply chain into Italy, which is the other place you source basmati rice, we were able to sell it throughout the period of the export ban. Now if you had said in 2006 that you wouldn’t be able to source basmati rice in two years’ time from Thailand and India,everyone would have said “I can’t imagine the circumstances in which that would happen”, yet it did.
EC: So you are thinking further ahead, but 2020 is the convenient target?
JK: Yes it’s close enough that we have had to start doing things now, and far enough away so that we can set stretching targets but not ones that are so impossible to achieve that we can’t even begin to think about how to achieve them.
EC: What do your customers think?
JK: In terms of communicating with customers, if you say that we’re setting targets for 2030 they’ll think that we’re not being serious – kicking into the long grass – or they think there isn’t need for action now. The first product we stopped selling was ray because we only source from fisheries that are on a journey towards sustainability and there are not any for rays. I got a letter from a customer who was seriously saying “as we all know ray is going to be extinct soon anyway, I’d like to eat it until it is”. But if we do something now we can bring about a different outcome. When people believe that an outcome is inevitable they take less action now, not more.
EC: So is the answer to carefully lead your customers? Can you go too fast?
JK: We mustn’t get too far ahead of our customers. Salt reduction is an example of this. All the evidence is that if you take too much salt out, customers will simply add back in more than you removed. Five years ago we took our bread to an industry-leading position on salt and our customers stopped buying our bread with low-salt and started buying other bread that had more salt than ours had in the first place. The net effect, initially, was that our customers consumed more salt. So you can be a step ahead but you can’t be in a different place altogether.
Sainsbury’s 20x20 plan
Launched in 2011, the 20x20 plan details 20 stretching sustainability commitments Sainsbury’s will work to achieve by 2020. The commitments are spread across five “values”:
- Best for food and health
- Sourcing with integrity
- Respect for our environment
- Making a positive difference to our community
- A great place to work
The commitments cover issues including lower salt levels in food, zero waste to landfill, an absolute 30% reduction in carbon emissions and sourcing “key raw materials” sustainably. Sainsbury’s has announced the development of a new independent sustainability standard that will certify raw materials that are not covered by existing schemes.2020 sustainability plan CEO interview Management spotlight Sainsbury's
May 2014, London, UK
Make sustainable innovation add to your bottom line. 15+ CEOs and C-Suite from leading multinationals plus heads of CSR will discuss the future of sustainability