Although its ambitious goals are some way off, Marks & Spencer is embedding sustainability across its business. And it isn’t costing the company a penny
In January 2007, Marks & Spencer ushered in the era of the eco-plan – and with it a sense that a sustainable business model might prove itself adaptable to a broad range of retail and manufacturing industries.
More than two years later, the 100-point Plan A initiative has delivered much – from lower carbon emissions and green energy production to new ranges of Fairtrade, organic, recycled and energy efficient products.
And M&S can also say that the sustainability initiative has not lost it any money. Plan A is, in the company’s words, “cost-neutral”. That’s a pretty good start, but still the fundamental question remains: can a sustainable business model be both profitable and far-ranging?
To accurately judge the initiative as it nears its half-way point is not easy, given the way information is being let out in dribs and drabs – so far there has been a June 2008 progress update on the first financial year ending in March 2008, plus a half-yearly update in November last year.
But based on a series of interviews with senior management and third-party stakeholders, three broad conclusions can be drawn. Corporate responsibility guidance and the Plan A commitment have systematically embedded themselves into the company’s management platform; clear package labels and effective outreach to third-party stakeholders are changing consumer behaviour; and steady progress is being made towards fulfilling Plan A’s five commitment areas of carbon emissions, waste, sustainable sourcing, ethical trading and healthy lifestyles.
So far 20 of the plan’s 100 commitments have been completed and a further 75 are under way.
Barely six months after its launch, environmental groups successfully pressured M&S into halting a trial programme that aimed to switch half of the company’s lorry fleet to biodiesel – a key climate change commitment that played an important role in the company’s carbon-neutrality plan. But M&S turned the defeat around, saying it expected this kind of oversight to spur the company on to finding new, innovative solutions.
And indeed it has – if one considers that every pound spent on Plan A is now matched in cost savings. Most of that comes from energy efficiency and improved waste disposal strategies, according to Mike Barry, M&S’s head of corporate responsibility.
“I’m not going to sit here and say we’ve worked out every solution,” Barry says, as he proceeds to then rattle off a string of accomplishments: 1,100 tonnes of food waste turned into electricity, 122m hangers collected for reuse and recycling, and carrier bag usage down 80% since the programme began.
Barry says one of the biggest challenges is achieving the zero landfill waste target. M&S sent 55% of its waste to landfill last year – the 51,000 tonnes was down 6% on the previous year. The rest was recycled. Barry admits that M&S is a year behind schedule on achieving its zero waste to landfill goal. But he insists that this part of the five-year Plan A is still attainable by 2012. He says waste efficiency more than covers the upfront costs with savings on landfill tax, and can generate income from the recycling market and the energy captured from anaerobic digestion, whereby UK farmers are converting their organic waste into energy. The savings, in turn, allow M&S to focus on more costly schemes involving sustainable raw materials such as the Fairtrade cotton programme.
“There will be a convergence, not only with cotton but many raw materials,” Barry says. “Social gain can be paid for by environmental efficiency improvements.”
Still, it is clear that while M&S is making progress, going sustainable remains fundamentally difficult and often expensive. Bringing in outside expertise to drive innovation, then, is essential.
M&S has given external stakeholders direct access to upper management, says Sally Uren, director of business programmes at Forum for the Future, a non-profit thinktank that helped formulate Plan A.
“The 100-point plan does cover all areas of business,” Uren says, “but where it excels is in providing a comprehensive framework on which the organisation can focus its efforts.”
This comprehensive approach has seemingly injected corporate responsibility throughout the company’s organisational structure – including an top level committee chaired by executive chairman Stuart Rose, which talks directly to external partners such as WWF and the Carbon Trust.
Consequently, when some supply chain organisations challenged M&S’s ambitions on labour standards, it reacted quickly to their advice by hiring additional in-country inspectors and by working with them to develop “ethical” model factories in order to identify best practices.
M&S’s work with the Carbon Trust also proved critical in developing a “carbon hotspot” strategy, which allowed the company to target solutions to the largest emissions areas. That meant working with the supply chain on food production, and a consumer-focused 30C washing campaign based on the finding that 75% of the carbon footprint of clothing can result from washing, drying and ironing.
Though carbon labelling – putting carbon data on consumer product labels – remains a Plan A commitment, M&S rejected the approach as ineffective and too costly. “We’re going to get on with [reducing carbon] behind the scenes,” says Barry, “unless the dominant part of the carbon footprint is in customer use, such as with electrical goods, where we can give people very simple instructions.”
M&S is quick to say that the driver behind Plan A is an increasingly informed consumer who expects retailers to take the lead on matters of climate change and ethical trade. That rationale fits in with the retailer’s brand image of quality and fairness but also reflects the reality of a price-driven marketplace in which consumers are overloaded with competing information.
Forum’s Uren says M&S has largely succeeded in reaching consumers by simplifying the message and through outreach campaigns that allow shoppers to feel both empowered and positive about their contribution.
“Consumers are saying on carbon, ‘M&S, when I buy a product from you, I expect you to be reducing the carbon footprint of that continuously,’” Barry says. “‘Only involve me if there’s a meaningful difference I can make.’”
In this regard, the Think Climate Wash at 30C campaign has proved a big success, increasing the level of 30C washes carried out by M&S customers from 23% to 31% in the first year of Plan A, saving about 25,000 tonnes of CO2.
M&S has also found new ways to communicate with the consumer. Its Oxfam Clothes Exchange, for example, encourages customers to recycle their old clothes by offering them a free £5 M&S discount voucher valid for a month. As of November, the exchange has reduced the amount of clothing sent to landfill by more than 1,000 tonnes, further bolstering the case for new campaigns centred on “green savings”.
But given the present economic climate, other communication efforts may suffer. In-store messaging for Forest Stewardship Council certified wood, for example, remains in the background, says Dax Lovegrove, head of business and industry relations at WWF. “We would like to see more individual storylines and it should be more directly in front of the customer’s face.”
Uren strikes a similar tone, saying: “When consumers weren’t this price conscious, we didn’t have to spell out what ‘quality’ means. We have to try and keep in the consumer’s mind that it’s not just about ‘price’ but ‘fair price’.”
Another gauge by which to judge Plan A rests on M&S’s pledge to go carbon-neutral – what some might call the most ambitious and overarching of the 100 targets. M&S must do considerably more to incorporate what it has learnt so far from using renewable energy in a more aggressive modernisation of stores, Uren says.
In 2007-08, the retailer reduced carbon emissions by 9%, a total of nearly 50,000 tonnes, mainly attributable to new renewable electricity supply contracts. This came at a time when M&S had to recalculate its emissions figure upwards because of new government energy conversion factors, which included additional emissions such as refrigeration and business travel.
Nevertheless, M&S improved energy efficiency by 4% for every square foot of space and it increased the proportion of renewable energy used in stores, offices and warehouses from 2% to 23%. The company introduced a range of 60 low carbon eco-products, began labelling air-freighted food and increased its use of rail delivery. And it also launched small-scale anaerobic digestion and wind turbine operations, while testing new technologies at three green stores.
M&S has opened three green factories, two in Sri Lanka and one in Wales, with a supplier exchange network providing additional support for suppliers wishing to share best practice on low carbon production. To date, more than 1,500 suppliers have used the site.
In a recent interview with the Daily Telegraph newspaper, Stuart Rose said that he wished he had been able to complete M&S’s store modernisation a year earlier, but overall he had few regrets. “An ethical business can be a profitable business,” he insisted, “and we have proved it here and now quite categorically.”
Greening the garment supply chain in Sri Lanka
Peer beyond the thick plant overhangs and through the glass walls of the Thurulie lingerie factory in Sri Lanka and, amazing as it seems, you catch a glimpse of the future of UK manufacturing.
Thurulie – opened in June 2008 as part of Marks & Spencer’s Plan A green factories initiative – employs a wide array of environmentally responsible building techniques and materials, as well as alternative forms of energy such as solar, wind and hydropower, which make the operation entirely carbon-neutral.
The newly built factory, owned by Asian powerhouse garment producer MAS Holdings, is designed specifically for Sri Lanka’s climate and geography. But according to Krishan Hundal, head of general merchandising and technology at M&S, the lessons learned are directly applicable to suppliers across the manufacturing spectrum.
M&S has now constructed three different green model factories – the newly built Thurulie operation, a conversion of an old factory in Wales for a furniture supplier, and a renovation of another garment factory in Sri Lanka.
“We’ve tested the latest thinking and technology innovation in three models and that was deliberate,” says Hundal, “as we want to share this information with our suppliers, to say, ‘This is what can be done.’”
Thurulie’s project manager, Vidhura Ralapanawe, says MAS employed existing technology all commonly available on the market. “We’re not devising any new principles; it’s the application,” he says.
Ralapanawe’s main challenge was to create a self-generating micro-climate that dispensed with the need for costly diesel-burning air conditioning units. Water-based evaporative cooling provided a mechanism, but the island’s warm, humid conditions made great demands on this technology.
Ralapanawe had to find a way to cool the surrounding environment and, in turn, the building itself. He planted trees, dug courtyards, draped the building in green plantings and constructed a “cool-roof” with high solar reflexivity panels for deflecting sunlight. The eco-factory uses the latest energy efficient machinery and is set to deliver more than 50% and 40% savings on water and electricity.
The $7m price tag is a roughly 25% premium on a conventional factory design, but Ralapanawe says MAS expects to recoup the additional expense within the first year of operation.
Still, the economics of green building design can be difficult to ascertain, and going ahead with a clean technology purchase largely depends on where a supplier finds itself in a supply chain. MAS, Sri Lanka’s largest garment manufacturer, paid for 95% of the design cost of Thurulie, says Ralapanawe.
Deep pockets play a role but Hundal insists attitude and willingness are equally important. He says: “The key thing is we have to share some of these lessons with our suppliers.”
MAS has hosted more than 1,000 visits to the facility, including an M&S supplier exchange conference in which 25 manufacturers participated.
Meanwhile, M&S has introduced its UK based suppliers to the Carbon Trust footprinting programme and it expects a fourth green factory in China to come online some time this year.