Consistency must be central to any 'sustainability index'

by Keith Nunes
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The effort by Wal-Mart Stores, Inc. to spur development of a sustainability index, as both a packaged goods measure and labeling initiative to allow consumers to compare the environmental impact of similar products, is a savvy business endeavor by the world’s largest retailer. In a very concise manner, Walmart is cementing its image as a steward of the environment and also improving its supply chain efficiencies with an eye toward further cost reductions, all the while putting pressure on competitors.

The effort also will result in significant pressures on manufacturers wanting to do business with Walmart. But as food and beverage manufacturers have learned from Walmart’s existing "packaging scorecard" effort, benefits are to be gained from taking a fresh look at operations with an eye toward improving efficiencies and resource management.

For many large and mid-size food manufacturers the most challenging aspect of sustainability is determining the starting point. For some, Walmart’s efforts have provided the impetus for developing business strategies built around resource conservation and improved efficiencies through lean manufacturing techniques.

For other food and beverage manufacturers not currently being so prompted by their customers, it may be useful to seek guidance. This past May the Grocery Manufacturers Association and the Packaging Machinery Manufacturers Institute, in conjunction with Deloitte, published "Sustainability, from the boardroom to the breakroom." The report provides insights and a framework for future endeavors.

As the study accurately notes, much of the focus on sustainability has involved changing to light-weight containers such as thinner-walled bottles and lower gauge packaging. Some of these initiatives have returned impressive results. Others have led to what the authors call "unintended consequences." For example, difficulties arise in running lighter-weight containers on existing processing lines, causing increased damage and unsaleable losses that only expand waste and result in energy inefficiency.

The G.M.A. and P.M.M.I. study recommends that companies seek better ways to achieve sustainability gains beyond packaging in their manufacturing and supply chain operations. In the short term, the trade groups encourage food manufacturers working with lean manufacturing programs to incorporate sustainability as a focus. In the longer term, manufacturers must consider the issue of sustainability when upgrading facilities. Enhancements in areas such as layout, supply chain control and equipment may improve efficiencies and reduce the use of water, energy and chemicals.

In the end, if Walmart and its partners succeed, all of these endeavors will be distilled into a simple labeling system that will allow consumers who base part of their purchasing decisions on environmental impact to select the most sustainable products. What form this labeling initiative takes will be of tremendous importance.

It will be a disaster if the sustainability index concept evolves in the same manner as nutrition ratings and labeling programs have surfaced. From Smart Choices, Disney, Guiding Stars or NuVal, differences in how each assigns a nutritional value to a product has created consternation among brand managers attempting to manage products and portfolios on a nationwide basis.

While Walmart is the catalyst for the idea of a sustainability index, the company has publicly declared that it would prefer that other groups handle the actual development. Ensuring consistency is at the heart of any labeling effort, especially one as ambitious as this endeavor. Food and beverage companies must absolutely participate in development of this index. No other products are purchased as frequently as foodstuffs and this industry will be further challenged no matter what form the sustainability index takes. For that reason, it is essential that the end product provide realistic sustainability benefits for manufacturers and not just perceived benefits for consumers.

This article can also be found in the digital edition of Food Business News, August 18, 2009, starting on Page 9. Click here to search that archive.

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