Climate change is a complex issue that requires a multi-disciplinary and cross-sectoral response. The UK retailing industry needs to come up with a coordinated response to the climate change. Sainsbury is responsible for taking the led on this issue as it is the current market leader of this industry. Sir Nicholas Stern has called climate change the greatest and most comprehensive market failure ever seen. Reducing carbon dioxide emissions has become the hot topic of public policy in Britain. The Stern analysis concluded that current levels of carbon emissions are increasingly unsustainable in the UK and around the globe. Stern estimates that 1% of UK gross domestic product must be spent on tackling climate change, leading to a 25% cut in greenhouse gas emissions by 2050. If measures are not taken before then and temperatures increase by 5ºC, Stern warns, rising sea levels could put London underwater.
The UK will implement a climate change bill, proposing a 60% cut in greenhouse gas emissions by 2050 which was highlighted by the Queen’s Speech during the state opening of parliament in November 2007. When global greenhouse gas emissions have not fallen by the end of 2015, then our chances of reducing climate change to the two-degree “safety line” are dwindling every day. The scientific data demands: the peaking of emissions within eight years, worldwide cuts of 60 per cent by 2030, and 80 per cent or more by 2050. Above two degrees, the possibility of crossing “tipping points” in the earth’s system will result in the collapse of the Amazon rainforest and the release of methane from the Siberian permafrost is higher.
The technology of Green Fuel Technologies should be employed to 1) reduce pollution, including thermal and 2) provide a fuel source that would make a big dent in reliance on imported oil.
The prospects for carbon recycling are huge primarily through new generation clean WTE, biomass cultivation (which covers the plantation of many trees and grasses depending on local soil and weather conditions) or by directly coursing flue gases through algae cultures to generate fast growing algae by the ton (with oil, ethanol and protein for animal feed squeezed out). The result is that the carbon efficiency of the economy will continue to increase.
If regulators and conservation activists convince people that they need the environmentally friendly economy, it will be a big feast for everybody from bio-tech companies to car industry for years to come. The demand for products as diverse as high efficiency ball-bearings, ‘smart meters’, low energy computer monitors, financial services and household goods is driven by climate change.
Background and Customer Base
Sainsbury Chief Executive Justin King stated that the market growth of Sainsbury has enabled the company to overtake Asda. The strong performance of this retailer can result in the fulltime staff getting a bonus of around 500 pounds sterling each as a reward and King could double his salary with a 700,000 pounds sterling bonus.
Sainsbury still faces a cut-throat competition which means price deflation has risen so the company has to achieve higher volumes to stand still. The retail climate is much tougher than expected so it could still struggle to achieve its target of total sales growth of 2.5 billion pounds sterling. Profit margins remain weak. Earnings are forecast to rise from [pounds sterling] 240m to [pounds sterling] 260m in the year just ended, rising to [pounds sterling] 340m after that.
Customer Base and Product/Service
Sainsbury’s was founded John James and Mary Ann Sainsbury in 1869. At 173 Drury Lane, London, they opened their very first small dairy store. Drury Lane was one of London’s poorest areas and the Sainsburys’ shop quickly became popular for offering high-quality products at low prices. By 1882, Sainsbury had four shops and planned to expand his business. To supply this rising chain, he opened a depot in Kentish Town, northwest London, and built bacon kilns on the same site which produced the first Sainsbury brand product. It was also in the affluent suburb of Croydon where John James opened his first branch in 1882. This shop sold a wide range of ‘ high-class ‘ items, and was decorated more elaborately than the previous shops. (Available at http://www.j-sainsbury.co.uk/?)
The main goal of Sainsbury’s is to deliver a high quality shopping experience for their customers with great product at fair prices. We strive to surpass customer expectations of good, nutritious, fresh and delicious food making their daily lives easier.
Sainsbury’s business has a huge and enormous customer base common to UK retailers. It has 11 million different customers which translate to a total of 11 million different needs. The company’s supply chain encompasses 2,000 suppliers, more than 35,000 SKUs, approximately 500 stores, more than 6 million stock points, and around 800 million cases moved annually.
The company’s goals were to reduce the cost of system ownership and enhance its supply chain capability through improvements in efficiency, integration, and control. These improvements were deemed essential for Sainsbury’s fulfillment factories. The company also needed to ensure that it was going through an upgrade and development path with its initiative.
Sainsbury Responds to Global Warming
Sainsbury can respond effectively to climate change in two ways: implementing practices that promote carbon cuts and implementing sustainability policies in overall operations in supermarkets. Those two ways will lead to 5 opportunities to reduce global warming.
Opportunities of Global Warming
- Sainsbury can help reduce plastic bags by preparing recyclable carrier bags for the shoppers. It can sell natural, handmade shopping bags. It can remove and do away with all the plastic bags.
- Sainsbury can start promoting heavily more Fairtrade products in 2009. The promotion of these types of products will result in the development of fuel efficient small businesses all over the world.
- The consumer market is changing. The consumer is changing because sustainability has a crucial factor for business survival. Sainsbury can hold seminars on climate change for regular shoppers and it can then offer specific grocery prizes to increase and encourage customer attendance to these seminars.
- Sainsbury can offer prizes for consumers who bring cars with less carbon dioxide emissions. The company can set up an indicator for carbon dioxide emissions outside the supermarket and around the parking lot areas.
- A lot of good retailers also act as life editors by helping consumers choose products and services that are environmentally-friendly.
Five Actions Sainsbury Will Adopt to Reduce Global Warming
Sainsbury will implement five actions that will help foster an environmentally-friendly society. First, Sainsbury can prepare recyclable carrier bags for the shoppers. The store staff can remove all the plastic bags and discard them. Second, Sainsbury can foster supermarket-based consumer contests on climate change practices. These practices are numerous. One, better home insulation makes living conditions more comfortable and reduces fuel bills. Two, getting more children to walk and cycle to school improves their physical health and helps to tackle obesity. Three, enforcing speed limits and reducing them further would save hundreds of lives a year, and give respite from the incessant noise pollution of speeding traffic. Fourth, protecting and encouraging small shops and local businesses, favoring farmers’ markets over supermarkets help build stronger and more cohesive communities by reducing the need for travel to far places.
The third strategy is that the store can implement carbon footprint labeling measure for all products sold in store. This strategy will coax the owners of products without labeling to shift and make the product fit the label. The fourth strategy is that Sainsbury can offer prizes for consumers who bring cars with less carbon dioxide emissions when they come to shop. The fifth strategy is that Sainsbury can highlight products which use less energy and help consumers make choices that help reduce carbon emissions.
Sainsbury’s reinforced the increasing popularity of Fairtrade products when it announced sales of over £ 1 m a week, a rise of 70 percent compared to 2007. During the annual Fairtrade fortnight, Sainsbury, which accounts for a third of the Fairtrade market, reported increased interest from the “conscious customer” as well as a wider range of goods for sale. In February it offered Fairtrade roses for the first time for Valentine’s Day. The strong sales of Fairtrade products in 2007 coincided with the beginning of Fairtrade Fortnight (25 February – 9 March 2008) set a new pace for international trade. The Fairtrade Foundation reveals an increase of estimated retail sales of Fairtrade products to £493m.
Fairtrade bananas are the best selling Fairtrade product with sales topping £150m, an increase of 130%. Approximately 1 in 4 bananas sold are Fairtrade and British consumers eat three million. Fairtrade bananas a day. Fairtrade coffee sales rose 24% to over £117 million. Items made with Fairtrade certified cotton increased from over half a million to under 9.5m units. For instance, Fairtrade tea sales rose by 24% to just over £30m. Interesting economic trends mean that a tenth of the tea sold in the UK by the end of 2008 should be fair trade tea.
Sainsbury Implements Five Strategies to Respond to Climate Change
Sainsbury Chief Executive Officer states that climate change is a complex issue that requires a multi-disciplinary and a well-managed cross-sectoral response from the supermarket industry.
Given the range of environmental actions that all companies need to take – energy efficiency and water efficiency – individual corporate action is the key.
Due to the serious nature of this issue, Sainsbury has shown its decision to provide carbon labelling and emissions initiative. The group also plans to reduce worldwide pollution from existing stores by at least 50 percent by 2020 and intends to restrict air transport to less than 1 percent the firm’s products, he added. Supermarkets have been subjected to increasing pressure from campaigners to move their goods by road and air for the environmental impact. Renewed efforts involve technology leapfrogging: helping developing countries skip over our dirty phase of industrialization, by installing solar power in remote in off-grid areas. Sainsbury is moving swiftly to measure and slash their greenhouse gas emissions.
In terms of power requirements, Sainsbury’s planned investments will be channeled to new, cleaner facilities which provide efficient energy. It will focus on lower-carbon alternatives such as wind power, “clean” coal, or natural gas, for its energy needs in all its supermarket operations. Simply reducing the energy consumption is the best way to cut emissions. Since carbon is basically a proxy for fossil energy, cutting carbon is similar to cutting costs.
When mandatory government regulations are issued later on by the British Parliament, they essentially put a price tag on carbon emissions. That obviously makes more financially attractive cleaner, more efficient projects, spurring new business opportunities.
The company’s new carbon labeling policy demanded that it responds to the social need to reduce the carbon footprint. Sainsbury reported that its total direct carbon footprint in the United Kingdom amounted to approximately 1 million tons of carbon dioxide (CO2) per year, with mass production refrigeration accounting for roughly a third of emissions. The company said it had commissioned independent research to chart its businesses ‘ overall carbon footprint worldwide.
- Turner, Martyn and Brian O’Connel. (2001). The Whole World’s Watching: Decarbonizing the Economy and Saving the World. New York: John Wiley & Sons.
- “Round Table: Retail in the 21st Century; Are Supermarkets the Best Way to Deliver Regeneration in Our Inner Cities and to Drive Forward Policy on Sustainability, the Environment and Climate Change?.” New Statesman. Volume: 136. Issue: 4865. October 8, 2007. Page Number: 20.
- Martinson, James. “Sainsbury’s reports 70% rise in Fairtrade sales.” The Guardian Online. March 15, 2006. Available at http://www.guardian.co.uk/business/2006/mar/15/fairtrade.supermarkets.
- “Fairtrade sales soar as shoppers go ethical” CSR News. Availble at URL: http://www.csreurope.org/news.php?action=show_news&news_id=451&type=
- Sainsbury PLC.Available at URL: http://www.j-sainsbury.co.uk/?pageid=188