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A long-term plan to integrate ESG factors in strategic decision-making is critical

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Gareth Ackerman is the chairman of Pick n Pay.

When we finally put the effects of war and the pandemic behind us, the challenges of the climate crisis, environmental degradation, waste, poverty and water scarcity – to name but a few crises – will still be with us. Environmental, social and governance issues affect long-term sustainability, no matter the demands of the moment.

Global shocks – Covid-19 and the war in Ukraine – have dominated headlines and absorbed public attention over the past few years, to the extent that longer-term threats have been eclipsed.

Locally, social unrest and the recent floods, amid the socio-economic aftermath of Covid and record unemployment, have been the focus. However, the devastation caused by these crises and the urgency of our responses should not blind us to the many other global and domestic challenges we face, nor to the fact that in many ways they are interlinked.

For example, Russia’s invasion of Ukraine has prompted both a frantic search for new oil and gas supplies, and a greater urgency in the quest to diversify energy away from fossil fuels. These seemingly contradictory responses throw into sharp relief the intense uncertainty we are living through, and the need to take a longer-term strategic view.

When we finally put the effects of war and the pandemic behind us, the challenges of climate change, environmental degradation, waste, poverty and water scarcity – to name but a few crises – will still be with us.

Environmental, social and governance (ESG) issues affect long-term sustainability, no matter the demands of the moment.

For corporates, ESG must work alongside financial factors to save, not increase, costs. It is only in this way that companies will give these critical issues their full attention.

A strong focus on ESG does not require a trade-off with core business priorities. In our experience at Pick n Pay, clear action plans on environmental and social priorities strengthen the operational resilience of a business, and – by reducing cost – have also strengthened our competitiveness. For example, we have saved more than R2-billion in electricity costs over the past decade.

It pays to take decisive steps to reduce your environmental impact. It pays to waste less – benefiting society as well as the bottom line. It pays to use less packaging – and customers thank us for it too, because they also want to be more sustainable in their lives.

We have been fortunate in that Pick n Pay has embedded ESG issues into its values since the 1970s. This has given us a head start in the way we approach these critical questions. Through its long-term plan, the group continues to reinforce and integrate ESG factors in strategic and operational decision-making.

Our value system at Pick n Pay is the cornerstone of our success. It defines what we do and how we do it. Critically, doing good is good business – an embedded value at the company that has guided us in how we approach ESG.  

Investor requirements around ESG are also becoming more onerous and there has been a substantial increase in the number of ESG indicators that need to be reported on.

Accordingly, we are increasing the depth of our ESG disclosures, and are reviewing and consolidating more than 1,300 ESG indicators across a range of ratings agencies and disclosure platforms.

We are specifically working towards increasing disclosure and transparency around our climate change-related targets, timelines and actions; labour and wage practices – focusing on a fair living wage for employees and ensuring pay parity across race and gender; and human rights and fair trade across our supply chain.

We have aligned our sustainability goals, and our responses, to those of the International Consumer Goods Forum and the UN Sustainable Development Goals (SDGs). This keeps us focused on the most important global issues.

In 2021, Pick n Pay was the top retailer in South Africa on the IRAS Sustainability/ESG Data Transparency Index.

We have made solid progress on a number of fronts.

The goal for both Pick n Pay and Boxer is to be a zero-carbon business by 2050 and to achieve a 60% reduction in carbon emissions by 2040.

We are expanding our renewable solar energy programme at our stores and distribution centres, bringing installed capacity to 5.6MWp, which produces 7.8GWh of electricity a year, with more sites on the way.

Our goal is to have 100% of our refrigerant systems in all Pick n Pay and Boxer stores and distribution centres using climate-friendly refrigeration by 2040. Already, 37% of our stores are using a form of natural refrigeration – 36 stores have full CO2 refrigeration systems and 80 have CO2 hybrid systems.

Progress on energy efficiency is tracked using extensive metering that enables us to measure real-time consumption, and we have achieved a 35% reduction relative to the 2010 financial year, against a target of a 45% reduction by 2030.

Our new Eastport Distribution Centre will raise the bar for our industry. It has 3,200 solar PV panels covering a roof area of 6,400m², with an annual electricity output of 2.344GWh, saving 2,320 tonnes of CO2 emissions every year.

Rainwater harvesting will save an estimated 89 million litres a year as the water is collected in an attenuation pond, filtered and pumped to the refrigeration plant and facilities for domestic use. This treated water will cost R6.80 per kilolitre compared with the municipal rate of R44.77.

The facility, with 100% LED lighting, will undergo EDGE green building certification.

Waste is not only a challenge in terms of pollution. It is literally a waste of resources. Food waste is an unforgivable problem in a country and on a continent where so many people still go hungry. We aim to reduce our food waste by 50% by 2030 as part of our 10x20x30 commitment and being a core signatory to the Consumer Goods Council’s Voluntary Food Loss and Waste Agreement. We have already achieved a reduction of 23% in waste costs and 28% in the number of products wasted since our 2019 baseline.

During the past financial year, we contributed 841 tons of edible surplus food to FoodForward SA, to the value of R38-million, for distribution to 2,222 beneficiary organisations that collectively feed 875,727 people daily every year. We are FoodForward SA’s largest retail partner.

We are also tracking well against our general waste reduction targets and over the past year diverted 61% of all our waste from landfill, with the aim of diverting 75% of all waste from landfill by 2025.

As a founding signatory of the SA Plastic Pact, by 2025 we want 100% of our packaging to be recyclable or reusable; have 30% average recycled content across PnP-branded products and reduced the average weight of packaging across our PnP-branded products by 30%. Since 2019, we have increased the average recycled content to 22.27% and reduced the average packaging weight of our PnP-branded products by almost 17%. We have also removed difficult-to-recycle materials, including carrier bags, plastic straws and microbeads, from our products and stores.

The use of technology is becoming a critical enabler of ESG and we have developed a unique integrated online waste management system that tracks waste streams, recycling levels and income from recycling across all our stores, allowing detailed management and reporting of our waste footprint.

The benefits of such an integrated approach to ESG are manifold: it reduces the environmental impact of doing business, reduces costs and consequently keeps prices lower for people who need it most, and ensures sustainable economic and employment growth.

When you strip away the noise of the current news cycle, this is the only viable path towards the future we would want for the generations who follow us. DM

 

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