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Retail Ethics and Green Retailing
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Retail Ethics and Green Retailing 2017:

Centre for Retail Research

mixed fruit and vegetablesRetailers are keen to show the 2017 consumer that they are green, recycling-friendly, fair-trading, waste-conscious, socially-responsible and energy-conserving. Whilst they may be condemned for 'greenwash' they have spent £millions on improving their merchandise, supply chains, systems and stores to make themselves greener and more ethical and have become more insistent on obtaining sustainable and fairtrade supplies for fish, timber, coffee, bananas etc. Retailers such as Waitrose, Sainsbury's, the Co-op and Marks & Spencer, no longer sell eggs from caged birds.

Many customers expect more than a nominal level of green/ethical awareness and practice by retailers, although they are usually not prepared to pay significantly higher prices. Most publicity is usually generated by the major multiples, but being green and ethical is also carried out by smaller companies. Booths, the northern supermarket group, showed this when it declared that its own-label farmers would get a 'fair-milk' price (defined as the highest farmgate price paid per litre). Retailers, particularly food stores, may emphasise their humane treatment credentials but a RSPCA poll found that only 2% of respondents understood what 'free range pigs' or 'outdoor bred pigs' actually meant in terms of animal treatment. Although people might want to adopt high ethical standards, there is an obvious information gap.

Green Retailers Need Green Customers

Green retail involves both supply and demand


The Situation is Better than You Might Think
The Ethical Consumer Markets Report 2016 (Ethical Consumer magazine) values total ethical consumer spending at £38 bn (2015). The progress from £6 bn in 1990 is shown in the graph below. Ethical spending figures discussed in the report are not only retail goods, but also include green transport, green energy and charities. We have analysed and adapted their figures and show that ethical retail spending amounted to £16.6 bn in 2015. We expect this retail ethical spending to rise in 2016 to an estimated £17.6 bn and as much as £18.476 bn in 2017.

Ethical spending uk - 1999-2015
[source: Ethical Consumer Markets Report 2016]

For standard retailing, the main categories are:

- Ethical food and drink £9.0 bn
- Ethical clothing and cosmetics £1.3 bn
- Green home products £3.9 bn (excluding green energy and boilers)
- Buying from local stores £2.4 bn
- Total £16.6 bn

Further detail below. We have reanalysed and adjusted several estimates made by the report's authors in order to be consistent with the specific retail orientation of this webpage.

The report also estimates that consumer boycotts cost industry 1.8 bn in 2015. These boycotts tended to be related to cosmetics (costing £486 mn) and food and drink (costing £752 mn) for various reasons including animal testing, the politics of Palestine, paying insufficient tax, environmental and social reasons. We do not know whether these estimates are correct. The methodology was to ask respondents whether they consciously boycotted certain companies or products, and then gross up the figures.

But It's a Network Out There

If retailers are to cut their carbon footprints, be more ethical and green(er), they need to intervene at all stages of the product lifecycle:

The Ethics Confusion over Definitions and Certification.
There is widespread confusion amongst consumers about what ethical food terms such as 'free range' actually mean as well as the range of certification and assurance organisations that verify many food and other products. It all depends. There is a legal definition of 'free range chickens', but it is not as free range as the term might imply. There is no legal definition or standards for 'free range' when applied to pork, allowing retailers and suppliers to label pork products as 'outdoor bred' or 'free-range' without implying some minimum access to the outside.

Here are some definitions:

Free range chickens must have continuous daytime access to open-air runs (an area mainly covered by vegetation) for at least half their lifetime, no more than 13 chickens per square metre for meat chickens or 9 hens/square metre for egg producers. There are other rules about access to water, litter etc. The birds are usually beak trimmed, except for Waitrose British Blacktail eggs and organic.

Barn eggs (sounds great) mean the flocks can be kept within large enclosed barns in flocks of up to 4,000.

Traditional Free-Range chicken requirements differ from 'Free-Range' by requiring more extensive open-air access, a lower stocking density and a greater minimum age at slaughter.

Free-Range - Total Freedom has similar requirements, but the birds must have unrestricted daytime open-air access.

Organic eggs (legal definition), have been kept in areas of up to six birds per square metre, have more access to outdoors and the maximum flock is 2,000 birds. The birds must not be beak-trimmed.

Free-range pigs may be born indoors.

Outdoor-bred pigs are born outside, where their mothers stay, but in many systems, the piglets at weaning are moved indoors, with a range of welfare standards.

Outdoor-reared pigs is a system where piglets are born outside and have full access to the outdoors for up to 10 weeks of age before being moved indoors.

Organic pork. As with chickens, organic standards for pork provide much more space for pigs than Red Tractor or Freedom Foods standards.


Even a term like 'British' does not mean that the food was grown or bred in Britain, but that it was subject to 'the last substantial change' in Britain. Danish pigmeat cured in the UK can be called 'British Bacon' (or 'Scottish Bacon' in Scotland). There are very strict regulations for beef, for example Scotch beef must be reared and prepared in Scotland. Sea fish must show where it was caught, whilst farmed fish would probably show where it was harvested. Slicing a product does not count as 'substantial change', hence 'British' may simply mean 'prepared in a British fashion' as long as the correct country of origin is shown in the origin area of the product label. But 'prawn crackers' have to contain some prawn extract. The only way to be sure of buying British food is to buy Lion Mark, Red Tractor, organic or Freedom Food.

Ethical Certification Programmes
There are several ethical or green certification programmes, which usually combine education, information and testing for compliance with the organisation's standards. They are assurance schemes rather than 'hey there, I'm so ethical!' logos, although members certainly hope they will help to sell product. Membership normally involves inspection and repeat inspection. Standards vary though: widely-used certification schemes are frequently criticised as 'insufficient', though their advocates argue that these standards show the basis of guaranteed minimum requirements.

Yes But, People are Different
Retailers cannot go much faster than their customers. Some shoppers want 100% Fairtrade or organic but the majority are far more nuanced. They will buy: some goods with no apparent green features, others that must be produced humanely, and other goods where they want to buy cheaply but look for some justification that it is OK (greenish) through a certification label, eg Red Tractor. Although most customers may claim to be concerned about retail practices and the environment this does not affect everyone's shopping habits every time.

A 2016 survey by Globespan found 64% of shoppers thought UK farmers and 63% though farmers from poorer countries were underpaid. 58% of consumers claimed to be prepared to pay more if they knew products were delivering a better price and fairer wages for farmers and workers; 53% would pay more for environmentally-friendly food production.

Globespan (2016) Assessing Public Support for Regulation for Fairer Trading Practices, June, London: Globescan.

The 'Categories of Ethical Shopper' Figure shows the breakdown of different kinds of ethical food shopper according to the IGD. It ranges from the 15% Ethical Evangelists (who normally are very conscientious in their buying decisions) to the 21% of shoppers (Conscience Casuals, who spend only part of their money on various ethical labels

Categories of Ethical Shopper
Source: IGD Ethical Shopping - Are UK Shoppers Turning Green? report,

The IGD survey found various barriers to widespread adoption of ethical shopping. As might be expected, price was the most important barrier to buying ethically (cited by 52%), lack of availability (=a green option is not stocked) was cited by 31%, lack of knowledge (17%), and lack of trust in green claims made (14%).

Ethics is More than Energy saving
Recent unwelcome news in 2016 and 2017 about retail working conditions and the financing of some businesses have shone an unwelcome light on the retail industry. Ethics is not merely energy saving, bags for life, Fairtrade bananas, and better sourcing of raw materials. News about Issues such as refugee children in Turkey apparently making clothes for UK stores, below minimum-wage pay in some Leicester garment factories, poor working conditions in several distribution centres in the UK ('sacked for smiling or having a panic attack') and deaths in unsafe factories in Bangladesh all raise questions for the sector. Most of these factories certify they meet the retailers' standards, but the practice of extensive subcontracting and stating untruths means that retailers can never be sure that their standards are being maintained. The 'gig' zero-hours economy can provide maximum flexibility for both employees and retailers, at their worst they can be abusive and poverty creating. The rapid failure of BHS one year after it was sold for £1 to someone with no previous experience of retail, the termination of thousands of employees and the loss of many of their pension rights contrasted with the luxurious lifestyle of BHS' former owner, but it was all perfectly legal. Were the problems at BHS, Sports Direct, Boohoo and others merely some very bad examples in an industry rapidly changing, or evidence of more widespread problems in the industry?

Retailers are Doing Something
Since about 2008, all the major retailers have had an environmental or ethical strategy dealing with their operational costs and systems, informing customers and trying to improve their suppliers. These plans are not broadbrush approaches but involve detailed changes to operations and procedures and strict timetables. In the UK the best known is probably Marks & Spencer which has a £200m "eco-plan" ("Plan A", "There is no Plan B") to make it a sustainable business, concerning packaging, operational, supply and waste standards. It is now working on its third project, Plan A 2020. Net CO2 emissions are now zero. It has cut waste by 35%, all waste is recycled and goes to anaerobic digesters.

The Co-op Group, is probably the prime mover of all retail environmentalists. It pioneered Fairtrade, won the Business Commitment to the Environment award after reducing its carbon emissions by 86 per cent, and the Environment Leadership Award from Business in the Community. Sainsbury's, which has been in the ethical business for longer than many, criticised rivals for unrealistic environmental promises, whilst claiming that some initiatives launched by rivals such as M&S and Tesco are just 'playing catch-up' to the work that Sainsbury's has been doing for years.

M&S and the Co-op are the most highly rated of retailers. In 2014, Ethical Consumer voted them joint winners of 'the most responsible supermarket' award.

Being Green is a Commercial Opportunity, It Should be Shared

As well as doing the right things for the right reasons, retailers want to be loved for their commitment to ethical retailing. Every schoolboy knows that companies like M&S, Waitrose and the Co-op have done a lot of work and are sincerely committed to ethical retailing. None of the major retailers sell eggs produced by caged birds, although much processed food (eg cakes, desserts) still contains imported egg product that may not meet declared corporate standards if put on the shelf in Waitrose. Shoppers are not experts and their perceptions can be based on their attitudes to the retailer.

Tesco feels deeply frustrated because the excellent work it does on ethics and green retailing is not given full credit. It has spent vast sums of money for example in determining the carbon footprint of a significant proportion of its product lines Most of the footprint occurred upstream in suppliers' facilities and the work Tesco has done to reduce its carbon footprint by redesigning products and processes has been passed on by suppliers to benefit other retailers as well, helping them to reduce their own carbon footprint. Much of this work went uncredited. Of course not only Tesco helps other retailers to cut their carbon footprints.

Retailers would attain their goals more cheaply if they worked together more. The number of labelling and verification schemes would be reduced - and they might mean more to the ordinary shopper. But retailers all have different views about what needs to be achieved and they also want to get maximum kudos, which may mean adopting a sharply differentiated green plan.

Our view is that inexpert shoppers tend to relate retailer quality to retailer greenness. They may love ASDA, Aldi and Tesco, but they may wrongly think that these companies are not doing much, and they ignore in-store communications. People who shop at Waitrose, M&S and the Co-op expect their ethically-conscious retailers to put a lot of effort into this issue and may look for evidence to check that this is actually occurring. Thus the virtuous are in a virtuous circle and the more utilitarian may seem locked into an apparent unvirtuous circle. The reality of course may be quite different.

Reducing Waste
There are to be no new landfill sites to be commissioned. The landfill tax forces retailers to use other methods of disposing of their waste. Most supermarkets now recycle or send waste to anaerobic digesters. Not everyone has achieved their targets, the main problems being the failure of the supply chains, local authorities, and producers of recycling equipment to supply or invest in the required resources. The environmentally-sound processing systems need to be there, in the right place and with the right capacity before the desired changes can be made.

Reducing waste has also involved retailers and their suppliers redesigning thousands of customer display packs, consignment packages and packaging to use fewer resources and create less waste. For example, M&S has reduced the number of glass jars it uses for packaging by 40%. However packaging is not created purely to make merchandise lovely, it has an important role in keeping goods safe, tamper-free and unbroken. Some minimum degree of packaging will always be required, if only to prevent waste occurring.

Food Waste
WRAP estimated in 2017 that total food waste produced by retailers in 2017 was 250,000 Tonnes, which was only 2% of post-farm gate food waste from industry, commerce and households. A House of Commons report in 2014 found that only 2% of retail food waste was given away to charities, food banks or others. Nonetheless, food waste in retail was worth around £0.8 bn, and practically all this value could have been saved. Food manufacturing produced 1.7 mn Tonnes of waste, plus a further 2.8 mn Tonnes that was sent to animal feed or rendering. Since the House of Commons report, retailers have increased their charitable donations and worked on ways of cutting food wastage, probably by around 7% under the Courtauld 3 commitment which starting in 2012. However concerns remain about retailers' antagonism towards 'ugly' fruit and vegetables, so that up to 40% of a crop may be rejected as blemished or substandard, which create significant food waste for the agricultural sector. .

Waste not, Want not

Retailers have also tried persuading shoppers to be more careful about their purchasing patterns, as there is no point in buying food that is thrown away. WRAP (2017) reckoned that UK consumers threw away 7.3 mn Tonnes of food, of which 4.4 mn Tonnes was truly avoidable. The difference was items like bones, egg shells, banana skins and uneatable product. The amount thrown away was equivalent to £470 per household. The main losses included: home-made or pre-prepared meals (£1.1 bn, 440,000 T); fresh fruit and vegetables (£2.6 bn, 1.2 bn T); and even more surprising, £270 m of wine, £150 m of fruit juices and smoothies and £200 m of carbonated soft drinks.

BOGOF or 'two-for-£2'offers may lead to some overconsumption by shoppers: Sainsbury's has already cut back on such offers. But it is hard to see how much retailers can do to reduce food waste by households, although smaller packs and smaller tins might be a start.

(WRAP (2017) Estimates of Food Surplus and Waste Arisings in the UK, Banbury:Waste & Resources Action Programme.

Energy Saving
According to the Carbon Trust, UK retailing accounts for 7% (only 7%) of UK carbon emissions and it should easily be able to cut these by 10% to 20%. Retailers have to make payments for waste sent to landfill; emissions are monitored and charges are levied if these are not reduced; and rising energy costs including an increasing green premium all make it unprofitable to be wasteful and a polluter.

The forty biggest shopping centres spent £40 mn on energy annually, and the top 15 produce 5.5. mn Tonnes of CO2 pa. On average energy is about 29% of the operating costs of a commercial unit. Reducing energy costs, typically, involves a programme of (a) switching off unused equipment, setting thermostats lower, (b) better and earlier maintenance ensuring equipment works with the smallest inputs, and is replaced with more energy-efficient devices when this is economic, and (c) regular refurbishment (see also, Utilitywise).

This diagram from Utilitywise shows the elements of energy costs in a typical retail store. Business energy monitoring devices can cut ongoing energy costs.

Utilitywise graph

Around 30% of energy is lost through the roof, and roof lining or spraying can reduce this figure. Small details like changing the position of refrigeration equipment to keep it out of the sun, not overfilling units, and reusing the heat generated to heat the stores (pioneered by Sainsbury's 15 years ago) save significant energy costs.

There has been increasing concern about stores operating in winter with their door open and other wasteful use of energy. The Carbon Trust suggests that the open-door policy costs the retail sector £1 billion and notes that some US towns now ban this practice. Other estimates of the open-door policy suggest it is around £300 mn. The BRC has adopted a new programme, 25-in-5: Unlocking Energy Efficiency, aimed at making a cumulative saving for the industry of £4.1 bn by cutting energy costs by 25% by 2050.

Plastic Carrier Bags.
Differences in retail approaches towards how to reduce the number of plastic bags have now been eliminated by the government decision to oblige large and medium-sized retailers (defined as having 250 or more full-time employees) to charge 5p for every non-reusable plastic bag (70 microns thick or less), including bags used for online deliveries. Bags used to wrap certain goods such as uncooked fish and meat products are excluded, as are bags used for flowers, bulbs, products contaminated by soil, blades, axes, prescription medicines and fish and chips or similar products that may spill or become contaminated if they are not packed in a bag. Bags for life are not charged the 5p. The retailer has to account for the costs of issuing and charging for bags and remit any surplus to charities and make a public announcement of what has been paid. There are slight differences in the rules for different UK regions.

In England, the number of bags being given out by supermarkets fell 85% in the first six months of the scheme compared to the previous 12 months. Plastic bag use was considerable before the new charge, although it had fallen by 30% in the previous ten years. In the UK, retailer-issued bag use fell from 11 per person per month in 2002 to 7.2 in 2009, though it rose to 7.7 in 2010.

WRAP found that retailers used 6.8 million bags in 2010 compared to 10.9 in 2006 (-37%). The trend towards thin gauge bags meant that the total weight of bags provided was 57,900 Tonnes in 2010 compared with 95,000 Tonnes in 2006.

Greener products
For several years, retailers and manufacturers have been redesigning many of their products to make them more sustainable and less energy and carbon intensive. Many retailers have focused recently on products that create problems when they pass through the sewerage systems into the sea, and add to the plastic already there. This was part of the public campaign against free plastic bags. Several retailers are pledged to eliminate cotton buds that have plastic stalks, to eliminate plastic microbeads from their own label products and to negotiate with suppliers about withdrawing branded products with plastic microbeads from sale. FSA-certified and Raintree Alliance-certified timber, bananas, wine, tea and coffee are already extensively sold in UK stores, whilst Sainsbury's and the Co-op vie to be the largest seller of Fairtrade products.

Although sales of organic food were growing at 30% pa in the early 2000s, they dropped during the recession. By 2016, organics sales reached £1.95 bn, an increase over 2015 of 5.9% (Soil Association report). In 2012 organics sales had been £1.7 bn.

Sales of organic products in supermarkets rose by 3.2% in 2016, but sales in the independent sector and box schemes rose even faster at 8.2% and these channels now account for a combined £544 mn of organics sales each year. Organic health and beauty increased by 21.6%. Organic catering purchases rose by 15.2%. Young adult consumers are thought to want to have a better idea of provenance, cruelty-free cosmetics, and baby products are all important growth areas. When organics reaches £2 bn (probably in 2017) it will have recovered to the point it was at before the recession.

Reasons for the decline in organics are a combination of price, the availability of other ethical labels like Fairtrade ('at least we are helping poor farmers overseas'), it may be too abstract and goody-goody for most consumers and there have been several reports (eg The Food Standards Agency) showing that there were no observable nutritional differences between organic food and non-organic. In contrast an article in the Royal Statistical Society's Significance journal showed that this was not true for organic milk. In addition supermarkets are less likely to put organics on promotion and some shoppers may buy organic products for children ('just in case') but not otherwise. There have also been frauds with 'organic' eggs, pies and meat being found to be ordinary foodstuffs, thus undermining consumer confidence. There are many causes but they mean that organics is often seen as a green subgroup rather than the primary ethical foodstuffs.

Organics as a brand is thought to be weak, difficult to understand and having brand values that are more about being contrary, rather than things consumers associate with. MMR Research showed that consumers were five times more likely to relate to terms such as 'healthy', 'natural', 'free from artificial colours, flavours and preservatives' than to the word 'organic'. Shoppers were looking for evidence of natural food that had not been tampered with, 43% looked for healthy and low fat evidence, 30% for low sugar, and 34% for low salt. The argument is that organics should change their name and reposition themselves as traditional values (think Hovis), healthy, free from chemicals, natural etc.

The Conclusions

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