Swiss retailers leading the way in sustainability management
oekom research evaluates the world’s 130 largest retail companies: for more than 80 per cent of them, sustainability remains an alien concept
Munich, 20 June 2011 - The sustainability rating agency oekom research put 130 of the world’s largest retail companies under the microscope in its recent rating of the sector. 105 companies exhibited so little engagement or transparency that they failed to qualify for a detailed analysis. 25 companies can point to having implemented comparatively wide-ranging measures, and eleven of them are playing a pioneering role. These meet the requirements for sound sustainability management defined by oekom research, and the analysts have awarded them “prime” status. The Swiss co-operative Coop came out as the top company in the sector, achieving a score of B+ on the rating scale from A+ (highest score) to D-. It was followed by another co-operative, the Swiss company Migros (B-), and the UK retailer Marks & Spencer (B-). The average score for all the companies analysed in detail was C+.
Key lever of product mix policy increasingly being applied
More and more, consumers are reaching for fair trade or organic products. Sales of fair trade products alone, according to Fairtrade Labelling Organisations International’s calculations, were up by 15 per cent worldwide in 2009. “As the intermediary between producers and consumers, the retail trade has a key role to play in promoting sustainable consumption,” is how Lisa Häuser, analyst at oekom research, assesses the retail trade’s responsibility. “After more than 25 years of debate on this so-called ‘gatekeeper function’, we are at last seeing the retail trade playing this part more actively.”
The majority of retailers are now offering at least some products that meet the rising social and environmental demands of consumers. Some chains have even introduced their own organic brands. This is also true of the discounters, who had previously competed for customers chiefly on price. Only a few companies, however, are pursuing a comprehensive strategy, with clear goals and measures, that systematically promotes the range concerned. Coop is setting the best example here. The analysts awarded the Swiss company the maximum score of A+ in this area of the rating.
Suppliers not the only ones with precarious working conditions
The retail corporations purchase their goods from hundreds of suppliers. Many of these are based in emerging and developing countries, where working conditions are often precarious. The majority of the 25 companies analysed in detail therefore require their suppliers to comply with international labour standards. However, the companies have yet to implement consistent systems for monitoring this requirement. For example, H&M and Marks & Spencer have comprehensive management systems for their supply chains. Labour rights violations by some of the suppliers of these two companies demonstrate, however, that even the best monitoring systems are not yet functioning seamlessly.
Wages constitute a particular problem where suppliers are concerned, as they are often not sufficient to meet the basic needs of workers and their families. The UK retailer Marks & Spencer is breaking new ground here: by 2015, it plans to guarantee that its textile suppliers from the least developed countries can pay their workers a living wage. As part of this scheme, the company - rather atypically for the sector - also plans to check whether its buying prices are adequate. The top company in the sector, Coop, is working with the Swiss development organisation Helvetas on improving the living conditions of cocoa farmers through infrastructure projects and further training.
For the retail trade, as one of the largest employers, the way it treats its own employees is also a key issue. There is constant criticism of the low wages paid and of the way in which workers are prevented from organising themselves in trade unions. In the US, many companies do not even have guidelines in place guaranteeing employees’ freedom of association. As far as guaranteeing freedom of association was concerned, the companies rated achieved an overall average score of just C-. The highest scores here were also achieved by Coop and Migros, each scoring A+.
The challenge of climate change
Climate change also represents a major challenge for the sector: Retail companies are directly responsible for significant greenhouse gas emissions, through the operation of their sales outlets and distribution centres, as well as the transportation of goods using their own fleets. However, the majority of the emissions accrue in the supply chain, for example in the cultivation and manufacture of products, and in the use phase. Almost all the companies evaluated report having programmes in place to reduce greenhouse gas emissions in their own branches and in their freight transport. Only in a very few cases is the supply chain also included here. The UK retailer Tesco, for example, has recorded the carbon footprint of more than 500 different products to identify starting points for improving the carbon balance in production. In order also to reduce emissions accruing during the use phase, Tesco provides its customers with information about relevant potential savings. Tesco, the best company in this area of the rating, achieved an A+ here.
More engagement necessary
The fact that only one in 12 retail companies is awarded “prime” status by oekom research reveals the need for further action, however. “Numerous positive initiatives in different individual areas show what is actually possible. However, what is lacking generally is a comprehensive and systematic approach to the principles of sustainability,” is how analyst Lisa Häuser sums up the situation.
Summary of the sector analysis
oekom research - the rating agency
oekom research is one of the world’s leading rating agencies in the field of sustainable investment. The agency analyses companies and countries with regard to their environmental and social performance. oekom research has extensive experience as a partner to institutional investors and financial service providers, identifying issuers of securities and bonds, which are distinguished by their responsible management of social and environmental issues. More than 70 asset managers and asset owners routinely draw on the rating agency’s research in their investment decision-making. oekom research’s analyses therefore currently influence the management of assets valued at over 90 billion euros.
Further information can be obtained from:
oekom research AG, Rolf D. Häßler, Head of Corporate Communications
Goethestraße 28, 80336 Munich
Fon: +49-89-544184-57, Fax: -99, email@example.com
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