Sustainability Watch – Lodewijk Hijmans van den Bergh, Ahold
Lodewijk Hijmans van den Bergh details Ahold's sustainability targets
Netherlands-based food retail group Ahold has recently committed itself to a range of sustainability targets. Speaking with Ben Cooper for this month's Sustainability Watch, Ahold's executive vice president and chief corporate governance counsel, Lodewijk Hijmans van den Bergh, expands on the company's approach to sustainability and the need to balance ambition and pragmatism.
If targets are as important to corporate sustainability as they appear to be, then last month marked a significant moment for Netherlands-based retail group Ahold. In its latest Corporate Responsibility (CR) report, the company set out a raft of sustainability goals with the intention of reporting on progress towards those goals in subsequent reports.
Corporate responsibility reports which read like litanies of goals and targets, usually attained or exceeded with aplomb, may sometimes appear a little too good to be true, but there is no doubting that setting quantifiable goals and reporting on progress in reaching them is central to any corporate sustainability strategy.
Clearly, the sceptical observer will suggest that if companies are meeting targets with ease they cannot be that exacting. Companies are in a difficult position here. They want to push the envelope but they do not want to be constantly falling short of what might be admirably challenging goals. Sceptics may scoff at CR reports chock-full of glittering success stories but would they be correspondingly generous with companies which set highly ambitious targets, make reasonable progress but fail to hit them? One can forgive companies for erring on the side of caution.
For Lodewijk Hijmans van den Bergh, executive vice president and chief corporate governance counsel, who oversees Ahold's sustainability strategy, the key lies in balancing realism with ambition.
"What we have done is to set a number of specific, measurable and clear targets and pick targets in areas that are close to our business where we can make a real difference," says van den Bergh. "The targets are I would say both ambitious and realistic which is a very important combination. Obviously there will be challenges as well. If there weren't any challenges, the targets would not be set right."
Among its commitments, Ahold has pledged to reduce CO2 per square metre of sales area by 20% by 2015 against a 2008 baseline of 433kg. By the end of 2011, the retailer says each of its operating companies will have a comprehensive waste-management programme in place, and a community engagement programme and CR employee programme in place by 2012.
Employee engagement in sustainability is critical, van den Bergh believes. "You have to start close to home and for us what is close to home and a powerful instrument is our employees. We are putting programmes in place to encourage our employees to live healthier and more sustainable lifestyles. Research tells us that people influence people around them – maybe each can influence around 20 people. With 213,000 employees, you start to influence quite a lot of people."
The retailer's commitment to map the environmental footprint of 50% of its own-brand suppliers and their supply chains by 2015 is also "ambitious", says van den Bergh. "It is a complicated and long supply chain, and not something we can do on our own." Indeed, this is one of the reasons why the company joined the Sustainability Consortium in 2010, the first European-headquartered retailer to do so.
Founded in 2009, the Sustainability Consortium brings together businesses, academics and NGOs to improve consumer product sustainability through all stages of the life cycle. In particular, the organisation is developing tools to measure environmental, social and economic impacts.
With regard to sustainable sourcing, cooperation with suppliers is also crucial. "Working with suppliers in the chain is the only way forward. My impression is that a lot of participants in the supply chain are just as serious about it as we are."
Van den Bergh says sustainability issues are increasingly coming into the buying negotiation but he stresses that this is not a question of the retailer using its buying power to cajole suppliers. Rather, he emphasises that it "cuts both ways" and helps all the parties involved.
For example, working with suppliers to reformulate products helps the suppliers sell more and is therefore mutually advantageous. "I don't see it as something that helps us not you. If you go hand in hand it helps both parties and also helps the consumer. It's a win, win, win situation. We have mature relationship and this is part of that maturity."
Ahold has identified six "critical commodities", namely tea, coffee, cocoa, palm oil, soy and seafood, as having a potentially adverse impact across several sustainability criteria. It has therefore pledged to source 100% of these commodities for its own-brand products in accordance with "accepted industry certification standards for sustainable production" by 2015. It has also undertaken to ensure that 100% of own-brand suppliers in high-risk countries are audited on social compliance by 2012.
While the company states that 100% of its estimated own-label palm oil consumption, amounting to around 6,000 metric tonnes, is now offset by GreenPalm certificates, van den Bergh acknowledges that GreenPalm is a "first step" towards achieving a sustainable palm oil supply rather than the "end game".
Ahold does not currently disclose how much Certified Sustainable Palm Oil (CSPO) it uses in its own-label products. "We want to move on to using sustainable palm oil. The issue with certified sustainable palm oil is that it is often mixed with other palm oil before it gets to us. And that's where progress is needed and that's why we are a member of Roundtable on Sustainable Palm Oil."
Like some of its peers, Ahold recognises that retailers are in a strong position to address sustainability through the life cycle, in production, consumption and disposal. "What we're trying to do is look at the footprint, and look across the life cycle of products."
At the consumer level, the close contact with customers represents both a unique opportunity to influence behaviour and a responsibility to offer healthier and more sustainable products.
"We see the consumers everyday. We think it is very important to give our customers an informed choice in terms of what they are buying and the type of lives they live. Obviously we don't want to control the consumer; we want to inform the consumer to make the right choices. We have to have the right products to sell to customers and then encourage customers to buy those products." Van den Bergh also notes that consumers "are more and more interested" in sustainability issues.
Ahold has pledged that each of its operating companies will have a "comprehensive healthy-living programme" in place by the end of 2011 and to increase sales of healthier products to at least 25% of total food sales by 2015 across the entire company.
"Corporate responsibility is an integral part of our business and should be and will increasingly be part of our DNA," says van den Bergh. "Otherwise you won't progress. We have a lot of passionate people and they want to work hard on this."
On a more pragmatic level, a strong sustainability programme produces three positive business effects, van den Bergh adds, namely to help increase sales, reduce costs and mitigate risks. "If you look at our targets, each will have one or more of the business effects. So we come to it from a business perspective and from a responsibility perspective and they go hand in hand. Caring for the future now makes good business sense. It is both a pragmatic philosophy and a moral compact."
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