Toolkit for strengthening sustainable retail value chains through quality labels - 3Keel
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Toolkit for strengthening sustainable
retail value chains through quality labels
Supporting the development of sustainable food retail value chains
through customer engagement, quality programmes and local
partnerships delivered through standards and labelling initiatives
With the support of
The designations employed and the presentation of material in this information product do not imply the expression of any opinion
whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) or the European Bank for
Reconstruction and Development (EBRD) concerning the legal or development status of any country, territory, city or area or of its
authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of
manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO
or EBRD in preference to others of a similar nature that are not mentioned. The views expressed in this information product are
those of the author(s) and do not necessarily reflect the views or policies of FAO or EBRD.
Creating shared value in retail value chains through
FOREWORD product labels and brands
Addressing the sustainability of the food system will make a significant contribution to meeting global sustainability ambitions as outlined in the 2030 Agenda for
Sustainable Development. In particular, the Sustainable Development Goals 12 (SDG12) focuses on production and consumption and includes a specific target on
“adopting sustainable business practices and reporting”. There is broad consensus by Governments that the SDGs can only be achieved with the involvement of
the private sector working alongside public institutions, the UN system and other international institutions, local authorities, civil society, as well as the scientific
and academic community. Thus, Governments in the Post-2015 declaration “…call on all businesses to apply their creativity and innovation to solving sustainable
development challenges”.
Achieving sustainable business practices includes adopting supply chain management practices that create and protect long-term environmental, social and
economic value for all stakeholders involved, while ensuring profitability and responding to market needs. Many food business operators are keenly interested in
finding efficient ways to pursue sustainable food supply practices and inform consumers about the qualities of the products that they sell. On the other hand,
consumers actively seek detailed information about products that have features serving their health needs and are consistent with their values. As a result of these
varied interests, a number of public and private initiatives have started communicating sustainability-related information about food to consumers, introducing
labels and logos both in-store and on-pack. Standards and certifications have been increasingly adopted by companies to demonstrate the sustainability
performance of their value chains or final products in specific areas.
In particular, food retailers play a key role along the value chain in that they can leverage local partnerships and customer engagement. Food retailers are held
responsible for the products that they offer and for the sustainable behavior of their suppliers, acting as gatekeepers between producers and consumers. Adopting
this position, retailers can influence the behavior of their supply chain partners and their customers. They can help incorporate sustainability along their supply
chains, for instance by enhancing changes in production processes (e.g. transport, storage and packaging) and consumption patterns with regard to economic,
social and environmental issues. Some retailers have also started creating their own sustainability labels and logos, assuming the communication to consumers.
Addressing SG12 provides also an opportunity for business.
In recent years, the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) have been
collaborating to strengthen sustainable value chains in the countries where they operate. As highlighted in EBRD’s Agribusiness Sector Strategy 2019-2023, in order
to achieve higher productivity and added value, investments supporting innovation, product quality and safety and standards are required.
This FAO-EBRD publication is intended to serve as guidance for retailers and help the decision-making process leading to pursuing, adopting or creating
sustainability standards or labels. It addresses sustainability as a competitiveness factor along the value chain, assessing how the efficient implementation of
sustainability labels and schemes can help business models achieve inclusive and efficient value chains. It explores what are key business challenges and benefits of
investing in more sustainable food retail value chains. It also explores the role of food business operators, and in particular retailers, in accelerating the sustainable
transition of food systems. Furthermore, it provides examples of best practices, identifying critical points for success and issues that should be addressed through
the label/brand development and consumer communication process. Moreover, it highlights specific lessons learned and experiences from a total of four retailer
case studies exploring practical examples of retail label development and implementation.
Natalya Zhukova, Director
Agribusiness Team of the European Bank for Reconstruction and Development (EBRD)
About this toolkit
Retail labels and brands: sustainability through local partnerships and quality programmes
Guidance for retailers on designing and developing customer-facing programmes
Environmental and social The most sustainable food retail value
responsibility has become a strategic chains are delivered through three
imperative for businesses. The UN interdependent strategies that are
Sustainable Development Goals underpinned by strong value chain
highlight the myriad issues that are governance:
driving more responsible supply
chains whilst exposing the • Local partnerships – engaging,
significant contribution our food supporting and working with suppliers,
system plays in the delivery of a stakeholders and customers to support
better future for our world. the delivery of more sustainable value
chains.
Retail companies operate in a unique
• Quality differentiation – providing
position within the food system,
responsibly produced products
being neither the producer nor
increases the value proposition to
consumer of products but
customers by enabling them to support
nevertheless being a critical
the delivery of economic, social, and
influencer for how both of these
environmental outcomes.
activities take place. The role of the
retailer within a sustainable retail • Customer engagement –
value chain is to support the communicating product, brand and
development of responsibly business initiatives and performance to
produced products whilst demonstrate action, impact, and
encouraging and communicating opportunities.
with households as to how their
purchases can align with their
values.
About this toolkit Feedback lessons 1-
INTRODUCTION
This document has been produced to provide practical guidance
for retailers on how they can develop more sustainable value
chains from concept to launch. The document presents key 6-
2-BUILD
considerations and suggests approaches to everything from COMMUNICATE
INTERNAL
creating the business case for labels – through to scoping, TO CUSTOMERS
BUSINESS CASE
implementation and communicating claims to customers (see AND
FOR ACTION
section headers, right). Businesses can use the toolkit to engage STAKEHOLDERS
their teams and suppliers in the process and identify useful
resources that can support the step-by-step plan to implement a
variety of potential initiatives.
5-IMPLEMENT
3-SCOPE
Toolkit navigation
IN
STRATEGIC
COLLABORATIO
OPTIONS &
N WITH
CREATE TEAM
SUPPLIERS
• This toolkit doesn’t need to be read Download at
cover-to-cover – it is designed so that Adobe.com 4-DECIDE ON
users can dip in and out of sections SUPPORT CHAIN
• Each section contains a summary and a STANDARDS OR
key resources page that contains useful CRITERIA
links to other information and data that
can support your activities
• The PDF has interactive navigation and
external hyperlinks. To use this
functionality open file in Adobe PDF
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Introduction Business case Process Requirements Implement Communication
Acknowledgements
This toolkit was developed as part of a technical cooperation project funded by
the European Bank of Reconstruction and Development (EBRD) and the Food
and Agricultural Organization of the UN (FAO).
The toolkit has been prepared based on the inputs from Will Schreiber and Richard
Sheane from 3Keel, with contributions and supervision from Emilie Vandecandelaere,
project coordinator and Arianna Carita, standard expert, from FAO Investment center.
The authors would like to acknowledge the support and input of the following experts
during the development of this tool kit: Hazel Culley and Hannah McIntyre (Marks &
Spencer), Cansu Ergün (Migros), Bertrand Swiderski and Matthew Mellin (Carrefour),
Ana Tomic (Bingo), Judith Batchelar (Sainsbury’s), Euan Murray and Christy Slay (The
Sustainability Consortium), Luis Samper (4.0 Brands SAS), Sara Walton (British
Standards Institute), Joe Wozniak (International Trade Centre).
In addition, the authors would like to thank Emmanuel Hidier, Senior Economist, FAO
and Nemanja Grgic, Technical Cooperation Manager, Agribusiness, EBRD, for support
in the development of the project and technical comments on the contents, as well as
Wafaa El Khoury, Chief, Europe and Central Asia, Near East and North Africa, Latin
America and the Caribbean Service, Investment Centre Division, FAO, and Mohamed
Manssouri, Director, Investment Center Division, FAO, for their overall guidance.
Valuable support at the final stages of the publication and dissemination was provided
by Nada Zvekic, Communications Officer, FAO and Stephanie Leontiev, Project and
Communications Officer, FAO.
Further information
For further information about this tool kit please contact FAO
Investment Centre at Investment-Centre@fao.org
or EBRD Agribusiness team at agribusiness@ebrd.com
Introduction Business case Process Requirements Implement Communication
Contents
Introduction Building the The label and brand
01 02 business case 03 development process
An introduction to the business Key costs, benefits and An overview of the key steps
case and strategic options for methods for demonstrating and considerations when
embedding quality and the business case of labels to developing a label or brand.
sustainability in products and internal decision-makers and How to scope & set-up project
brands investors governance
Setting requirements and Implementation Customer communication
04 standards
05 06
Options for adopting, adapting Ensuring label and standards Options for engaging with
or developing value chain systems are trusted, efficient customers – and ensuring
standards and codes of and deliver intended claims are credible
practice outcomes
Introduction Business case Process Requirements Implement Communication
Introduction
01
Driving sustainability through labels, brands and local partnerships
W hy lab els?
Introduction Business case Process Requirements Implement Communication
Section 1 contents
Introduction to sustainable retail value chains
This section introduces the concept of sustainable retail
value chains and explores why businesses are adopting
labels and brands to support continuous improvement.
Sustainable retail value chains Summary
1.1 What are they and why does it matter to retail 1.4 Key take-aways from section
businesses?
Resources & tools
1.5
The business case for labels and brands
1.2 Customer engagement and standards mitigate risk, Additional sources of information to support the scoping
and planning process
support growth and productivity
Retailer case studies
1.3 Key insights from four retailers who have
implemented labels
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication
1.1 Sustainable retail value chains
Sustainability: a strategic issue for 21st Century retail businesses
Figure: Food system linkages to UN Sustainable Development Goals
Addressing environmental and social issues 1.2 billion people work in agriculture - about
has become a strategic issue for retail Obesity has a total economic cost of Agriculture uses about
31% of the global workforce
$2.0 trillion e.g. health costs, lost 70% of global water
businesses wishing to remain competitive,
productivity, etc withdrawals
retain customers and demonstrate prudent risk
management to investors and policymakers.
Aside from providing a basic human need, the
food system’s role as a major employer and
user of natural resources means that
addressing its sustainability will make a
significant contribution to meeting global
sustainability ambitions. More than half of
the United Nation’s ‘Global Goals’ would be
supported through improvements to the
sustainability of the food system (see figure,
right).
This document provides you with an
introduction on how to leverage local
partnerships and customer engagement to The food system causes more
deliver more sustainable retail value chains. 29% of commercial fish Agriculture occupies nearly 40% of total
than 20% of global greenhouse
populations are fished at at land area and is a major driver of
gas emissions
an unsustainable level deforestation
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.1 Sustainable retail value chains
Definition
A sustainable food value chain is “the full range of farms and firms and
their successive coordinated value-adding activities that produce Figure: Example
particular raw agricultural materials and transform them into particular issues addressed in
sustainable retail
food products that are sold to final consumers and disposed of after use, value chain
in a manner that is profitable throughout, has broad-based benefits for projects (FAO)
society and does not permanently deplete natural resources” (FAO, 2014).
The concept of sustainable food value chain provides the framework for ECONOMIC
sustainable development and poverty reduction, by defining it, ideally as IMPACTS
a food value chain that: Pro ts
Jobs/i ncomes
Tax revenues
is profitable throughout all of its stages (economic sustainability); Food supply
has broad-based benefits for society (social sustainability); and
has a positive or neutral impact on the natural environment Inclusive Green
(environmental sustainability). growth growth
SFVCD
Within this guidance it is important to note that sustainability is
considered as a pathway (not a state) and supports companies in taking SOCIAL ENVIRONM ENTAL
IMPACTS IMPACTS
further steps on that journey – regardless of their starting points. For Added value distribution Eco-social Carbon footprint
example, a company early on that journey may focus on activities that Cultural tr aditions progress Animal health
have a clear short-term business case with indirect sustainability benefits Nutrit ion and health Water footprint
Workers rights and safety Soil conservation
in a small number of areas. For example, a retailer could commit to Animal welfare Biodiversity
longer term contracts with local suppliers to support investment in Institutions Food loss and waste
better quality systems and resource efficiency. Toxicity
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.1 Sustainable retail value chains
Retail opportunities to leverage partnerships, quality & customer engagement
Sustainable food retail value chains can be supported through three related strategies: building strong local value chain par tnerships,
investing in product quality and finally engaging with customers. These all benefit from strong value chain governance models .
Local partnerships Quality Customer
differentiation engagement
The environmental and ethical issues Investments in the sustainability of Retailers are in a unique position to
that retail businesses face are value chains can complement efforts engage with customers. Labels,
complex and interconnected: to differentiate products and support brands and the standards that
Partnerships – within supply chains broader product quality messaging. underpin them have been identified
and with external stakeholders – are The added value that customers as a tool for supporting the delivery
critical for delivering credible and receive from quality products can of the UN Global Goals. Information
effective improvements in value chain support the delivery of economic, technology also offers new
quality and sustainability. social and environmental outcomes. opportunities to engage with
customers.
Strong value chain governance
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.1 Examples of labels
Labels cover a variety of topics that address different social expectations
The Nordic Keyhole has been shown to help drive product
Some labels address
Nutritional/ health development and healthier alternatives in the Scandinavian retail
a combination of sector. It is used to highlight healthier products.
these issues. We go benefits
into more detail on
Consumers messaging topics
the types of label and Labels can tell customers about the environmental performance of a
different Environment product such as the France’s Indice Carbone, or they relate to
production requirements for growers, such as LEAF Marques that
implementation require the use of Integrated Farm Management principles.
mechanisms in
Section 4.
The French Label Rouge scheme specifies the best production and
Food quality - encourages the use of Integrated Farm Management principles. It also
organoleptic sets spec methods to ensure higher quality on final product as
perceived by consumers through taste. It covers a large variety of
products, mainly food but not only.
The Símbolo de los Pequeños Productores (SPP) – small-producers’
Social welfare and equity symbol, tells and guarantees consumers about democratic, self-
managing organizations of small producers, and commercialization
under fair conditions, in view of improving prospects for life.
Labels can be used to promote and guarantee specific quality linked to
Origin & traditional origin, such as in the case of Colombian coffee, through a geographical
methods indication (GI), protected as an intellectual property right. Specific
standards define the production and processing practices as well as
final product characteristics.
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.1 Label characteristics
General considerations and components of labels and standards
There are multiple types of elements that are considered during the design of product standard and label, including the follo wing key
characteristics from a review of over two hundred commonly used ones on the market in 2018:
OWNERSHIP STANDARD CERTIFICATION AUDIENCE
The owner of the label may be a Not all labels will have a written Some labels can be self-certified Some labels or standards serve
private company, non-profit standard underpinning their by companies whilst others a business-to-business (B2B)
organisation, or public body. credibility and application. require rigorous third party purpose rather than business-
Depending on the owners’ Those that are developed by review and registration with a to-consumer (B2C). These
interests, the requirements private sector bodies may be third party. High credibility standards and labels are not
could be set privately and the kept confidential leading to labels often require some level limited to purely operational
scope for influence by other external uncertainty regarding of third party certification, performance or food safety
organisations may be limited. their effectiveness and role in which can take many forms measures as they could also
driving significant change in the (e.g. chain of custody relate to ‘hidden’ issues that
Example value chain. traceability, operational retailers wish to manage in their
Vivi Verde is a label and brand performance). supply chain despite low public
developed by retailer Coop Italia Example awareness of the challenge.
in 2009. It relies upon existing Criteria and performance Example
third-party organic standards to requirements for the Small Origin Green provides a flexible Example
underpin its requirements. Producer’s Symbol are publicly framework for setting individual Round Table on Responsible Soy
available. business targets, however it still (RTRS) is primarily recognised in
requires external reviews every B2B environments only.
18 months.
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.2 The business case for labels & brands
The need for differentiation in retail to maintain a competitive advantage
Competition in the retail market is as intense as ever, leading branded
label products to become a critical battleground for consumer loyalty.
Retailers are having to keep pace with changing shopping demands –
in particular, they are responding to increasing demands for healthier
products from more transparent, ethical and environmentally-friendly
supply chains with the launch of premium products. Differentiation is
also being supported through the launch of products with regional
provenance that leverage consumer interests in local flavours,
ingredients and recipes. Promoting human rights and advancing sustainability has a key role
In response, retailers are seeking to address Sustainable Development to play in the M&S transformation. It is helping make our business
Goals (SDGs) by investing in improved corporate social responsibility. and our supply chains more resilient and cost effective. It has an
impact on how our customers perceive the value and quality of M&S
This toolkit focuses on how labels and brands can enable new product
products and it matters to our colleagues.
development that creates business value and at the same time
Louise Nicholls, Marks & Spencer.
increases value chain sustainability. This covers a range of
opportunities ranging from provenance and quality claims through to
large-scale value chain partnership programmes that include producer
capacity building and enhanced environmental and ethical practices.
The business case for these sorts of initiatives is summarised in detail
in Section 3. See Section 1.3 for the experiences of
four retailers who have used
standards and customer messaging to
improve value chain sustainability
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.3 Retailer case studies
Company experiences of using labels and brands for sustainability value chains
As part of the development of this
guidance document, four leading
European retailers provided insights
on their experiences of developing
customer-facing sourcing initiatives Forever Fish S u ppo r t i n g l o c a l
focusing on quality, provenance product label bu si n esses w i t h
and/or sustainability. launched to shine f a v o u r a bl e
spotlight on the t r a di n g t er m s
business’s work on a n d pu r po se
This section summarises some of the seafood sourcing dr i v en m a r k et i n g
key benefits to reatilers of adopting
these approaches.
D ev el o pi n g a f a i r D ev el o pi n g
pr i c e f o r l i f est y l e br a n ds
pr o du c er s u si n g t o pr o m o t e m o r e
c u st o m er su st a i n a bl e
en ga gem en t t o pr o du c t i o n
dev el o p a n ew
br a n d
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.3 Retailer case studies
Forever Fish – Kvalitetan Proizvod
Sustainable fish product – Supporting local
label on all fish products producers with
alongside consumer favourable trading
facing campaign on terms and product
marine conservation placement
Good Living – Helping
customers select
C’est qui le patron?! products that have
(Who’s the boss?!) – strong environmental,
Customer-led social and commercial
product pricing producer benefits
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.3 Retailer case studies
MARKS&SPENCER BINGO CARREFOUR MIGROS
Forever Fish is one of M&S’s most Domestic sourcing is embedded in In 2016, farmers in France began In 2013, Migros expanded its supply
successful labelling campaigns. The Bingo’s way of doing business. 51% of protesting low milk prices, which chain sourcing requirements to
label was used to draw attention to the products on the shelves are were causing farmers to go out of include stronger environmental,
fish sustainability and was produced domestically in order to business. Carrefour teamed up with human health and animal welfare
underpinned by a robust seafood support local producers and the wider the French food waste activist group criteria to its egg and poultry
sourcing policy and activities, such as economy. To make these products “Gueules Cassées” to develop a fair products with its “Good Chicken”
use of Marine Stewardship Council recognisable on their store shelves, price, consumer-based milk scheme label, and then creating broader
certification. The label was put on Bingo has adopted the ’Kvalitetan called C’est qui le patron? (Who is the “Good Meat” and “Good Agriculture”
every own-brand fish product. The Proizvod’ label and actively promotes boss?). It is run by a collective, La labels. It is now using this brand with
campaign, which was in collaboration the use of this label with their Marque du Consommateur, between a range of other products, including
with two conservation charities, had suppliers. activists, small dairy producers, and non-food, to create a broader
excellent customer reach and strong the Carrefour supermarket chain. initiative to help its customers choose
support in the business. low-impact lifestyle products in a
“Good Living” brand.
Go to case study Go to case study Go to case study Go to case study
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.3 Retailer case studies
Key lessons
CUSTOMER FOCUS The Forever Fish programme and label was
viewed very positively internally and got great
01 Be clear on customer angle from the start. Undertake customer research
to understand perceptions & benefits of label. Get your marketing and PR traction with our customers. To protect our
colleagues on board early. business brand we had to be totally comfortable
that we had confidence in our policies and
standards are delivering sustainable fish
PRODUCER ENGAGEMENT
products.
02 Suppliers are critical delivery partners.
Hannah Macintyre
Fisheries & Aquaculture Manager
at Marks & Spencer.
ENSURE LABELS UNDERPINNED BY ROBUST POLICIES & PROCESSES
03 Claims will be scrutinised so you need to ensure you are comfortable
that they are credible and can be defended.
GET INPUT FROM CREDIBLE EXPERTS AND INFLUENCERS
04 Researchers and civil society organisations can add a lot of value
to programmes. This includes ensuring the activities are credible
and deliver meaningful outcomes.
SET-UP A INTERNAL STAKEHOLDER WORKING GROUP
05 For the initiative to be a success you’ll need early input and buy -in
from a range of technical, commercial & communications teams
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.4 Summary
Key take-away messages for introduction section
The first section of this document focuses on the
definition of sustainable value chains and introduces the
types of label that can be deployed. It highlights specific
learnings from four retail case studies.
01 02 03 04
Sustainability is an Opportunities for all to A range of options are We can learn a lot from the
increasingly strategic issue work on value chain available to retailers to work of retailers who have
for grocery retailers sustainability – regardless communicate to implemented labels
Addressing environmental and of starting point customers From our discussions with a
social issues has become a Regardless of your business’s Customer communications range of retailers key lessons
strategic issue for retail current activities there are can address a combination of include: having a strong
businesses wishing to remain opportunities to build topics including social welfare customer focus; collaborating
competitive, retain customers business value through and ethics, environmental with suppliers; underpin
and demonstrate prudent risk customer communications on performance, health and initiatives with robust policies;
management to investors and value chain sustainability. nutrition, organoleptic and get input from trusted
policymakers. quality, quality linked to origin partners.
etc.
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication1.5 Resources & tools
Relevant reports, guidance and data to support your planning
Framework: UN Sustainable Development Goals Guidance: Inclusive Business Models
The UN SDGs are a helpful framework that UN FAO guidelines for improving linkages between
businesses can use to check their activities and producer groups and buyers of agricultural produce.
external communications against. http://www.fao.org/3/a-i5068e.pdf
https://sustainabledevelopment.un.org/
Report: SDGs mean business Guidance: Guidance for Responsible Agricultural
A report by ISEAL and WWF outlining how standards Supply Chains
can help deliver the UN Sustainable Development A guidance report developed by OECD and FAO
Goals. providing support to companies in ensuring that
http://www.standardsimpacts.org/ their operations do not lead to adverse impacts and
contribute to sustainable development.
http://www.fao.org/economic/est/issues/investment/
guidance/oecd-fao/
Case studies: Retail label insights
As part of the development of this toolkit, four Partnership: Retail Horizons
detailed case studies were developed exploring
examples of retail label development and A multi-year project led by the Retail Industry
implementation. Leaders Association and Forum for the Future to help
retailers take action on sustainability by providing for
http://www.fao.org/technical-cooperation/investment- practical tools around current and future scenarios in
centre/en/ the retail environment.
https://www.forumforthefuture.org/project/retail-
horizons/overview
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement CommunicationBuilding the business case
02
Assessing the benefits of adopting new supplier practices
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement CommunicationSection 2 contents
Building the business case
This section introduces some useful concepts and tools that can be used to
develop a business case for action. These can be drawn upon at all stages of
the process and are likely to be returned to as the programme evolves. To
jump to a sub-section click the titles below.
What is a business case ? Summary
2.1 What are the options open to retailers? How does a business 2.4 Key take-aways from section
decide what will deliver the most value?
Business value drivers Resources & tools
2.2 Linking your business case to basic business drivers:
productivity; growth and risk
2.5 Additional sources of information to support the scoping
and planning process
Types of business case data
2.3 The sorts of information that can be used to support the
development of a business case
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement CommunicationIntangible business values: More than
half the US$4 trillion value of retail
enterprises is locked up in “intangible”
2.1 What is a business case?
assets such as brand reputation
(Global Intangible Finance Tracker)
Demonstrating standards, claims and brands deliver business benefits
A ‘business case’ is a frequently used term that has many meanings and definitions. In the context of developing retail
standards, claims and brands, it is important to be aware of some of the elements of a good business case – and also some of
the challenges you will face when quantifying it.
Elements of a good business case Key issues to be aware of
When developing a business case for activities that
A good business case is one that is carefully designed to fit a
increase retail value chain sustainability through
specific set of circumstances and objectives:
labels and claims it is important to be aware of the
following:
1. It is closely aligned to the strategic goals of your company.
If there are relevant corporate commitments or targets, can • Some of the most important benefits are likely to be
you support them through your project? intangible and/or hard to predict. For example, working with
2. Clear and compelling explanation of how the net benefits suppliers to improve standards can increase resource
will support one of three broad business value drivers: efficiency, but the cost savings to your business will be hard to
improving productivity; business growth and mitigating quantify. Activities that offer good brand protection benefits
risks (see chart on next page). similarly are hard to put hard numbers on. This makes your
3. A clear understanding of the business case audience and choice of evidence much more important (see Section 3.3).
their interests. It can be helpful to identify an internal • Linked to the above point, the benefits of investing in more
‘champion’ who can help guide your choices. sustainable retail value chains will therefore likely be more
4. Ultimately it must contain compelling evidence and strategic and longer-term. For this reason, getting senior
analysis to convince decision-makers that adopting the sponsorship for a project will make the task much easier.
proposed changes will deliver net benefits.
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement CommunicationExamples
M a r ke t
2.2 Business value drivers
G R OW T H
Unilever’s Sustainable Living
brands grew more than 50%
The use of partnerships, labels and standards can benefit businesses at all stages of faster than the rest of the
the corporate sustainability journey (see diagram below). When developing your business (Unilever, 2017)
business case you should consider which of these areas are of most relevance to your
situation and audience. There's been a 321% increase in
the number of food products
The stages of corporate sustainability journey labelled with ethical and
environmental claims between
Non- Beyond Integrated Purpose/
Compliance 2011 and 2015
compliance compliance strategy Mission
(Agriculture and Agri-Food
Canada, 2016)
Va l u e c h a i n
P RO D U C T I V I T Y
Business value drivers
53% of studies examining the
use of standards in supply
RISK PRODUCTIVITY GROWTH chains reported increases in
profitability over the long term
• Increased traceability and • Closer supply chain • Labels and brands can offer a
supplier oversight through collaboration can help key point of differentiation (ISEAL, 2017)
certification helps mitigate deliver operational and help with deeper
risks efficiencies through customer engagement and RISK
• Standards reduce risk of
better co-ordination, trust-building – helping management
resource efficiency and defend market positions or
reputational damage
through poor ethical or
food waste management build market share Almost three quarters of millennials
environmental practices • Enhanced ethical and • Supplier patrnerships can and "generation Z" are willing to
• Continuouse improvement environmental unlock new product spend more money on personal care
and use of voluntary performance helps with innovation opportunities – products that are from companies
recruitment and staff many of which are focused on
standards prepare value that are environmentally friendly
chains for new regulations retention environmental and ethical
issues and socially minded
(ATKearny, 2017)
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication2.3 Types of business case evidence
From qualitative arguments to detailed cost-benefit analyses
A ‘business case’ is a frequently used term that has many meanings and definitions. In the context of developing retail
standards, claims and brands, it is important to be aware of some of the elements of a good business case – and also some of
the challenges you will face when quantifying it.
Evidence type Description Example Comments
Qualitative Logical but unquantified “Implemeting new standards will help us This is the simplest type of evidence, but also the
arguments arguments draws on address risks of ethical and environmental bad least likely to sway decision-makers
existing data practice damaging our reputation”
Competitor Showing how your “80% of our competitors have already This can be a simple but effective way of
Increasing complexity
benchmarking company compares to developed product lines with sustainability demonstrating that a business is at risk of being
others claims” left behind
Case studies Examples of business “We have seen 5% year-on-year growth in To be most effective this need to be companies
benefits seen by other products with sustainability claim. They are operating in similar markets
retailers now worth € 100M”. See Section 1 for some
case studies
Key A quantified measure of “Companies that have adopted the standard To be most powerful these need to resonate
performance business benefit have seen a 5% drop in quality rejections” with your target audience
indicators
Investment costs Quantification of “The programme will cost €200,000 in staff Being clear on costs helps decision-makers even
implementation and time to implement and then €50,000 per if the benefits are more intangible/strategic
running costs annum for fees and administration costs”
Cost / benefit Quantification of the “Implementing the standard would have a For a full examination of cost benefit analysis see
analysis costs and benefits over payback period of 2.5 years and a Net Present guidance documents referenced in the
time period Value of €4m” Resources page of this section
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication2.4 Summary
Key take-away messages for this section
The section of this document provides an overview of the
business case for implementing a label programme. It talks
in general terms about how to frame the business benefits
with key internal stakeholders. PRODUCTIVITY RISK GROWTH
01 02 03 04
Business cases must be A business case needs a Six different types of evidence Senior buy-in and support is
aligned to strategy & deliver strong narrative and careful can support business cases critical to ensure success
value tailoring Regardless of the audience, six In many instances it will be very
A good business case is one A business case is unique to the different approaches are challenging to calculate a
that is carefully designed to fit a organisation and the target commonly used – often in robust cost/benefit analysis
specific set of circumstances audience. A supply chain combination. These range in that passes detailed scrutiny.
and objectives. Key ‘value director in a discount retailer complexity from the simple The benefits of more
drivers’ to focus on are: will have very different (such as qualitative arguments, sustainably supply chains can
business growth (e.g. new interests to a marketing competitor benchmarking and often be intangible and long-
customers); productivity (e.g. director at a high-end grocer. case studies) through to the term. Because of this it is
better engaged employees); more complex (for example important to get senior buy-in
and risk mitigation (e.g. detailed cost / benefit analysis) from strategic decision-makers.
protection of brand & raw
material supply).
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement Communication2.5 Resources & tools
Relevant reports, guidance and data to support your business case development
Guidance: The business case for sustainable Review: The business benefits of using sustainability
commodities standards
Guidance developed for global environmental charity Review funded by ISEAL into the benefits of
WWF on how to develop and communicate the standards seen by different types of business –
business case for sustainable commodities. including retailers.
http://www.panda.org
http://www.standardsimpacts.org/
Book: HBR Guide to Building Your Business
Case
Harvard Business Review short booklet outlining the
guidance and tools you need to make a strong
business case. Includes details on cost benefit
analysis methodologies.
http://hbr.org
Guidance & tool: The Value Driver Model
A model & toolkit from the UN Global Compact
offers companies a simple and direct approach to
assess and communicate the financial impact of their
sustainability strategies.
https://www.unglobalcompact.org/
Introduction B u s i n e s sWchy
a s elab els? P r o c e s s Requirements Implement CommunicationThe label & brand development process
03
From scoping to communicating
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement CommunicationSection 3 contents
The label & brand development process
This section introduces the key strategic options open to
retail businesses and summarises the key steps to developing
a label or brand. These are expanded on in later sections. To
jump to a sub-section click the titles below.
Overview of label/ brand development process Adopting or adapting existing mechanisms
3.1 What are the key steps in developing and implementing 3.4 Should you adopt, adapt or develop your own standards
and mechanisms?
a label or brand?
Scoping & prioritisation Summary
3.2 Decide which value chains and issues to focus on. What will be
communicated to customers?
3.5 Key take-aways from section
Strategic options Resources & tools
3.3 What are the options open to retailers? How does a
business decide what will deliver the most value
3.6 Additional sources of information to support the scoping
and planning process
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.1 Overview of development process
Key stages in developing a label or brand that supports sustainability
There are five steps that businesses need
to go through to successfully develop 02
INTRODUCTION
and roll-out a label or brand that helps Feedback lessons
deliver improved value chain
sustainability (see figure, right).
COMMUNICATE BUILD
TO CUSTOMERS INTERNAL
These steps are expanded upon in
AND BUSINESS CASE
subsequent sections of this toolkit. On
the pages that follow we explore best
STAKEHOLDERS FOR ACTION03
practices in scoping opportunities and
buidling the right team. Although these (Previous section)
are shown sequentially, the process can
be iterative.
It is important to note that this toolkit
focuses on the elements of the process IMPLEMENT IN SCOPE
COLLABORATIO STRATEGIC
that are unique to supporting improved
N WITH OPTIONS &
value chain sustainability. It does not
SUPPLIERS CREATE TEAM
provide generic advice on brand 04
development and marketing. For this
reason, it is critical to get marketing
05 DECIDE ON (This section)
teams engaged early in the process so SUPPORT CHAIN
STANDARDS OR
they can ensure that new products and
CRITERIA
claims align with wider business
marketing strategy.
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.2 Developing an approach
4
Prioritise actions
Identifying what is right for your business Create a list of supply
chains, product groups
or categories, or
2
Why are you taking action?
geographic regions to
Have a clear understanding of
focus on. This is
what the business interest is in
covered in the
addressing the issue. For
following sections.
example, investor requests or
supply chain resilience.
Settingyourgoals
PROBLEM STATEMENT
Clearly articulate what the purpose is for
the initiative and why your business is
Determine your influence
well placed to deliver it
Consider what your business
3
can realistically achieve. SCOPE
Define what will be addressed (e.g.
How close are your direct
product placement), and what will not be
1
Review your company values suppliers to the issue(s) you (e.g. supplier contracts), in what you
are trying to affect? What develop
Before starting a new initiative or
levers can you pull to
project you will need to identify RESOURCING
incentivise change?
what is appropriate for your Who is critical for the team and what
business based on existing level of human and physical resource is
commitments and approaches. needed to deliver?
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.2 Prioritising value chains
Create short list of products and raw materials to investigate
One of the first tasks following an alignment of your vision and principles with the desired
for an initiative is identifying where you should focus. The case for attention is influenced
by three things: the nature of the value chain; your company’s situation; and the state of
the operating market. The more of the criteria below that are relevant to a value chain, the Prioritising value chains
greater the case for working with value chains to increase sustainability through the use of
standards & labels. BACKGROUND RESEARCH
NATURE OF YOUR COMPANY OPERATING MARKET
01 Use sales data, research and criteria, left,
to identify categories wit good potential
for launching initiative.
VALUE CHAIN SITUATION CONDITIONS CONSULT CATEGORIES AND SUPPLIERS
Gauge capacity & appetite for action.
• You have a high degree of
influence over value chain
• You have limited flexibility
for sourcing raw materials
• Products and related 02 Identify potential supplier partners and
sustainability issues are of key challenges/opportunities
e.g. own-label products, significant customer and
• There is considerable
fresh produce stakeholder concern DEVELOP PROPOSED SHORT LIST
opportunity to gain
• You have existing strong
local relationship with
•
market share
You have the potential to
• Many supply risks exist in
value chains due to
03 Create set of options with pros/cons.
Include case study examples and
suppliers and growers sourcing location or nature potential partners to engage
take a leadership role and
• Raw material quality make influence value chains of raw materials e.g.
WORKSHOP TO DISCUSS OPTIONS
significant contribution to (without any market climate risk, ethical risk,
overall product quality power it is harder to
influence practices
etc. 04 Develop and deliver workshop with
technical and commercial colleagues to
• The product or raw • Existing risk management identify favoured options
material is commercially through value chains) tools within the business
or market are immature GET SIGN-OFF FOR NEXT STAGE
important to your business • You have already made
• Production of products or public commitments on
sourcing or sustainability
05 Summarise group recommendations and
get sign-off from relevant staff. Include
raw materials is proposed next steps
concentrated in a few in related value chains
countries or companies
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.2 Identify priority issues
Using materiality assessment to prioritise what issues to focus on
Having identified the value chains of most interest, you need to understand which issues should be addressed
through the standard and consumer communications. There is no ‘right’ answer for this. You will need to balance
what is known about the importance of issues within the value chain and the expectations of important external
stakeholders, e.g. customers, investors, policymakers and civil society organisations.
A commonly used framework for prioritising which issues to look at is a Materiality Assessment.
Materiality assessment – from the Global Reporting Initiative
The Global Reporting Initiative (GRI) is an
international, independent, non-profit
A materiality assessment – or determining what is most relevant and important to standard-setting organization based in
your business - has become a key part of integrated corporate reporting. the Netherlands. It supports businesses,
governments and other organizations to
The Global Reporting Initiative provides guidance on how to apply this principle. understand and communicate their
Generally, businesses will go through the following five steps to develop a materiality impacts on critical sustainability issues
matrix (see Danone example): such as climate change, human rights,
governance and social well-being.
1. Issue identification
2. Issue prioritisation
3. Stakeholder engagement
4. Internal validation
5. Strategic alignment
See for example the Danone Materiality matrix
This approach is popular with companies as it ensures the issues that are prioritised at http://iar2017.danone.com/performance-in-
balance the competing needs of different stakeholders, are of financial relevance, and 2017/materiality-matrix/
pursue activities that deliver meaningful environmental and social outcomes.
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.2 Decide what to communicate
From quality and origin to environmental performance
Standards and labels have become one of the primary methods for communicating specific quality and production characteristics to
consumers. In addition to regulated labels, retailers use make claims about one or more of five key characteristics of produc ts. These
sorts of claims can be used as part of retail programme to increase the sustainability of the organisation’s value chains.
Nutritional/ Food quality - Environmental Social welfare and Origin & traditional
health benefits organoleptic standards equity methods
Health concerns continue to These standards and labels These systems encompass These concern ethical This type of labels
be a mega trend that is specify minimum standards labels that tell customers behaviors among value encompass claims about the
driving product launches. A of certain food about the specific chain stakeholders provenance of the product
recent review of health characteristics e.g. taste, environmental performance including: taking into ingredients and/or
claims found 26% of foods flavour, appearance. of a product or they are account the rights of manufacture, and labels
carried at least one underpinned by a set of employees and more about specific quality linked
nutrition, health-related Example: The French Label production criteria that generally international to the production origin
ingredient or health claim. Rouge guarantees eating producers adhere to (social human rights and respects, (geographical indication), in
The vast majority are text- quality through best and environmental, providing them with a safe this case combining with a
based claims, no logos. production practices. The including animal welfare). and healthy workspace, specific standard on
Serbian Quality Label These are developed by ensuring trading production practices and
Example: Nordic Keyhole differentiates high-quality governments, independent partnerships based on organoleptic quality of final
food products made from bodies or retailers dialogue, transparency and product.
local raw material with themselves. respect.
specific qualities, such as Example: Piedmont Grown;
meat. Example.: LEAF Marque, Example: Fairtrade, SPP Idaho potatoes
Ukraine Green Crane small-Producers’ symbol Café de Colombia;
ecolabel for foods
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.2 Create internal working group
Getting input and buy-in from key business functions
Getting the right project team in Alignment with company
place is crucial for these Figure: Business functions with brand and promotional
interests in value chain projects activities
projects. Once you have
identified your priority supply
chains, and depending on the Technical teams
scope and ambition, you will ensure the correct
need input and buy-in from implementation of
Deployment of in-
many different business and store publicity new standards
supplier functions over the and
course of the process. The communications
figure, right, shows some of the
key stakeholders and their likely
interests. Based on an initial
review it is sensible to set-up a Review of
core working group that is Forecasting, product and
responsible for delivering the planning, ordering promotional
work. This group can draw on and distribution claims
additional input, as needed. to depots
In addition to these internal
functions you will have external
Identification and
stakeholder group e.g. suppliers, Sponsorship tendering of
producers, technical experts, and overall suppliers to deliver
consultants, etc. support for products
project
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.3 SRVCs– The basic approaches
There are four basic options open to retail businesses who wish to improve the sustainability of their value chains – each have different
pros/cons and degrees of complexity and consumer communications opportunities. At any one time, all four approaches may be us ed
by a business. The four options are outlined below, with examples provided for Marks & Spencer. The pros and cons are outline d in
more detail on the next page. The focus of this toolkit is the use of labels, claims and brands.
Increasing customer engagement and complexity
Direct supplier codes & policies Primary production standards Consumer-facing label or claim Brand and master brands
These tend to be a set of minimum Retailers can specify in more detail The adoption of production standards Sustainability can be a key aspect of a
standards of business practice that production practices – including those can be communicated to consumers in retailer brand and/or the brand of a
direct suppliers agree to adhere to as in primary production (e.g. agriculture, product descriptions (e.g. ‘organic’, specific product category. In some
part of a supply contract. These range aquaculture). These standards can Geographical Indications) or by use of cases labels or specific claims aren’t
from quality, to requirements on cover environmental and/or ethical a label e.g. FairTrade, Marine used on pack – but rather
traceability and ethical practices. practices – or focus on quality-related Stewardship Council). It is important sustainability, traceability, quality and
Suppliers are responsible for the aspects such as traditional methods of for labels and claims to be credible – a supplier partnership activities are
actions of their suppliers. In some production. These need not be topic we explore in Section 6. communicated as part of wider
instances they can be used to underpin communicated actively to customers, marketing efforts.
customer messaging on sourcing. but can be used as basis for label.
Example: As part of its Forever Fish
Example: Suppliers need to adhere to Example: M&S uses the LEAF Marque campaign, M&S developed a logo for Example: Many of the sustainable
M&S Food Technical Terms of Trade standard (but not label) in its fresh its products. See more detail of this in value chain activities support the
and Global Sourcing Principles if they produce value chains to deliver against our case study section. wider M&S ‘master brand’ e.g.
supply the company products. some of its ‘Plan A’ commitments. standing for values such as
‘responsibility’.
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement Communication3.3 Pros & cons of different approaches
This table sets out some of the advantages and disadvantages of the different approaches set out on the preceeding page. It c an be
used by the project team to consider which options will work best for your business. This toolkit focuses on labels, claims & brands.
Approaches to setting standards in value chains are covered in detail in Section 4.
Mechanism Direct supplier policies Supply chain standards Labels and claims Brand
Partnership • Low – policies are cross- • Low-to-high – depends on • Low-to-high – some labels • Low-to-high – supplier
opportunities business and tend to focus on standard. Some require close and claims require no supplier partnerships can support a
minimum requirements supplier and producer or external partnerships e.g. more authentic brand –
collaboration organic although it’s not essential
Customer • Low-to-medium – while these • Low-to-medium – these can • High – implicit in the • High – the goal of brand
engagement policies are intended to be referred to in customer development of a claim of development is increased
opportunities – protect business reputations, communications e.g. through label is the desire to customer engagement
including on they do not offer good websites and in-store. engage/inform customers
product quality opportunities for customer Sometimes they are ‘hidden’
engagement. However, basic supply chain management
supplier data could be used activities that are used to
to underpin transparency deliver against corporate
communications e.g. maps commitments
(see Section 6)
Implementation • Low – Suppliers agree to • Low-to-high – private • Medium-to-high – at a • High – full integration of
effort (for retailer) generic terms, who need to standards require significant minimum, the use of a claim value chain sustainability
implement within own commitment to develop and on a product will require the within the brand of an
organizations and supply manage – whereas public input of technical teams. If organization needs cross-
chains. The main effort standards may be specified the claim is underpinned with business planning and will
involved is getting sign-off on and implemented by a private standard then this likely require significant
the contents of the codes and suppliers e.g. organic adds to the complexity supplier engagement to
policies ensure credibility
Introduction B u s i n e s sWc hy
a s elab els?P r o c e s s Requirements Implement CommunicationYou can also read
