Woolworths

“It is becoming increasingly obvious that sustainable growth can only be achieved through paying greater attention to the world around us than has been the case in the past. The links between economic growth, transformation, poverty alleviation, the environment and climate change can either form a vicious or a virtuous circle. For the past 75 years, these issues have been deep at the heart of Woolworths values but the launch of the Woolworths ‘Good business journey’ marks a step change in the way we will operate going forward, ensuring that we drive that virtuous circle that will benefit all of our stakeholders.”

“Our customers and our people expect us to take a lead on issues such as this. Our ‘Good business journey’ is, therefore, the result of a comprehensive and systematic review of the way Woolworths addresses the issue of sustainable growth within the context of the changing social and environmental needs of South Africa. It is a five year plan, changing the way we do business, and incorporating a series of challenging targets and commitments, centred on four key priorities: accelerating transformation, driving social development, enhancing our environmental focus, and addressing climate change.”

Wooworths' commitments to 2012 include:

Accelerate transformation

• Become a level 4 contributor (dti code)
• Drive preferential procurement
• Advance skills development and equity ownership
• Push our “South Africa first” approach harder

Drive social development

• Utilise Woolworths expertise in enterprise development
• Increase social contributions to more than R300m per year

Enhance environmental focus

• Increase organic and free range food sales fourfold to over R1bn per annum and increase organic-content clothing sales to more than R1bn per annum
• Continue the transformation to healthy eating & lifestyles through the Good food journey
• Accelerate environmental conservation and biodiversity programmes
• Reduce and recycle packaging from source through to customer

Address climate change

• Reduce relative carbon footprint by 30%
• Focus on energy savings and transport emissions
• Open a trial carbon neutral store

“We have used the phrase the ‘Good business journey’ because this truly is a journey and there are no easy solutions. We are committed to meeting the 5 year targets we have set and to do this, we will be exploring new ways of doing things in many areas. Reaching these destinations will require significant behavioural and cultural change. If we can take our customers and suppliers along with us, this journey will have an even more meaningful impact on the wide range of transformational, social and environmental challenges that face South Africa,” said Susman.

Woolworths first priority is to accelerate transformation, with the focus on enhancing BEE, skills development and equity ownership plans, ensuring a collaborative approach with suppliers, government and franchisees, and driving our policy of ‘South Africa first”.

“We will be rolling out an extensive BEE employee share ownership scheme in mid 2007, we have made preferential procurement a priority and we will work with our suppliers to help and encourage them in their own empowerment journeys. Many of them have already made significant progress” says Susman.

“Woolworths is also uniquely placed to drive enterprise development projects,” comments Susman, “And we have set up teams devoted to working more closely with emerging suppliers, further driving our commitment to supporting South African businesses first.”

Skills development and training will continue to be a focus throughout the business in order to establish a pipeline of talent that can rise to senior levels of the business. To this end Woolworths will establish three new provincial learning centers which will provide accredited courses in the core skills required in modern retailing.

Woolworths second priority is to work harder to drive social development – poverty drives environmental destruction and that in turn creates more poverty. To help alleviate poverty, we need to expand the existing initiatives of the Woolworths Trust and link with the transformational goals to drive enterprise development.

“We need to work much harder on social development in South Africa and by 2012, we will make a total direct contribution in excess of 300 million rand per year,” said Susman. “The full value will, however, come from our collaborative efforts. We intend to expand the activities of the Woolworths Trust, especially our involvement in Food and Trees for Africa’s Eduplant programme, which already makes a significant difference to the lives of many children through the school vegetable growing and nutrition programmes.

“We will extend the MySchool educational programmes to include education on the environment in addition to the current curricula of nutrition and design. In addition we will start an awareness and fund raising programme in our stores to improve the plight of orphans and vulnerable children.”

The third priority relates to Woolworths impact on the environment, in particular the issue of diminishing biodiversity. Organic production, conservation and a new approach to packaging are the key areas of focus.

Woolworths will continue to drive the organic food and clothing offering, aiming to increase organic food sales by a multiple of five and to sell more than R1 billion of organic-content clothing by 2012. The resultant reduction in the use of potentially harmful pesticides and chemicals, especially in South Africa, will be of significant benefit to both consumers and water quality.

Nutrition and healthy living are already a cornerstone of the way Woolworths does business, with the Good food journey having made major strides in improving awareness and offering customers the right food for a healthy lifestyle. “This will become a much stronger theme throughout the business,” said Susman. “We can do a lot more though education, new product development and the integration of our environmental initiatives in terms of organic production.”

Water is one of South Africa’s scarcest natural resources and Woolworths is targeting a 30% reduction in water consumption and will develop a programme to encourage our suppliers to do the same. A number of programmes are also being established to encourage and protect South Africa’s biodiversity including crop planning to address the impact of global warming, a strict policy of not selling products which might impact endangered species, and the adoption of more environmentally-sensitive farming practices throughout our supply chain.

“We have to be more aware of our impact on the biodiversity and water supplies of South Africa. As a fast growing business in the food and clothing sector we have to ensure that we support the protection of these scarce and unique natural resources – be it water conservation, predator-friendly lamb, fynbos-friendly potatoes, not selling any endangered species, encouraging the right farming practices or ensuring that key raw materials only come from the most sustainable sources. We will make a difference.”

Packaging has become a major selling tool for retailers, but at significant environmental cost. Woolworths focus in packaging will be to reduce, recycle, reuse or compost all packaging. This is one of the toughest issues for us to address. Packaging will be reduced to the essential requirements of product protection, promotion and information. Our targets include a one third reduction of packaging in clothing and a 20% reduction in food packaging. Customers will continue to be encouraged to use reusable shopping bags, thereby reducing the number of new shopping bags required, and there will be an increase in the percentage of recycled material in all Woolworths plastic shopping bags – 100% recycled material in Woolworths clothing shopping bags by 2012.

Woolworths will launch a major national initiative to make the recycling process easier for customers. “One of the biggest barriers to recycling in South Africa has been the lack of recycling facilities and we will introduce a range of initiatives to help address this, thereby making a major contribution to reducing waste-to-landfill,” says Susman.

The fourth priority addresses climate change directly by focusing on reducing Woolworths carbon footprint. Woolworths will reduce their relative carbon footprint by 30% – this will be achieved through energy efficiencies (reducing relative electricity usage by 30%), reducing product miles (reducing relative transport emissions by 20%), and reinvesting some of the savings in exploring more sustainable sources of energy and more efficient forms of transport.

“Woolworths will support carbon offsetting in as much as greening reduces carbon excess,” said Susman. “We’ll do this by planting more trees at our MySchool schools, our Eduplant schools and our extensive Midrand campus grounds.”

Woolworths will also work closely with suppliers and customers, mobilising them to understand their own carbon footprints and making it simpler for them to reduce their footprints. “For example, we will be one of the first retailers worldwide to ONLY sell energy saving lightbulbs – our customers will no longer be able to buy traditional light bulbs in our stores,” explained Susman.

The ‘Good business journey’ is a business imperative for Woolworths. Many aspects of it are linked together to generate a multiplier effect: reducing product miles by encouraging greater local sourcing we will open up opportunities for enterprise development and preferential procurement; reducing packaging will result in energy and paper savings thereby reducing the Woolworths carbon footprint.

The largest aspect of this multiplier effect is expected to come from broadening Woolworths work with the customer and supplier base. Woolworths existing Supplier Code of Business Principles, against which all suppliers are regularly audited, will be amended to include goals and standards that align themselves with the ‘Good business journey’. Woolworths will also establish a best practice network to share and encourage initiatives across the supply chain in critical areas, and encourage customers to use their purchasing power where it can make a difference to South Africa as a whole.

Susman concludes, “Our customers expect Woolworths to take the lead in the areas covered by the ‘Good business journey’ and that is what we will do. We can have substantial influence as a business with more than 20,000 employees, 350-plus stores, 6 million customers and network of over 1000 suppliers. It will involve investment, but we will not pass the cost of this on and we fully expect it to be recovered as we see the results of our actions. These results will open up new opportunities, create new targets and ensure that our journey is a dynamic one which will help address the issues of 21st Century South Africa. If we don’t take the leap now and ensure a virtuous circle of sustainable economic growth, the world will be a worse place for our children and grandchildren.”