When Sir Stuart Rose launched Plan A at Marks and Spencer (M&S) in 2007, he said “we’re doing this because it’s what our customers want us to do. It’s also the right thing to do.” Five years later, as the company reports that it already achieved 138 the 180 Plan A commitments, it seems that Sir Rose’s ambitious vision is becoming a reality. What Sir Rose was maybe too cautious to say is that that Plan A demonstrates a strong business case for sustainability.
M&S’s new progress report shows it very clearly. First, the company reports on impressive progress in its sustainability efforts – during 2011/12 it achieved 43 new commitments, including becoming carbon neutral, sending no waste to landfill, 100 percent wild fish from the most sustainable sources available and bringing the 5,000th participant into its Marks & Start work experience program. Second, M&S shows some clear benefits from Plan A including a net benefit of $162.5 million last year, an increase of 50 percent from 2010.
So how does M&S do it exactly? Here are 5 lessons that might provide the explanation:
Lesson #1: Integrate sustainability in the company’s values
Although the business case is mostly about the bottom line and benefits, it all starts with the company’s success to fully integrate sustainability into its values and mission. “We sell high quality, great-value clothing and home products and outstanding quality food. We source products responsibly from over 2,000 suppliers around the world. Over 81,000 people work for M&S in the UK and worldwide. Our core values are Quality, Value, Service, Innovation and Trust,” it says in the company’s progress report. As you can see, sustainability is not explicitly mentioned here, but it’s reflected in every word in this statement, showing how it became integral to M&S’s strategy and culture.
Lesson #2: Strategic approach and magnitude make a difference
From the beginning of Plan A, it was clear that M&S is going all the way. “Our intention when we designed Plan A was to integrate it into every aspect of how we do business,” Said Sir Rose back in 2007 and so it did, starting with 100 commitments with a 2012 deadline that grew in 2010 to 180 commitments with a 2015 deadline. Unlike many companies that are cautious and try to experience sustainability one bit at a time, M&S understood from very beginning that it’s almost impossible to integrate sustainability partially and do it well. Through Plan A, M&S was able to fully embrace sustainability, reaching every part of the business.
In addition M&S adopted a strategic approach that helps it implement the plan successfully. Behind every achievement, from reducing non-glass packaging per item in 26 percent to launching carbon neutral chocolate and lingerie stands a collaborative work of different parts of the organization. You can’t meet so many goals without having finance, logistics, operations, procurement and other functions at the organization working together and being on the same page.
Lesson #3: Fully embrace stakeholder engagement
When you look at M&S’s achievements, you see that it’s not just about reducing food waste (40 percent), improving energy efficiency per sq. feet (28 percent), or even becoming carbon neutral, but also about engaging stakeholders. The company understood that to become the most sustainable major retailer is not just a question of performance assessment or integration of sustainability measurements, but also a matter of stakeholder perception.
To establish this perception M&S works very closely with its stakeholders – last year it included a supplier conference, dialogues with trade associations and meeting with regulators, involving employees in wide range of Plan A activities, offering customers to get involved in Plan A activities and campaigns like Shwopping, and so on. I think though that M&S’s main strength is its ability to actually listen to stakeholders, understand what they want and apply it accordingly. This way M&S knows for example that “integrating social and environmental policies and performance into financial reporting is an important issue amongst many investor groups,” and hence works with stakeholders on integrated reporting.
Lesson no. #4: Show shareholders substantial material benefits
Even as other groups of stakeholders play a pivotal role in M&S’s success, shareholders still have a powerful impact on shaping the company’s strategy and priorities and hence it’s very important to get them on board. And the name of the game is materiality. As Jonathon Porritt, Founder Director of Forum for the Future explains, investors argued for years that they understand sustainability is important, but there are many more material things to take care of first. Now, he says, M&S has created the case where sustainability has a material impact on the bottom line, on top line growth and risk management. The result is that it’s much more difficult for investors to use the non-materiality excuse and it’s easier to get their support for the plan.
Lesson #5: It’s not just about savings
M&S have made in 4 years a net profit of $286 million from Plan A. Yet, as Alan Stewart, M&S CFO explains, the company sees more benefits beyond the savings – from tangible benefits like the creation of business opportunities to intangible benefits such as making the company more attractive as an employer for employees and people who seek to join it. It is important for a company to acknowledge and embrace all types of benefits, because a successful journey to become a sustainable company is not just about a better bottom line, but a better triple bottom line eventually.
[Image credit: ell brown, Flickr Creative Commons]
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.
Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.
In January 2007, Marks & Spencer (M&S), a major UK retailer, launched its five-year eco-plan entitled Plan A. This initiative set out commitments on the most important social, environmental and ethical challenges facing their business. Under Plan A, among other objectives, M&S established targets and actions to:
- Become carbon neutral
- Send no waste to landfills
- Extend sustainable sourcing
- Set new standards in ethical trading
- Help customers and employees lead healthier lifestyles
Plan A was launched with the tag line, “Because there is no plan B.” The tagline reflected its strong view that delivering long-term value to shareholders and meeting the needs of customers required proactive leadership in sustainability performance.
At launch, M&S was prepared to invest £200m (US$331.8m1) over five years in Plan A. Two years later it has already become cost positive, mainly from the savings made on operational climate change and waste initiatives. In addition to reducing costs, M&S believes Plan A differentiates its business and brings more customers into its stores. M&S customer research has revealed that despite the current economic climate, more and more customers support its Plan A objectives.
The right governance structure
It was critical for M&S to create the right governance structure to implement and monitor progress of Plan A. To start, the Corporate Social Responsibility Committee was replaced with the, “How we do business committee,” which is chaired by the Chief Executive, Sir Stuart Rose. This committee meets monthly and comprises the senior executives responsible for the business areas implementing Plan A. Richard Gillies, Director of Plan A and Sustainable Business, oversees implementation, budget management and coordination. Mr. Gillies, who reports directly to the chief executive, states, “We believe that for our business to deliver long-term value for its shareholders, it must be environmentally and socially sustainable. Over the past two years, we've found out that leading on sustainability issues not only differentiates our business and drives sales, but also makes us more efficient.”
To emphasize the importance of Plan A to the M&S culture, the company has appointed Plan A champions in its stores and head offices to further drive and coordinate Plan A activities at the local level.
Monitoring and measuring
Monitoring and measuring Plan A's progress has been critical, enabling timely action to be taken and helping to ensure there is accuracy in progress reports to stakeholders. To support these management reports, new processes have been introduced, including independent assurance from EY covering 32 of the most important Plan A commitments. This independent assurance engagement has built further confidence in progress, and has also helped M&S review stakeholder perceptions of Plan A by providing independent collation of feedback. This in turn has helped to keep Plan A up-to-date and relevant.
M&S recognizes they can do more. But with positive customer support and with cost savings already realized, M&S is confident that Plan A is becoming integral to its business at all levels.
1 £1 = US$1.654 as at 22 October 2009.