Our focus on manufacturing and natural capital in the supply chain
As a provider of food, we recognise our responsibility to deliver quality products to our consumers through a sustainable network of first-choice suppliers.
With the growing participation of emerging farmers in the SPAR supply chain, we adopted localg.a.p. as an entry-level food safety standard with the aim of achieving full compliance with GLOBALG.A.P. within two years. Large-scale commercial farmers are expected to comply fully with GLOBALG.A.P. All suppliers are expected to comply with the Global Food Safety Initiative (GFSI).
Suppliers and retailers have to comply with SPAR’s food safety standards – read more about this in our section on material relationships. All SPAR stores are furthermore subject to hygiene and safety audits. The group has a SPAR-appointed central resource to ensure food safety, compliance and audits for all suppliers.
Read more about product responsibility and nutrition in the section on our relationship with consumers.
Our environmental commitment
SPAR’s fundamental environmental aim is to reduce its use of various natural resources. This extends to our supply chain, where emphasis is placed on supplier and retailer practices that SPAR can influence for the better.
Our environmental initiatives are developed to yield commercial gains and foster environmental welfare, as the long-term reductions in input costs will have a positive impact on the business. In support of this, SPAR adjusted our business’s technology strategy and specifications, particularly for large-scale infrastructure investments. This includes, for example, vehicles, buildings and equipment, as well as incorporating green technology wherever possible. By implementing socially and environmentally sustainable business practices, SPAR seeks to guarantee its own long-term viability.
Supply chain optimisation and innovative energy management are critical to achieving cost and carbon footprint reduction. SPAR engages directly with smallholder farmers in our value chain to encourage sustainable farming practices. Due to the large role that packaging materials play in SPAR-branded products, we engage with packaging material suppliers to reduce our environmental impact and waste.
SPAR engages with our independent retailers to assist them in reducing their carbon footprint. This is done by making recommendations on green building practices and assisting them with purchases of energy-efficient technologies.
Climate change impacts
We are alive to the challenges climate change poses to our business and society as a whole.
Our risk management and sustainability approach is premised on the understanding that this will effect significant changes in the way economies use and value natural resources in the future. We have identified the key risks and opportunities posed by climate change that could have a substantive impact on SPAR. These are classified according to regulatory, physical and other risks and monitored by the Social and Ethics and the Risk committees. Mitigation plans and the cost of mitigation have been determined in our latest CDP (formerly the Carbon Disclosure Project) submission.
SPAR has participated in the CDP since 2009. SPAR’s carbon footprint is calculated according to the International Greenhouse Gas (GHG) Protocol’s Corporate Accounting and Reporting Standard, and the data provided pertains to the period from 1 October 2015 to 30 September 2016. Scope 1 and 2 emissions were independently verified.
The scope of the submission comprises the central office and the seven distribution centres with their associated distribution fleets. SPAR is committed to reducing our carbon emissions, specifically around Scope 1 (Mobile Combustion, Stationary Combustion and Fugitive Emissions) and Scope 2 (Electricity).
To achieve meaningful GHG reduction we have set science-based targets. This is a joint initiative of CDP, the UN Global Compact, the World Resources Initiative and WWF and is in line with the level of decarbonisation required to keep global temperatures’ increase below 2 °C.
Read more about our commitment in the case study here.
During the 2017 financial year, SPAR’s activities emitted a total of 75 858 tonnes of carbon dioxide equivalent (CO2e) for Scope 1 and Scope 2 emissions (2016: 79 947 tonnes). This decrease was due to the reductions achieved in the better management of the fuel used by our fleet and forklifts along with the reduction in fugitive emissions. Unfortunately, there was an increase in the emissions from generators and in the use of pool cars. Significant reductions in Scope 2 emissions were due to the installation of air curtains in the freezer sections of some distribution centres and the installation of timers on air conditioning units and lighting.
Electricity consumption contributes toward our Scope 1 and 2 emissions. We consumed a total of 42 517 MWh of electricity for the stated period compared to 45 397 MWh in the previous period and well within/exceeded our target of 42 673 MWh (from a 2013 base year of 51 500 MWh). The reduction is the result of our heating, ventilation and air conditioning (HVAC), refrigeration and machine replacement programme, which reduced consumption at our distribution centres and warehouses through the introduction of newer and more energy efficient technologies. Solar panels were installed at the South Rand distribution centre in October 2017 and are estimated to generate 2 200 000 kWh for the 2018 financial year. Plans are in place for solar panels to be rolled out to North Rand and the Western Cape distribution centres in 2018.
We also run behavioural change campaigns to raise employee awareness around the benefits of reducing electricity consumption. The group neither purchased nor consumed heat, steam or cooling energy during the stated period.
The breakdown of the Scope 1 and 2 emissions below are tracked from a 2013 base year:
Transport and logistics
SPAR’s logistics model and strategy is focused on route planning and fuel efficiency to reduce our environmental impact and transport expenses, particularly on the back of fluctuations in the fuel price. Fuel costs for SPAR’s day-to-day operations were approximately R146.2 million for the year (2016: R159.7 million). Continuous improvement of the SPAR vehicle fleet is a core focus over the long term.
- Monitoring of fuel consumption, excessive idling, route determination and optimisation, route adherence, and speeding via an on-board computer system
- Fitting of aerokits on long-distance vehicles to reduce drag
- Increasing the use of 95:5 (diesel: biodiesel) fuel mix
- Driver training, with associated assessments and remuneration incentives, to improve fuel efficiency
- The implementation of a national integrated transport system across regional boundaries
- Fleet optimisation, also to meet the increasing need for night deliveries
- Route optimisation in all territories, with improved analysis of cross-border costs
- Increased demand for recycling space at distribution centres with a concomitant need to optimise recycling initiatives
Recycling and waste management
All distribution centres have comprehensive recycling programmes in place for plastic and cardboard. This includes waste generated at the distribution centres and by certain participating retail stores. This waste is backhauled when deliveries are made.
Recycling is targeted at SPAR branded packaging. We have successfully partnered with third-party service providers to achieve major improvements in this area. Our approved SPAR packaging suppliers have undertaken to channel their waste into our recycling programme, and to use the recycled cardboard from our distribution centres (and participating retail stores) in our SPAR branded packaging. In this way, we are closing the loop in our cardboard waste cycle and contributing to our overarching goal of reducing our waste to landfill. Recycling includes the recycling of vehicle lubricants and refrigeration oils.
Organic waste is converted into compost, which is used by local community farmers. This initiative is currently piloted at one of SPAR’s distribution centres. We anticipate that other facilities will implement the process going forward. Glass and metal recycling is not in place at all distribution centres, but is anticipated to become more of a focus going forward.
We experienced an industry challenge in the recycling of plastic carrier bags this year.
Read more in the case study.
The use of water is imperative in SPAR’s stores and distribution centres in order to maintain a hygienic environment for the storage of food products. Access to a constant, good-quality water supply is also critical in terms of the group’s agricultural activities, with limited availability posing a risk to the availability of food sources. Recycled water is used for activities such as washing trucks, ablution facilities and watering on-site.
In accordance with the group’s sustainability strategy, water risks are identified and evaluated by analysing and prioritising those relevant to SPAR’s operations. SPAR participates in the CDP’s water programme.
In terms of our target of a 30% reduction in the use of municipal water we have achieved a 28% reduction. To ensure that the groups retailers, suppliers, consumers and communities are protected against water risks the group undertakes enhanced due diligence in its procurement process. Water risks and opportunities are assessed as part of the due diligence process.
This includes investment in new opportunities, expanding to new retailers and engagement with potential suppliers. All distribution centres have water recycling systems installed, and water recycling/collection schemes are being explored on existing sites, as well as in the development of new sites and expansions.
Water targets and goals (along with energy, waste and fuel) have been included as part of the group’s aim to improve its sustainability performance.
Environmental sustainability summary
The following is a summary of the environmental sustainability commitments made by SPAR in 2014, along with the relevant focus areas and our performance during the 2017 financial year.
Progress during 2017
Reducing our direct environmental footprint
Innovation in our house brands
Suppliers’ and retailers’ business practices