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.

Read more about our supplier development initiatives in the section on material relationships. Our emerging farmer development programme remains our flagship initiative in this regard.

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. 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 must 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.

Our commitment for a new future

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. Read more about our role in the food system in the section on strategy and our emerging farmer development programme.

Our environmental initiatives are developed to yield commercial gains and foster environmental welfare, as the long-term reductions in input costs will positively impact the business. In support of this, SPAR adjusted its 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 reducing our carbon footprint. 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. Read more about our initiatives in the case study below.

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.

Reducing our plastic footprint

The challenge of single-use plastics and their impact on human health, life on land and life under the sea became a prominent issue in South Africa in 2018. SPAR joined efforts to reduce single-use plastics and address the longer-term challenge to collect and recycle all plastic.

In South Africa, environmental legislation came into effect in 2003 prohibiting the use of thin plastic bags and encouraging retailers to use thicker, durable, recyclable bags to reduce plastic waste.

Last year, it emerged that plastic manufacturers were using increased volumes of chalk filler (from 7% to 25% – 30%), resulting in a heavier albeit cheaper plastic. Recyclers, on the other hand, rejected the heavier bags as they sink during the recycling process and therefore discard these to landfill as waste. This effectively made plastic carrier bags unrecyclable at the time.

Several SPAR distribution centres, spearheaded by the Eastern Cape, launched campaigns and projects to address the plastic shopping bag problem.

We started to encourage SPAR customers to take ownership of the problem and to stop using conventional plastic shopping bag altogether. In store communication encouraged shoppers to:

  • Bring your own shopping bag
  • Buy a SPAR brown paper bag
  • Buy a SPAR canvas bag
  • Carry your groceries to your car and pack into your boot
  • Only as a last option, buy a plastic bag – but please recycle responsibly

A further example was the SPAR Eastern Cape offer to give members of the public a paper bag free of charge for every 10 plastic shopping bags brought into an outlet, irrespective of the retailer or the brand – for a limited period.

Several SPAR group actions and commitments followed these initiatives:

  • SPAR is now selling only 100% recyclable plastics bags with an 8% calcium carbonate filler. Plans to only sell plastic bags made from 100% recycled plastic are underway for the 2019 financial year.
  • We are taking periodic samples from the market to ensure compliance across all SPAR carrier bag manufacturers.
  • We are in the process of approving a SPAR bag philosophy as a formal declaration of our intent to recycle and reduce the use of plastic.

In December 2017 we initiated a SPAR paper bag customer feedback campaign to support retailers wishing to move away from plastic carrier bags, to engage with our customers on the topic and understand their views.

Consequently, we launched alternative paper carrier bags made by a local manufacturer from wet-strength paper and not wax-lined – making them easy to recycle. The paper is Forest Stewardship Council certified and we have encouraged our supplier to apply for certification of its site.

The uptake of these bags has exceeded expectations: we are now sourcing additional wet strength paper and are exploring ways to integrate our cardboard recycling at the distribution centres with the paper bag supply chain.

We also started a strategic collaboration with Tetra Pak to find more holistic solutions to the plastic challenge. These consider the environment, product safety, affordability, health and nutrition requirements. Our ultimate objective is to offer products that are made from renewable sources, are fully recyclable and are made locally, while being scalable and available to all players in the industry.

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.

As a leading retailer, SPAR is committed to contribute towards changing the culture around the use of plastics.

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 conscious of the challenges climate change poses to our business and society. Our risk management and sustainability approach are premised on the understanding that this will effect significant changes in the way economies use and value natural resources in the future. We 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 Risk committees. Mitigation plans and the cost of mitigation have been determined in our latest CDP (formerly the Carbon Disclosure Project) carbon and water 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 2016 to 30 September 2017. 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 (SBTs). 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.

We have selected an appropriate SBT methodology, a Sectoral Decarbonisation Approach (SDA), which separates SPAR’s business into three sector categories:

  • warehouse;
  • distribution; and
  • retail.

Based on the SBT research, we developed a carbon reduction framework which was approved at the end of 2017. The framework provides an outline of the optimal pathways to achieving sustainable minimisation of SPAR’s carbon footprint in South Africa. It further provides a framework for meeting SBTs and considers parallel imperatives which will impact on GHG management going forward:

  • Carbon tax liability
  • Energy and GHG reporting regulations
  • Energy management systems integration

A baseline was measured in 2016 with action plans set for 2017 to 2025 and then key actions for 2025 to 2035 followed by 2035 to 2050. We mapped projects with potential savings to prioritise the key actions.

Based on the framework, we designed an internal carbon pricing methodology aimed at the following outcomes:

  • reaching our proposed GHG emission reduction targets;
  • protecting SPAR Group against risks relating to compliance with future carbon pricing systems such as a Carbon Tax;
  • encouraging investments in low-carbon technologies; and
  • making sound investment decisions in terms of energy efficiency projects and future operational changes

SPAR carbon reduction framework: our performance against the 2016 baseline

During the 2016/2017 financial year, reported in the CDP data submitted in 2018, SPAR’s activities emitted a total of 79 101 tonnes of carbon dioxide equivalent (CO2e) for Scope 1 and Scope 2 emissions (2015/2016: 82 984 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. Significant reductions in Scope 2 emissions were due to further installation of air curtains in the freezer sections of some distribution centres, the installation of timers on air conditioning units, lighting and better energy management.

Electricity consumption contributes toward our Scope 1 and 2 emissions. We consumed a total of 45 620 MWh of electricity for the stated period compared to 43 974 MWh in the previous period and well within 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. The impact of the solar panels will be seen in our 2017/2018 CDP submission in 2019. Internal monitoring of municipal electricity usage at the South Rand distribution centre shows that municipal electricity consumption has decreased from 9 642 MWh in 2016/2017 financial year to 7 542 MWh in the 2017/2018 financial year.

Plans are in place for solar panels to be rolled out to North Rand and the Western Cape distribution centres during 2018/2019. 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:

Scope per GHG protocol 2014 2015 2016 2017 2018
Total footprint Scope 1 and 2 (CO2e) 78 758 77 882 82 984 79 101 81 271
Scope 1: direct GHG emissions from vehicles, warehousing cooling and air-conditioning facilities (CO2e) 37 644 37 203 39 010 34 081 39 201
Scope 2: indirect GHG emissions from electricity consumed (CO2e) 41 114 40 800 43 974 45 020 42 070
* The figures in this table have been restated after external verification of our Scope 1 and 2 data. The figures in the 2018 column are not verified and will only be verified once the 2019 submission of the CDP is completed.

Transport and logistics improvements

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 rapidly rising fuel prices. Fuel costs for SPAR’s day-to-day operations were approximately R184.4 million for the year (2017: R156.2 million). Continuous improvement of the SPAR vehicle fleet is a core focus over the long term.

Initiatives include:

  • 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

The North Rand distribution centre implemented solar systems on refrigerated and dry trailer boxes, which aid the operation of tail lifts and auxiliary equipment used to power up CCTV cameras. Asset life improvements follow as a secondary benefit. New vehicle fleet technology improvements as well as design changes on trailer boxes substantially improved vehicle performance and fuel consumption.

Recycling for a better world

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 close the loop in our cardboard waste cycle and contribute 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.

Recycling of electronic waste is becoming a further imperative. A permanent container has, for example, been placed at the South Rand distribution centre to collect electronic waste. Typical waste includes old desktop computers, laptops, monitors, keyboards, telephone handset and cables. This ensures we do not dispose electronic waste into our landfills, which in turn prevents toxins, metals and ashes being released into air, water and soil.

Taking action for a new future

The South Rand distribution centre launched the SPAR VUCA project this year to address three waste management challenges:

Food security and waste: the aim of this initiative is to reduce food waste at canteens (about 9 kg daily) by involving stores and consumers. The focus is on food waste management education, particularly during October, which is food waste month and 16 October, which is world food day. A competition served to motivate employees and departments to take a pledge on how to combat food waste.

Retail water security: this project aims to improve water management in stores and communities. We started by approaching selected stores and requesting them to buy 5 litre water bottles. R1 of every bottle bought was used towards buying a Jojo tank. The project is set for a wider rollout in October.

Food sustainability: this project aims to increase rain harvesting by providing Jojo tanks to communities and schools, and working with suppliers to revamp learners’ toilets. We partnered with Sharpeville Spar, Build it and the Department of Agriculture to better the serve the community around Sharpeville. Tsoelopele Primary School was selected as the first beneficiary and had its kitchen and toilet facilities upgraded. A Jojo tank was installed for gardening which has resulted in reduced municipality bills for the school.

Closing the recycle loop for packaging

We are committed to recycling for a new future. Two partnerships illustrate how we are making this a reality.

We partnered with Tetra Pak, a long-standing supplier, to work towards fully renewable packaging for SPAR juice and milk. In terms of cartons, we have been able to preserve the product through seven-layered packaging, which means we do not have to use preservatives in the juice or milk.

Tetra Pak launched the world’s first bio-based cap which we are implementing for SPAR UHT milk as a first step. The caps are made from a high-density polyethylene (HDPE) derived from sugar cane. By using the new bio-based cap we are increasing our material used from renewable resources from 67% to 83%.

In October 2017, we started procuring corrugated cartons that are environmentally friendly and responsibly managed for all SPAR branded products. Corruseal Group was identified as our partner. They created a fully integrated national corrugated business: they manufacture, collect waste and feed this back into their paper mill. The mill, which is Forest Stewardship Council accredited, supplies the bulk of the Corruseal Group’s recycled paper requirements.

With the help of Corruseal we collect waste cartons from most SPAR distribution centres and supply these back into the paper-making process. Paper is then distributed to the Corruseal Corrugate manufacturing plants for the manufacture of new boxes according to the SPAR brand requirements.

By creating a sustainable loop and recycling, we reduce our reliance on natural capital and save costs throughout the value chain, thereby creating a new future.

Recycling innovation through vending machines

To recycle for a better world, SPAR is exploring the use of innovative new reverse vending machines. Consumers can use these to return packaging at stores. Once deposited, the reverse vending machine can sort used packaging according to weight, volume and classification. It is further able to supply real time information on all these indicators, including identifying the parent company of the waste and region. These collection reports can be used to determine trends and averages over time, helping us to increase recycling.

Through the reverse vending machine we can educate consumers about packaging while potentially incentivising this through our rewards programme. It will support our efforts to reduce packaging waste and track progress.

We are piloting 10 units in Johannesburg to understand consumer behaviour and to identify the best sites for these machines.

Using water for the future

The use of water is imperative in SPAR’s stores and distribution centres to maintain a hygienic environment for the storage and sale 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 17% reduction. To ensure that the group’s retailers, suppliers, consumers and communities are protected against water risks, we undertake enhanced due diligence in assessing water risks and opportunities as part of our procurement process.

We also consider water risks when investing in new opportunities, expanding to new retailers and in our 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.

Our North Rand distribution centre has, for example, invested and implemented two water harvesting techniques using a closed loop system. Defrost cycle water from ammonia condensers is diverted from an effluent drain into a softener plant and used in cooling towers. Approximately 5 m3 of water is saved per day in this way. The distribution centre is also doing a feasibility study on a rain water harvest system as well as a greywater plant.

Read more about water risk mitigation in the Western Cape in 2018 here.

A sustainable food system

A sustainable food system is a collaborative network that integrates all aspects of the value chain to ensure the environmental, social and economic value for communities and regions. One of SPAR’s commitments in terms of a sustainable system is to innovate through our house brands. We have made significant progress in working with our suppliers towards sourcing responsibly, reducing waste and implementing biological farming. Our Freshline team, for example, assists local farmers in the Freshline supply chain to adopt more sustainable farming methods.

On the other side of the value chain, we engage with consumers in terms of nutrition, water use and reducing the use of plastic. Read more about the ways in which we reduce plastic use here.

SPAR’s commitment to sustainable seafood

SPAR is a co-signatory to industry and government bodies on issues relating to fishery improvements and is aligning all SPAR seafood procurement to be within the parameters of the World Wide Fund for Nature (WWF) Southern African Sustainable Seafood Initiative (SASSI) guidelines on how seafood should be caught and sold.

SPAR offers an extensive house and supplier branded seafood range. However, the Southern African seafood industry faces several sustainability-related issues that go well beyond competition in the marketplace.

These concerns include illegal harvesting or poaching and the over-exploitation of marine resources. SPAR is committed to collaborating with WWF-SASSI to overcome these challenges and guard the sustainability of seafood resources.

SPAR joined the WWF-SASSI Retailer/Supplier Participation Scheme in December 2010. Since then, we have completed an assessment of the SPAR house brand seafood range demonstrating that all SPAR house brand seafood procurement is taking place according to our formal sustainable sourcing policy.

We created internal awareness of the WWF-SASSI and SPAR commitments, and generated external awareness through the guilds. We provided real-time access to seafood data by linking WWF-SASSI and suppliers to SPAR’s online portals. Through working closely with suppliers, we have been able to establish full traceability of SPAR branded seafood products. This included random DNA testing on SPAR branded seafood products to ensure correct identification and labelling.

We expanded this initiative beyond SPAR house brand products to all seafood and fish in procured through our distribution centres. We engaged with and assessed all suppliers who engaged directly with distribution centres according to the standards stated in the SPAR brand procurement policy. We also focused on training buyers at the distribution centres and gathering seafood information from all seafood suppliers to assess whether any species were red listed. Work was also done to assist retailers that sourced their own seafood and a pilot project was launched with Fish4Africa, which supplied fish directly to SPAR stores.