Nor is sustainability, according to consulting giant KPMG New Zealand, “nothing more than an inconvenient compliance cost.”
KPMG has recently issued a superb report, titled Sustainability in the Agribusiness Sector (download here).
I don’t think anyone has ever confused KPMG with the Green Party, yet there’s a huge amount of consistency in what these two disparate voices are saying about the fact that sustainability is fast becoming the “price of entry” for any food producer expecting to succeed survive.
Says the report:
“The views of customers in markets that we have traditionally sold into are changing and it is apparent that the affluent consumers we must target in Asia are also thinking along similar lines. Retailers are looking to ensure that their end-to-end supply chain meets acceptable standards for sustainability from an environmental, economic and social perspective. Momentum and pressure is growing for businesses to recognise the importance of meeting their customer’s definition of sustainability if they wish to continue to act as a supplier. Increasingly, it is looking like there will be little or no premium for supplying sustainably produced products. However there is unlikely to be anything more than a base commodity market available for a product if we fail to take our customer’s concerns seriously.”
And sustainability is no longer “just” an moral issue:
“Leading retailers have identified that sustainability has become a significant business issue rather than a moral issue. It is important that New Zealand agribusiness, a major supplier of primary products, accepts that sustainability is a business issue and treats it as such and acknowledges that our customers are taking the issue very seriously.”
KPMG reminds us that the customer is always right:
“… it is important that we in New Zealand realise quickly that the measures global retailers are introducing are in response to real changes in societal thinking that is happening, not just in European and North American markets, but throughout the world. Continuing to seek evidence that the ordinary consumer really wants to eat sustainably produced food only continues to demonstrate that some sectors of our industry are failing to recognise the fundamental rule of business, that the customer’s requirement is paramount, even if it appears outlandish to us.”
What is “sustainability” to KPMG?
“In essence, sustainability is about meeting the needs of today, without adversely impacting on the needs of tomorrow and is about balancing environmental, social and economic concerns in doing so.”
And finally, who is steering the sustainability ship today?
“International food retailers, such as Walmart (the world’s largest retailer), Tesco, Sainsbury’s and Marks & Spencer to name a few, are driving the sustainability trend for food products.”
Governments will come and go, but these giant retailers are here to stay … and they will set the standards as they listen to their customers!
Whatever farmers are growing in Hawke’s Bay today, it had better meet the sustainability test.
Concludes KPMG:
“The ‘green consumer’ and ‘responsible retailers’ of today are demanding increased creditability, greater accountability and traceability in their suppliers’ supply chain. To meet these expectations, New Zealand’s agribusiness sector needs to adopt a sustainable supply chain approach, which entails a whole life cycle analysis from on-farm activities, processing and manufacturing, to end consumer engagement. New Zealand’s clean, green, pure image in the global market place is an advantage for the agribusiness sector. However, substantive action to support this image must be taken in order to leverage New Zealand’s global brand and to avoid further “greenwash” allegations.”
Amen!
Tom Belford