By Kim Stewart
BERLIN, Germany—Adopting environmental, social and governance (ESG) initiatives just for the sake of looking good to shareholders or consumers doesn’t work. Instead, elements must be woven into a company’s DNA—which includes contributing to a greater social purpose but also making money. And companies need to tell their ESG story to their customers. These were some of the takeaways from the “ESG in Action—How to Get Value Out of It” session at the NACS Convenience Summit Europe (CSE).
Henry Armour, NACS president and CEO, told attendees that if he was going to facilitate a morning session on ESG, he intended to make it provocative. In the end, though, there was more common ground than disagreement among the three European retailer panelists who joined Armour on stage for yesterday’s morning session.
ESG started in Western Europe and has gained traction among corporations in recent years “when companies realized that they could make money by being environmentally responsible in their operations,” Armour said, mentioning the 2006 book “Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage,” by Daniel C. Esty and Andrew S. Winston.
- Rafał Rudzki, ESG director, Żabka Polska, based in Warsaw, Poland, with about 7,000 convenience stores across the country.
- Murat Zengin, chief marketing officer, OPET, based in Istanbul, Turkey. OPET is the second-biggest fuel-oil distribution company in Turkey, with more than 1,300 stations under the brand of OPET and SUNPET.
- Stephen Hamilton, customer proposition director, Henderson Retail, Belfast, Northern Ireland. Henderson Retail is a division of Henderson Group, which owns and operates more than 95 SPAR and EUROSPAR stores in Northern Ireland.
In guiding the discussion, Armour said he sought to bridge the gap between those companies who aim to save the planet and those who aren’t yet concerned with ESG efforts.
“We’re retailers, and people who meet and serve half of our population every day,” Armour said. “It’s important for us to play in the middle and understand the importance of this. Without being authentic, without being credible, without being sincere in your ESG initiatives, you’re on very dangerous ground. The reputational risks of greenwashing are real,” he said.
All three companies represented by the CSE session panelists focus on the three pillars of ESG, with overlapping approaches.
At Żabka, the crucial elements are “integrity, integration with the business and a strategy,” explained Rudzki.
Żabka lives out its ESG purpose in multiple ways, Rudzki said. The Polish company strives to improve the quality of its private-label brands by scoring them for nutritional value, offering a selection of 100% plant-based food that caters to flexitarian lifestyles.
Armour asked, “At Żabka, how does governance get incorporated in business?”
The organizational culture is the first line, Rudzki said. Then “sharing the story with the public is quite important. And in our case, we’ve been reporting ESG elements for years. We are transparent in what we do. When we fail, we say that.”
Zengin of Turkey’s OPET stressed the importance of sincerity and community investment when it comes to ESG efforts and then telling the story of your company’s social purpose. “Communications is crucial in every aspect, especially in ESG,” he said.
OPET doesn’t lose sight of the fact that it’s an oil company. “We are in business to make money, not save the world,” he said. “You must invest in your business, so the business grows, people work, they feed, they travel, people prosper, the environment will change, the society will grow.”
At the same time, “we believe in what we do, and we do it sincerely,” Zengin said. “We are very strong values-driven company and get results for our business.”
Henderson Retail is just starting out on its ESG journey, Hamilton said. In its stores, Henderson Retail uses 100% renewable energy across its store portfolio, including energy from solar and wind turbines. “It’s an initiative that’s part of ESG, but it’s also a commercially sensitive thing to do,” he Hamilton.
Armour remarked that “the governance piece of [ESG] is one that’s less well defined, less understood. At Henderson, when your leaders talk about ESG, what do they think of as governance?”
One corporate goal is to increase sales of better-for-you products, Hamilton explained, and the other is decarbonization. “This is how you can tell the story to the financial community,” he said. “Another focus area and strategy is to help our customers lead a more sustainable life,” part of which is expanding its physical store assortment and digital offer to “help customers lead better lives and free up their time.”
There’s still work to do, Hamilton notes. His company could do a better job of telling its ESG story, he says. “We want to get better at ESG. We believe from an integrity process it’s the right thing to do.”
To read more about incorporating ESG into your businesses go to https://www.nacsmagazine.com/issues/october-2021/challenge-or-opportunity.
Kim Stewart is editor-in-chief of NACS Magazine and editorial director of NACS. She can be reached at firstname.lastname@example.org.