According to a sustainability report issued by the discount company CouponFollow, 68 percent of US consumers surveyed said they would be likely or very likely to change their buying habits in order to reduce their impact on climate change. In response to that growing demand for planet-friendly shopping, retailers have been searching for ways to go green.
“We realized that our customers want [to] build more and more for sustainability with their wallet,” says Yana Synesiou, Director of Sustainability at X5 Retail Group. “We see that our partners and our stakeholders, [and] suppliers focus more and more on that.”
With 17,000 stores across Russia, X5 is the largest retailer of food and groceries in the country. Due to the company’s scale, Synesiou and her team realized that X5 was “big enough to make an impact and really lead the industry in Russia.”
Synesiou was appointed to her position two years ago. Since then, Synesiou and her team have developed the company’s environmental, social, and governance strategy. That includes working on sustainability initiatives across the supply chain, innovation departments, and business units.
Choosing the Right Sustainability Goals
According to Synesiou, X5’s Sustainable Development Strategy is based on the 17 Sustainable Development Goals adopted by the United Nations in 2015. Her team also looked at competing retailers around the world — including Tesco, Walmart, and Kroger — to understand common sustainability benchmarks in the grocery sector.
After that initial research, Synesiou spoke to leaders in the company and customers to better understand which of the UN goals aligned best with their motivations.
“What is important for us to do?” Synesiou recalls asking them. “Where do you think we can have the same impact with the suppliers and other parties like the government? And based on that, we chose four main goals.” They were:
- Zero hunger. As the leading food retailer in a geographically-dispersed country, X5 aims to provide products across Russia — in both populous cities and rural towns — as a way to prevent hunger. According to Synesiou, that involves creating an efficient supply chain where products arrive there on time, in good shape, and long enough before the expiration date. This also helps reduce food waste.
- Health and well-being. “[We’re] making sure that the products that we provide — they’re healthy,” Synesiou says. That includes expanding the retailer’s fresh fruit and vegetable assortment.
- Employee well-being. According to Synesiou, her team seeks to create equal opportunity, learning opportunities, and a safe working environment for the company’s 300,000 employees spread across Russia. One initiative in this category is a pilot where cameras were placed in trucks to monitor how tired the driver might be. If the technology indicated that a driver became drowsy, it would sound an alert to awaken the driver and send a signal to a call center that would remind the driver to safely stop and rest.
- Making planet-conscious decisions. “[That includes] sustainable use of resources…sustainable production, making sure that the customers use or buy only what they need and not excess, and then use it properly and recycle afterwards,” Synesiou says.
The company is also working toward what they call 30X30 goals, including a 30 percent reduction of green house gas emissions, 30 percent share of renewable energy used in X5 operations, and 30 percent reduction in ratio of waste generated to retail sales, by 2030.
Running Pilots
When working on sustainability initiatives, Synesiou’s team runs pilots in different stores across Russia. Synesiou emphasizes that teams needs to look for the right location to test different solutions, based on the needs in that geographic area.
She says her team selects “the most appropriate stores that can benefit us, in terms of giving the most transparent and fair data — whether the pilot works or doesn’t,” Synesiou says.
To find the best fit, the team looks at data points including store traffic, the demographics of shoppers, and their needs.
“You can just focus on a certain area and just go for that because you know that it has the most need,” she explains. “If you go into a tiny little town with not many people, the queues there are not likely to be very high, or the speed of life in those areas is slower than the big, cosmopolitan cities like Moscow.” So concepts related to reducing traffic are often tested first in big cities.
For example, the sustainable development team collaborated with other X5 teams on smart scales, which can identify and price items just by placing a fruit or vegetable on a scale; there is no need to scan a barcode or punch in a number. This project, Synesiou says, was best tested in stores with a high volume of shoppers, since the goal was reducing store traffic and limiting the need to touch surfaces.
Teams at X5 then track the initiative for four months, identifying and fixing roadblocks along the way.
Keeping Track
According to Synesiou, her team of three utilizes special dashboards in Tableau to keep track of key metrics. However, the metrics her team monitors vary by project, based on the sustainability goal each initiative hopes to achieve. Synesiou says her team evaluates the different dashboards on a monthly basis.
“For each of the four goals…we have quantitative and qualitative goals [and] metrics,” she explains. “So if we talk about climate, one of them is a 10 percent reduction in CO2 emissions. If we talk about the employees, it’s having over 75 percent employee engagement” in sustainability programs.
In order to get employees across the organization to do their part, ESG has also been factored into X5’s bonus structure. “That helps [sustainability] get a real financial motivation as well,” she says.
