WHEB Commentary

Seb Beloe

This is not just any corporate sustainability, this is M&S sustainability


Today (19th June) marked the fifth anniversary of the launch of Marks and Spencer’s ‘Plan A’ on sustainability. The breadth of what is still regarded as the most ambitious corporate sustainability strategy in existence was underlined by the eclectic range of questions fired at the company from the 500 strong audience of NGOs, supplier and investors.

Made up of over 130 specific targets covering everything from child labour in garment finishing factories, to carbon emissions from stores in the UK to detailed analysis of animal welfare, the range of issues confronting M&S is overwhelming but the only genuinely surreal moment came with a question about how the company was supporting butterflies on farmland – but even that was ably fielded by Mark Bolland and his team of lieutenants.

The scale of M&S’s achievements is indisputably impressive. Of the original 100 targets set in 2006, 94 have been achieved. And these include challenging targets such as the elimination of all waste going to landfill across the company’s entire UK and Ireland operations. No mean feat in five years. Perhaps even more impressive is the fact that the company has delivered a 22% reduction in carbon emissions across all their operations at a time that they have also increased their retail footprint by 18%. And the list goes on. 31% reduction in total waste produced, 679m coat hangers recycled (generating revenue of over £1m for social enterprise projects in in Bangladesh), all wild fish now sourced from sustainable sources etc. One area they missed – not all their timber is from certified sustainable sources, but 84% is, and they anticipate that 100% will be within the next few years.

Whilst not a stock that we would hold in the IM WHEB Sustainability Fund, M&S’s experience is salutary, because it demonstrates that large mainstream retailers are big customers for the products and services supplied by companies in our fund themes. M&S has invested £40m in sophisticated energy management systems to reduce their energy use. Companies in our fund like Schneider Electric who supply and install these systems are benefiting from this type of demand. Similarly companies like Intertek who provide consumer product testing services to ensure that products do not contain toxic materials, or paper recycling services like DS Smith also benefit from corporate sustainability strategies.

Equally importantly though it underlines the business case for corporate sustainability strategies. ‘How does all this do-gooding benefit the poor, beleaguered investors?’ I hear sceptics in the audience proclaim? Such scepticism was perhaps warranted at the initial launch of Plan A when Stuart Rose, the then CEO, announced the accompanying £200m price-tag. Roll the clock forward five years however, and Plan A is delivering £105m in annual net benefits to the company’s bottom line. This equates to approximately 15% of pre-tax operating profit for the year – not bad for an initiative that many might have considered to be ‘non-financial’.

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