{"id":12766,"date":"2016-11-04T17:19:21","date_gmt":"2016-11-04T21:19:21","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/navigating-climate-change-at-a-leading-natural-and-organic-foods-supermarket-chain\/"},"modified":"2016-11-04T17:19:21","modified_gmt":"2016-11-04T21:19:21","slug":"whole-foods-natural-organic-sustainable","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/whole-foods-natural-organic-sustainable\/","title":{"rendered":"Whole Foods \u2013 Natural &amp; Organic. Sustainable?"},"content":{"rendered":"<p><span style=\"text-decoration: underline\"><strong>Introduction<\/strong><\/span><\/p>\n<p>Founded in 1978, Whole Foods Market (WFM) is a leading natural and organic foods supermarket chain with 464 stores and 87,000 employees in the US, UK and Canada [1].<\/p>\n<p>As is the case with many companies, climate change presents several challenges (and some opportunities) to WFM, and the company must take steps now to prepare for the future.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Likely effects of climate change<\/strong><\/span><\/p>\n<p>The risks posed by climate change to businesses can be classified into six kinds, as illustrated below [2]:<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-12571 alignnone\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/climate-change-300x102.png\" alt=\"climate-change\" width=\"550\" height=\"187\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/climate-change-300x102.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/climate-change-768x261.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/climate-change-600x204.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/climate-change.png 916w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/p>\n<p><strong>For WFM, price and product risks would likely be the most severe<\/strong>. WFM sources a wide variety of food products from 69 countries including the US. \u00a0The price, availability, and quality of a range of food products will be increasingly adversely affected by climate change [3].\u00a0 For example, global crop prices are expected to be 20% higher in 2050 than they would have been without climate change [4]. The effects on supermarkets could be amplified for carriers specializing in perishable and organic products like WFM, where perishable products accounted for 65% of FY 2015 sales [5]. Extreme weather events such as heatwaves, droughts and floods are already causing losses in yields of food products, in turn affecting availability, quality and price. For example, a huge crop failure in 2014 in Turkey \u2013 the world\u2019s largest producer of hazelnut (70% of global production) \u2013 led to a doubling of world market prices [6].\u00a0WFM\u2019s supply chain could also be disrupted by extreme weather events.<\/p>\n<p>Aside from price and product threats, other key risks include:<\/p>\n<ul>\n<li><strong>Increased energy costs<\/strong> (transportation and store operations) due to carbon regulations [7]<\/li>\n<\/ul>\n<ul>\n<li><strong>Potential physical damage to infrastructure <\/strong>and other assets from extreme weather events [8]<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Alongside these risks, there are two notable climate change-related opportunities that WFM could capitalize on:<\/p>\n<ol>\n<li>Concern about climate change has greatly <strong>increased the public appetite for environmentally friendly products<\/strong>, which are closely associated with WFM\u2019s brand.<\/li>\n<li>Weather changes could <strong>increase WFM\u2019s ability to source products locally<\/strong>, boosting its brand image. Global warming has extended the season length for growing certain products domestically, and has enabled some products that previously could only be sourced abroad to be grown closer to home [9].<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Steps WFM is taking to address the impact of climate change<\/strong><\/span><\/p>\n<p>The main steps WFM is taking relate to efforts to reduce the company\u2019s carbon footprint and dependence on fossil fuels [10]. For example, WFM has taken steps to:<\/p>\n<ul>\n<li><strong>Reduce waste in stores <\/strong>e.g. through composting, which has reduced landfill waste by up to 80% in some regions and resulted in zero waste in several stores<\/li>\n<\/ul>\n<ul>\n<li><strong>Promote the use of renewable energy sources<\/strong> to power its operations, e.g.:\n<ul>\n<li>Supplementing traditional power with renewable power<\/li>\n<li>Purchasing renewable energy credits from wind farms to offset 100% of the electricity used in all US and Canada stores and facilities (led to recognition by Environmental Protection Agency)<\/li>\n<li>Providing electric vehicle charging stations at its stores (45 as of 2015, with 31 more being built)<\/li>\n<li>Converting truck fleet to biodiesel fuels, and fitting trucks with fuel-saving systems<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Use green building techniques for store construction, <\/strong>e.g.:\n<ul>\n<li>New stores are constructed in line with guidance from \u2018Leadership in Energy and Environmental Design\u2019 and \u2018Green Globes\u2019, resulting in special certification<\/li>\n<li>As of 2015, twenty Whole Foods\u2019 stores had been awarded the Environmental Protection Agency\u2019s GreenChill<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Strengthen brand association with environmental responsibility<\/strong>, e.g.:\n<ul>\n<li>Often partners with non-profit environmental organizations e.g. it is currently partnering with Recycle For America [11]<\/li>\n<li>Offers CSR days for employees to volunteer for local clean-ups and non-profit conservation work<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Additional steps that could be implemented<\/strong><\/span><\/p>\n<p>The main threat to WFM\u2019s operations is price and product risks from exposure of its supplies to climate disasters, including the potential disruption of its supply chain. As such, the company needs to quantify the potential impact on its supplies by mapping its global fresh produce supply chain against models used by the Intergovernmental Panel on Climate Change. This would allow it to place a value on the risks of climate change and develop appropriate strategies, such as identifying new locations to source products in at-risk areas or working with suppliers to improve their climate change resilience strategies. UK supermarket Asda did a similar mapping exercise and found that 95% of its entire fresh produce range is already at risk from climate change [12].<\/p>\n<p>Additional steps WFM could introduce include:<\/p>\n<ul>\n<li>Conducting flood risk impacts for its stores and distribution centers<\/li>\n<li>Joining and persuade other retail partners to take the American Business Act on Climate Pledge [13]<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>[755 Words]<\/p>\n<p>&nbsp;<\/p>\n<p><strong>References<\/strong><\/p>\n<p>[1] Whole Foods Market, Press Release, 2 November 2016. Available at: http:\/\/investor.wholefoodsmarket.com\/investors\/press-releases\/press-release-details\/2016\/Whole-Foods-Market-Reports-Fourth-Quarter-and-Fiscal-Year-2016-Results\/default.aspx<\/p>\n<p>[2] McKinsey, \u201cHow companies can adapt to climate change\u201d, July 2015. Available at: http:\/\/www.mckinsey.com\/business-functions\/sustainability-and-resource-productivity\/our-insights\/how-companies-can-adapt-to-climate-change<\/p>\n<p>[3] Business Social Responsibility, \u201cBusiness Action for Climate-Resilient Supply Chains\u201d, May 2015. p.14, Available at: https:\/\/www.bsr.org\/reports\/BSR_Report_Climate_Resilient_Supply_Chains.pdf ; Paloviita &amp; Jarvela, \u201cClimate Change Adaptation and Food Supply Chain Management\u201d (New York: Routledge), 2015<\/p>\n<p>[4] World Economic Forum, \u201cThe Global Risks Report 2016\u201d, p51. Available at: http:\/\/reports.weforum.org\/global-risks-2016\/<\/p>\n<p>[5] Whole Foods, \u201cAnnual report \u2013 2015\u201d, Available at: http:\/\/s21.q4cdn.com\/118642233\/files\/doc_financials\/2015\/Annual\/2015-WFM-Annual-Report.pdf<\/p>\n<p>[6] WWF. \u201cThe consequences of climate change for the agricultural economy and consumers<\/p>\n<p>with examples of selected products and their main growing countries\u201d, October 2015, p5. Available at: http:\/\/wwf.panda.org\/wwf_news\/?256676\/Climate-change-food<\/p>\n<p>[7] Business Social Responsibility, \u201cBusiness Action for Climate-Resilient Supply Chains\u201d, May 2015, p.12. Available at: https:\/\/www.bsr.org\/reports\/BSR_Report_Climate_Resilient_Supply_Chains.pdf<\/p>\n<p>[8] KPMG. \u201cClimate Changes Your Business: Business Action for Climate-Resilient Supply Chains\u201d, 2008, p26.\u00a0 Available at: www.kpmg.com\/EU\/en\/Documents\/Climate_Changes_Your_Business.pdf<\/p>\n<p>[9] The Financial Times. \u201cClimate: Growers and supermarkets face challenge of worsening weather.\u201d November 20, 2012. Available at: https:\/\/www.ft.com\/content\/ba2fc410-29de-11e2-a5ca-00144feabdc0<\/p>\n<p>[10] Whole Foods Market. \u201cEnvironmental Stewardship: Our Green Mission\u201d, Available at: http:\/\/www.wholefoodsmarket.com\/mission-values\/environmental-stewardship\/green-mission<\/p>\n<p>[11] Food Weekly News, \u201cRecycle Across America; Whole Foods Market North Atlantic Region Joins Recycle Across America&#8217;s &#8220;Leaders for Progress&#8221; Initiative to Help Reduce Global Waste\u201d, May 28, 2015. Available at: http:\/\/search.proquest.com.ezp-prod1.hul.harvard.edu\/docview\/1681975007?rfr_id=info%3Axri%2Fsid%3Aprimo<\/p>\n<p>[12] Asda. &#8220;The Challenge of a Changing Climate.&#8221; 2014. Available at: http:\/\/your.asda.com\/system\/dragonfly\/production\/2014\/06\/17\/15_38_19_612_4234_Climate_Resilience_Campaign_a5_Brochure_v10.pdf<\/p>\n<p>[13] https:\/\/www.whitehouse.gov\/climate-change\/pledge<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How should supermarket chains prepare for global warming? 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