Higher costs, happier customers: What deforestation-free means for retailers

Businesses think using sustainably sourced wood and paper is more expensive, but makes staff and customers happier, a WWF study has found. But data is lacking on what deforestation-free really means for the bottom line.

The use of sustainably sourced forestry products is good business for retailers, despite the perception that it costs more and does not help win market share, a report from environmental group Worldwide Fund for Nature (WWF) has suggested.

In a study of 54 retailers from 20 countries launched last week, more than half said they think that using sustainable forest products would mean larger operational costs, but 80 per cent said sustainable sourcing boosts brand reputation. Some 70 per cent said their staff are happier, and 60 per cent saw a bump in customer satisfaction and stakeholder engagement thanks to sustainable sourcing practices. 

Only three of the companies featured in the report, titled Retailers’ Business Case for Responsible Sourcing Study, were headquartered in Asia Pacific. But more than 80 per cent of the firms polled sell wood products in APAC, and 60 per cent source wood from the region.

For Bunnings, Australia’s largest household hardware seller, supply chain risk dropped as a result of a better relationship with a sustainable wood supplier, the report found.

It also noted that the more progressive retail companies did not only demand certified products from their suppliers, but used their policies to educate suppliers, customers and staff, to build a more stable supply chain.

Another example highlighted in the study was Migros, a Swiss retailer, which reported a 30 per cent lift in sales of sustainably sourced products between 2012 and 2015. The report suggested that Migros customers expect to see responsibly produced products on the shelves.

The perceived impacts of responsible forest products sourcing on businesses. Image: WWF

The study did not measure the impact of responsible sourcing on a company’s bottom line, because of a lack of available data.

WWF suggested that companies should be more transparent about how responsible sourcing is affecting their balance sheets.

Though the growing number of public deforestation-free commitments made by companies is “encouraging,” the report cautioned that progress has been “too gradual”. 

Most commitments are not time-bound, and two-thirds of them do not publically report quantifiable progress, WWF pointed out.

British homeware retailer Kingfisher uses 96 per cent of its wood from sustainable sources, and aims to lift that ratio to 100 per cent. But no timeframe is given to reach this target in the company’s sustainability report

But Ikea, the world’s largest furniture retailer which uses 1 per cent of all commercially harvested wood, has said that by 2020 it will plant at least as many trees as it uses to make products through its Forest Positive scheme, and quadruple the volume of wood it buys from certified sources.

WWF noted in the report that certification from industry bodies such as the Forest Stewardship Council (FSC), a sustainability certifier for the forestry industry, could be used to “proactively engage NGOs and policy stakeholders so they can identify and resolve contentious issues and mitigate impacts pre-emptively.”

Do Asian companies care less about responsible sourcing? 

Responsible wood and paper sourcing has to date been more of a strategic focus for Western multinationals, and there are differences in the perceived benefits of responsible sourcing for global and local brands in Asia, the NGO told Eco-Business.

Because of their international reach and visibility, global brands that operate in Asia are usually subject to higher civil society scrutiny than a local Asian brand, said Karen Mo, senior specialist, research and development, forest, WWF.

“It is more likely that global brands would perceive greater value from responsible sourcing in guarding their brand reputation.”

The perceived benefits of sustainable sourcing also depend on the retailer, added Mo. “In China, for example, the case for supply chain risk mitigation may be more applicable to specialty retailers that have vertically integrated supply chains than general retailers that lease out floor and shelf space and do not directly engage in product sourcing.”

The report emerges one month after the world’s third largest pulp and paper firm, Asia Pulp & Paper (APP), welcomed the news that FSC had approved a plan to re-engage with the agribusiness giant.

If APP is eventually re-certified by FSC - which severed ties with the firm 10 years ago because of destructive forestry practices - the company would be able to more credibly claim to its customers that its products are responsibly sourced.

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