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Market News

 June 18, 2007
Consumer Industry Quickly Embracing Sustainability, Study Finds

 West Virgina, USA -- Environmental sustainability, far from being a passing trend, has become a critical business issue for consumer businesses, according to a study by Deloitte Consulting and the Grocery Manufacturers Association.

"While the issues associated with sustainability -- such as waste management, commodity shortages and energy usage -- are nothing new, the expectations of shareholders, consumers, regulators, and other constituencies have changed, pushing sustainability to the top of the agenda for many consumer products companies," said Peter Capozucca, a principal with Deloitte Consulting and co-author of the study. He added, "It is unlike any business issue consumer businesses have encountered in the past. The industry's large environmental footprint and unique dependencies on agricultural inputs, water and packaging make sustainability a critical strategic issue that consumer packaged goods companies must address proactively."

The study, entitled "Sustainability: Balancing Opportunity and Risk in the Consumer Products Industry," found that 85 percent of U.S. consumer business companies have active sustainability initiatives; most common are recycling and energy conservation programs.

Although retailer requirements, specifically Wal-Mart, have been influential, they have not been the primary driver behind the sustainability movement: more than 60 percent of the companies surveyed said that internal priorities are the primary driver of these efforts, while regulatory compliance and Wal-Mart's packaging initiative are the second most cited drivers.

The study found that consumer packaged goods (CPG) companies are ahead of most retailers in implementing sustainability programs, driven by internal motivations such as cost reduction, regulatory risk mitigation, and concerns over potential shortages of commodity inputs. However, both retailers and CPG companies cited several barriers to comprehensive sustainability efforts, including regulatory uncertainty and unjustifiable returns on investment.

"This study tells us that sustainability is not just about 'going green' -- it involves competing in a different world with constantly evolving issues and expectations," said Stephen Sibert, GMA's senior vice president of industry affairs. "GMA will continue to develop the compendium of retailer practices to foster and enhance collaboration between manufacturers and retailers on sustainability initiatives. Such cooperation is mutually beneficial, and more importantly, helps companies meet consumer demands."