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Sustainability Overview and Sobeys Inc. Sustainable Seafood Direction. Atlantic Lobster Sustainability Foundation. David Smith, Sobeys Inc. July 27, 2011 Moncton. About Sobeys Inc. One of two national supermarkets in Canada >$15 billion in sales; >1,300 stores >100 years old

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Sustainability Overview and Sobeys Inc. Sustainable Seafood Direction

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    1. Sustainability Overview and Sobeys Inc. Sustainable Seafood Direction Atlantic Lobster Sustainability Foundation David Smith, Sobeys Inc. July 27, 2011 Moncton

    2. About Sobeys Inc. • One of two national supermarkets in Canada • >$15 billion in sales; • >1,300 stores • >100 years old • Owned by Empire Ltd; Sobeys family majority shareholder

    3. Markers of Time: 25 Years Markers of Change: 8 Years

    4. The Case for Sustainability ?

    5. Sustainability – Why? 80% Middle Class by 2030 + 50% food production

    6. Feeding the World: Largest Environmental Footprint • Agriculture Today • consumes 70% of fresh water • major global warming impact (80% is from nitrogen fertilizer)

    7. Sustainability Lifecycle Thinking: 2 Key Risks Facing Business • Supply Side: “Externalities” • Demand Side: “Radical Transparency”

    8. “Externalities” • Threat of inputs/outputs previously not a business cost, becoming an internal cost • Previous examples: employee benefits; product safety • Near term: • Carbon emissions • Water • Post-consumption handling of packaging: “Extended Producer Responsibility” • Increasingly on the agenda of Regulators; Institutional Investors • Magnified cumulatively across supply chain

    9. “Radical Transparency”: Products ~80-90% of footprint Industry led “External” led – start-ups Now. 70,000 products. 5 years? All consumer products? Scan Barcodes Easily with your Phonebarcoo links products in stores with independent consumer information. Extensive Product Information and AssessmentsPrice comparison, test reports, health, green and sustainability information.

    10. Supply Chain Transparency:Beyond Voluntary Best Practices “Trust but Verify” “Without documentation it’s just a rumour.” “Without measurability it’s just checking a box.”

    11. Beyond Certification: Requirements for “Step Change” • Create the business systems • Supply chain ~ 80-90% of footprint • Pre-competitive “Radical Collaboration”: systemic solutions • “Yard stick” vs. “Gold standard” • Incremental improvements focused on laggards – “can’t hide” • Leadership • “Eco-literacy” • “What gets measured gets done” Optimism !!!

    12. Need the Sustainability “Infrastructure”: Measurement Systems

    13. Product “Lifecycle Analysis” / Lifecycle Thinking “Cradle to Grave” “Ecosystem Thinking” Lifecycle Inventories

    14. “Radical Collaboration” – Supply Chain

    15. Focal Areas Direct Operations (Stores, Warehouses, Fleets): • Carbon Footprint • Waste Diversion Supply Chain: • Sustainable seafood • Sustainable packaging • Ethical & environmental performance – Private Label Over-the-horizon: • Sustainable agriculture • Animal welfare

    16. Sobeys Sustainable SeafoodDirection

    17. Sobeys Seafood Sustainability: Case Study • Stakeholder engagement: beyond Greenpeace • Strategy: beyond eco-labels • Sourcing baseline: data capture12 months • Procurement: evaluation web tool • Supplier engagement: National Summit • Staff training: e-Learning Module • Marketing: integrated program – make it easier

    18. Sustainable Seafood: Making Sources Visible

    19. Sobeys’ Sustainable Seafood Policy: Beyond Eco-labels to “Fix the Worst First” Certification to-date: The “Low Hanging Fruit”But what about the Biggest Challenges? 7% Green Yellow Red

    20. Sobeys Sustainable Seafood Policy Goal By 2013: Stop selling any “seriously challenged” seafood species sourced from areas where the producers do not have an improvement plan, with specific milestones.

    21. Sobeys’ Sustainable Seafood Direction: “Fix the Worst First” • Not dependent on eco-labels (i.e. MSC, BAP) • Focus: improving our sources of species considered most at risk (i.e. worst of the “Red List”) • Improvement via Engagement: not de-listing; Improvement Plans • Stop selling only as a last resort: when situation calls for it; when producers do not commit to improvement • “Green list” and “Yellow List” sources/species are fine to sell • Do not need to be certified if independently and credibly reviewed • Eco-labeled product is a sub-set

    22. Sustainable Seafood: Making Sources Visible Our suppliers input monthly sourcing data into a web tool that provides us an evaluation of each species purchased

    23. Sobeys’ Product Focused Actions To-Date • Tightened our specs: • any Chilean sea bass we sell will only come from a MSC certified fishery, and not in Ross Sea; • Swordfish will only come from Atlantic Canadian sources that are harpoon caught (MSC certified) or longline caught (in MSC full assessment) 2.De-list: only when dire situation warrants – • - all sharks, skates, and rays, Orange Roughy, and “Bluefin tuna”

    24. Sobeys’ Product Focused Actions To-Date 3. Improvement Plans: source from areas with commitments – • Existing fisheries improvement plans: • Wild Pacific Coho salmon from British Columbia (2010) • Wild shrimp from Gulf of California (2007) and Gulf of Mexico (2008) • Indonesian blue swimming crab (improvement plans launched in 2007) • Acting as a catalyst we look forward to announcing new Canadian based fishery plans as they develop

    25. 4) Sobeys’ Product Focused Actions To-Date: Eco-Labels • Are part of the solution; just not the only solution • To-date 50 Private Label skus in-store & in-progress:

    26. Sobeys Ontario Traceable Pacific Halibut Sticker on package – staff write in code T-stand Flyer Recipe card

    27. system Customers can trace who, where, how, when; Fishermen can see who, when, where traced.

    28. BC Wild Salmon Videos @ • Objective: educate public on an example of the complexity of challenges and solutions in wild seafood sustainability • Support the Wild Salmon Policy direction, and seek collaboration to help implement • Example of Sobeys policy in action: “Beyond Eco-labels”

    29. Thank You.