2003 results - Introduction

New: Read some initial reflections on the premature end of the Race to the Top project in "Top to Bottom", an article recently featured in The Environment Council's >elements magazine. A full report on the lessons learned from the project will be available here shortly.

These pages provide an overview of how the UK supermarket sector has responded to the challenge of a project that set out to benchmark and track the social, environmental and ethical performance of UK supermarkets.

The need for transparency

While public trust in supermarkets remains quite strong, a swing in the public mood seems to be taking place, around concerns about supermarkets' growing dominance of the food system.

Government scrutiny is also quite intense; the impending buy-out of Safeway prompted a tough Competition Commission inquiry on the heels of another Commission investigation into the sector in 2000. Secretary of State Margaret Beckett announced a Food Industry Sustainability Strategy in which 'challenging key performance indicators' were to be developed for food manufacturers, wholesalers, retailers and caterers.

Friends of the Earth and some farming groups have been heavily critical of supermarkets' commitment to fair trading and UK produce.

Because supermarkets are the gatekeepers of modern food systems, they are automatically targets for numerous campaigns aimed at driving improvements in the social and environmental performance of food systems — from ending slavery in cocoa plantations, or improving food security in poor housing estates, to increasing bird populations in farmland. There are many benchmarking tools in use by supermarkets and their critics with different degrees of credibility, transparency and rigour. Most either fall into the category of broad industry indices or single-issue campaigns. There are some very innovative and dynamic companies in food retailing which are campaigners in their own right. But there no tools available to take a look across the sector to get an in-depth view of how supermarket companies are performing beyond traditional measures of market share, profitability or shareholder value.


Race to the Top

Race to the Top (RTTT) was set up in 2000 with the idea of expanding competition to other issues influenced by supermarkets' 'gatekeeper' role in the food system, including the improvement in production practices and animal welfare, the promotion of public health, and the fairness of trade between consumers and workers along the food chain.

An alliance of 24 farming, conservation, labour, animal welfare, health and sustainable development organisations drafted a number of indicators of supermarket performance. These indicators were then developed into a set of survey methodologies, including a comprehensive questionnaire to supermarkets and techniques to gather other data from surveys of stores and supermarket suppliers. The themes were divided into 'modules' with an organisation or individual expert leading on each module.

The intention has been to publish annual results on how the top 10 UK supermarkets are performing across the board, and to track improvement over at least 5 years. RTTT can therefore be described as multi-stakeholder benchmarking, in that many of the key stakes in agriculture and food pool their resources to benchmark the performance of an industry over time.

The project was structured as a brokered relationship between civil society and supermarkets, with IIED as the intermediary and an Advisory Group providing oversight. Thousands of hours have been invested in the administration and analysis by IIED and partners.

Race to the Top was welcomed by civil society groups as a groundbreaking initiative in which comparable data is gathered together in one place to allow sectoral comparisons over time against a range of indicators along the whole interface between supermarkets and sustainability. This would allow interested citizens, investors, consumers and policy makers to easily see information which otherwise is either not available or is buried in reports by benchmarking schemes or NGO campaigns. The key principles of the project are constructive engagement and dialogue; respect for confidentiality where necessary; a focus on positive examples of good practice; rigorous research; and efforts to build on and coordinate with other initiatives to minimise the duplication of effort in data collection.


Testing the tools

In order to ensure that the project did not rush to premature judgement with untested methods, partners eventually agreed with retailers that a confidential pilot year should be undertaken in 2002 before going public in 2003. In 2002, six of the top 10 UK supermarkets — Co-op, Iceland, Marks & Spencer, Safeway, Sainsbury's and Somerfield — and 24 alliance members had signed a memorandum of understanding with the project, committing themselves to the process of data collection and constructive dialogue. All six retailers provided a full set of data in the pilot phase, and received detailed analysis of their scores relative to the industry best and industry average. This important phase of the project represented an acknowledgement by civil society partners that they did not necessarily have all the answers, and that RTTT could comprise a form of joint learning. In the light of experience from the pilot year, most survey methods were modified for 2003.


Going public, going nowhere

At the beginning of the 2003 'public' year, things were looking good for large-scale industry participation. A letter was received from the chief executive of Tesco on 2nd June 2003, stating that the company "would like to participate on a yearly basis providing our concerns are addressed". This was followed by a constructive meeting at Tesco headquarters. Meetings with Waitrose had been taking place. Only Morrisons had resolutely distanced itself from the process, and Asda showed no intention of taking part. After some very tough negotiations, a compromise was reached between civil society partners and participating supermarkets on the way in which results would be made public. The agreement meant that only the narrative reports on each company would be made publicly available, but not the detailed scores on which the published results are based. In addition, the supermarket that scores best in each category would be named. The detailed scores would be provided with detailed feedback to each respective supermarket.

But by the deadline for data submissions in 2003, only 3 supermarkets were on board — the Co-operative Group, Safeway and Somerfield. Therefore, comprehensive company profiles are only available for these three supermarkets. These companies are to be commended for their hard work in collecting data and for demonstrating a willingness to open themselves up to scrutiny.

In the face of a shortage of participating supermarkets, IIED has no choice but to terminate the project in its current model in January 2004. A full analysis of the RTTT experience will be posted on this website in early 2004.


What went wrong?

What has made a large proportion of the UK supermarket sector turn its back on this constructive approach by civil society organisations?

Critical mass

The key problem was one of critical mass. Once it became clear that industry leaders Tesco and Asda were not going to actively participate in the project in 2003, the attractiveness of participation for other supermarkets clearly declines. The reasons behind these two company's decisions must therefore be examined in detail, along with other challenges faced by supermarkets in responding to the RTTT challenge.

Regulation and self-regulation

Supermarkets have advocated voluntary self-regulation rather than mandatory and enforceable rules to improve their social and environmental performance. Transparency is a key pillar of self-regulation, but even the basic idea of Key Performance Indicators on sustainability for food retail — as proposed in DEFRA's Food Industry Sustainability Strategy — have been strongly resisted by parts of the industry. There was no strong government drive to push supermarkets into engagement with the project, but some companies still seemed to fear that government might pick up a successful RTTT and turn it into a form of third-party regulation. The low participation in RTTT could be seen as evidence of the failure of self-regulation in the sector. Another example is the DTI Code of Practice on supermarket trading relations with suppliers — an outcome of the Competition Commission 2000 report — that has been criticised as being emasculated by industry lobbying to the extent that it is valueless to all parties.


Compromise and leverage

In seeking to find compromises along the way, RTTT lost some leverage with the corporate sector. The commitments of civil society partners to respect constructive engagement and confidentiality diluted their ability to challenge business, and may have contradicted the aims of partnerships with RTTT, which is increased transparency as a lever for change.

Over-reliance on industry data

The project relied heavily on data disclosed by the retailers themselves. But it is clear that external (third party) surveys are the most powerful measures of supermarket performance, in that they are indicators of observable changes rather than measures of aspiration or company policy. External surveys, such as store surveys for local food, or surveys of supermarket suppliers, are expensive, highly labour intensive, and methodologically problematic.

The lack of company resources

Committing to a process such as RTTT requires staff time and technical resources. But in order to stay competitive against Asda and discount supermarkets, rival companies feel obliged to squeeze costs in both their supply chains and offices. Companies such as Sainsbury's are cutting staff and technical capacity in order to match Asda's cost structure and profitability. It is ironic that the increasing pressure on supermarket companies to improve the quality and transparency of data which they release on environmental and social impacts comes at a time when companies have a declining ability to collect that information.


The diversity of the sector

UK supermarkets are very heterogeneous, in terms of ownership, customer base, and market sector served. Ownership ranges from PLCs such as Sainsbury's, subsidiaries of transnational corporations (Asda), co-operatives (e.g. Co-operative Group), or employee-owned structures (Waitrose). PLCs are judged on profits, market share and relatively short-term shareholder value, and wider corporate citizenship is often not rewarded in the marketplace. Customer bases range from the affluent (Waitrose, M&S) to shoppers on a tight budget (e.g. Somerfield's Kwik Save, and Iceland).

Store sizes range from very large (e.g. Asda) to smaller high street formats (e.g. Somerfield, Co-op), with some of the smaller stores being used mainly for 'top-up shopping' rather than weekly shopping trips. All these factors affect the ability of companies to be successful in certain aspects of 'sustainable' business such as the marketing of organic or high animal-welfare produce. Some companies have stressed the risks of RTTT indicators comparing 'apples and oranges'. Clearly each company's performance needs to be evaluated in the business context within which it operates, which is why the RTTT results are published in the 'company profile' format.

Quality of benchmarking tools

Some of the RTTT tools, particularly for the 'emerging' issues addressed by the Local Economies and Health modules, are still at a relatively experimental stage. Supporting research is still required to demonstrate the connections between business activity measured by some of the indicators and positive outcomes for sustainable development.

The 2003 results

Despite the low level of participation in 2003, it is important to evaluate the RTTT results to draw lessons from the surveys and point to both best practice and areas in need of attention to improve the impact of UK retailers on the wider impacts of our food system on people and the planet.

The issues under the seven RTTT 'modules' are now discussed in turn.


Posted: 24-May-2004

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