Examination of Witnesses (Question Numbers
240-259)
MR JULIAN
WALKER-PALIN,
MS GEMMA
LACEY, MR
ARTHUR SAYER
AND MR
RICHARD WHITEFIELD
19 NOVEMBER 2008
Q240 Chairman: That is an impressive
exposition of what you are doing. You said effectively it was
your parent company which decided this was the right thing to
do. Does that suggest that the waste strategy which the Government
has put forward and other policies did not actually have an influence
on your company's policy?
Mr Walker-Palin: No, I do not
think that is true. I think you have to look at the way that ASDA
runs its business. We are a very commonsense business and everything
we do is about delivering low price for our customers.
Q241 Chairman: I am glad you got
your commercial in early! That is all right.
Mr Walker-Palin: Our business
model relies on driving out inefficiencies. What the Government's
waste policy, in particular the increasing of the Landfill Tax,
has allowed us to do is to make a very strong business case for
investing in the new technology needed to divert the material
to landfill. So I think if I had to pick out one key element from
Government policy, it has been the increase in the Landfill Tax.
Q242 Chairman: What is John Lewis's
position on this? We are going to come on and talk about some
of the very good things you have been doing, but do you have an
overall approach and philosophy like ASDA does to this problem?
Mr Sayer: Yes, we do. It differs
from ASDA, as I suspect you would expect it to from company to
company. We have an aspiration to divert our waste from landfill
to the extent of 95% by 2013, so perhaps not quite as bullish
as my colleague's on my right, but the approach we take is to
adopt a responsible approach to the waste that we are generating
and I am in the post that I am in with one other colleague in
the last year to obviously try and identify what fits the size
and scale of our business and looking at how we can actually dispose
of the waste which our operations generate. We do use the waste
hierarchy. We support that in terms of reducing, reusing, recycling
and then recovering. To actually get to the levels we want to
aspire to of 95% from landfill will require energy from waste
solutions to actually deal with the waste which we cannot recycle,
which is difficult to do, but at the moment we do not see fully
how you can get to 100% because there are some residues from these
processes which still exist and are categorised as hazard waste.
At the moment those solutions seem not to be there, but as they
emerge—and hopefully they will in the next five years or
so—then obviously that will help us get to those targets.
Q243 Chairman: From the small business
sector, Mr Whitefield, what is your overall philosophy and approach?
Mr Whitefield: We have only been
developing our management policy over the last two years really
and that is with the onset of having to take on ISO 14001, which
is basically a requirement on us by our suppliers. So there is
not too much external drive other than our customers on that.
We had very modest targets to start with. We were looking to reduce
landfill by 5% a year to start with. We are reducing it by about
40% per year at the moment. We have no defined ultimate target
because we are not sure where we are going with it, but what we
are trying to do is to have progressive targets as the years go
on.
Q244 Chairman: Can you just for the
record—because you are an electrical business, are you not?
Mr Whitefield: It is mechanical
engineering really.
Q245 Chairman: Right. Just give us
a 30 second scenario of your business, because I think people
know who ASDA and John Lewis are but they may not know your company.
Mr Whitefield: We are a design,
manufacture and supply company. We produce conductor rail for
the railways, namely new aluminium conductor rail which is going
in on the Jubilee, Northern and Victoria Lines. We provide the
shoe gear that collects the electricity from those rails. Overhead
systems, the Dublin Lewis tram system we have recently installed,
and pantographs which go on top of the trains and collect the
electricity for all the UK trains. We are in Somerset and we are
a company of around about 180 people.
Q246 Chairman: Very good. Can I ask
our two colleagues from the retail sector, you have talked about
what you are doing to minimise your own disposals to landfill
over time, but what is your approach to minimising the incidence
of waste itself in the first place? Do you want to start for John
Lewis, Mr Sayer?
Mr Sayer: Yes. In terms of minimisation,
packaging is probably what you are referring to, I suspect, and
my colleague, Gemma, I think is actually more informed on that
than I am.
Ms Lacey: Obviously following
the waste hierarchy, then we are very much focusing on reducing
the amount of packaging we produce, first and foremost. As part
of our commitment to packaging reduction we look at not just opportunities
where we can eliminate unnecessary packaging but also look at
opportunities to introduce innovative new types of material. There
are opportunities as well around lightweighting particular types
of packaging and introducing recycled materials.
Q247 Chairman: Can I just stop you
there so that we can be entirely clear, because all of us are
customers of a product which is packaged, but I think you are
talking about what comes in, if you like, from the warehouse end
in which the product is either delivered to your stores or in
the case of Mr Walker-Palin, who gave us a very clear indication,
where you would have an outer container which can then ultimately
be modified to go on display directly in a store?
Ms Lacey: The approach is actually
the same in terms of obviously looking at both the secondary and
tertiary packaging, which would be in terms of what is actually
delivered into our stores, but when I talk about, for example,
when we are looking at eliminating unnecessary packaging then
it is about looking at our product range and identifying areas
where we can eliminate packaging which we consider no longer necessary.
Examples of that within Waitrose are that we have been looking
particularly at the fruit and vegetable range and also our meat,
fish and poultry. So examples of that are where we have removed
the outer sleeve from our breaded fish packaging, which actually
results in a reduction of around 33% in the weight of the total
packaging. There are also things around our salad bags, for instance,
where we introduced lightweighting, again saving reductions overall.
They are not always necessarily visible to the end consumer. We
have also been looking at what alternative types of material we
can use as well, from trialling materials such as biodegradable
compostable types of material, but again it is very much obviously
making sure that we have still got packaging which is fit for
purpose and adequately protects the product both in transit and
also on the shelves, and also carries all the relevant information
we need for the customer from an information perspective. So it
is really a balance of looking at opportunities across different
areas, and what we are now looking to do, where we have focused
on specific categories, is actually taking that learning and sharing
that best practice through packaging forums with our buying teams
and with our suppliers to look at further opportunities across
the whole product assortment and the packaging around that.
Q248 Chairman: Okay. Mr Walker-Palin?
Mr Walker-Palin: For our primary
packaging, ie which is around our products, we look at it in three
ways. We look at right sizing the packaging that is around there,
we look at lightweighting for the packaging that is around it
and we look at bringing in more recycled content where we can.
We were one of the first members, as I believe John Lewis were,
to sign up to the Courtauld Commitment of a 10% reduction. We
looked at the 10% reduction of lightweighting of packaging and
said, "Actually, we think we can set ourselves a stretch
target on top of that," so we have been working over the
last two years to a 25% reduction by weight in our primary packaging
and we are currently at about 24% and will hit 25 by either the
end of next month or probably the first or second week of January.
We started off looking at our Organics packaging range because
we thought it is the kind of range where you can make some real
differences and customers will work with you around those differences,
so we could do some trials to see what worked and what did not
work. Generally, the approach which we took worked there in terms
of reducing the amount of packaging that is around it and then
lightweighting the materials we are using. We are also one of
the lead partners on WRAP's light glass project, so we looked
at particularly moving away from glass and into plastic bottles.
A lot of our materials now have been lightweighted from materials
like glass into plastic. The reason we have done that is that
there are lots of efficiencies throughout the whole supply chain.
If you can take the weight and the thickness of a piece of glass
and replace it with plastic, you can then fit more of these goods
on a trailer itself. The trailer is lighter, so therefore you
are moving more goods for the same trailer at less fuel and we
can fit more of these goods on the shelves, which helps in terms
of availability to customers as well. We have so far removed about
40,000 tonnes of packaging from our products. What we are now
doing, when we have done lightweighting, which we have done so
far, is looking at what is next and one of the key challenges
we have got is if you take lightweighting too far—and I
think a block of cheese is a good example—if you have a
prepared block of cheese which has a lightweight plastic packaging
around it, as soon as the customer cuts that packaging it starts
to go off, notwithstanding whether it is in the fridge or not,
and probably if we just put the lightest possibly packaging around
that a lot of that cheese would go in the bin and then turn into
food waste and create a lot of methane. We believe it is probably
better for items like that to put a zip lock on that piece of
packaging and therefore you can re-seal it, it retains its freshness
and all of the product can be eaten, but as soon as you start
to do that the packaging then becomes heavier. So we have reached
that point where we have done a lot of lightweighting and now
need to look more across the whole lifecycle of the product to
see what is actually the best direction to take from here.
Q249 Miss McIntosh: How much control
do you have, Mr Walker-Palin, over the producers of the supplies
on the type of packaging you are given? Can you virtually dictate
how you wish the product to be packaged?
Mr Walker-Palin: What we have
done is we have brought in an external consultancy to help us
with this who are experts in packaging. To be really clear, our
commitment is around our private label packaging, so it is around
the ASDA packaging, not around branded packaging. In terms of
branding, we do share a lot of information with our brand owners.
I did a seminar with Unilever, for example, yesterday where I
was talking about packaging and what we have learned and what
we could pass on to them. In terms of the private label, the own
brand product, then yes, we will sit down with the manufacturer
and say, "We have this target to lightweight the packaging
and we do require you to work with us on this. Let's work together
on what the appropriate solution is."
Q250 Miss McIntosh: Do you see any
evidence yet that the producer responsibility is working in terms
of packaging?
Mr Walker-Palin: I think it is
well-established that yes, it has worked so far probably, I would
suggest, with the exception of mixed plastic packaging. What we
have moved to very quickly, the whole retail sector, is that as
part of the lightweighting work which has been done under the
Courtauld Commitment, as I said before, more of these materials
are now plastics which are very light materials, but the non-rigid
plastics in particular, the things which are not generally bottle
shape, are not usually collected by local authorities for recycling.
So I think producer responsibility now has a role to play in looking
at more of those materials and certainly we are part of the Packaging
Recycling Action Group, which is a group of industry members—and
I actually chair the group—which works with Defra on trying
to find solutions to this. We are very pleased with the packaging
strategy that Defra is working on at the moment to look at tweaking
producer responsibility, to focus on some more of these materials,
because we do get a lot of postbag from our customers saying,
"Why have you given us this plastic packaging? I can recycle
glass but I can't recycle plastic. I don't want it," whereas
actually we know environmental it is the right decision to take.
But where we can, we need to close that loop and get that material
back either to convert into energy or preferably closed loop recycling.
Q251 Miss McIntosh: I will come back
to the energy question in a moment. Could I ask John Lewis how
we can reduce the Primark factor and the throwaway society? Are
you looking at ways of reducing that level of waste?
Ms Lacey: Again, going back to
the waste hierarchy, I think it is about working across all the
different areas and I think it is about working in all those areas
in balance, so looking at both packaging and also product optimisation
in terms of the materials you are using right through to then
obviously putting in place the right infrastructures then to actually
be able to use those products in a responsible way but also then
deal with those products once they come to the end of their lives.
Q252 Miss McIntosh: Do you think
price has a role to play in Primark?
Ms Lacey: Certainly from our perspective
it is about providing quality products and as part of that I think
we have got a big responsibility in terms of how we communicate
the use of those products and in terms of the responsible use
of those products.
Q253 Miss McIntosh: Can I ask Mr
Whitefield on this point: is it difficult for small and medium
sized companies to demand higher environmental standards from
suppliers?
Mr Whitefield: Yes, but it depends
on where the goods are coming from. We purchase an awful lot of
aluminium, 2,000 tonnes a year, and if we are buying that from
UK sources, meals in the UK, then it is very easy for us to use
recyclable packaging, ie either aluminium or steel packaging.
When we are buying it from abroad—and an awful lot comes
from Germany—we find that there is a tendency to use wood
packaging because the transport costs do not make it effective
for us to reuse the packaging. So that is one of our main things,
to try and get rid of wood packing with reusable steel packaging
in the main. Our biggest waste is wood. We are throwing away 5
tonnes a month. We want to reduce that by introducing reusable
stillages for our equipment and for some of the products which
are coming in, but it is very difficult when you have got a supplier
in Germany and you are trying to get them to actually come on
board with that and also keeping the cost down, because it does
have a cost implication on those goods.
Q254 Miss McIntosh: Are you able
then to collaborate with other small companies from Germany?
Mr Whitefield: Not really. Because
of the uniqueness of our product it is very difficult to do that.
The other thing which does affect it is the transport that we
are using from an environmental point of view is very much utilised
in delivering that product to other areas of the world, so virtually
every wagon that comes into our premises is re-booked again by
our transport agents to take goods away. So that space is probably
better utilised for that than it is for transporting packaging
around. But we have had contracts in Europe where we have had
demands on us to return our packaging to the UK.
Q255 Miss McIntosh: Can I just return
to something Mr Walker-Palin said? You take the packaging, the
plastics, to Skelmersdale and you have a facility there where
you go?
Mr Walker-Palin: Not in Skelmersdale.
What we do is we take it back to Skelmersdale, where we bulk it
all up. At the moment we have got it split into three way streams,
so we have got animal by-products, bakery and then everything
else, because we are looking to the future, hoping that animal
by-products will probably go for rendering and therefore biofuels.
Bakery will hopefully go to feeding animals and there are certain
microbiological issues to resolve first. Then we are hoping the
rest of it will go to an anaerobic digestion facility because
we like the idea of getting electricity and digestate from these
materials, but there is not currently sufficient infrastructure
in the UK of anaerobic digestion so what we are doing is bulking
it all up as one and then our waste contractor, Veolia, is taking
it away to a facility, I believe in the Midlands, I think it might
be in Bedford or Coventry, where it is then being burnt to create
electricity. But that is our short-term solution. Our long-term
aim is to have proper uses appropriate to the materials that we
are bulking up, which is why the process we have got actually
has the three streams rather than everything in one go.
Q256 Miss McIntosh: Does your company
own the Birmingham facility?
Mr Walker-Palin: No.
Q257 Mr Drew: It was just on the
plastic and glass issue that I wanted to come back to Mr Walker-Palin,
and maybe Ms Lacey as well. I remember from years ago and I still
see in a lot of European supermarkets customers returning their
empty bottles to the supermarket and back, presumably to the supplier
for re-using. Have you looked at the feasibility of that, the
practicality of that, and indeed the environmental issues involved?
Is it something which could be re-introduced and ought to be re-introduced?
Mr Walker-Palin: I think from
ASDA's perspective we are looking at this from two angles. One
is the general "bring bank" facilities we have in our
stores where customers can bring those kinds of materials back.
We do not believe they are probably as attractive as they ought
to be. However, almost all of these "bring banks" are
operated by the local authority in which area the store resides,
so we do have a process where next year we are hoping to roll
out more and more to engage with the local authorities to spruce
up these facilities. In fact, we are running a competition with
schools in Leeds and schools in Bristol at the moment to say to
the schoolchildren, "Have a look at these facilities and
how would you encourage your parents and parents that you know
to use them more?" As part of that we are saying, "Do
we need to bring more different types of recovery within those
facilities?" One of the difficulties is that if the local
authority does not collect that material for recycling, they then
will not collect it from the bring bank facilities because they
are serviced by the local authority. But we believe that is something
we need to focus on more next year, and we will do so. Then in
terms of reusable packaging, we certainly see a place for certain
types of products. What we are trying to work through at the moment
with a company called Easyserve is on the liquid detergents. We
like the idea and we tried it about eight years ago and we want
to dust it off and have another go with new technology, whereby
customers would click in a reusable pouch for their washing detergents
and then by reusing the pouch we can give them money off at the
checkout as well. There is a lot of cash which needs to go into
making that work. I think it was something like £150,000
in terms of R&D costs, which is a huge amount of money to
get to the position to put this machine in, but it would also
have productivity savings in terms of merchandising on the shelves
as well, so we are motivated to try to make it work. For us, it
is probably about six to 12 months away before we get to that
point.
Q258 Chairman: Could I just take
you back to the line of questioning which Anne McIntosh was pursuing
on this question of a so-called Primark effect. Let me say at
the outset this is not an attack on Primark as a brand, but it
was the language which was used when we visited a waste site in
Croydon. The operator commented that they had seen a significant
increase in the amount of textile waste which was being disposed
of. Five years ago it constituted 7% of the waste stream and now
by weight it was up to 30%, and it was presenting them with real
challenges because these materials were not easily recyclable,
in other words it was either landfill or burning them. It does
raise a rather more fundamental issue about sustainability because
I suspect from the John Lewis Partnership, a point which you were
making, Ms Lacey, you concentrate on perhaps the longevity of
life in terms of the clothing offer, whereas, with no disrespect
to ASDA, the price points are going to be lower. You have a different
appeal. How much do these sustainability arguments influence,
if you like, the type of textile goods you are selling, bearing
in mind they now seem to be occupying an increasing proportion
of the waste stream with difficulties for ultimate disposal and
so some quite serious questions on sustainability are being raised?
Mr Walker-Palin: We have textile
recycling facilities in all of our stores, so customers can recycle
textiles through us. I think it is important to look at it from
the angle that we are there to give our customers the product
they demand from us, and what is really interesting in terms of
the kind of fast fashions and people buying clothes and then disposing
of them that we might have seen in the past is that we did a survey
with our customers at the beginning of this year and said to them,
"What do you like about our ranges? Do you think we turn
them over fast enough? Do we freshen the designs fast enough?"
What they actually said to us is that they are making product
choice decisions now around quality and value for money. They
are shopping for wardrobe essentials rather than impulse buys,
which fast fashion tends to be. So we have now completely changed
our brand offer on our George clothing to reflect that and are
moving away from the so-called "fast fashion". We have
done that in three areas. We have brought three new brands in.
We have brought in a brand called Moda for the ladies and we have
brought in Boston Crew for the gentlemen and G21 for the younger
customers, and G21 are the kinds of customers who in the past
would have gone for cheap, fast fashion, and we have moved them
away from the disposability of goods to the durability of the
textiles they are purchasing. In certain areas, footwear being
one, we have completely moved away from fast fashion. We have
a stable range of footwear. Generally as a whole business we have
reduced the number of clothing options available to our customers
by 20% and it is our strategy to actually fall in line with what
our customers are demanding, which is yes, the right price, but
also clothes which will last them for a considerable period of
time because they do not have a huge amount of cash in their pockets.
They want to buy something, invest in it and then use it longer
than perhaps they have in the past.
Q259 Chairman: Now, Ms Lacey, in
the interests of proper retail balance, having had a very good
commercial for three new brands from ASDA, is there anything you
would like to add to what you said earlier?
Ms Lacey: I think it comes back
to the point you made in terms of what our brand offer is about
and I think within the terms of the John Lewis Partnership and
John Lewis and Waitrose brands it is about offering quality products
which offer value for money. I think it is all sorts of ethical
issues. Our customers will have an expectation that as a business
we make all those sorts of considerations, so there is much greater
interest in terms of where our products come from, how they have
been sourced, the relationships we have with our suppliers, what
materials they contain and also in terms of providing good information
about what they are actually buying and how they can get the best
and the most from that product.
Chairman: Okay. We are going to move
on. We have got a lot more questions to ask and it probably will
mean that not each one of you will have the opportunity to comment
on the question simply because, with no disrespect, we could be
here all afternoon. So if you are not asked to respond it is not
because we do not want to know what you say, but those who are
asking the questions will have decided who, in their judgment,
might be the most appropriate person to answer them.
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