Case study: Marks & Spencer
Marks & Spencer’s Plan A made the business an extra £50m in the 12 months to 31 March 2010. The programme is now four years old and aims to reduce the retailer’s environmental impact while trading ethically and helping consumers become healthier. This involves meeting 180 self-imposed targets by 2015.
Click here the read the cover feature: CSR – This time it’s profitable
Click here to read about Unilever’s CSR programme
According to head of sustainable business Mike Barry, the financial benefits from Plan A are the result of modest gains accumulating in various areas of the business. He says the nature of corporate finance means that without a concerted effort to review M&S’s processes as an entire organisation these small changes would not have been made or the cost reductions realised, even though they are often the result of making relatively simple efficiencies.
“Plan A has been enormously powerful to link together relatively small sums of money that we save in many different stores, products and supply chains. On their own, none of them would have got the attention that they actually merit without the Plan A wrap-round.”
Some aspects of Plan A cost M&S more, for example sourcing Fairtrade products, but Barry says any extra expenditure is covered in other areas. “We will face some higher costs for certain products, but within the overall Plan A business case we can subsidise any additional costs on product from savings elsewhere in the business. The overall cost to the consumer is zero,” he adds.
There is also a need for investment in the supply chain if M&S is to fulfil the social aspects of its CSR commitments. But these investments also contribute to the retailer’s long-term profitability or at least become cost-neutral, Barry claims.
He says that in Bangladesh, for example, M&S is working with factory owners to ensure workers there are paid enough to support themselves. “Although that leads to higher wages, we also improve the productivity of those factories through training and that has released the cash to pay the workers more. They get the outcome that they want without costing us or the suppliers any more money.”
Plan A has also been a vehicle for moving M&S into new business areas, notably M&S Energy, which now supplies more than 500,000 households. The service offers gas and electricity through Scottish and Southern Energy, and pledges to return one unit of low-carbon hydroelectric energy to the National Grid for every unit used by customers.
