Risks and opportunities in ICA's sustainability work

ICA’s sustainability work entails both risks and opportunities. It needs to be adapted constantly to demands for greater transparency, regulatory changes and increasing requirements with respect to sustainability at every level of the supply chain.

If ICA cannot satisfactorily meet the market’s expectations and its own goals, there is a risk that the brand and the Group's position in the market will suffer. There is also a risk that cost efficiencies will be affected unless satisfactory measures are taken, e.g. to conserve energy and reduce waste.

ICA can improve its market position by satisfying customer demand for transparency, quality, human rights and for green and healthy products better than the competition.

The Group can also make itself more cost-effective by reducing consumption of energy and materials in its operations. In general, the Group is best able to address sustainable development issues through its local presence in each market and by educating and informing customers.

In accordance with ICA's Good Business, sustainability issues are integrated into the Group’s daily operations and contribute to greater focus in the Group. ICA is constantly developing its sustainability efforts, notably by pursuing issues such as climate impact, energy efficiency, water use in production, social responsibility in the value chain, food safety, health and wellbeing and community involvement.

In order to ensure that the products ICA sells live up to both legal requirements and ICA’s Good Business, with their demands for quality, health, environmental and social responsibility, in 2009 the Group-wide initiative “I Care” was started. The goal of this initiative was to create tools and models to secure the product flow in every market, from sourcing to logistics and stores. This is being done through environmental and quality certification of the processes involved in sourcing, logistics and in the stores using selected established standards. The initiative was ended according to schedule in 2012 and work on securing the product flow is continuing in each department responsible. Today, a number of parts of the business hold environmental and quality certification to current standards, and work on certification of the remaining operations is continuing.

ICA manages potential risks of significant adverse environmental effects by integrating ICA's Good Business in the daily work and by working with established procedures and processes for the environmental work.

See also Risk and risk management.

Risks and opportunities of climate change

 ICA must constantly adapt to increased scrutiny of the Group. In addition, there may be legislative changes and increased requirements for sustainability in every part of the value chain. ICA's overall risk analysis also includes the assessment and management of risks related to climate change.

Change   Risks   Opportunities
New laws   Society’s growing awareness of climate change is likely to result in new laws and regulations, which in turn affect our operations financially and operationally. We continuously monitor these issues so that we are ready to adapt quickly. Important areas include emissions limits on goods transportation, taxes that result in more expensive fossil fuels and society’s transition to renewable energy sources.   Challenges give rise to new ideas. The climate change debate is likely to lead to stricter limits on carbon dioxide emissions from transportation. This increases the need for environmentally sustainable solutions. New technology is also being developed as a result of the new demands, providing opportunities for eco-friendly solutions. For example, a likely future tax on synthetic cooling agents would steer development towards more eco-friendly alternatives in everything from transportation to refrigeration systems in stores. By working on the issue today, ICA can strengthen its position in the market if and when new rules are introduced.
Physical changes   The physical risks inherent in climate change – temperature changes, drought, flooding, etc. – affect everyone in society. For us, it means that the supply of various crops may change in quantity over time because of changed farming patterns. Transport of goods may be affected if extreme weather conditions affect accessibility. The decision to open new stores could also be affected, as we take into consideration factors such as the flood risk of certain locations. A shortage of fossil fuel is also a potential risk unless the operations can be switched over to and adapted to renewable fuels.   Increasing demand from customers for climate-friendly and green products also provides new business opportunities, whether this involves developing new products or finding locations for new stores that are within walking or cycling distance of where people live. Better waste disposal and management in society generally means that stores can manage their own waste in a greener way, which is a further opportunity. The focus on food waste and its significance for the climate is encouraging waste reduction. Switching to renewable energy sources at an early stage allows us to be sure the business can continue even if the supply of fossil fuel should reduce. Reducing energy use is also a way to save money.
Other changes   New consumption patterns due to growing awareness of climate change could present a risk unless ICA adapts sufficiently quickly to customers’ new demands.   Customer satisfaction is a competitive advantage. ICA can improve the relationship with customers by conducting a good dialogue, being innovative and being ambitious – all things that could put ICA ahead of the competition.

ICA's influence on its supply chain

ICA can affect various parts of the value chain to a certain degree. All parts of the chain include activities that ICA can control.

  
  
  
  

ICA’s own stores

Choice of products
Choice of store location
Choice of energy sources
Waste management
Regular self-assessments
Internal training and employees' development

ICA’s own warehouses and transport

Choice of warehouse premises
Choice of energy sources
Waste management
Choice of transport route
Mode of transport chosen
Eco-driving training

ICA’s main product range

Product range strategy, e.g. offering value-added products such as eco-label, organic, ethical label and Keyhole label items
Product quality aspects
Choice of products

Outsourced transportation

Choice of shipper
Requirements of transport route, mode of transport, fuel and eco-driving
Periodic inspections and monitoring

Franchisees

To a large extent, the choice of products
Agreements and partnerships
Information and lobbying

Suppliers

Choice of supplier
Contracts and terms
Choice of products
Product quality and environmental audit

Independent retailers

To a certain extent, the choice of products
Agreements and partnerships
Dialogue and cooperation with stakeholders

Customers

Product offering
Loyalty programmes
Dialogue and cooperation with stakeholders
Information and lobbying