As the Cost-of-Living Rises, Grocery Must Not Compromise on its Sustainability Commitments

Last year’s UN Climate Change Conference (COP26) in Glasgow left many wanting for more. But it may yet prove itself to have been the primary catalyst for a surge in public pressure on governments and the business community to do more. The commitments, claims and discourse that followed certainly took on a notable upward trajectory, albeit inflated in places.

That is until recently as attention began to slide towards the expected repercussions of an economic slow-down. Affordability became the primary concern. And that’s a problem, because environmental and economic conditions are now binary. We can no longer focus on one without the other.

ALDI Australia has launched its inaugural Sustainability Progress Report, a review and update of its progress on initiatives that positively impact the environment, its customers and people and the communities in which it operates.

It maps the progress we have made as Australia’s first grocery retailer to switch to 100% renewable electricity, reduce plastics from our supply chain, and commit to zero waste: the result of an organisation-wide conviction to make a positive impact on communities and the planet.

The fact that it follows so soon after the release of our 2022 Price Report earlier this month is no coincidence. The correlation between affordability, provenance and sustainability has become a preeminent concern as consumers grapple with the dual challenge of economic prudence and environmental responsibility.

It is a situation that we believe is redefining the role of grocery in Australia. Fuelled by an accelerated sustainability agenda, we’re now seeing an alignment of issues that, collectively, are creating a systemic shift in the economy and reshaping stakeholder expectations.

Some of that change can be attributed to new market regulation and reporting requirements. But there’s a broader shift in opinion about the role organisations must now play in mitigating risks associated with the climate emergency and the depletion of nature.

The grocery sector is at the forefront of that expectation. The size, scale and impact of the food industry on natural capital, and its direct and indirect relationship with consumers through supermarket stores, means that there are few sectors that have greater opportunity to influence and inform a nature positive impact.

Tackling an issue of that significance requires all of our attention. The UN Intergovernmental Panel on Climate Change (IPCC)’s most recent report on the consequence of inaction is a stark reminder of just how much we have to do.

But the steps taken by organisations to mitigate the impact of climate change on people and eco-systems is no reason to make sustainable products inaccessible through price – all the more so when inflationary pressures are driving up the cost of living and undermining the confidence of consumers.

Our Pricing Report found that almost all (98%) Australian grocery shoppers have seen an increase in the price of essential household items compared to previous years, with over four in five (81%) concerned about the affordability of living costs in 2023. In fact, consumers are worried about grocery affordability (51%), second only to petrol (59%).

The environmental and economic imperative is fast becoming a singular issue. Grocery customers are now looking to our industry to help them make purchasing decisions that are good for the pocket and the planet. Our own commitments to reduce plastics packaging by 25% by 2025, and to send zero waste to landfill in the same period has garnered enormous support from our customers. But we believe grocery has the potential to do so much more, and we are ensuring we deliver that through all of our business decisions.

The size of the grocery sector has a broader role to play in supporting the country’s transition to renewable energy sources. Our own decision to procure energy as part of a 10-year power-purchase-agreement with local companies, coupled with our investment in wind and solar, allows us to meet our 100% renewable electricity needs whilst proudly supporting the accelerated growth of the Australian renewable energy sector.

Elsewhere, the development of enduring partnerships with Australian farmers ensures the longevity of the supply of local, quality produce and that helps sustain the livelihoods of those we rely on most.

By adopting an Australia-First approach to sourcing, 100% of our fresh meat, eggs, bread, milk, salmon and fresh poultry is locally produced, and 97% of our fruit and vegetables are sourced from Australian farms.

It’s a decision that has significant flow-through effect on local communities too, building confidence in sustained revenue streams and the means to invest in regenerative agriculture and the natural environment.

As the cost of living goes up, so the grocery sector must double down on delivering more affordable and sustainably and responsibly sourced products to consumers. One should not be at the expense of the other. Nor will consumers excuse it. The fact that 100% of our own label cocoa and tea, and more than 80% of our own-label coffee is sourced from certified supply chains is something they consider to be a hygiene factor, not a luxury.

Like others in the grocery sector, ALDI has always placed a focus on working in harmony with the communities in which we operate. We have helped consumers navigate the health and supply chain challenges presented by the global pandemic; provided a source of assurance and continuity to those impacted by natural disasters; and developed sustained and fair partnerships with hundreds of Aussie businesses.

Through that role, our industry has secured the trust and confidence of consumers. How we align our environmental and economic contribution in the future, will determine how resilient that consumer confidence proves to be.

Words by Daniel Baker, Director Corporate Responsibility, ALDI Australia