It’s not ‘sustainability’, it’s ‘resilience’
(4 min read)
It will not be a surprise to anyone reading this that the wine industry is going through a bit of a tough period. Unsurprisingly at times like this, the Financial Directors of the world start looking at expenditure lines to see where savings might be made. In some organisations, the financial pruning secateurs come to hover above sustainability initiatives. Why do we need to be saving the planet, the FD thinks, when we are facing margin pressures which threaten our profitability?
This got us thinking because we believe that our work, and that of our members, is not a ‘nice to do,’ but actually essential to companies’ survival and success in the long term. Is ‘sustainability’ therefore the right word to use, given that the term is at times regarded as describing a slightly self-righteous bubble not wholly relevant to commercial realities?
However, if you take away the word ‘sustainability’ and look at the various elements that it encompasses, the picture becomes rather different. The elements of sustainability build corporate resilience; they enable the effective management of complex risks; and, yes, they drive cost savings and access to new markets.
Resilience
Sustainability builds corporate resilience.
Many wine growing regions are facing unprecedented water pressures and rising heat – even in this past week we heard stories of South African wine farms starting the harvest at 3:30 in the morning to avoid midday temperatures about 40oC. In these conditions, worrying about water management is not a ‘sustainability nice to do’. It is an essential part of making sure that grapes can continue to be grown in locations like this.
The same is true of work to move away from intensive use of chemicals in the vineyard. Certainly, the benefits in terms of improved soil health are real, but so too is the ability to build resilience to price volatility of fertilisers and other chemicals. Our initial report on vineyard inputs was driven primarily by companies’ desire to look for alternatives to expensive bought-in inputs, and our on-going work on the Sustainable Vineyard continues in that vein.
Risk management
Sustainability is a key part of corporate risk management.
Some in wine still grumble about the increasing focus on labour rights. Not, of course because anyone in the industry would condone practices like modern slavery, but many still think this is an issue which simply does not affect the wine sector. But, as recent exposés demonstrate, it does. Not managing labour rights properly therefore presents a very real legal and reputational risk which exists on several levels. Already executives in the businesses responsible for abuses that came to light in Champagne and elsewhere have faced criminal prosecution. A rising legislative bar, especially in Europe, means that it will not be long before makers who cannot demonstrate that their wines were produced without labour abuses will simply not be able to sell into many key markets. And, reputationally, how palatable will consumers find a wine if they think it has been produced through abuse of other human beings?
Cost savings and business development
Sustainability can save, not cost money; and there is good evidence it can open new segments of the market.
Let’s look first at packaging. Obviously, we at SWR are proud of the fact that, in its first two years of operation, our Bottle Weight Accord (BWA) has mitigated some 440,000 tonnes of carbon. However, the introduction of Extended Producer Responsibility (EPR) means that weight reductions also provide a significant financial benefit. We estimate that, were all the bottles in the BWA to have been subject to UK rates of EPR, companies in the Accord would have saved nearly £60 million. With similar schemes likely to come into force in many sales markets, reducing packaging weight is not just a sustainability goal: it is a financial one.
Our on-going work on packaging also suggests that alternatives to glass bottles, rather than being do-good-driven fads have the potential to open up new market segments. It is clear from our research that developments like aluminium cans appeal to consumers, for example younger people, who might otherwise buy beer or a canned cocktail. Innovation in packaging, be that lightweighting or using other formats, is not just good for CO2 reduction; it provides a means to access new markets.
So, no: sustainability probably may not be the right word to use if it does not adequately convey the mission-critical nature of the activities that it encompasses. But for the time-being at least we are stuck with it. However, we, and those we work with, need to ensure that our framing of what we do always makes clear that sustainability activities are central to the strategy of a successful business. The finance director can be re-assured that resilience is enabled by sustainability, particularly when linked to these business critical issues.
If you’d like to know more about ‘The Sustainable Vineyard’ and the work it encompasses, please do get in touch with ilva@swroundtable.org
