European supermarkets under fire in new research
Large European supermarkets can and should do much more to reduce their plastic usage.
Ahold Delhaize’s plastic policy has improved but still falls short
14 April 2022
Ahold Delhaize NV, among whose holdings is the supermarket chain Albert Heijn, has not reported fully about plastic in its last annual report.
Several months after the filing of a complaint by ClientEarth and Plastic Soup Foundation to the AFM (Netherlands Authority for the Financial Markets) about deficiencies in Ahold Delhaize’s reporting, the holding has published its latest 2021 annual report.
Plastic is becoming a higher risk for investors because of societal pressure and standards set by governments. Whilst some additional information on plastics has now been provided, the holding still barely mentions this risk and is furthermore not fully transparent about its current use of plastic packaging. It is therefore not surprising that the board of Ahold Delhaize were asked about their performance on plastics at the Annual General Meeting in Zaandam on 13 April.
AHOLD DELHAIZE’S PLASTIC POLICY
The holding recognises the problem of the plastic soup. Its latest annual report talks yet again in abstract terms about the millions of tonnes of plastic that end up in landfills, the environment or are incinerated every year. The concern states that it wants to prevent plastic waste, says that it is working towards ambitious goals, and praises progress so far. Every year the holding reports its progress to the Ellen MacArthur Foundation (EMF).
However, some of the key data in its report to EMF is not included in the annual report and is not available to investors. EMF publishes a summary of the data supplied by Ahold Delhaize. In the meantime, the holding is defending the use of plastic packaging as plastic is alleged to promote product safety and prevent food waste (p. 28).
DISPOSABLE PLASTIC = RISK TO THE COMPANY
Will investing in large users of plastic, such as listed supermarket chains, be riskier for investors in the years to come? Will measures to reduce plastic usage come at the cost of the returns? These questions are important for investors but are not addressed in the latest annual report.
To curb the plastic soup, governments are moving towards more stringent regulations. France has already banned the packaging of fruit and vegetables in plastic in supermarkets. The United Nations was recently mandated to draw up a treaty with binding objectives which will limit the use of single-use plastic packaging in the foreseeable future. As the energy intensive production of plastic is one of the threats to achieving the Paris climate goals, listed companies will also be evaluated on this.
AH PACKAGING FREE
Last week, Albert Heijn, a subsidiary of Ahold Delhaize, introduced unexpectantly ‘packaging free shopping’ in one large branch in Rotterdam. According to the press release (in Dutch), 50 other shops will follow suit in the next year. Customers can tap 70 products such as grains, pasta and rice from dispensers into reusabe packaging. This is a very praiseworthy step as by definition, packaging that is not produced will not enter the environment. This step in the right direction was unexpected as reuse and refill are not prominently mentioned in the 2021 Annual Report. It remains unclear if and when all the holding’s shops will have dispensers or if it will remain just a pilot.
100% RECYCLABLE
Ahold Delhaize’s target for 2025 is for all packaging to be 100% reusable, recyclable or compostable. In its 2021 report, Ahold Delhaize disclosed its progress against this target – which was missing in its 2020 report. But its progress against this target primarily covers recyclable packaging (p. 267) and Ahold Delhaize does not appear to be confident in its progress, citing challenges of making packaging more recyclable (p. 60). It seems that the holding is covering itself just in case it does not achieve the target. Furthermore, it only applies to its house brands. In order to get the full picture Ahold Delhaize should demand from A-brands to share the information about the amount of plastic used in their products sold through the holding’s shops.
IN UNITS INSTEAD OF IN TONNES
For the first time, Ahold Delhaize is publishing the weight of the total amount of plastic packaging in its house brands. This is also praiseworthy. For 2021, this was 158,000 tonnes of plastic, of which 36% is recyclable (the goal is 100% in 2025). If you want less plastic to enter the environment, you will have to reduce the amount of plastic by packaging less. Apart from the total weight, the number of products that are packaged in plastic should also be published every year. Plastic Soup Foundation research showed that last year 82% (in Dutch) of AH house brands were packaged in plastic.
Q&A ON PLASTIC AT ANNUEL GENEREAL MEETING
In a clear sign of investor interested in this topic, VBDO (Vereniging van Beleggers voor Duurzame Ontwikkeling) questioned Ahold Delhaize on its plastics performance at the Group’s Annual General Meeting on 13 April. In response to VBDO’s questions on Ahold Delhaize’s progress on plastics reduction and switching to re-use, CEO Frans Muller stated that Ahold Delhaize would be introducing enhanced targets for re-use, describing re-usable packaging as a ‘good innovation’. He also stated that the group wished to engage with brands on their plastic packaging, acknowledging that own-brand represented just one part of the plastics picture. We will follow these comments to see if this translates into disclosures on total plastic packaging footprint moving forward.
PLASTIC MIGHT BE A LONG TERM RISK
Last year, ClientEarth and Plastic Soup Foundation filed a complaint in which we set out that Ahold Delhaize’s 2020 annual report was in breach of the Non-Financial Reporting Directive (NFRD) clauses. The complaint argues the holding is not reporting either on the impact of plastic packaging on the environment or on the financial risks that are associated with the use of plastic packaging. Has anything changed in the holding’s report, whether or not related to the charge?
Yes, it has. In terms of ‘sustainable packaging’, from a financial perspective, plastic is viewed for the first time as a possible long term material risk (p. 45). Apart from the ambiguous use of language – plastic packaging is anything but sustainable – you need to read the small print carefully to discover this cautious positive change in direction.
Photo: Yasmin Hargreaves Photography / Albert Heijn
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