Plan A was developed in late 2006 to help M&S shift from a largely compliance-based approach to corporate social responsibility (CSR), which focused on maintaining the business status quo, to a new mindset that embraced the broader sustainability challenge and the need to radically improve the environmental and social aspects of our retail business model.
One of the defining factors that makes Plan A very different from our previous approach is its sheer breadth. Plan A covers all the social and environmental issues relevant to our business, and commits us to achieve performance improvements across our operations (1000+ stores, offices and warehouses globally) and the thousands of factories, farms and raw material sources in our supply chain. It even encompasses the use and disposal of the three billion individual items we sell each year to 21 million customers. It was, and remains, an ambitious programme; one that requires fundamental and far reaching changes in the behaviour of millions of people worldwide.
Although we worked at speed to develop Plan A in just three months, we found time to estimate its implementation costs. At the heart of our costing exercise was a presumption that mainstream consumers would not pay more for sustainability. On this basis we estimated that the social and environmental improvements we had in mind represented a potential £40m per annum investment cost for M&S, with no on-cost for the consumer. We were not able to calculate potential benefits at that stage.
In 2007, we briefed our top ten shareholders about our Plan A investment plans. None of them were critical (they recognised that a high profile business such as M&S had to have a position on these emerging issues) but none of them were particularly engaged by Plan A; they could not see how it would generate an immediate financial return.
In 2008, recognising the scale of Plan A, we put in place very tight project management controls to ensure we delivered some highly publicised targets and to maintain tight control over costs. With 100 work streams across our business, there was a significant risk that costs would run out of control without this discipline.
In everything else we do as a business, we manage the business case and financials carefully, why wouldn’t we do the same for Plan A?
In developing a methodology and means of calculating the true costs and benefits of Plan A, we soon realised that there was a compelling business case for sustainability. It saved us money, inspired our employees, opened up new revenue streams, drove innovation in anticipation of disruption in our sector, made our supply chains more resilient and strengthened our brand.
Importantly, our methodology involved all of the M&S Finance Analysts, it increases their understanding of how looking through a green lens can deliver business benefits and built a sustainability mindset in to their day jobs.
Over the last 6 years, the business case for Plan A has become clearer and more compelling: a cost in its first year, cost-neutral in its second, and by the end of last year, delivering a total net benefit of £320m. The substantive part of this benefit comes from improved resource efficiency, although we are now deriving extra benefits from initiatives that drive our existing business and from new revenue streams.
We know we’re only at the beginning of unlocking the business case. There is so much more to do. We need to help our suppliers apply our learning; improve our ability to measure intangible benefit (reputation, employee motivation, resilient supply chains); align our benefit measurement with nascent approaches to valuing nature and societal contribution; and provide investors with a clearer understanding of how Plan A can contribute to future earning and share price growth.
Global Head of Plan A Delivery, M&S Plc