The challenging aspects of decision-making related to sustainability in Pizza 4P’s
Here at Pizza 4P’s we are committed to carrying out environmentally-conscious projects to achieve our vision to ‘Make the World Smile for Peace’, one step at a time. Inviting you to come along for the journey, we will be sharing a series of original articles titled ‘Peace for Earth’ focusing on such sustainable projects.
In this article, Yuma Nagata will introduce some of the case studies from Pizza 4P’s. He will talk about internal conflicts and challenging aspects of decision-making related to sustainability, as well as sharing a behind-the-scenes look at what we do on a corporate level to make our business and supply chains greener, including the information we’re making public for the first time.
It’s a lonely job being a sustainability officer
In recent years, more and more companies have been focusing on sustainability. Various factors, including a sense of crisis over climate change, the adoption of Sustainable Development Goals (SDGs), and the increase in ESG investments have led to a worldwide call for companies to embrace sustainability. Today, bosses are not only focusing on reducing the environmental impact of their business, i.e. doing less harm, but also looking at ways how their organizations can actually be a force for change.
These environmental champions are adopting initiatives beyond the framework of CSR. As a result, more and more businesses are setting up in-house sustainability departments. However, most founders and CEOs are still new to this sustainability-first mindset, which partially explains why so many sustainability officers are having a hard time. As Pizza 4P’s head of sustainability, I am speaking from experience.
“We can’t spend money on something that doesn’t generate profit.”
“Sustainability is not a priority for us.”
“It’s just part of marketing.”
These and similar comments, incomprehensible and frustrating, is what I and my colleagues are used to dealing with on a daily basis. And I am sure many of you can relate.
While the attitude to sustainability at C-suite and board-level is changing, it seems that there is still a lack of know-how in terms of involving the right people within the company and solving bottlenecks in decision-making.
In this article, I would like to share some of the difficulties I have faced while working at Pizza 4P’s, as well as some of the lessons I have learned.
Battle Royale: organic vegetables vs. low costs
At a restaurant, ethical sourcing is one of the pillars of sustainable operation. Are the ingredients grown sustainably? Are they local and seasonal? Do we buy directly from the farmers? You can make vast changes by looking at each of these factors individually and optimizing your approach.
I think it was about six months after I joined the company that I decided to tackle our procurement inefficiencies. I thought that we should use more organic vegetables and other ingredients that are produced in a sustainable way. Easier said than done, as it turned out.
I spent time expanding my network of local organic producers, visited the farms, and obtained quotes, before presenting my proposals to the management. But in the end, my efforts were a waste of time. All the changes I tried to implement were rejected by my direct supervisor at the procurement department. It was simply beyond my control.
The procurement department had this to say.
“The price is higher than what we currently pay for vegetables.”
“Why purchase one kind of vegetable from this one farm when a wholesaler can deliver a variety of vegetables in bulk?”
In other words, reducing costs and lightening the workload was a high priority for the procurement department, and my actions were in direct opposition to that.
To be honest, at the time, I was quite upset about this conflict. But looking back, I think it was perfectly logical for them to brush me off. In fact, I was at fault for proceeding with the procurement-related matters on my own without discussing the direction with those in charge first.
To find a solution, we sat down with top management and the head of the procurement department. We agreed on the company’s position on sustainable procurement and on how to proceed. To make it official, ‘sustainable food procurement’ became one of the KPIs of the procurement department.
From that point on, things moved quickly. We are now aligned and working together to promote sustainable food procurement across the organization.
Getting hard-to-sell-ideas through the door: a case study from the Jar Return Program
Sustainability-related ideas rarely get big budgets. This is because they rarely generate direct sales. Of course, your bright green idea may actually lead to cost savings and profit generation for the company: energy conservation is a typical example. Reducing electricity consumption can reduce greenhouse gas emissions, which in turn can reduce costs for the company.
However, generally speaking, in the field of corporate sustainability, such win-win ideas are few and far between.
Pizza 4P’s not only operates restaurants but also sells cheese, yogurt, and pudding – all produced at our cheese factory – via convenience stores and supermarkets. Yogurt and pudding are sold in small glass jars, which can be cleaned and sterilized for reuse. An eco-solution was staring us in the face; all we needed was to convince customers to return the jars.
So I proposed a reuse program. Customers would bring empty jars to Pizza 4P’s locations and be rewarded with a free stick of string cheese for every jar returned (and a free yogurt or pudding when returning two jars.) I thought it was a very attractive incentive.
But we quickly realized there was a problem. A back-of-the-envelope calculation showed that even after deducting the cost of the jars if customers continued to receive free “matcha green tea pudding”, the program would end up in the red.
Was the company prepared to run a loss-making green initiative? Typically, in the world of business, such a suggestion would be rejected outright.
However, our Chief Operations Officer was prepared to try. He said: “I think this program is a great idea to get customers to come to our restaurants. Even if we lose some money on the jar collection itself, if the customers eat in when they come to return the jar, this will generate additional sales”.
As a result, we were able to design an attractive incentive scheme, and we have already collected 2,000 bottles in the four months since the bottle collection program started.
Decision-making on sustainable actions is really difficult
It is relatively easy to make a decision about an action that is sustainable and will actually contribute to sales. However, there are many sustainable ideas that cannot be clearly predicted until they are actually implemented, whether they will increase sales, reduce costs, or increase brand value.
For a company, profit is like air; it is not the purpose of business, but if the business does not generate profit, it will die. No matter how great a sustainable idea may be, not all of them can be implemented without regard to cost.
But sometimes, the company has to make a decision. Even if the economic benefits are unclear, if there is a strong social expectation on sustainability, the company will need to make a decision. At the same time, however, it is not always possible to provide numerical evidence of sustainable action, which may make managers, who are accountable to investors, feel uneasy as if they are heading into a dark jungle.
I believe that it is the responsibility of corporate sustainability managers to support such decision-making to the best of their ability, and this is one of the most exciting aspects of their job. You have to gather data, organize information, find collaborators, calculate figures, and solidify the fluffy idea to a point where it is as easy as possible to make a decision. If the idea is still rejected, that is because your proposal is not good enough, or the timing is not right for the company yet.
As WWF’s documentary “OUR PLANET: OUR BUSINESS” suggests, there is a great deal that companies can do to contribute towards global efforts by choosing a sustainable direction of travel. I, for my part, will keep putting my efforts into promoting the sustainable business model, as much as I can.