Sainsbury's

Sainsbury’s completed its first TCFD-aligned scenario analysis, covering its operations and supply chains. The company identified that dairy, meat, fish and poultry are amongst the product categories most exposed to climate-related risks. Sainsbury’s reports that transition risks such as changes in consumer preferences are the most material risk for animal proteins. Following these initial qualitative results, the company has adopted a quantitative approach to determine the potential financial impacts of each material climate risk. Additionally, the company has assigned a director-level employee to be responsible for monitoring and mitigating each climate risk. The company considers 'healthy sustainable diets' as part of its ‘Net Zero by 2040’ strategy and understands the carbon abatement potential of portfolio diversification. The company continues to use the Eatwell Guidance to inform its strategy and is proactively increasing its offering of plant-based foods to accelerate consumption. However, the company has not yet quantified the carbon abatement potential of Scope 3 from transitioning consumer diets in line with the Eatwell Guide. Despite Sainsbury’s statements, and its CEO publicly recognising the need for a dietary transition and the company’s role in transforming the food system, the company has not set any formal targets for portfolio diversification.

Sainsbury's plant-based strategy continues to take a dual approach, focusing on the supply-side and demand side. Sainsbury’s is implementing supply-side interventions to improve the sustainability of its sourcing. The company engages with 400 key suppliers, encouraging them to disclose their carbon emissions through the CDP or the Higg platform. 87% of these key food suppliers disclose via CDP; this is the first time the company has disclosed this supplier data, although it is unclear what proportion of animal protein suppliers disclose via CDP. Additionally, the company reports that due to continued engagement with suppliers, the percentage of soy assessed as ‘sustainably sourced’ increased from 6% in 2020 to 42% in 2021. Sainsbury’s wants to expand its plant-based offering through “true” plant-based products such as unprocessed whole-food proteins, which are healthier and have fewer ingredients than meat analogues. The company is looking into how to create supply chains for this and expand its offering of whole-food plant-based proteins. Sainsbury’s encourages suppliers to manufacture more plant-based products using whole-food proteins rather than meat analogue ingredients. The company reports that for FY21/22 80% of sales were derived from “healthy” and “better for you” products, indicating the company is on track to meet its 2025 target. Sainsbury’s still has not set a protein diversification target, and during the meeting with investors, it shared its hesitation to develop such a target in the short term. It wants to ensure industry alignment and standardised national definitions and metrics are available before it sets a target and reports metrics. Nevertheless, the company shared with investors that, similarly to Tesco, it expects approximately 300% sales growth for meat alternatives. According to Sainsbury’s, this is the expected growth rate for the markets both companies operate in. To address the definition issue, Sainsbury’s is feeding into the UK government’s National Food Strategy to help the development of standardised metrics, and the company is a strong advocate of mandatory reporting.

The company continues to expand its plant-based offering and invest in new product development. Seventy people constitute Sainsbury’s product development team, one is focused solely on plant-based products. The company shared with investors that two of its chefs took part in the Plant-hub, a plant-based culinary school, to learn how to further incorporate plant-based ingredients into product development. The company does not have a specific R&D budget for plant-based product development. However, it does dedicate resources to plant-based innovation and works with suppliers (including branded suppliers) to bring new products to market. Sainsbury’s shared with investors that alternative proteins are a pillar within the company's product innovation strategy. Sainsbury’s shared with investors that it will not be reformulating products to reduce their meat content, as it feels reformulation will not significantly impact the customers' overall diets or reduce the company’s emissions. Yet, it has not calculated any figures around the potential effects of scope 3 reductions from substituting animal-derived ingredients or swapping towards less carbon-intensive meats (i.e. from beef to chicken). To promote the consumption of whole-food proteins, Sainsbury's launched a new range called ‘Inspired to Cook’; this encourages consumers to make homemade meals from scratch. The range includes ingredients for plant-based recipes and enables customers to develop their cooking skills, teaching them to cook alternatives to meat-focused meals. The company sees this as a clear opportunity to increase the sales of plant-based whole foods and vegetables. Sainsbury’s continues to expand its plant-based offering; Plant Pioneers, Sainsbury’s own brand, offers products in underserved categories such as seafood, chicken and desserts. Additionally, Sainsbury’s is integrating plant-based products into its existing ranges, such as ‘Taste the Difference’. The company is reviewing a target to have a 50/50 split of plant-based to animal product offerings in each range, although, at this time, it is not a business target. The company did not share its current splits per range, so there is no evidence that at least 10% of items in each relevant category are plant-based or alternative proteins.

Sainsbury’s consumer engagement strategy involves embedding plant-based eating into existing communication plans, such as including plant-based products in its Christmas marketing campaigns. In 2021, Sainsbury’s ran a comprehensive, multichannel engagement campaign called ‘one plate at a time’ that focused on replacing animal proteins with whole-food proteins. Their emphasis was on the health and sustainability benefits of making the swap. However, the company could not provide evidence of this campaign translating into sales of plant-based proteins, stating it is difficult to disaggregate this data. Sainsbury’s encourages flexitarians to try plant-based products by designing them to be attractive; through nomenclature, taste and texture and by offering customer rewards. Sainsbury's is one of four UK retailers trialling environmental labels in collaboration with IGD. The virtual trial on product labelling will see how customers respond to a label detailing each product's carbon, water and land use. Sainsbury's is re-evaluating where to place its plant-based products, as it found that while placing them in the meat aisle increased their sales, it did not result in a decline in meat sales. Due to the pandemic causing significant delays, Sainsbury’s is still awaiting the results of the LEAP study; it therefore, has not incorporated them into its consumer engagement efforts. The company shared with investors that it does not track marketing spending for plant-based products, as they are part of more extensive campaigns. The company uses metrics such as the number of sales, basket size and repeat purchases to track the success of campaigns but it did not have any examples of measuring the success of a specific plant-based product launch.

Sainsbury’s now discloses its protein sales in its annual report, however, it continues to exclude Scope 3 emissions. Sainsbury’s reports a breakdown of its protein sales volume (in tonnage) in its annual report, enabling year-over-year comparison. The company reports that 11.6% of its protein sales volume is from plant-based sources, and 72% of tonnage sold within the protein and dairy goods category is ‘meat-free’ (including products containing milk and/or eggs). Sainsbury's is willing to disclose overall portfolio diversification metrics once there is a standardised national metric for this type of disclosure. However, it is hesitant to do so beforehand in case there are negative repercussions. Like protein diversification metrics, Sainsbury's wants a standardised Scope 3 methodology and metrics to track progress. It is working with the DHSE, DEFRA, WRAP and the government to generate these. The company has not provided updated Scope 3 figures in its 2021/22 annual report, preventing the tracking of year-over-year progress.

The company attended and presented a case study at the technical roundtable. It met with FAIRR and the investors for an engagement dialogue. The company was receptive to the investor’s feedback and transparent about the challenges the company faces. Sainsbury’s provided detailed responses to the follow-up questions and reviewed the final assessment.