ENVIRONMENT REPORT 2005 - Morningstar, Inc.

AUSTRALIAN FOOD AND GROCERY COUNCIL

ENVIRONMENT REPORT 2005

THE FOOD AND GROCERY INDUSTRY IS AUSTRALIA’S

LARGEST MANUFACTURING SECTOR – EMPLOYING MORE THAN 200,000 AUSTRALIANS AND

THE INDUSTRY HAS A TURNOVER OF MORE THAN $73 b A YEAR

ADDING 2.5% TO AUSTRALIA’S GROSS DOMESTIC PRODUCT

AUSTRALIAN FOOD AND GROCERY COUNCIL ENVIRONMENT REPORT 2005 1

Contents2 Environment committee chairman’s introduction

3 Key fi ndings

5 The industry and the environment

7 Environment reporting

8 AFGC initiatives to improve environment reporting

11 2005 environment survey results

12 Water

15 Energy and greenhouse

20 Waste

24 Environment management

31 Future directions

32 References

The AFGC is the peak national organisation

representing Australia’s processed food,

beverage and grocery products industry.

It seeks to help create a business environment

that encourages the food and grocery industry

to grow and remain profi table.

This report refl ects the continual improvements

made by member companies in the collection of

environment data and provides detailed indicators

of the performance of the 11 sectors that make

up our industry. It also shows the resource

intensity of processing different food and grocery

products.

Manufacture is one stage in the production,

consumption and disposal cycle for food and

grocery products. To report accurately and

meaningfully on the environmental performance

of the food and grocery industry, each stage in

the cycle, and its impact on the supply chain,

must be measured.

Environment reporting plays an important role

in furthering cooperation between industry,

government and consumers for the benefi t of the

environment. This report enables the AFGC to

document examples of good performance,

identify areas for improvement and consider key

issues affecting the food and grocery sector.

The Environment Report 2005 highlights the

growing importance of environment reporting in

Australia and demonstrates industry’s ongoing

commitment to improving its environment

management. Since the last report in 2003,

the industry participants have reduced energy

use by 14%, water use by 21%, greenhouse

emissions by 29% and waste to landfi ll by

20% (per unit of production).

Given the improvements made by AFGC

members over the past fi ve years, the challenge

ahead for us is how to continue to reduce the

industry’s footprint on the environment while

still effi ciently meeting the need for greater

food safety through packaging and consumer

demand for smaller size varieties and

convenience products to meet demographic

and social changes.

In the face of this challenge, individual

companies and the industry must not let their

commitment to the environment waver. By

devoting greater resources to environment

management and reporting, we are better able to

determine the real impact we are having and what

opportunities there are for further improvement.

This report is the distillation of the efforts of

many members of the AFGC. I thank them for

their continued efforts.

Don Matthews

Chairman, Environment Committee

President, SCA Australasia

environment committee chairman’s introduction

Don MatthewsChairman, Environment CommitteePresident, SCA Australasia

This is the third environment report produced by the Australian Food and Grocery Council.

It builds substantially on the fi rst report in 2001 and enhances the steps taken by this

industry to report on its environmental performance and identify key issues across the

entire supply chain.


processed food supply chain

primary production

processing packaging retail/ transport

consumption

• The Australian food and grocery industry

is improving its environment reporting in

response to community expectations and

government regulation.

• More than 80% of the companies

surveyed have formal environment

policies, and the percentage of

companies with environment

management systems has increased from

less than 50% in 2003 to more than 60%

in 2005.

• Energy use per kg of fi nished product has

fallen 14% to 1.84 MJ since 2003.

• Greenhouse emissions per kg of fi nished

product have fallen 29% from 0.42 kg in

2003 to 0.30 kg in 2005.

• Water use per kg of fi nished product has

fallen 21% since 2003 from 4.7 L to 3.15 L.

• Almost 90% of waste and by-products

are reused or recycled, with only about

10% going to landfi ll. The food and

grocery sector produces only a small

amount of waste to landfi ll – less than

8 kg per tonne of fi nished product. Total

waste to landfi ll per tonne of fi nished

product has been reduced by more than

20% since 2003.

• Water, waste and greenhouse are the

areas in which member companies

have made the greatest improvements.

• In future, companies will increase their

focus on reducing the relative impact of

packaging within the wider supply chain

highlighted by the increased relevance

of the new National Packaging Covenant

for industry.

• Improved reporting is a priority for the

food and grocery industry. AFGC

members are committed to ensuring their

reporting keeps pace with developments

in the supply chain, changes to the policy

and regulatory environment, and shifts in

community expectations.

key fi ndings

WATER USE PER KG OF FINISHED PRODUCT IS DOWN 21% SINCE 2003

FROM 4.7 LITRES TO 3.15 LITRES


Environment reporting has gained in importance in Australia and overseas, with companies

increasingly recognising it as an essential part of their business planning and growth strategies.

A better understanding of the key threats and opportunities that impact on the sustainability of

industry is necessary for companies to maximise their interests as brand owners and those of

their consumers as brand users.

the industry and the environment

The AFGC recognises that environmental

sustainability is a major issue confronting the

industry. The continued supply of high-quality and

competitively priced raw materials is crucial for a

global manufacturing industry.

Manufacturing inevitably has implications for

resource use. However, the key challenge for the

food and grocery industry is to ensure that

resources are used effi ciently and that the impact

on the environment is minimised.

Accurate and meaningful environment reporting

has the potential to provide critical information for

business analysis that can help companies improve

their performance across the scope of operations.

To this end, the AFGC signed the Eco-Effi ciency

Agreement with Environment Australia in 2000

and, as part of that agreement, produced

environment reports in 2001 and 2003. This

reporting initiative by the AFGC has continued

beyond the life of that agreement, resulting in a

commitment to collect key performance indicator

data from member companies on an annual basis

and publish a public environment report detailing

this data every two years.

The Environment Committee is one of a

number of committees that operate within the

AFGC structure to address specifi c issues relevant

to the food and grocery industry. The Environment

Committee comprises up to 15 representatives

from member companies and is chaired by a

member of the AFGC Board.

The Environment Committee considers and

advises the Board on environment issues and

represents the industry on the development and

implementation of environment policies. Over the

past two years, the Environment Committee’s

work has focused on:

– reporting and benchmarking industry’s

environmental impact

– the National Packaging Covenant and

product stewardship

– water and energy management

– litter management

– sustainability

The World Commission on Environment and

Development defi nes sustainable

development as “development that meets

the needs of the present without

compromising the ability of future

generations to meet their own needs”.

World Business Council for Sustainable Development

(www.wbcsd.org).

Environment Committee members

Mr Don Matthews, SCA Hygiene

Australasia Pty Ltd (Chair)

Ms Fiona Fleming, George Weston Foods Ltd

Dr Simon Chhatbar, Colgate-Palmolive Pty Ltd

Ms Sue Burnet, Clorox Australia Pty Ltd

Dr Russell Peel, Foster’s Group Ltd

Mr Paul Prendergast, Golden Circle Ltd

Mr Janis Cecins, Dairy Farmers Group

Mr Alec Wagstaff, Coco-Cola Amatil (Australia) Ltd

Mr Michel Moutia, Kraft Foods Asia Pacifi c

Mr Lester Gilmore, HJ Heinz Company Australia Ltd

Ms Susan Blacklow, National Foods Ltd

Mr Tim Lane, Masterfoods Australia New Zealand

Dr Ross Hearne, Kimberly-Clark Australia Pty Ltd

Ms Karen Duncan, Nestlé Australia Ltd

Mr Mike Searles, Goodman Fielder Ltd

Mr Kelvin Hawkins, Kellogg (Australia) Pty Ltd

Ms Heather Campbell, Amcor Limited (observer)

Mr Gavin Williams, Packaging Council

of Australia (observer)

Mr Harris Boulton, AFGC

Mr Tony Mahar, AFGC

GREENHOUSE EMISSIONS PER KG OF FINISHED PRODUCT ARE DOWN 29%FROM 0.42 KG IN 2003 TO 0.30 KG IN 2005


Australian companies need to keep building their capacity to report on their environment

management and performance. Environment reporting has come a long way over the past

20 years. Early environment reports tended to provide minimal information and often were an

attempt to mitigate negative perceptions about a company.

environment reporting

Producing an environment report is an important

way to communicate an industry’s environment

management practices and performance to

external stakeholders. In part, this contributes to

the ability of the company to protect brand value,

reputation and increase intelligence gathered for

investment decisions. Environment reporting also

offers signifi cant benefi ts internally to a company.

Measurement and reporting enable better cost

control and lower overheads in what is an

increasingly competitive market.

Environment reporting is now being

incorporated into management structures along

with other key performance indicators.

Regulatory changes are likely to increase

pressure for environment reporting. For example,

in 2005 a federal Parliamentary Joint Committee1

began an inquiry to determine whether it is

appropriate to require companies to report triple

bottom line data. The committee released a

discussion paper in November 2005 that raises

the issues of clarity and comparability in

environment reporting, mandatory reporting and

external verifi cation of data.

Should the committee recommend in its fi nal

report that industry improve its environment

reporting, this will impact policy development.

Companies that already have reporting systems in

place are likely to fi nd any recommended changes

to reporting easier to adopt.

Recently, a number of initiatives have

contributed to the development of reporting

standards to elevate environment reporting to a

level equivalent with fi nancial reporting.

The most common guidelines used in

Australia include:

– Global Reporting Initiative Guidelines

– triple bottom line reporting

The Global Reporting Initiative was established

in 2000 as an independent institution whose

mission is to develop sustainability reporting

guidelines for use globally.

These guidelines are for voluntary use by

organisations for the reporting of the economic,

environmental and social impacts of their activities,

products and services. The use of Global Reporting

Initiative Guidelines is becoming more widespread,

particularly among international companies2.

Triple bottom line reporting aims to provide

simple methodologies and, where possible, link

these methodologies with existing Australian

initiatives, such as the National Pollution

Inventory3. It enables organisations to measure

their performance against environment indicators

that are consistent with the Global Reporting

Initiative’s environment indicators.

Comprehensive environment reporting still has a

long way to go. The existing environment reporting

guidelines recognise that many organisations are

still developing their reporting capacity.

Of those AFGC members who completed the

2005 environment survey, 27% indicated they

produce a public environment report either as a

stand-alone document or as part of their annual

report. This compares favourably with a recent

survey of Australian companies commissioned by

the federal Department of Environment and

Heritage that found only 23% produced a public

environment report4.

Including an external assurance statement

increases the credibility and perceived status of

environment or sustainability reports. Ten years

ago, less than 20% of reports were externally

verifi ed. By 2003, this had doubled to 40%,

suggesting industry is beginning to accept the

importance of external assurance and that

producing a report, in itself, is not suffi cient5.

The AFGC survey showed that about 80% of

AFGC members used internal and/or external

verifi cation for collecting and reporting

environment data (Figure 1).

Wal-Mart will be seeking to source 100% of

its wild fi sh catch for the North American

market from fi sheries that meet independent

environment and sustainability standards.

Wal-Mart meeting with suppliers at Wal-Mart headquarters

in Bentonville, Arkansas, on 19 January 2006.

The Australian food and grocery sector has identifi ed the need to improve its capacity

to report. The AFGC has been collecting environmental data from its members since 1993,

and environmental impacts have been publicly reported since 2001.

AFGC initiatives to improve environment reporting

The fi rst environment survey was conducted in

2001, with subsequent surveys in 2003 and 2005.

Key performance indicator (KPI) data was also

collected in 2004. The AFGC plans to continue its

biannual environment reports, with KPI data

collected in intervening years. As the survey has

been run for several years, it is now established in

many member company reporting systems.

Since its last environment report in 2003,

the AFGC has undertaken a number of

activities to help improve environment reporting.

These include:

– reviewing the AFGC members’

environment survey

– seeking more rigorous methods of

benchmarking industry performance

– participating in the development of

reporting requirements for the National

Packaging Covenant

The AFGC recently commissioned a gap

analysis between the AFGC environment survey,

previous environment reports and emerging

environment reporting standards.

The key fi ndings of this gap analysis included

recommendations to:

– increase the quality of environment data, such

as reporting boundaries and data verifi cation

– supplement the survey with questions to

identify areas where and how environment

reporting may be increased

– obtain information on which members were

producing public environment reports and

their scope

– assess the voluntary and mandatory

environment codes adhered to by members

The results of the analysis and the subsequent

recommendations were incorporated in the 2005

environment survey. The AFGC is committed to

ensuring that industry can report through

rigorous, standardised and recognised systems.

Benchmarking environmental performance

As part of the gap analysis, the AFGC also

commissioned research into methods of

benchmarking the environmental performance

of the Australian food and grocery sector.

This was intended to give the sector an

understanding of how it is performing in

comparison to other industries.

The research found that it is diffi cult to

compare between, or even in, sectors using KPIs

based on environment impacts relative to

production. This is due to the highly variable

nature of manufacturing operations across the

different sectors. However, the research identifi ed

that cross-sectoral comparisons can be made in

environment management systems and practices,

as some elements of environment management

systems are generic across all companies,

although this is dependent on the information

being publicly available.

There is a range of useful proprietary

benchmarking tools available to companies to

help them with this process. The AFGC sourced

benchmark information from the One-2-Five®

suite of tools. These are based on ISO 14001

principles, which provide internationally

recognised standards for assessing environmental

management. The tools provide users with a

benchmark rating against each element of a best

practice environment management system.

Results from thirty food and grocery

companies that have used the One-2-Five® tools

over the past fi ve years to measure energy and

water management were reviewed. This data has


provided an indicative assessment of the relative

performance of the sector and identifi ed key

areas for improvement. Not all of the companies

surveyed were AFGC members, but the

information provides a gross view of the

sector’s performance.

The research indicated that, in general, the food

and grocery sector is performing in line with other

manufacturing industries. The three top performing

areas – and the three areas requiring the greatest

attention – are summarised in Table 1.

This benchmark data shows that compliance

and risk issues generally have been well managed,

however there has been limited action beyond

compliance. Resourcing and budgeting are also

areas that have been well managed, as they are

usually part of standard operating practices.

The research found that companies in the

sector need to work on integrating environment

management. This will require a high level

corporate commitment to underpin any

successful environment management program.

Understanding the opportunities that arise

through reliable data collection and auditing will

also help in the development of action plans.

The AFGC Environment Committee will use

this and other relevant information in the

consideration of its future activities and will report

back on performance and progress in the next

AFGC environment report, scheduled for 2007.

The AFGC does not specifi cally endorse or promote the One-2-Five® tool. It is used as an example of the type of approach to environment management systems that encompass an analysis of process and demonstration of how improvements have been achieved.

Coca-Cola Amatil

Coca-Cola Amatil’s Northmead plant in NSW has

used functional benchmarking with One-2-Five®

Water to facilitate a radical culture shift in the way

the company and employees view water usage.

In 2003, the plant undertook a review of its

water management system as part of the

Sydney Water ‘Every Drop Counts’ program, and

achieved a score of two stars.

Between 2003 and 2005, Coca-Cola

Amatil has shown a commitment and a

proactive approach to water management.

The plant’s 2005 review of its water

management system showed an increase to

an outstanding four-star rating. This was

achieved through a range of activities, such

as improved water metering and greater staff

awareness of water issues. This placed Coca-

Cola Amatil at best practice performance level

in the beverage industry.

Through implementing a range of

management and technical actions, Coca-Cola

Amatil has reduced its water consumption

by 133 ML a year and water costs by 10%

in NSW.

Action Description

Best performing areas

Compliance with legal and

other requirements

Having systems in place to manage compliance and other internal and external

requirements, such as policies, guidelines and industry codes of practice.

Resourcing Having access to the right mix of human resources to ensure implementation of

water and energy projects.

Operating budgets Establishing budgets to effectively track and manage water and energy costs.

Areas requiring improvement

Understanding of performance

and opportunities

The level of understanding of current energy and water performance, and

associated risks and opportunities from attaining best practice.

Demonstrated corporate commitment The extent to which senior management shows that energy and water management

matters, and how effectively this attitude is communicated.

Metering and monitoring The measuring and tracking of energy and water use, and identifying variances

from target levels.

Table 1

Best and worst performing areas for the Australian food and grocery sector

ENERGY USE PER KG OF FINISHED PRODUCT IS DOWN 14%TO 1.84 MJ SINCE 2003


The Environment Report 2005 has three key objectives:

– to report on the environmental performance of the food and grocery industry

– to promote a more systemic approach to environment policy, measurement and reporting

– to communicate the importance of continual improvement in reporting to provide accurate

and meaningful information

2005 environment survey results

The 2005 environment survey comprised a

number of questions about environment

management practices, perceptions and

performance, as well as a number of specifi c KPIs.

In 2005, 46 AFGC member companies took

part in the survey, with 30 providing KPI data.

The total amount of product produced by these

companies exceeded 10.5 Mt in 2004-05.

The survey collected KPI data on:

– the amount of water used per kg of

fi nished product

– the amount of energy used per kg of

fi nished product

– the amount of waste generated and the

proportion recovered for secondary uses

per kg of fi nished product

The purpose of reporting KPIs in this way is to

show the relative amount of resources used per

unit of product. Data is collected against the 11

food and grocery industry sub-sectors defi ned by

the Australia New Zealand Standard Industrial

Classifi cation (ANZSIC) system used by the

Australian Bureau of Statistics.

These sub-sectors include:

– paper and paper products

– meat and meat products

– fruit and vegetable processing

– medicinal and pharmaceutical products

– dairy products

– fl our mill and cereal foods

– oils and fats

– beverages

– home and personal care

– bakery products

– other foods

Thirty AFGC members have provided KPI data,

thereby providing a reasonable sample to illustrate

the overall performance of the whole sector.

However, of these 30 companies there may only be

a small number that are reporting in a sub-sector.

This means that the data collected for each

sub-sector can be signifi cantly infl uenced by the

activities of a single company, as well as the

number of companies that provide data from year

to year. As this is the case, this report focusses on

the performance of the whole food and grocery

sector and the sub-sector data is viewed as

indicative only. For example, in the oils and fats

sector there was only one survey respondent,

and therefore this sector has not been included.

Industry average rates for consumption and use are

indicative and are refl ective of survey participants.

Water is a key input for the processing of most food and grocery products. The amount of

water used in 2004-05 by AFGC members completing the survey was more than 33,000 ML.

water

This is equivalent to water use for the entire

population of Sydney for three weeks6. While

apparently a large amount, water consumption

in processing is very much smaller than other

stages of the production cycle.

The average water consumption per kg of

product for the whole sector in 2005 was 3.15 L

(Figure 2). This is a 33% reduction on 2004

consumption of 4.71 L/kg, and a 21% reduction

on 2003 consumption of 3.99 L/kg.

While the industry average water consumption

was reduced, the responses from a separate

survey question revealed twenty-two companies

had achieved reductions in water use in the past

two years, with fi ve companies reporting

reductions of more than 20% (Figure 4).

Consumption in the sub-sectors ranged from

0.23 L/kg of product for fl our milling and cereal

manufacture to more than 56 L/kg of product

for paper and paper product manufacturing

(Figure 3). The level for paper and paper products

manufacture is higher than the 2001-02 industry

average reported by the Australian Paper Industry

Council of 28.66 kL/t of product7. However, the

fi gure reported by AFGC members is likely to be

higher for a range of reasons. These include the

fact that the usage fi gures are based on the

production of paper products used in the home by

consumers, such as some types of tissues, which

must meet hygiene standards. In addition, the

membership of the Australian Paper Industry

Council encompasses a larger and more diverse

range of paper producers.

The amount of water used in the primary

production of food is signifi cantly greater

per kg of product than in the processing

or packaging of these foods. Primary

production uses between 600 and

50,000 L/kg, compared with 1-9 L/kg for

processing. Packaging uses up to 2.5 L/kg

for heavier packaging and signifi cantly less

than 1 L/kg for lighter packaging.

Consumption uses about 16 L/kg.

The Australian Food and Grocery Council’s

Environment Report 2003.

After carrying out a water effi ciency audit, basic data on

where and how water was being used in the plant was

documented. This enabled effi ciency improvements to be

implemented in key areas. Some of these included new

meters at high-use points and a review of condensate

classifi cation to dirty and clean.

After implementing engineering changes and site use

modifi cations by personnel, previous usage of 460 kL

a day or 167,900 kL a year has been reduced by about

20%. The modifi cation process has returned 100%

on investment.

case study – goodman fielder

Goodman Fielder has reduced

the use of water at its Mascot

facility by about 20% or

33,000 kL a year.

20% REDUCTION

IN WATER USAGE

The site has established water conservation teams to

identify areas in which water could be recycled, reused

or eliminated altogether.

Specifi c areas where water savings have been

achieved include the reuse of water previously directed

to waste at the vacuum pumps in its canned food and

beverage plant.

In addition, by implementing shutdown checklists

during non-production times, the sugar plant has

achieved water reductions that have delivered savings

of up to $20,000 a year.

Golden Circle’s water effi ciency strategy has reduced

its total water consumption in 2005 by 15% over 2004

levels. The water use per tonne of production has been

reduced from 6.47 to 6.05 kL/t of production.

The Golden Circle food and beverage

processing plant in Brisbane has a

policy of continuous improvement in

the area of water use.

case study – golden circle

$20,000

ANNUAL

SAVINGS ACHIEVED

water


Energy plays a vital role in the food and grocery sector. It powers the equipment used to

process and package products in a safe and effi cient manner.

energy and greenhouse

As the sector relies heavily on energy inputs to

create products, signifi cant attention is given to

reducing energy consumption, while still meeting

production and quality standards.

The form of energy used by food and grocery

companies varies across the different sectors of

the industry. Coal is still a signifi cant source of

energy in some fruit and vegetable processing.

Gas provides more than half the energy used in

processing in paper and paper products, bakery

products and dairy. Electricity is the main source

of energy for all other products.

Total annual energy use reported by survey

respondents in 2005 was 19.3 PJ. This is about

0.4% of Australia’s total annual energy

consumption8. Energy use per kg of product was

1.84 MJ, a reduction of 14% from 2003 (Figure

5, p16). More than half of the respondents in the

survey reported reductions in energy use in the

past two years. (Figure 6, p16).

Total greenhouse gas emissions from energy

use in the sector reached nearly 3.2 million

tonnes of CO2e in 2005. This is an overall

reduction in the total greenhouse emission rate

of 15% over 2003 levels.

Gas consumption represented the majority

(55%) of all energy use, with electricity 35% and

coal 10% (Figure 8, p17). Over the last three

years, there has been a marked increase in the

use of gas and a decrease in the use of electricity.

This shift has helped reduce the overall

greenhouse gas emissions from the sector.

The amount of energy used in the processing

of food and grocery products varies greatly from

19.23 MJ per kg for paper product manufacture

to 0.44 MJ/kg for beverage manufacture (Figure

7, p16). Likewise, greenhouse emissions vary

from 2.88 kg of CO2e equivalent emissions per kg

of paper product to 0.09 kg/kg of beverage

product manufactured. Average greenhouse

emissions per kg of total product produced have

fallen 29% from 0.42 kg in 2003 to 0.30 kg in

2005 (Figure 9).

The Swan Brewery in Perth is one of Lion Nathan’s four major

breweries operating in Australia. The plant has undertaken a series

of actions that has reduced its annual greenhouse gas emissions

by about 8900 t of CO2e, which is equivalent to about 21% of its

emissions. The associated reduction in its energy bill also has

delivered benefi ts for the bottom line.

Waste minimisation has been achieved through the responsible

management of brewery effl uent and innovative on-site treatment

of processed water. The Swan Brewery’s process for brewing beer

produces two main by-products: spent grain and waste yeast.

Spent grain is the used husk of the malted barley, and the Swan

Brewery sells this as cattle feed to farmers. The yeast is

thermalised and tanked to pig farms for mixing with other

nutrients for food.

The Swan Brewery waste water treatment plant uses electricity,

representing 16.5% of its total power consumption. The innovative

and newly installed water recycling system recovers water and

redirects it to the evaporative condensers and cooling tower,

saving about 50,000 kL of water and 320,000 kW hours a year.

Further, the installation of variable speed drives on the aerators in

the treatment ponds has resulted in additional greenhouse gas

savings and other environmental benefi ts.

The recycling initiatives have provided for the irrigation of the

brewery’s gardens and grounds. The remaining surplus treated

water is irrigated over licensed spray fi elds and stormwater is

returned to the metropolitan water drain system, thereby ensuring

no contamination of the Canning River system.

case study – lion nathan

Lion Nathan is a company that actively displays an ongoing commitment to sustainable

environment practices. It has a great track record in reducing greenhouse emissions and

has embraced a wide range of public awareness activities.

ANNUAL GREENHOUSE GAS EMISSIONS REDUCED BY ALMOST 21%

Swan Brewery by-products are used as cattle feed or mixed with other nutrients for pig food.


Foster’s Abbotsford Brewery in Victoria employs more than 500

people and produces more than 450 ML of beverages a year.

As the plant’s refrigeration system had been designed initially

for a much larger production volume, it was operating at only 75%

of its capacity, leading to ineffi ciencies. This created a major

challenge for Foster’s in reducing electricity consumption.

Working under the Australian Government’s voluntary Energy

Effi ciency Best Practice Program initiative, Foster’s was able to

bring together key staff with professionals from various technical

fi elds to analyse the plant’s refrigeration system in a task that was

codenamed the Refrigeration Project. Three key outcomes of the

Refrigeration Project were:

1. The refrigeration system was made more fl exible by linking the

previously independent refrigeration sets. This allowed the use

of a combination of any equipment and removed the need to

run unnecessary equipment.

2. Refrigeration processes were scheduled so that loads were

evened out and large peaks in usage were avoided.

3. Variable speed drives were added to equipment, such as

compressors and condensers/cooling tower fans, to allow

the system to be ramped up or down as needed, thereby

reducing power consumption. The variable speed drives also

increased the life of the machinery, as sudden stopping and

starting was avoided.

The Refrigeration Project provides an example of what can be

achieved by looking beyond routine operations and gaining

knowledge from external experts. The project reduced refrigeration

electricity consumption by more than 30% and emissions from the

refrigeration systems by up to 6,830,000 kg of CO2e – exceeding

expectations and the targets set for the project.

case study – foster’s group limited

Foster’s Group Limited has strived to achieve sustainability across its operations for many

years. Foster’s recognises it has a responsibility to all its stakeholders: the community,

shareholders and employees.

ELECTRICITY CONSUMPTION REDUCED BY MORE THAN 30%

Foster’s cooling towers. Foster’s ammonia compressor.

Industry practices refl ect this in that almost 90%

of waste and by-products from manufacturing and

processing are reused or recycled and only about

10% goes to landfi ll (Figure 10).

The rate of waste generation increases

towards the consumer end of the supply chain.

This is because waste materials generated in the

home are less homogenous than they are at the

supply end and the capacity to divert them to

another purpose or to reuse them diminishes.

Processing and packaging play a role in

minimising waste by reducing product wastage.

The main impact of this is the contribution of

packaging to the waste stream, which is

increasingly being offset by the improvement in

kerbside recycling systems.

Survey respondents reported that, while total

waste increased in line with production, the

proportion of total waste to recycling increased

from 79% to 87%.

The food and grocery sector produces only

a small amount of waste to landfi ll in relation to

the total amount of goods produced – less than

8 kg/t (1000 kg) of product. Yet waste to landfi ll

remains an important issue for industry, and

ongoing efforts are being made to further reduce

this. Total waste to landfi ll per tonne of fi nished

product has been reduced by more than 20%

in the past three years from 10.02 kg/t of product

to 7.90 kg/t (Figure 11).

Every year, Australians spend $10 b

on goods and services that they never use.

Fifty-fi ve per cent of this is food.

John S Croucher,

Professor of Statistics, Macquarie University.

Food and grocery manufacture produces large quantities of by-products that can end up as

waste, if not managed effectively. Minimising waste production is a central part of reducing

cost and improving effi ciency in the industry.

waste

As part of a designated waste management strategy, recyclable

materials – such as particle board, plastics and vegetable matter –

have been identifi ed and separated from the landfi ll stream on-site

prior to removal by contractors.

By implementing a range of activities encompassed in its

strategy and sourcing end markets for solid wastes, the centre is

diverting about 2500 m3 of material from landfi ll a year.

The next step is to try to reuse what cannot be eliminated from

the waste stream. An example of this is cardboard boxes used to

transport the steel caps used on baby food jars. These are reused

as storage boxes for furniture and household removalists.

Materials that cannot be reused in their current form are

delivered to a recycler.

Heinz actively seeks to develop methods and processes, along

with working with waste management businesses, to treat solid

wastes to prevent them going to landfi ll.

As a producer of high-quality baby foods, Heinz recognises the

importance of ensuring the responsible and sustainable use of

resources for future generations.

case study – heinz

The Heinz Infant Feeding Centre of Excellence at Echuca, Victoria, has made significant

improvements to its waste management.

ABOUT 2500 m3 OF MATERIAL DIVERTED EACH YEAR

Heinz production line.Heinz Infant Feeding Centre of Excellence.


case study – clorox australia

Total waste to landfi ll reduced from 442 t in 2001-2002

to 66 t in 2003-2004.

This result has been achieved by increasing the

sorting of recyclable waste materials, particularly waste

wood and aluminium foil from tertiary packaging in the

production sites. Clorox has implemented specifi c sorting

bins for aluminium foil and wood-based products that

previously would have been directed to landfi ll.

The implementation of sorting bins has resulted in

board from the foil crates to be made into compost and

the timber incorporated into new reusable pallets for use

by Clorox.

Clorox Australia has significantly reduced the

amount of solid waste going to landfill.

TOTAL WASTE TO LANDFILL REDUCED FROM 442 TONNES TO 66 TONNES

Signifi cant and long-term environmental improvements can be made through the

implementation of environment management practices. An environment management system

needs to be part of the overall management system and includes the organisational structure,

planning activities, and practices and procedures for developing and implementing

environment policy9.

environment management

An important initial step in the development of an

environment management system is the adoption

of a formal company environment policy. The food

and grocery industry continues to recognise the

growing importance of environment management.

The results of the survey indicate that the

number of AFGC member companies adopting

formal environment policies has been growing. In

2005, the percentage of companies with formal

environment policies rose to about 80% (Figure

12). In addition, more than 60% of companies

have moved beyond this and have implemented

an environment management system (Figure 13).

Another tangible indicator of business

commitment to environment management is the

establishment of formal environment committees

or teams. More than 70% of respondents

reported the existence of a formal environment

committee or management team in their business

in 2005 (Figure 14). Also, to implement an

environment management system effectively

requires dedicated staff resources. More than

30% of companies now have a full-time

environment manager – this is an increase from

18% in 1999 (Figure 15).

TOTAL WASTE TO LANDFILL PER TONNE OF FINISHED PRODUCT IS DOWN 20%

SINCE 2003

packaging

ALMOST 90% OF WASTE AND BY-PRODUCTS ARE

REUSED OR RECYCLED


Packaging is used to contain and deliver a product

to the consumer. It is essential in terms of its ability

to maintain the particular characteristics and quality

of the product chosen by the consumer to satisfy a

requirement. It plays a vital role in the whole of

system, supplying safe goods and services from

production through to post consumption. While it

has a tangible impact on waste streams, the real

benefi ts are unmistakably recognised in the

economic, environmental and social contribution it

makes to the community. The AFGC’s view is that

packaging must be considered in light of all of the

costs and benefi ts in any debate about waste

management and resource effi ciency.

AFGC member companies have made specifi c

improvements in the area of packaging

management. More than 50% of companies have

made an improvement in packaging across a

range of areas. An exception is the area of refi ll

packaging (Figure 16). Refi ll packaging is used,

where possible, for products such as liquid soups

and detergents. However, food safety and

distribution issues prevent the use of refi llable

packs for most food products. This is an area that

is more likely to have relevance in areas such as

agricultural and veterinary chemicals and parts of

the industrial sector.

While signifi cant improvements have been

made in packaging, the food and grocery sector

continues to look for ways to make further

environmental gains. Almost 80% of companies

surveyed highlighted packaging or waste

management as a priority for their company over

the next fi ve years. This was followed by water,

with almost 50% of companies identifying it as a

priority over the next fi ve years (Figure 17).

The National Packaging Covenant

The National Packaging Covenant is a voluntary

agreement between government and industry to

develop a sustainable market-based approach to

packaging and recycling in Australia.

On 1 July 2005, federal and state

environment ministers agreed to strengthen the

National Packaging Covenant and commit to a

further fi ve-year period from 2005 to 2010. The

revised Covenant commits signatories to a national

recycling target of 65% for packaging (up from the

current 48%) and no further increases in packaging

waste disposed to landfi ll by the end of 2010.

The AFGC has been a signatory to the National

Packaging Covenant since 1999 and is an active

member of the National Packaging Covenant

Industry Association. Through this industry

Association the AFGC was closely involved in the

review of the previous Covenant and implementation

Packaging plays a crucial role in the supply of high quality, safe and hygienic food and

grocery products. It has developed signifi cantly over the last decade, with improvements in

lightweighting, packaging design and manufacturing processes.

of the revised Covenant. The National Packaging

Covenant will require the food and grocery sector to

increase and improve environment management

and reporting on a wide range of packaging-related

environmental indicators.

These include:

– the total weight of consumer packaging and

non-recyclable packaging

– the total weight of consumer packaging that is

recycled and sent to landfi ll

– improvements in design, manufacture,

marketing and distribution to minimise the

environmental impacts of packaging

– changes to protection, safety, hygiene, shelf

life or supply chain factors affecting the

amount and type of packaging

– packaging recycling collection systems on site

– implementation of ‘buy recycled’ purchasing

policy or practices

– annual reporting against an action plan

Consistent with the above key performance

indicators, industry signatories will need to document

the implementation of the revised Environmental

Code of Practice for Packaging and Guidelines. The

code provides a tool to help guide companies in the

design and manufacture of innovative packaging that

meets the sometimes confl icting demands of the

market and the environment.

The objective of the code and guidelines is to

ensure that effective and clearly documented

practices are in place to address environmental

concerns in the product development and review

process for packaging and packaged products.

The AFGC took an active role in the review of

the code. It is providing the chair and secretariat for

the Management Committee that was established

to oversee the implementation of the code.

The AFGC strongly supports the National

Packaging Covenant as the best option available.

It allows fl exibility in operations and provides

industry with the chance to self-regulate and

make improvements. The National Packaging

Covenant provides certainty for action

and investment.

It is important to note that, given the

environment ministers set overarching whole-of-

system targets under the new National Packaging

Covenant, reductions need to be made by all

members of the supply chain and not just food

and grocery manufacturers.

The AFGC will continue to work with other

industry associations and the National Packaging

Covenant Industry Association to fi nd ways

packaging manufacturers, brand owners and retailers

can minimise the impact of packaging, while

maintaining the essential functions of protecting the

product and ensuring consumer safety.

case study – nestlé

Nestlé Australia made packaging changes in 2004 that avoided

the use of about 460 t of carton board material.

Nestlé Australia worked closely with supply chain partner

Amcor Fibre Packaging to fi nd ways to reduce product packaging

without compromising its quality. This has resulted in a reduction in

the weight of the packaging board used per square metre and

removes 56 t a year of packaging waste from the environment.

Nestlé has delivered further improvements by down-gauging

the ice-cream packaging inners used at its Mulgrave site in

Victoria, resulting in a saving of 61 t of packaging waste a year.

Again, this was achieved without compromising the quality and

integrity of its packaging.


Whole-of-chain sustainability

The National Packaging Covenant acknowledges

the need for a whole-of-chain approach to the

targets it has established. It is important, however,

to take an even broader approach to environment

management to ensure policies and strategies

refl ect the full environment and economic costs

and benefi ts. As noted in the Environment Report

2003, by focussing on single-issue environmental

outcomes in isolation, without a full understanding

of the overall environment benefi ts and costs, there

is the risk that strategies and policies may reduce,

rather than improve, environmental gains.

The production of food and grocery products

requires numerous resources. These include water,

land, agricultural and forestry products, chemicals

and packaging materials. Energy used in

production, distribution, storage and consumption

also have to be factored in.

The sustainability of the industry and its

products requires sound environment management

throughout the chain of production to the end

consumer. Efforts by AFGC members to track this

impact across the supply chain are the basis for the

2005 report and refl ect the pursuit of continual

improvement. The assessment of these efforts and

the implementation of national policies to optimise

resource use requires consideration of the whole-

of-chain environment impact.

Processing and packaging play a crucial role in

protecting and preserving products, and the

resources embedded in them. The environmental

cost of these processes in the overall system of

providing food and grocery products to Australians

is relatively minor. The industry continues to improve

its performance and reduce the impact on the

environment. But when considered from a whole-of-

system perspective, many of these gains will be able

to deliver only small relative improvements.

The production, processing, packaging and

consumption of food and grocery products have an

impact on the environment. However, this impact

continues to be partly offset by the environment

achievements that have been made in the

processing and packaging stage. In some cases,

the production of recyclable packaging may be

more resource intensive and have a larger negative

environment impact when viewed in the whole-of-

chain approach. The overall environment impact of

packaging needs to be considered, balancing the

resource intensity of production and recyclability

against the need to produce safe, high-quality

consumer products.

Research overseas also has focussed on the

wider sustainability issues of packaging. The

following snapshot looks at the apparent confl icting

issues associated with packaging and the inherent

trade-offs between product development and

packaging to meet the needs of consumers.

case study – george weston foods

Tip Top Bakeries achieved a saving of 1400 t of plastic over a

three-year period by re-engineering its packaging.

Packaged bread has a limited environmental impact due to the

use of reusable bread crates for secondary packaging and the

absence of any tertiary packaging. However, the company

identifi ed an opportunity to further reduce its impact by changing

its primary packaging, namely its bread bags.

Trials found that the bread bags could be made 12.5% lighter

without affecting their integrity.

This initiative was undertaken as part of the company’s

Covenant commitments and provided benefi ts for the environment

and cost savings for the company.

Packaging can be seen in two ways. One, it prevents waste;

two, it creates waste.

Packaging is not a product in itself. It is a means of delivering

products to customers in good condition, enabling products to

pass through the supply chain without being damaged. However,

it becomes waste at the end of its useful life.

Focussing on reducing packaging with the sole aim of creating

less packaging waste can be counterproductive. If goods are

under-packaged, there is a risk they will either be damaged or

spoiled before they reach consumers. This leads to waste and

puts more pressure on resources.

Changing demographics and lifestyles – including the trend

towards smaller households, people living alone, an ageing

population and greater convenience – have an impact on the type

of products demanded by consumers. Industry has no infl uence

over demographic changes, but must be responsive to them.

Industry, however, can determine the type of packaging used.

Packaging needs to fulfi l a number of criteria to ensure that

a product is delivered to consumers in good condition. This can

require a number of trade-offs, such as balancing the need to

reduce the environmental impact of packaging with the need to

ensure it performs well and prevents the waste of products in the

supply chain. The specifi c demands placed on the packaging by

end-users may be relatively limited compared with those

demanded by production, distribution and storage processes.

These demands and trade-offs are rarely evident to consumers.

The challenge is to design packaging systems to get goods

from production to consumption using the minimum amount of

resources and generating the least amount of waste.

Monkhouse C, Bowyer C & Farmer A (2004), Packaging for Sustainability: Packaging in the Context of the Product, Supply Chain and Consumer Needs, Institute for European Environment Policy, Report for the Industry Council for Packaging and the Environment.

Packaging for sustainability?


AFGC member companies can make a substantial

impact on the prosperity and liveability of the

environment in which they operate. In many

cases, the pursuit of environmental gains by

companies can also result in lower production

costs, as demonstrated by the case studies in

this report.

The AFGC has sought to lead the industry by

initiating projects that focus on improving the

overall environmental performance of companies

and their activities through better management

and reporting practices. Further, it has collected

industry information and tracked progress, and

reported this publicly.

Effective whole-of-system environment

reporting can provide a greater understanding of

future risks so they can be incorporated into

investment and product development decisions.

A systemic and recognised approach to industry

reporting provides more reliable data as the basis

for policy decisions and more informed debate in

the community.

The AFGC continues to actively participate in

environment forums and issues, and has helped

facilitate industry’s adoption of the National

Packaging Covenant. However, it considers that

future progress is best achieved through the

development of a comprehensive industry-wide

strategy. The Environment Committee will

continue the work it has been doing to

understand and report on the environmental

impact of food processing and, more broadly, the

other stages of the supply chain cycle: primary

production and consumer recycling.

The challenge remains to engage the industry

to ensure what is being reported represents the

entire sector. The AFGC will continue to seek

greater participation by members in its

environment survey. Over the next few years,

industry can anticipate a continuation of the trend

towards greater reporting requirements and

increased transparency and accountability. In

addition, the AFGC will continue to pursue the

adoption of packaging manufacture, design and

management that takes account of the wider

system approach to environment issues.

This Environment Report 2005 refl ects the

AFGC’s commitment to industry sustainability,

and presents an open and honest approach

to reporting on industry’s achievements

and challenges.

The Australian food and grocery sector has made signifi cant progress in reducing its impact on

the environment in the past few years. The AFGC’s 2005 environment survey shows that the

industry has further reduced its energy and water consumption, greenhouse emissions and

waste to landfi ll and has increasingly adopted a range of environment management systems

and procedures. This progress is commendable, yet there is still scope for improvement.

future directions

1. The Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Corporate Responsibility,

http://www.aph.gov.au/senate/committee/corporations_ctte/corporate_responsibility/.

2. World Business Council for Sustainable Development (2004), ‘The WBSD on Accountability & Reporting,’ http://www.wbcsd.org.

3. Department of Environment and Heritage (2003), ‘Triple Bottom Line Reporting Guidelines’,

http://www.deh.gov.au/settlements/industry/fi nance/publications/indicators/foreword.html.

4. Center for Applied Energy Research, KPMG and Deni Greene Consulting (2004), The State of Sustainability Reporting in Australia 2004, Kentucky.

5. Association of the Chartered Certifi ed Accountants (2004), ‘Report of the Judges: ACCA Australia and New Zealand Awards

for Sustainability Reporting’, London.

6. Sydney Water Corporation (2005), http://www.sydneywater.com.au.

7. Australian Paper Industry Council (2003), 2003 Public Eco-effi ciency Report, Canberra.

8. Australian Bureau of Statistics (2003), 2003 Year Book Australia, Commonwealth of Australia, Canberra.

9. International Organisation for Standardisation 14001 (2004), ‘Environmental Management Systems – Specifi cation with Guidance for Use’,

http://www.iso.org/iso/en/ISOOnline.frontpage.

references

AAB Holdings Pty Ltd

Arnott’s Biscuits Ltd

Snack Foods Ltd

The Kettle Chip Company Pty Ltd

Asia-Pacifi c Blending Corporation Pty Ltd

Australia Meat Holdings Pty Ltd

Australian Pacifi c Paper Products

Beak & Johnston Pty Ltd

BOC Gases Australia Ltd

Bronte Industries Pty Ltd

Bulla Dairy Foods

Bundaberg Sugar Ltd

Cadbury Schweppes Asia Pacifi c

Cantarella Bros Pty Ltd

Cerebos (Australia) Ltd

Christie Tea Pty Ltd

Clorox Australia Pty Ltd

Coca-Cola Amatil (Aust) Ltd

SPC Ardmona Operations Ltd

Colgate-Palmolive Pty Ltd

Coopers Brewery Ltd

Dairy Farmers Group

Danisco Australia Pty Ltd

Devro Pty Ltd

DSM Food Specialties Australia Pty Ltd

DSM Nutritional Products

Fibrisol Services Australia Pty Ltd

Firmenich Ltd

Fonterra Brands (Australia) Pty Ltd

Foster’s Group Limited

General Mills Australia Pty Ltd

George Weston Foods Ltd

AB Food and Beverages Australia

AB Mauri

Cereform/Serrol

GWF Baking Division

GWF Meat & Dairy Division

George Weston Technologies

Jasol

Weston Cereal Industries

Gillette Australia Pty Ltd

GlaxoSmithKline Consumer Healthcare

Golden Circle Ltd

Goodman Fielder Pty Ltd

Meadow Lea Australia

Quality Bakers Australia Pty Ltd

Green’s Foods Ltd

H J Heinz Company Australia Ltd

Hans Continental Smallgoods Pty Ltd

Harvest FreshCuts Pty Ltd

Heimann Foodmaker Group

Hoyt Food Manufacturing Industries Pty Ltd

J Boag and Son Brewing Ltd

Johnson & Johnson Pacifi c Pty Ltd

Kellogg (Australia) Pty Ltd

Day Dawn Pty Ltd

Kerry Ingredients Australia Pty Ltd

Kimberly-Clark Australia Pty Ltd

Kraft Foods Asia Pacifi c

Lion Nathan Limited

Madura Tea Estates

Manildra Harwood Sugars

MasterFoods Australia New Zealand

Food

Petcare

Snackfood

McCain Foods (Aust) Pty Ltd

McCormick Foods Australia Pty Ltd

Merino Pty Ltd

Merisant Manufacturing Australia Pty Ltd

National Foods Ltd

Nerada Tea Pty Ltd

Nestlé Australia Ltd

Nestlé Foods & Beverages

Nestlé Confectionery

Nestlé Ice Cream

Nestlé Chilled Dairy

Nestlé Nutrition

Foodservice & Industrial Division

Novartis Consumer Health Australasia Pty Ltd

Nutricia Australia Pty Ltd

Nutrinova (Australasia) Pty Ltd

Ocean Spray International, Inc

Parmalat Australia Ltd

Patties Foods Pty Ltd

Peanut Company of Australia Ltd

Pfi zer Consumer Healthcare

Prepared Foods Australia

Procter & Gamble Australia Pty Ltd

PZ Cussons Australia Pty Ltd

Quality Ingredients Ltd

Prima Herbs and Spices

Reckitt Benckiser (Australia) Pty Ltd

Ridley Corporation Ltd

Cheetham Salt Limited

Sanitarium Health Food Company

Longa Life Vegetarian Products Pty Ltd

Sara Lee Australia

Douwe Egberts

Sara Lee Bakery

SCA Hygiene Australasia

Schwarzkopf and Henkel

Sensient Technologies

Simplot Australia Pty Ltd

Specialty Cereals Pty Ltd Spicemasters of Australia Pty Ltd

Spicemasters of Australia Pty Ltd

Stuart Alexander & Co Pty Limited

Sugar Australia Pty Ltd

SunRice

Symrise Pty Ltd

Tetley Australia Pty Ltd

The Smith’s Snackfood Company

Uncle Tobys Pty Ltd

Unilever Australasia

Waters Trading Pty Ltd

Wyeth Australia Pty Ltd

Yakult Australia Pty Ltd

Associate MembersAccenture

Amcor Fibre Packaging

CAS

CHEP Asia-Pacifi c

CoreProcess (Australia) Pty Ltd

Dairy Australia

Exel (Australia) Logistics Pty Ltd

Focus Information Logistics Pty Ltd

Food Liaison Pty Ltd

Foodbank Australia Limited

IBM Business Consulting Services

innovations & solutions

KPMG

Legal Finesse

Linfox Australia Pty Ltd

Meat and Livestock Australia Ltd

Minter Ellison Lawyers

Monsanto Australia Ltd

OTS Search

PricewaterhouseCoopers

Promax Applications Group Pty Ltd

Sue Akeroyd & Associates

Swire Cold Storage

Touchstone Consulting Australia Pty Ltd

Wiley & Co Pty Ltd

afgc membership list

Australian Food and Grocery Council

ABN 23 068 732 883

Level 2, Salvation Army Building, 2-4 Brisbane Avenue, Barton ACT 2600Locked Bag 1, Kingston ACT 2604

Tel: (02) 6273 1466, Fax: (02) 6273 1477E-mail: [email protected], Web: www.afgc.org.au

ENVIRONMENT REPORT 2005 - Morningstar, Inc.

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