We partnered with The Carbon Trust to help us re-evaluate our strategic direction for carbon and waste. A revised, more targeted strategy is being prepared, taking into account our rapidly growing business and ever changing industry.
GREENHOUSE GAS EMISSIONS
For the reported period, our CO2 emissions increased relative to the previous year. The business has continued to grow significantly, highlighted by a rise in order volumes of more than 30% at both Ocado.com and Morrisons.com. The carbon efficiencies implemented however, has meant that despite our substantial growth we have successfully achieved a three-year trend of improving energy efficiency, culminating in a 11.9% efficiency gain relative to our 2013 baseline year.
Our progress is illustrated in the table below.
PwC has carried out a limited assurance engagement on selected GHG emissions data(table below) in accordance with the International Standard on Assurance Engagements 3410‘Assurance engagements on greenhouse gas statements’ (ISAE 3410), issued by the International Auditing and Assurance Standards Board and, in respect of the intensity measure, in accordance with the International Standard on Assurance Engagements 3000 (Revised) ‘Assurance engagements other than audits or reviews of historical financial information’ (ISAE 3000 (Revised)). A copy of the limited assurance report
is available here.
GHG Emissions (Tonnes CO2e)
|Our carbon emissions
|Scope 1 – Direct
|Scope 2 – Indirect
|Total gross emissions (CO2e tonnes)
|Tonnes CO2e/100,000 orders
The largest share of our emissions are attributable to vehicle usage (62%), followed by the operation of our premises (37%); mirroring the findings of our previous two years’ greenhouse gas reports. As a result, developing the fuel-efficiency technologies within our operation and addressing the energy efficiency of our CFCs continues to be the focus of our carbon reduction strategy.
With regard to minimising the environmental impact of the fleet, we are continuously evolving the design of our vehicles to improve aerodynamics, capacity, and trialling fuel efficient technology developed in-house. Further, our strategic geographical expansion is in part designed to alleviate the use of fuel in our operations, opening new spokes to reduce the overall mileage of our delivery vans.
Environmentally-conscious customers may also select ‘green van slots’, saving fuel and reducing emissions by having a delivery at a similar time to another customer local to them. Through implementing a range of initiatives, investments in our fleet have positively contributed to our substantial company-wide improvement in energy efficiency.
The Group’s reported emissions have been prepared and calculated with reference to environmental reporting guidelines (2015), issued by Defra and using conversion factors published by DECC/Defra May 2015.
We continue to monitor our waste closely and we remain confident that our waste volumes are very low when compared to the industry. The partnership with Ecometrica includes analysis of waste, and we look forward to reporting on this in more detail in future years.
CRATE LINER (“CARRIER BAG”) REPORTING
Bags and our business model
The Ocado business model is based around delivering groceries from a highly-efficient, climate-controlled warehouse. This model differs in every way from the store-based model operated by traditional supermarkets. Our business model is built around efficiency and low waste; our warehouses use sophisticated automation and software to pick approximately 2 million items every day directly into final customer orders, which are delivered locally in using fuel-efficient vans. This helps us to deliver food which stays fresh for longer, reducing food waste.
We use single-use plastic carrier bags to line our delivery crates. Each crate contains three separate bags, and these bags both segregate and protect goods from damage during the picking process. The bags also allow us to safely separate potentially hazardous products from edible items in the customers’ order, complying with UK and EU legislation. They also allow drivers to safely carry groceries into our customers’ homes. However, their primary use is to line the crates which travel on a supremely efficient, highly-automated system around our warehouses collecting goods. This unique distribution model means the bags a customer receives from Ocado are not strictly carrier bags, but crate liners.
Operationally we are unable to cease using these crate liners at the moment, but we are constantly looking at ways this might be possible in the future. We continue to trial alternative bag materials and containers, although none so far have proven to be as efficient or as cost effective as plastic bags.
Bag Recycling Programme (2007)
We have always been mindful that we produce a large number of crate liners. In 2007, we launched a programme to recycle our crate liner bags. Our drivers asks customers to hand back their used crate liners (along with any unwanted carrier bags from our competitors.) We then recycle these into new bags. To reduce our carbon footprint further, this recycling is carried out wholly within the UK, rather than the Far East. We are satisfied that this keeps down “supply chain miles” and carbon emissions to a minimum.
In case you’ve ever wondered why such a bright and colourful brand uses such muted colours on its bags, we also altered the design of our distinctive colour-coded bags to make it easier to recycle bags produced by other competitors. This allows us to avoid bleaching the raw plastic that makes our bags.
Bag Buy Back Scheme (2015)
Ocado is included in the legislation requiring a 5p charge on new single use carrier bags in England. The intended aim of the legislation is to reduce bag littering and damage to wildlife. We believe that this is best done in the first place by preventing the bags from becoming litter, and removing the bags from circulation. One of the unintended risks of the Single Use Carrier Bag Charging Legislation for us is that it could encourage our customers to keep hold of carrier bags rather than return them to us for recycling, so we took the decision to build on our existing (and very successful) bag recycling programme by offering a financial incentive for customers to return used bags to us. We call this our Bag Buy Back Scheme. We use a large majority of the proceeds from the Charge to fund this scheme, as we believe that using a Bag Buy Back Scheme to proactively retrieve and recycle used crate liners from a customer's home correlates closely with the aim of the legislation, and is environmentally more sensible than simply donating all the proceeds to a charity.
Bags and the Ocado Foundation
We use the remainder of the money from the Charge to support a number of waste, litter and recycling charities across the UK. This supports the desire of the Single Use Carrier Bag Charging Legislation to see some of the money raised go to environmental causes such as supporting work to help tackle littering. Our CR strategy has four strategic pillars – Education, Entrepreneurship, Environment and Eating Well – focusing on areas where we can make a meaningful difference. This year, our CR team has made good progress in all four ‘E’s:
Environment - partnering with local UK charities to encourage and incentivise litter-picking. We will have spent over £50,000 in this area by end of November 2016.
Education - working with charity partners to educate children and young people on waste and recycling. We will have spent over £100,000 in this area by end of November 2016.
Entrepreneurship - continuing trials on alternative bag materials and containers. We will have spent over £50,000 in this area by end of November 2016.
Eating well - furthering our partnership work with local UK food banks and reducing food waste. We will have spent over £100,000 in this area by end of November 2016.
During the 2015/16 reporting period, we generated the following;
|Number of single use
plastic bags issued
of charge (£)
THE OCADO FOUNDATION
The Ocado Foundation was established in April 2015 with the aim of our employees and customers helping us make well-aimed actions at a local level across the UK – we try to choose projects where our input will be the most valuable and our impact the greatest. The same sentiment applies here to the carrier bag proceeds, whereby the funds are being held in the Ocado Foundation to be spent on local waste and recycling projects across the UK, trying our best to maximise our impact in as many local communities across the UK as possible.
We look forward to sharing our feedback and that of our waste and recycling activities over the coming months. Updates will be posted here.
If you have any questions, please email us at email@example.com