Introduction

Safeway operations include transport and logistics, depot and storage, stores and offices. These activities have a wide range of potential social (including health and safety) and environmental impacts. Safeway is continuously developing management arrangements to identify, evaluate, manage and mitigate these impacts.

This section addresses Safeway's key operational issues.

Environment

Environmental Management System (EMS)

Safeway's system for managing environmental issues in its operation is based broadly on ISO14001 (Environmental Management Systems - Specification with guidance for use). We are in the process of rolling out an ISO14001 certification programme at our Regional Distribution Centres (RDCs) of which there are 20 in total. Bellshill RDC, Scotland, became ISO14001 accredited in April 2001 (the first retail operation in Scotland to achieve certification). Our first in-house RDC operation achieved certification in June 2002 and a further four RDCs are targeted to achieve accreditation by June 2003.

Identification and evaluation of environmental issues

Environmental issues are identified and their significance to Safeway determined by a combination of factors. These range from business wide risks and opportunities assessments to stakeholder engagement and understanding future government policy and legislative requirements.

Key areas of environmental impacts for Safeway's operations have been identified as waste, packaging, energy, refrigerant emissions, water use, transport and store development. These are explored in detail below.

KPIs and target setting

Key environmental issues identified by the business according to significance inform the process of setting annual environmental targets. These are designated to relevant points of the business for implementation and delivery.

Safeway conducts continuous research and development to ensure that environmental results can be measured and new targets set. Suppliers are expected to subscribe to these aspirations. (See Appendix detailing targets).

In 2000 Safeway became an early signatory of Government's Making a Corporate Commitment Campaign (MACC2) which commits the Company to the setting and reporting of environmental targets.

Waste Management

Safeway's operations lead to the generation of liquid and solid waste materials and the company has a Duty of Care to take all reasonable steps to keep waste safe.

Safeway strives to minimise waste to landfill and maximise cost-effective recovery and recycling. Examples of related initiatives and programmes include:

• Safeway was the first retailer in 1972 to invest in dedicated Resource Recovery Units (RRU). Packaging materials are recovered from stores for recycling and re-use.

• In 2000 we rationalised our store waste contracts to three regional waste management companies.

• We work closely with local authorities in the siting of recycling facilities in our car parks. Safeway was the first retailer to provide collection points in store for used plastic carrier bags. Details of our facilities can be found on the Valpak website recycle-more.co.uk.

• We stock a range of recycled products which are listed in our news section under company information as well as recycledproducts.org.uk

• We support consumer awareness campaigns such as 'Buy Recycled'. Between 1999 and 2001 Safeway towed Government's 'Are You Doing Your Bit?' roadshow around the country which had a number of environmental themes, including waste management.

• We were an early signatory of the National Waste Awareness Initiative Rethink Rubbish campaign launched in June 2002 (rethinkrubbish.com) also the Mayor of London's Green Procurement Code which seeks to stimulate demand for recycled material. Details can be found on the London Remade website LondonRemade.com

• We have refined our internal reporting system to monitor quality of salvage returned from stores in order to recognise and reward the best performing store each period.
  

Packaging

In selecting packaging materials for own brand products, Safeway recognises the importance of ensuring the maintenance of hygiene, food safety and protection from spoilage or tampering. The design of standard own brand packaging aims to use the minimum amount of packaging necessary to provide safe, effective protection, performance and presentation of products.

Safeway was a founder member of Valpak, the country's largest packaging compliance scheme set up to comply with the Product Responsibility Obligations (Packaging Waste) Regulations 1997. Recent examples to design out-packaging include:-

• Replacing recycling flower buckets with re-usable buckets.
  
• Replacing cardboard sleeves with labels.
  
• Pallet stretch film reduced in thickness by 15%.
  
• Removal display packaging used for instore bakery products.
  
• Switching from imported green packed glass products to clear.
  
• Trialling of returnable transit packaging for tinned goods.
  
• Moving to a range of potatoes from 3 separate packaging components punnet, label, bag) to 1 single item (printed bag). This will eliminate 212 tonnes of plastic and 14 tonnes of paper (an 85% reduction).

Our key packaging target 2002/3 is to reduce packaging weight per £sales by 1% on 2001/2.

Energy

Safeway is a leader in energy management within our sector. This involves:-

• Achieving the best possible usage of energy.
  
• Using performance monitoring and auditing to measure our progress.
  
• Allocating appropriate resources both for the implementation of energy conservation and management programmes and for research and development.

We have operated an energy data logging system since 1996 and advanced refrigeration control and monitoring system since 1998. Electricity monitoring is in place in all stores providing half-hourly information.

Target setting has been in place since 1993. Energy targets include Like For Like Year on Year Index 101 (against a natural growth index of 104) in stores for electricity and gas consumption - this against a background of a comprehensive refit programme.

In 2001 we signed a voluntary Climate Change Levy Agreement (CCLA) to reduce our CO2 emissions. In return for an 80% levy discount for energy consumed in store bakeries and chicken rotisseries, we are committed to achieving certain energy consumption targets over the next 10 years.

Safeway uses the DEFRA "Environmental Reporting Guidelines for Company Reporting on Greenhouse Gas Emissions". (See performance data in the Appendix).

Safeway is involved in a number of research programmes. These include:-

• Application of artificial intelligence techniques to provide defrost on demand for refrigerated food display cabinets. This is a DEFRA funded project. Laboratory trials have been completed and the capabilities of a software based demand defrost controller is now being tested in a Safeway store. Laboratory tests have shown defrost energy savings of 25-50%.

• Safeway is also involved in a LINK programme to look at the feasibility of a low temperature absorption refrigeration system which will use low grade exhaust heat to power the refrigeration plant. This could increase thermal efficiently, currently around 38% to 70 to 80% and reduce the Hydrofluorocarbon (HFC) discharge to zero. (defra.gov.uk/research/researchfrm.htm)

• Currently co-funding research to identify the most reliable and cost effective small scale auto-transformer suitable for food retail applications - this could lead to up to a 4% reduction in power consumed.

Refrigerant Emissions

Safeway is committed to minimising the environmental impact of ozone depleting chemicals by:-

• Transferring to alternative chemicals with reduced ozone depletion potential.
  
• Minimising the opportunity for loss or release of such chemicals into the atmosphere.

Our direction and strategy are founded on sound, scientific, information in relation to the properties of such chemicals and on the principles of the Montreal Protocol.

Safeway phased out the use of Hydrochlorofluorocarbons (HCFCs) in 1997 as part of our efforts to introduce non-ozone depleting chemicals. We do not use HCFCs in new installations and have been phasing out R22 (HCFC) in favour of R404a (HFC). A programme to phase out HCFCs by using RS44 (HFC) is also underway. This is progressing rapidly with expected completion date 2004 for phase out of HCFCs.

We do not see HFCs as a long term solution and are researching alternative refrigerants. The next generation of vehicle refrigerant is also being developed so HCFC/HFC can be eliminated.

We are encouraging our Safeway brand suppliers to transfer to alternative chemicals with reduced ozone depletion potential and where no viable alternative exists, to adopt practices which minimise the opportunity for loss or release of such chemicals to the atmosphere.

Water Management

Safeway is highly conscious of the need for effective water management. We are always looking at ways to conserve water supplied. Water monitoring is in place in all stores providing half-hourly information. Individual store targeting is carried out rather than setting a corporate target.

Some of the methods of water usage reduction are:-

• Two of our large distribution centres use recycled rain to wash the lorries. At another distribution centre we use large volumes of water recovered from cooling refrigeration in the vehicle wash following the cooling process. In the past it would be put to waste immediately.

• Car washing facilities at petrol stations recycle water to recover up to 95% of each wash. The water passes through a series of filters to remove dirt and wax so that it can be used again.

• For many years we have had infrared devices fixed to urinals so that flushing occurs only on demand. This saves the equivalent of about 100 Olympic sized swimming pools worth of water every year.

• 61 stores are fitted with "grey water" recycling systems, taking processed water used for cooling the dry cleaning machines and recovering this for toilet flushing.

• Reducing water consumption by identifying abnormal water consumption patterns and effecting speedy repairs.

Transport

Safeway strives to maximise the efficiency of its transport operations and reduce associated environmental impacts. We are achieving this by ongoing improvements in fuel performance and vehicle usage, managing emissions, using alternative fuels and operating an integrated transport approach.

We have improved year on year km/litre travelled since 1993/4 at 2.77km/litre to 3.41 km/litre in 2000/1. Unfortunately km/litre fell slightly in 2001/2 to 3.39 due to use of temporary vehicles used in successful nationwide promotions and Euro 3 vehicles performing less efficiently than expected.

Initiatives and programmes to help achieve this include:

• The first retailer RDC in Scotland became ISO14001 accredited in April 2001 at the Safeway depot at Bellshill, thus demonstrating that a formal environmental management system is in place. Our first in-house operation achieved accreditation June 2002 and four further RDCs are planned by June 2003.

• We have used computerised vehicle scheduling since 1990 and were the first major UK retailer to install a vehicle satellite tracking system to tackle congestion. The Integrated Transport Management System monitors fuel consumption and tracks vehicle location automatically.

• We are the only UK food retailer to use the railway network to deliver products directly to our stores. We launched this initiative in Scotland in 1999 and in 2001/2 we transported 2.8 million cases of product by rail saving both road journeys and diesel fuel. The strategy won the Safeway Supply Division a Queen's Award for Sustainable Development in 2001.

• A three year replacement programme is operated for HGVs. All tractor units were Euro 2 compliant by May 2000 and 83% of the fleet operate with Reduced Pollution Certificates. 7% of our units are Euro3 compliant.

• We have recently changed our replacement programme for trailer units from 10 to 8 years. One of the benefits of this is that this will speed up our phase out plans for HCFC gases in refrigerated trailers.

• We operate one of Europe's largest fleet of Compressed Natural Gas (CNG) vehicles. It is our intention ultimately to service stores in all major conurbations in this way, as these vehicles have significant air quality and noise benefits compared to equivalent diesel engines. Our target is for 11.5% of our HGV fleet to be CNG vehicles by March 2003.

• We were the first retailer to use fully synthetic lubricants, the environmental benefits including improved fuel consumption and reduced lubricant usage.

• Safeway specifies tractors and trailers to minimise noise disturbance when delivering to and unloading products at stores.

• BP Shield carry out annual audits of Vehicle Maintenance Units and Mechanical Handling Equipment at Safeway's RDCs in order to highlight areas of environmental significance in the operations carried out on the subject site. The survey incorporates best practice guidelines for improvements. Progress on recommended actions also reported.

• Safeway is participating in a Transport 2000 project "Wise Moves". This seeks to identify more sustainable ways of delivering goods to stores.

Green Travel Plans

Safeway does not currently have a formal Green Travel Plan Strategy in place. However, a number of initiatives are in place across the business to reduce environmental impacts. These include:-

Head Office

• Provision of bicycle storage facilities and showers.
  
• On-site banking and grocery dry cleaning services.
  
• Interest-free loans provided for rail travel to work.
  
• Office collect and go shopping service provided. 300 registered users with 50 regular users. Users order their products by midnight and the products are delivered to Hayes for end of day collection from Hayes.

Corporate initiatives include:-

• Recent review of company car offering carried out to ensure best CO2 performing cars listed for employee take up.

• Videoconferencing was introduced into the business June 2000 with Head Office and 12 RDCs now connected. 85,000 kilometres of travel was avoided by Supply Division employees using the facilities 2001/2. The tool has also been an important means of inter-active communication during the regular Meeting for Everyone held by the business. A review is underway to consider opportunities for increased usage of videoconferencing facilities.

• Bellshill RDC carried out a staff travel survey to all employees in May 2001 issuing a questionnaire via all pay slips to employees. 26% of the workforce responded. The findings led to a number of suggestions being considered further.

Stores

Safeway has 480 stores across the UK including the Orkneys, Isle of Man, Channel Islands, Gibraltar and Northern Ireland. We operate four formats: megastores, at least 50,000 sq ft of selling space (our first was recently opened in Plymouth); superstores, 20,000 - 50,000 sq ft; supermarkets, 10,000-20,000 sq ft and convenience stores which are less than 10,000 sq ft of sales area.

Our objective is to be a good neighbour within the communities we serve.

Investment in reformatting our existing stores along with our focus on product development is fundamental to the current phase of our business strategy. We are on track to complete the reformatting of our entire portfolio within the next three years. Since 200/1 we have refitted and re-launched 121 stores, equivalent to 26% of our total selling space. We have received a lot of very positive feedback from our customers and we have taken note of constructive criticisms. Our 2002 Annual Report describes the format of our stores and what they offer to our customers.

Locating Safeway Stores

Shopper convenience is central to Safeway's new store development programme. Our principle is that every new Safeway store should represent a positive improvement to its environment.

So, although the prime purpose in selecting a new store location is to serve a real demand for food shopping, environmental factors play an important part in the choice of the site and its development. Over the last eight years, Safeway has built 33% of stores in town centres, 50% in suburban areas and 17% on edge-of-town sites.

Safeway's policy on store location is to provide facilities which match shoppers' aspirations. Though studies by independent consultants show that even in town centres, shopping by public transport or on foot represents only 13% of customers. Safeway complies with government guidelines by ensuring that all new stores are easily accessible on foot and by public transport. Experience shows that most shoppers arrive by car, wherever stores are located.

This reflects the heavy and bulky nature of a family's weekly food shopping which averages some 35 kilos (80lbs). The need for surface level car parking which is free for customers is also a key determinant of site location.

Development

We assess the environmental impact of both new stores and extensions at an early stage and, from the moment we start to develop a site, exercise control over that impact.

Our 'Considerate Contractor' code of practice ensures that building sites are run in as environmentally sensitive and safe manner as possible, given the disruptive nature of the construction process. We are careful to keep pollution, through noise, vibration, dust and visual intrusion, to a minimum.

We are constantly reviewing building electrical, mechanical and refrigeration specifications to ensure that they encompass the latest best environmental practice in both material selection and design principles.

Traffic

Surrounding roads must be able to cope with immediate and future traffic levels and the number of vehicles entering and leaving the store. Safeway studies carefully the effects that opening a new store may have on the adjacent road network. Where necessary, in partnership with the local authority, we will widen roads, add extra lanes, construct roundabouts, and provide traffic lights or pedestrian crossings.

Noise

Site surveys identify whether neighbours are likely to be affected by noise from refrigeration and extraction systems when the store is in operation, so that we can design effective sound screening around the plant, or relocate it within the design of the store. We have also redesigned our loading docks and are systematically minimising noise from vehicle movements and goods handling during deliveries, as well as modifying store working practices.

A register of complaints is held on each site with monthly reports to HQ.