Environmental Retail Projects In Russia

Abstract

The article touches upon the problems of implementation of environmental actions and projects as a factor in the corporate social responsibility of the company. Based on the study of the companies experience operating in the Russian Federation, the main directions of retail chains environmental activities are highlighted. Environmental campaigns examples and retailers' projects implemented over the past three years are given. Among the participants in such events were the retail chains Pyaterochka, Lenta, M.Video, Eldorado, mobile operator Tele-2, Nespresso, IKEA. The interest in such events on the part of consumers is analyzed. An example of the dynamics of the volumes of raw materials accepted by an ordinary Russian company for recycling from the population during 2019-2020 is considered. Based on statistical data, it is concluded that an increase in the share of the population realizing the importance of environmental projects, separate waste collection, processing and recycling of resources is made. It is noted that at present environmental friendliness is not a key factor in shaping consumer preferences. An interpretation of the observed trends is given. The importance of environmental business initiatives from the point of view of state policy was noted, as evidenced by the tasks of the national project "Ecology". The measures of state stimulation of business to participate in environmental projects are indicated. The conclusion is made about the prospects of including the ecological component in the marketing strategy of the enterprise.

Keywords: Environmental actionsocial responsibilityrecycling

Introduction

The environmental problems of modern society have been steadily gaining weight among other social challenges over the past decades. To a greater extent, this is initiated by developed countries, calling for the solution of problems through changes in legislation, the introduction of new technologies for production and disposal, the formation of civil responsibility, the achievement of international agreements, etc. Long-term and stable attention to the problem forms among citizens, as consumers of goods and services, certain requirements for the environmental friendliness of production and consumer goods. The response of manufacturers to society's expectations is reflected in the adoption and implementation of the concepts of voluntary corporate responsibility, including in the field of ecology. In Russia, environmental problems are ambiguous. On the one hand, being a member of the world community, the state assumes obligations in accordance with international agreements. Manufacturers and sellers of consumer goods are increasingly using environmental campaigns and projects in their marketing programs. On the other hand, environmental problems cannot be called paramount in the minds of ordinary citizens. The data of opinion polls indicate that the environmental friendliness of a product is currently not a priorityor a significant factor in consumer choice.

Problem Statement

This study sets the following objectives. Studying the experience of companies trading in the Russian Federation in the implementation of environmental marketing campaigns. Monitoring the actions of the largest Russian retailers in promoting their retail chains, goods and brands in order to assess the dynamics of the number of marketing projects. It is necessary to analyze the reasons that encourage businesses to participate in environmental actions. It is of interest, in particular, to analyze the initiatives of government bodies to support nature conservation initiatives. The problem of small businesses participation in eco-projects deserves a separate consideration. Conditions for the dissemination of large enterprises experience should be formulated. Using the analysis of statistical data, it is necessary to investigate the dynamics of the environmental factors significance for consumer choice, to assess the prospects. On the basis of the conducted research, formulate conclusions about the effectiveness and feasibility of ecological retail projects in Russia.

Research Questions

When studying the problem, questions were raised that require consideration to achieve the goal of the study. What are the objectives of the actions of retail chains in the preparation and conduct of environmental campaigns? What are the reasons and social mechanisms that induce large producers of goods and sellers to bear the costs of implementing social environmental projects? Are advertising, transportation, organizational, personnel and other costs of environmental campaigns economically viable? How does the buyer evaluate the socially useful activity of the company? What is the impact of the company's environmental performance on business performance in the short and long term? What prevents Russian enterprises from taking an active part in social projects?

Purpose of the Study

The purpose of the work is to study, analyze and formulate conclusions about the effectiveness and feasibility of environmental retail projects in Russia. To formulate conclusions, it is necessary to solve the research problems. The significance of this goal is explained by the fact that environmental problems are within the scope of priority national projects. For business structures, environmental actions belong to the area of corporate social responsibility, and therefore are important as factors of long-term development. The practical significance of the study lies in the possibility of using the results in the construction of marketing strategies for retail chains and other business structures. Achievement of the goal of this study will allow developing strategies for further dissemination of experience in the participation of retail chains in environmental protection measures. This will make it possible to approach the solution of the most important tasks in the field of environmental preservation with the benefit of all interacting actors.

Research Methods

In the course of scientific work, general scientific and specific research methods were used. Analysis and processing of statistical data (when building a graph). Collection and analysis of information using methods of searching and sorting information, search engines. Sociological methods of conducting surveys (when conducting an electronic survey) and statistical methods of processing the results. Analysis of the legal aspects of the problem based on the study of the legal framework. Generalization of the conclusions obtained from the collection and analysis of information. In the field of researching the problems of corporate social responsibility of enterprises, a centrist approach is used, based on the understanding of the social aspect as an integral part of economic activity, the result of which is the growth of the welfare of society.

Findings

In the studies of specialists in the theory of consumption, the importance of the product environmental friendliness factor for the choice of the consumer is estimated. In the work of Ikonnikova differences in the perception of environmental problems in various social and geographic groups are noted (Ikonnikova, 2017). In particular, in groups of consumers, whose needs of the first and second stage are satisfied, environmental problems are placed at the second stage of the pyramid, along with the needs for safety. For other social groups, environmental problems belong to the fourth step, therefore, environmental friendliness is not a key criterion for consumer preferences. According to the authors of the 2014 study, the Russian consumer pays negligible attention to the issues of environmental responsibility of the manufacturer and the environmental friendliness of products (Fedotova & Tabekina, 2014). According to the results of the Russian study, the environmental factor (of a mobile phone) for the consumer is in last place after such factors as consumer characteristics of the product, price, manufacturer's brand, durability, image considerations, etc. At the same time, according to the 2019 study 37 % of Russians are highly likely to choose the goods and services of “responsible manufacturers” at a comparable cost (Bakhova, 2020).

Among the multitude of environmental problems, there are those that can be largely solved by the forces of the citizens themselves, subject to support from business and government. These include, for example, the separate collection of recyclable waste, the use of energy-efficient technology, responsible consumption and reuse of goods. Realizing this, consumers of goods and services form the potential for the development of commercial, social and charitable activities in the field of ecology. Let's look at the situation from a business point of view using the example of one small business. The VtorPlus enterprise is a young dynamically developing Russian company-operator for the receipt, transportation and temporary storage of resources to be processed. The electronic business platform is a mobile application that provides the user with a high-quality service: quick search, complete information, the possibility of remote booking, communication, organizing tenders and concluding transactions for the acceptance and purchase of secondary resources. Operating on the electronic trading platform since 2019, the company demonstrates consistently high growth rates in the volume of raw materials accepted for processing. In the summer of 2020, a company based in Ulyanovsk registered a trademark and set out to expand its business by opening new sites for receiving recyclable materials in Russian regions. The firm offered potential partners to purchase a franchise. During the summer period, agreements were reached on joint work in three Russian cities: Samara, St. Petersburg, Nizhnekamsk. Kazan, Cheboksary, Saransk, Togliatti, Yoshkar-Ola are planning to join them in autumn. By attracting partners to work together, VtorPlus offered its customers favorable conditions for the purchase of various goods and services with discounts on coupons received in exchange for the raw materials delivered. The list of partners is constantly growing. It is also worth noting the educational work of the company, its contribution to the formation of a consumption and recycling culture, environmental responsibility of the consumer and manufacturer, informing citizens about the possibilities of reusing and recycling of waste.

See Full Size >

The dynamics of the VtorPlus business development clearly demonstrates the prospects for secondary processing of raw materials in Russia. Figure 1 shows the data on the volume of accepted applications for the export of recyclable materials in the period from July 2019 to October 2020. The indicator of the volume of applications reflects the demand for this service among the population, which allows us to record a trend that is important for marketing research. The steady growth of the indicator illustrates an increase in the share of the population realizing the importance of environmental projects, separate waste collection, reusing and recycling of resources. Despite the objective difficulties associated with the 2020 pandemic, many Russian environmental projects demonstrate a steady growth in population involvement, which indicates the gradual formation of an environmental recycling culture in Russia.

In the context of this study, the above facts lead to the conclusion about the gradual formation of the category of consumers LOHAS (Lifestyles of Health and Sustainability) in Russia, for whom the environmental friendliness of a product, service, production is important when choosing a product. According to various estimates, the share of LOHAS consumers in Russia reaches a value close to 13%. According to a 2019 survey, 37% of Russians are highly likely to choose goods and services from “responsible manufacturers” at a comparable cost (Bakhova, 2020). Bakhova also cites the results of a survey, according to which 53% of respondents noted the importance of product packaging from the point of view of environmental friendliness, and 74% of respondents showed a willingness to pay a margin for the environmental friendliness of the product. According to researchers, in European countries, the annual growth of the market for organic products is about 20%; in Russia, there is also an increase in demand for farm product (Borkova et al., 2019).

There is also an increase in the interest of enterprises in social environmental actions and projects. Environmental projects are part of the corporate social responsibility of business. On the one hand, they are an indicator of the company maturity, the literacy and advancement of its management, orientation to the long-term perspective, and readiness to make voluntary commitments for socially useful purposes. On the other hand, the question arises about the feasibility of spending in the present and the future, the effectiveness of marketing activities. Research results proved that the Russian business community realizes the strategic value of CSR (corporate social responsibility) (Bataeva et al., 2018).

Some Russian companies contribute to the development of society, encourage innovation and distribute part of their income to social and environmental projects. Here are some examples. At the end of 2017, Duracell (2018) and the Chelyabinsk recycling plant Megapolisresurs signed an agreement on the joint implementation of the federal program for the collection and disposal of batteries. The project is accompanied by a massive Recycle Batteries with Duracell awareness campaign that educates consumers about the environmental benefits of recycling versus other recycling methods (Duracell, 2018). The Lenta (2018) company was one of the first to join the project in April, 2018. Containers for collecting waste batteries appeared in hypermarkets of the chain in more than 30 cities of Russia: Moscow and the Moscow region, Omsk, Novokuznetsk, Krasnoyarsk, Orenburg, Voronezh, Novosibirsk, Kazan, Samara, Chelyabinsk, Yekaterinburg, Rostov-on-Don and Nizhny Novgorod, etc. The management of Lenta also positively assessed the results of participation in the project, and indicated its desire to support projects aimed at reducing the negative impact on the environment and improving the environmental situation in the cities where the company operates. Matsyuk, General Director of Megapolisresurs Group of Companies, highly appreciated the prospects of cooperation and identified the achieved results as the first successful cooperation of a manufacturer, processor and retail in Russia (Lenta, 2018). In 2020 the volume of batteries handed over during the six-month campaign for recycling almost tripled in comparison with the previous year. Now it is possible to recycle electronic equipment.

In 2019, M.Video-Eldorado Group supported the project and replenished the federal battery collection network with 500 points in almost all cities where M.Video and Eldorado are present. Duracell battery-shaped collection containers installed at the chain's retail outlets, which meet the safety requirements, have collected up to 100 tons of waste power supplies (Retail.ru, 2019).

Mobile operator Tele2 at the end of 2020. carries out the action "Tele2 Remelting" "in order to attract attention, generate and maintain interest in the operator of mobile radiotelephone communication, providing services marked with the trademark" Tele2 ", to improve environmental culture, to popularize the problem of environmental pollution." Bonuses in the form of promotional codes for connecting an Internet package, discounts on the purchase of smartphones are provided to customers who have handed over used mobile phones for recycling (Tele2, 2019).

One of the largest retailers in Russia, Pyaterochka, actively positions its business as socially responsible, supporting and initiating various social projects and actions. The ideas of enlightenment and the formation of an engaged civil society are identified by Pyaterochka's marketers as elements of the company's development strategy. Ideas in the field of energy saving and energy efficiency are supported. The Smart Store project is being implemented in all regions of Pyaterochka's presence (X5 Retail Group, 2019). It can reduce energy consumption in retail outlets by 4.9%. With the help of special sensors, controllers and software, the system is built into the existing operational processes of the store, allows you to save energy, manage the main electricity consumers in an automatic mode and minimize emergency situations.

Nespresso, a coffee brewing equipment and consumable supplier, is actively pursuing an advertising campaign on social media, encouraging its customers and potential customers to participate in the campaign to collect and recycle aluminum capsules for coffee. The launch of capsule processing technology in 1991 was the start of a social responsibility program. In 2014, Nespresso announced the launch of The Positive Cup program to achieve the positive impact of each cup of coffee on the environment, launching a project to restore coffee ecosystems (Nespresso, 2020). Continuing the course towards the implementation of environmental initiatives allowed the company to begin production of capsules in 2020, consisting of 80% recycled aluminum.

IKEA is represented on the Russian market as the most environmentally friendly manufacturer and retailer. An active marketing strategy based on the principles of humanism, the promotion of a healthy lifestyle, family values, reasonable consumption, care for each consumer and the environment - this is what makes IKEA known as a "company with a positive reputation", creates a special image of the company as a socially responsible manufacturer and significantly distinguishes it from competitors. The company “is working to convince every visitor to its stores and shopping centers, websites and social media pages that taking care of nature is not at all difficult, that it does not cost much, and that it doesn’t have to sacrifice your comfort. It creates products, solutions and services that help reduce environmental impact” (IKEA, 2019, p. 9). The company publishes quantitative data in the public domain in press releases on the corporate website, for example, in the form of an annual report on ecology and social responsibility. The accounting of the number of sales of energy-saving goods and the approximate calculation of the saved resources are presented in an accessible and understandable form, so that each buyer can consider himself involved in the implementation of an environmentally important global mission. For example, sales of 3,373,309 LED bulbs and fixtures in fiscal 2019 are interpreted as an opportunity to save 376,765 MWh of electricity. This amount of energy is capable of supporting 241,515 households for a whole year. And the implementation in 2019 of faucets with aerators and environmentally friendly dishwashers saved consumers 44 million cubic meters of water per year, which is approximately equal to a train of 824,000 cisterns from Moscow to Vladivostok. In 2019, IKEA announced the opening of collection points for raw materials for processing on its own premises. Environmental campaigns, educational work with the population were carried out and interaction with processing enterprises was established. According to the company, the conducted environmental campaigns attracted on average 3 new buyers a day, which is not economically significant in the short term. New directions of ecological recycling of goods have been opened, such as the buy-out of used furniture and its subsequent sale at a reduced price, cyclical production of products from recycled materials. In 2019, IKEA launched a grant competition for social projects and provided financial support to the winners in a total amount of RUB 7,044,251.

Many researchers of the question of the economic feasibility of social projects agree that it is practically impossible to assess the commercial efficiency and value of social programs. Various approaches to assessing the effectiveness of marketing (including environmental) projects can be found, for example, in relevant works (Kamoeva, 2013; Olekh et al., 2013). However, it is not possible to take into account the long-term effect of the project. The question of the effectiveness of social costs remains open: is it not more useful for society if the employees of the company receive large salaries, buyers purchase goods at lower prices, and the state will take over the solution of social issues using tax deductions? Are not ecological, for example, promotions a game with the consumer, pursuing purely commercial goals? This opinion is supported, for example, by data from the already cited annual report on the environment and social responsibility of the IKEA company: In 2019, we installed another 612 solar panels. The project will allow us to save about 2.5 million rubles a year and will pay off in about 7 years (IKEA, 2019). The use of Russian-made polyester recycled from PET plastic allows you to reduce costs and save about 500 thousand euros per year. The profit from the sale of recyclable materials (net of the costs of removing the remaining waste to the landfill) amounted to 40 million rubles, which is 12 million more than a year earlier. The benefits of environmental projects have been noted by many researchers (Drejeris & Ozeliene, 2019). A number of scientific works prove the correlation between the implementation of corporate social responsibility policies and sales growth (Saeidi et al., 2018). Implementation of corporate social responsibility of manufacturers and importers in the field of ecology is more profitable than paying an environmental fee. Cooperation with recyclers in the framework of the implementation of extended producer responsibility allows them, according to various estimates, to save up to 40% of the official environmental tax rate. Waste disposal certificates are submitted together with reporting to Rosprirodnadzor.

The implementation of eco-projects, being part of the corporate social responsibility policy, is aimed at solving the company's marketing objectives. Among them, obviously: reduction of variable costs; formation of a positive image; demonstration of good business conduct; rehabilitation in the eyes of society by preventing possible negative consequences of their activities; direct and indirect consumer information; staff motivation; increasing competitiveness and sales volumes. There are also goals that are less obvious from the buyer's point of view: search for profitable interaction with the state; increase in the market value of the company's shares; reduction of the tax base. From the standpoint of the centrist theory of "reasonable egoism" that the social responsibility of business is simply "right business". The decline in current profits is offset by lower costs in the future. The creation of a positive image through the implementation of charitable and other social programs forms a “credit of trust” on the part of consumers, local society, partners, employees and the state. Corporate social responsibility is a means of conducting a dialogue with the social environment that allows you to manage the risk of unexpected threats of a legal, administrative, financial, and public nature. By interacting with the authorities and control bodies, the public, partners, with its social environment, the company makes investments in its intangible assets and acquires significant arguments in case of unexpected challenges from their side.

An important tool for solving the above tasks is the preparation of social reporting - a means of informing all interested parties about how the company implements measures to achieve socially significant goals. To confirm the reliability of the information provided in the reporting, external independent audit companies are involved. Social responsibility indices are calculated on the basis of social reporting according to various methods and international standards. In particular, environmental indicators, among the performance indicators of corporate social responsibility, take into account the share of recyclable materials used, the amount of energy saving and reduction in resource consumption, initiatives to reduce the impact of production on the environment, etc. The amount of air emissions, the use of alternative energy sources, waste disposal methods, etc. can also be taken into account. Investment decisions can be made or rejected on the basis of stock indices of social responsibility, while non-stock indices serve as a basis for comparative positioning, rating, etc.

The willingness of large producers and sellers to participate in solving problems in the field of environmental protection serves as a means of solving important political issues at all levels and is encouraged by the state in the form of various preferences. Such preferences contribute to the creation of a waste processing industry in Russia as part of a cyclical economy (or a closed-cycle economy), which provides for the maximum return of secondary raw materials to industrial circulation, saving the environment and natural resources. The national project "Ecology", approved by the decree of the President of the Russian Federation of May 7, 2018 (Passport of the national project "Ecology”, 2018), determines that by 2024 36% of solid municipal waste should be sent for recycling, and the share of neutralized waste of hazard classes I and II should increase to 65%. Given the importance of the task at hand, adequate measures are being taken. Several large processing enterprises have been established over the past three years. Thus, the Ecopolis Corporation for the processing of electrical equipment, created in October 2017, is capable of processing up to 25 thousand tons of body plastic per year. As a result of recycling, up to 95% of equipment will return to production as secondary raw materials.

In the context of the need to bring the environmental norms of Russia to international standards, the state is taking a set of measures to improve the law in the field of ecology. In the future, the Government of the Russian Federation continued to refine the by-laws of the regulatory framework for the formation of an integrated system for handling solid municipal waste, stimulating business with extended producer responsibility. However, the problem cannot be considered completely solved. It is necessary to find environmental, legal, technological means of influence that will stimulate business to introduce environmental resource-saving technologies for production, sale and disposal of products. One of the steps on this path is, for example, the creation of a concept for the implementation in Russia of the principle of extended responsibility of manufacturers and importers of goods and packaging.

At the same time, ideas of environmental social responsibility are less common in the category of small and medium-sized businesses. Due to financial and legal instability, it is difficult for small businesses not only to implement eco-projects, but also simply to comply with environmental legislation in terms of issuing all the necessary documentation (waste passports, declarations, reports, testing, etc.). Accordingly, the implementation of socially beneficial ideas remains more a philanthropic choice of leadership than an economically profitable event. According to Blinov (2015), enterprises that contribute to the improvement of the natural environment must be provided with preferential taxation up to complete exemption from municipal taxes, as is done in the legislation of countries with developed market economy. The Russian experience in the interaction of government authorities and small businesses in the improvement of adjacent territories, support for government initiatives, holding festive and charitable events can also be transferred to the implementation of environmental projects.

It should be noted that foreign companies are more active in environmental initiatives. Perhaps, the European mentality of owners and managers, formed on the ideas of humanism, social responsibility and care for the environment, plays a role here. Participation in solving common problems of society is a distinctive feature of large foreign companies, which ultimately allows them to gain competitive advantages. This is a good example for Russian business, which is wary of investments that do not have an obvious economic effect. In this context, the environmental stocks of the largest retailers are a strong shaping factor. Following the leading market participants, other participants will come to social responsibility, which in general will contribute to the achievement of socially useful goals and the solution of social problems. According to scientists, combining the acquired practical experience and the theory of environmental marketing will allow to develop positive strategies (Akbulut & Adaman, 2020).

Conclusion

The above examples and arguments allow us to make an input about the focus of large manufacturers and sellers of products on the implementation of environmental projects. There is a growing public demand for environmental initiatives in Russia. This is confirmed by the social activity of consumers, volunteers, and public organizations. The authorities are ready to support them, taking measures to improve environmental legislation at various levels. The formative role of environmental actions is a factor in increasing the social responsibility of business structures. Despite the non-guaranteed short-term economic effect, environmental projects should be considered as a factor in the long-term strengthening of the stability and competitiveness of the enterprise. Based on the study, it follows that it is promising to include the environmental component in the marketing strategy of the enterprise.

References

1. Akbulut, B., & Adaman, F. (2020). The ecological economics of economic democracy. Ecological Economics, 176, 106750.
2. Bakhova, J. A. (2020). Compliance with environmental legislation by producers of goods and independent waste disposal: Impact on consumer demand. Questions of Russian Justice, 6, 302-317.
3. Bataeva, B. S., Mantaeva, E. I., Goldenova, V. S., & Slobodchikova, I. V. (2018). Corporate social responsibility: Russian companies emphasize the role of the environmental component. European Proceedings of Social and Behavioral Science, 57, 416-425.
4. Blinov, A. O. (2015). Environmental development of small business. Business Strategies: Analysis, Forecast, Management, 3(11), 3-8.
5. Borkova, E. A., Shisterov, P. I., & Voilokov, A. I. (2019). Development of retail trade at the contemporary stage. Bulletin of the Tula State University. Economic and Legal Sciences, 2, 25-33.
6. Drejeris, R., & Ozeliene, D. (2019). Modelling environmental actions of corporate sustainable activity: Evidence from Lithuania. Central European Business Review, 8(5), 69-93.
7. Duracell (2018). Project "Recycle your batteries with Duracell". https://www.duracell.ru/recycling/
8. Fedotova, O. V., & Tabekina, O. A. (2014). Study of the attitude of Russian consumers to eco-products (on the example of electronics). Regional Economics: Theory and Practice, 21, 21-28.
9. IKEA (2019). Environmental and social responsibility report. Fiscal 2019. https://www.ikea.com/ru/ru/files/pdf/aa/54/aa541e31/russia-sustainability-summary-fy19.pdf
10. Ikonnikova, M. A. (2017). Targeting the perception of environmental problems by various groups of the population based on the analysis of socio-economic indicators. Successes of Modern Science and Education, 2(6), 67-91.
11. Kamoeva, T. K. (2013). Development of eco products in retail within the framework of the concept of sustainable development. Scientific Journal of NRU ITMO. Series Economics and Environmental Management, 2, 14.
12. Lenta (2018). Environmental campaign "Battery collection week" starts at "Lenta". https://lenta.com/o-kompanii/news/-------6/
13. Nespresso (2020). Businness matters. Our commitment towards sustainable development. https://www.nespresso.com/ru/ru/commitments
14. Olekh, T. M., Rudenko, S. V., & Gogunsky, V. D. (2013). Evaluation of the effectiveness of environmental projects. Eastern European Journal of Advanced Technologies, 1(10(61)), 79-82.
15. Passport of the national project "Ecology" (2018). https://www.mnr.gov.ru/activity/directions/natsionalnyy_proekt_ekologiya/
16. Retial.ru (2019). “M.Video” launches collection of batteries in stores. https://www.retail.ru/news/m-video-zapuskaet-sbor-batareek-v-magazinakh/
17. Saeidi, S. P., Othman, M. S. H., Streimikiene, D., Saeidi, S. P., Mardani, A., & Stasiulis, N. (2018). The utilitarian aspect of the philosophy of ecology: The case of corporate social responsibility. Filosofija-Sociologiya, 29(1), 39-51.
18. Tele2 (2019). Dispose of old phones properly with Tele2. https://pereplavka.tele2.ru/
19. The Federal Law No. 7-FL "On Environmental Protection" (approved on 10.01.2002, No.207). http://ips.pravo.gov.ru:8080/document/567/
20. X5 Retail Group (2019). “Pyaterochka” cuts energy consumption with smart store. https://www.x5.ru/ru/Pages/Media/News/070819.aspx