The ‘deal’

Matthew Neilson

Head of Sustainability

Process – first steps•DMA formed environmental working group:

To oversee development of new deal

To support review of PAS 2020

•Sub-working group on unaddressed mail created:Royal Mail Door to Door

The Leaflet Company

TNT Post

•Regular meetings with government

•SMP also involved in discussions with government

Guiding principles•To support government’s ambition to be the

‘greenest ever government’Zero waste economy

Low carbon economy

•To aid government understanding on the industry and our media

•To build on the success of PAS 2020, Sustainable® Mail and recycling rates

•To show that advertising mailings can and will be responsible for their environmental impacts

What Royal Mail has delivered…•Founding member and lead funding of PAS 2020 with

the DMA, ISBA & Acxiom

•Created & funded a new, more robust recycle-rate monitor for Direct Mail from 2009 onwards for the DMA

•Launched two sustainability focused services in 2009 - Sustainable® Mail and Responsible Mail

•Supported industry adoption of ISO 14001 through our mailing house scheme

• Introduced Sustainable Door to Door™

•Produced the first ever industry environmental report

%Million items

Source: TNS Consumer Panel (monthly research with c. 1,000 UK adults)

NB Direct Mail only (ie Door Drops excluded) NB Figures for 2009 representative of Nov 08-Oct 09

Better targeting has benefited the consumer, as shown by the improvement in Direct Mail response rates since 2003

31063253

34873681

39034212 4196

3978 39113669

34633281

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

3

4

5

6

DM Volumes

DM response rates

A decrease in DM volumes and increase in recycling has led to falls in the quantity of direct mail entering landfill

0

100

200

300

400

500

2003 2005 2008 2009Ton

nes

of D

irec

t M

ail /

Doo

r D

rops

(th

ousa

nds)

Recycling

Landfill

Tonnes (thousands) of mailed direct marketing material, split by mode of disposal

Sources: Direct Mail volumes from TNS consumer panel; Door Drop volumes from DMA Market Size report; volumes are for calendar years except 2009 which shows Nov 08– Oct 09 for DM and a forecast for Door Drop based on current trends. Average weights from Royal Mail MCS (‘Mail Characteristics Study’). Recycle rates from latest MEL study and previous DMA measures.

504.1

13%

87%

486.3

29%

71%

403.08

50%

50%

379.9

76%

24%

Average weight of Direct Mail = 75.7g

Average weight of Door Drop = 15.6gSource: RM Mail Characteristics Study

289,920 tonnes of Direct Marketing Material recycled during 2009(Source: MEL Recycle Rate Study 2009)

In 2009 DM recycling equated to a saving of 382,698t of greenhouse gas emissions vs the landfill alternative

For every 1 tonne of paper recycled rather than incinerated / sent

to landfill, 1.32 tonnes of greenhouse gas emissions (in CO2 equivalents) are saved(Source: WRAP)

382,698 tonnes of greenhouse gas emissions saved in 2009 as a result of Direct Marketing recycling vs landfill

22% of all advertising mail in the UK is now posted through RM’s PAS 2020 aligned sustainability services

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarTotal RM Sustainability Services Total UK Advertising Mail Received

Although recycling levels remains above 70%, recycling messages only appear on 26% of advertising mail

UK Advertising Mail Received

0%

10%

20%

30%

40%

50%

60%

70%

80%

Apr-10 May-10

J un-10 J ul-10 Aug-10

Sep-10

Oct-10 Nov-10

Dec-10

J an-11 Feb-11

Mar-11

Perc

enta

ge o

f Ad

vert

isin

g M

ail I

tem

s

Items with recycling message

+5.0% pts

+3.3% pts

Source: Consumer Panel Apr 2010-Mar 2011, UK Primary Advertising Mail ReceivedBase: 1,000 households per month

12 month % point

change

The new deal• Introduction

Our shared ambition with government

• Scope

What and who it will cover (and who it won’t cover)

• Objectives and actions

Waste prevention

Sustainable production & distribution

Recycling

• Governance & reporting

How it will be managed

Scope•The GB direct marketing industry

•All activities associated with physical direct marketing

•Media and channels over which the DMA has control

•Government to engage excluded materials and develop environmental actions to avoid ‘shift’

Inclusions: Exclusions:

Addressed advertising mail Free newspapers and magazines

Unaddressed advertising mail Paid for newspapers and magazines

Inserts Directories

Objectives and actionsWaste prevention

Create a single opt-out scheme for door to door itemsProvide guidance to consumers/local authorities on opt-outDevelop and implement an industry non-production report

Sustainable production & distributionCreate a new industry standard to replace PAS 2020Introduce tighter controls on paper use & supplier managementDevelop an industry carbon calculator

• RecyclingTighter controls to ensure use of recyclable materialsIncrease amount of mail with recycling messagesPromote mail recycling best practice across local authorities (Defra)

Proposed Key Performance Indicators•% Non-production (baseline to be determined)

•% of households opting out of advertising mail

•% of mail posted against new standard

•% of mailers using RM sustainability services

•% of authorities accepting window envelopes

•% recycling rate (70% minimum)

•Carbon footprint indicator to also be considered

Governance•Deal steering group to be established

Assess performance

Review emerging environmental needs

Propose amendments to the deal

•Group formed of:Direct Marketing Association (Chair)

Defra

Royal Mail (TBC)

Other government organisations and industry members (TBC)

•Group to produce annual report and plan

Your opportunity to comment…