Retailers are going through a period of environmental awakening, but some businesses are progressing further with retail’s green agenda than others.
At Retail Technology Show 2023, the British Retail Consortium’s (BRC) food & sustainability director Andrew Opie called out the areas of immediate focus and the reasons why. He suggested these are strategies and priorities that will be good for the environment, but also positive for the businesses establishing them. Green Retail World picks out the highlights…
Tech can help (and sometimes it doesn’t)
Opie said retailers are being “bombarded” by IT companies with information about tools that can potentially help drive improvements from an environmental, social, and governance (ESG) perspective.
“There are great platforms out there, but some that aren’t so great,” he explained.
“In terms of Scope 3, we’re seeing really quite sophisticated tools that measure this most important part of carbon emissions.”
Opie called out some incarnations of artificial intelligence (AI) as allowing customers to make better choices, and he talked up the evolution in digital labelling that can help drive better transparency of product provenance.
“There’s a huge investment in innovation in this area to help retailers have a really good conversation with customers.”
Collaboration in the supply chain is a must
Retailers will never reduce scope 3 carbon emissions without cooperation across the supply chain, according to Opie.
He said “there’s a really great conversation going across different supply chains” in terms of tracking downstream to find the primary producers and educate them on what carbon emissions are and how they can reduce them.
Opie hinted at more initiatives to come in relation to greater collaboration in the UK on objectives on scope 3, and this is one area the BRC is looking to educate and build traction via its Climate Roadmap, which now has more than 85 retailers signed up. Opie claimed the US and Australian retail trade bodies are looking to replicate the model.
“It’s one of the biggest nuts to crack, scope 3 – there’s great work going on in food but less in non-food which we’re looking at.”
The importance of efficiency and finding new retail models
As Opie said, supply chain management is what retailers are built on. And improvements and efficiencies they can make in existing operations will be beneficial to retail’s green agenda.
“Anything that cuts waste is easy to demonstrate to the board that it’s worth investing in because it’s a cost saving and its delivering benefits on sustainability – a real sweet spot,” he noted.
“Everyone always talks about sustainability being so expensive but most of sustainability initially is about cutting out waste and doing all the good things in the supply chain you should be doing to begin with.”
Opie also talked up new models of retailing that can help shift the dial on sustainability improvements in the industry. Rental, repair, and more circular practices are filtering into retail businesses – and all of this can reduce the environmental impact of consumption, while bringing additional revenue streams.
“As well as having the conversation on how our consumption has an impact on the planet, retailers will [need to] think what’s the next model alongside traditional sales models where [they] can offer a different type of approach?”
Legislation, regulation, and finance
Opie said the sustainability dialogue in retail has changed. That is part of the reason for the emergence of the industry environmental awakening Green Retail World has been tracking over the last two and a half years.
“Five to ten years ago the focus was on consumers and how to take them with you,” he commented, adding that the pressure is now coming from mounting regulation as well as the the financial institutions shaping investment strategy on sustainability and ethics.
“As well as the customer right at the heart of everything you do, we’ve got the added pressure from regulators and the financial institutions.”
He continued: “That is putting pressure on retail businesses thinking about how to secure good financing going forward.”
Regulation “coming down the track”, as Opie put it, includes next year when big public limited companies will have to lay out plans for their transition to net zero.
“You will have to have a statement that says this is how we are going to take our business to net zero – in this case it’s UK government target of 2050,” he said.
There are also pending commitments around deforestation coming in from the Department for Food & Rural Affairs. Retailers will have to prove their supply chain is not involved in areas that are driving illegal deforestation – a bill has gone through parliament and the consequent secondary legislation is imminent.
“If your business isn’t sustainable you can forget about getting finance from [financial institutions],” Opie warned.
Transparency there for all to see
Green Retail World editor, Ben Sillitoe, is brewing a wider piece about transparency being the core strategy in wider sustainability work. That is coming soon, but Opie’s comments at the Retail Technology Show supported the theory.
Mandated carbon reporting, and legislation around ethical labour as part of the modern slavery statement already exist, which is pushing retailers to look into their supply chains and therefore increase transparency. But this need for openness is only set to grow as businesses have to prove their practices are sustainable.
“The government and regulation piece is for business to be absolutely transparent about what they are doing and you underpin that by being able to report and demonstrate how you are taking those processes seriously,” explained Opie, who described it as “absolutely key going forward”.
The government talks about a “sunlight of disclosure”, said Opie, or opening up businesses to see what they are doing. According to the BRC director, this is the government saying “you can see what that business is doing, you make a judgment call if you want to shop there”.
This is relevant around the tightening scrutiny on marketing claims and the Competition and Markets Authority’s Green Claims Code aimed at stopping greenwashing.
Opie said: “You’re responsibility as a retail business is not to deceive the customer with claims you are making with products you must be able to underpin them.
“This seems to be the right way because not only do you take spurious claims out of the market which shouldn’t be there in the first place but you encourage retailers to make claims that are backed by evidence and actually demonstrate they make a difference.”
Once again, lots of food for thought, but it looks increasingly as if it will become more difficult to succeed and grow for retailers not adopting sustainable thinking.
“Any retailer not up on the CMA code absolutely needs to [be],” Opie cautioned.
“They’ve just put a bill through parliament to up the ante in terms of what fines could be [up to 10% of global turnover]. I think that will start to focus minds.”
[Image credit: Green Retail World]
