Transparency is key in retail's environmental crusade

Editor’s blog: I can see clearly now… retailer sustainability starts with transparency

Last year, I started touting the line that sustainability in retail starts with efficiency. The more retailers can tighten their supply chains, reduce waste, gets things right the first time and cut out the unnecessary, the better that will be for the planet.

But I think I only addressed half the argument.

Sustainability in retail, it has to be said, also starts with transparency. It sounds obvious when you say it out loud, but nevertheless it doesn’t change its importance.

And I’m fearful the wider retail industry hasn’t quite realised how crucial boosting transparency across their supply chains is, particularly as a raft of new legislation comes into play over the coming months.

If retailers don’t know what their carbon emissions currently are and are unsure of what their planetary impact is up and down the entire supply chain, then how are they to know if they are improving? What is more, they will soon need to understand this all in forensic detail and report on it, with legislation such as the European Union Corporate Sustainability Reporting Directive and regulation to prove they are operating with deforestation-free supply chains on the horizon for 2024.

I’ve been trying to find a way to write this for a while – since I attended an exclusive retailer event in London in March, held by tech company Segura. More on that shortly, but some research out this week has given me the impetus required to put pen to paper.

Planet Tracker

This week, Planet Tracker, a non-profit financial think tank that produces analytics and reports “to align capital markets with planetary boundaries”, has helped frame the transparency importance argument even more clearly.

Its report looking at 3,900 companies across the textile supply chain, specifically, urges all retailers to start actively engaging with suppliers and manufacturers – if they have not done so already – to help them as they work to reduce carbon emissions.

It rightly suggests regulators are adopting an increasingly aggressive approach to ‘green’ claims in the textile industry – making it more important than ever for investors to demand greater transparency on the textile value chain.

Planet Tracker also calls on retailers to work with their supply chain partners to improve traceability and environmental impacts, adding that frequent outsourcing of manufacture leads to poor supply chain visibility and limited direct control of most of the negative environmental impacts associated with the industry.

Without significant efforts by the textile retail sector to work with their supply chain partners and “follow the thread” of the supply chain while pushing for real change, it argues, retailers are going be regulatory exposed.

Richard Wielechowski, senior investment analyst for textiles at Planet Tracker, notes that green claims from brands “are meaningless when the clothing they sell contributes to accelerating global warming and polluting water supplies with toxic chemicals”.

“That’s why Planet Tracker is calling on investors to pressure retailers to work with their supply chains as they look to reduce their negative environmental impacts,” he adds.

“Brands can for example help via direct funding or order guarantees and together with their suppliers drive meaningful action across the whole value chain.”

Encouragingly, several of the retailers and retail folk I have spoken to lately are on the transparency train. John Lewis Partnership (JLP) director of ethics & sustainability, Marija Rompani, told me how JLP wants to take suppliers on the journey of improvement with them – and for that to be achieved successfully, supply chain transparency is essential.

The British Retail Consortium’s sustainability lead, Andrew Opie, told Retail Technology Show delegates in April that underpinning green claims with clear evidence is going to make major improvements to the industry’s environmental progress.

And Abel & Cole’s sustainability boss, Stefanie Sahmel, rolled out the “you can’t manage what you don’t measure line” in an interview with me. She is perfectly right, of course.

Tech to help

As I mentioned earlier, Segura, which we featured on Green Retail World last week for its sterling work in setting out a legislation guide for fashion retail, is at the heart of this debate. And it is making some great strides in helping boost transparency in the supply chain for a growing number of retailers and brands.

Among other things, Segura’s software helps retailers map out their supply chains, centralise supplier reporting, and automate collection of data, providing one platform for supplier assessment and performance.

The Segura event I attended in the spring was also attended by many of the UK’s largest fashion retailers, who joined in discussions about potential problems arising from not mapping out supply chains. It was agreed supply chain transparency is the logical place to start with a wider Environmental, Social and Governance (ESG) strategy, and those in the room welcomed the forum for debate.

We spoke about how a breach of legislation potentially incurs a huge financial impact through not only fines, but also costly investigations and general disruption to business-as-usual processes. We spoke about how access to finance in retail is now coming with ESG strings attached – with organisations having to prove they are meeting certain criteria to gain discounts on loans and other borrowings.

All of this should be shaping retailers’ thinking today – businesses need to be combing through their supply chains and building a clear picture of all the components comprising them if they are to keep trading successfully in the future.

There are several companies other than Segura that can help with this, including TrusTrace and Green Story, all offering different services and tools to support retailers on their respective journeys. Indeed, we’ll feature the latter in our Greener Retailing Champions series in the coming weeks, so please look out for that.

Well mapped-out supply chains

It’s not an easy area to rank, but it is safe to say River Island is one of the most progressive UK fashion retailers in terms of building transparency through its supply chain.

At the Segura event we heard about some of the processes the business has implemented to make significant strides in this space. It operates with very open communication channels, giving suppliers the option to regularly talk to its team and help shape their working partnerships around use of the Segura system and how to increase transparency.

River Island is two and a half years down the line working with Segura, and Adrian Stevenson, who looks after ethical trade at River Island, said 200-plus own brand suppliers are now on the system. The more data put on there, the more powerful the platform becomes, he explained – and it allows the retailer to monitor the progress its suppliers are making in terms of who they are working with and the materials used.

He said being sustainable, transparent and compliant is “key to moving forward – without that you’re not going to be able to trade”.

“That transparency piece is just huge,” he added, in what should sound as an alarm bell for any retailer not yet exploring how they can improve this area of their operations.

River Island runs training sessions every two weeks on processes for suppliers – covering how they and their factory and vendor partners process orders and use the Segura system. This is currently done digitally by River Island, but there are plans to do this “in country”, according to Stevenson.

There’s a long way to go for all fashion retailers, including River Island, to get full transparency. But forums such as the one Segura hosted so well in March can give retailers the opportunity to share best practice and tackle the challenges together, which is going to be crucial in making significant progress in this space.

After all many in UK fashion retail use the same international suppliers.

Pentland Brands started working with Segura earlier this year, and Green Retail World covered news of Reiss’s partnership with the software company just yesterday. All of this is indicative of the thirst and need for fashion retailers to work more closely with their suppliers and find ways to increase supply chain transparency.

It is all in the name of environmental and ethical trade progress. And, alongside making general improvements to business efficiency, I’m pretty convinced this has to be the place to start in any retailer’s eco strategy.

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Ben Sillitoe, editor, Green Retail World (@bsillitoe)

[Image credit: Green Retail World]

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