Sustainability initiatives at retail require team effort. Teams representing merchandising, operations, marketing and supply chain all play an integral part in carrying out sustainability efforts.
For these initiatives to succeed, the sustainability team must reduce distraction for commercial and operational teams by setting clear, prioritized commitments and targets and taking the necessary steps towards their implementation.
The Power of Partnership
Implementing retail sustainability initiatives can be an immense task, requiring executive teams to balance the needs of multiple stakeholders while finding solutions with both short- and long-term impacts. Achieve this requires taking an open approach - which many organizations struggle with achieving; as it’s hard to show achievements in an engaging way that builds consumer trust. Prioritization becomes difficult due to an abundance of sustainability themes; finding collaborators also can be tricky.
Partnership is increasingly the solution to complex ecosystem challenges, especially when addressing climate change - governments, investors, local communities and even other companies can come together as allies in fighting this threat together. Partnership can especially prove powerful when it comes to climate change mitigation - where required changes would be too great for any one organization or company alone to implement alone. Retailers increasingly understand this is integral to their business strategies.
Forming these relationships presents the unique challenge of ensuring both parties share similar agendas; otherwise collaboration may quickly fizzle out. A good place to start is creating a shared vision and setting aspirational goals which are both achievable and exciting. Furthermore, sharing risk/reward and outlining roles/responsibilities should all help facilitate effective collaboration.
Commercial and operational teams may view sustainability as something done to them instead of something they need to drive themselves, creating the challenge of engaging their teams with sustainability in a meaningful way so they feel empowered to make hard trade-offs and difficult decisions required for real progress. Achieve this requires dialing back ESG noise by including sustainability as part of daily decision-making processes and practices, providing clear accountability mechanisms and targets, and giving these teams clear accountability measures and targets.
Why Collaboration Matters
Companies whose leaders consider sustainability an integral value proposition will find collaboration key to their success, but it can be challenging when dealing with disconnected systems, siloed teams and inefficient processes. Such organizations will require extensive changes to both infrastructure and internal working practices for effective sustainability initiatives to take place.
Success lies in ensuring all stakeholders share a single purpose and vision, which requires selecting participants carefully at every step. When we advised the dairy industry’s Sustainable Apparel Coalition, for instance, participants were chosen through an intensive interview process that targeted only promising companies within its sector. Walmart hosted its inaugural meeting where Patagonia founder Yvon Chouinard discussed his business model - this created a powerful coalition among key industry figures that set aggressive targets while driving significant behavioral changes within operational behavior.
Collaborations must also be carefully designed to avoid conflicts of interest, which is best achieved by engaging independent project management specialists who possess proven success in building trust between different stakeholders. Furthermore, these experts should have experience handling tradeoffs that arise when sustainability goals conflict with business priorities.
Successful collaborations aim to unlock natural ecosystems’ full system value. However, this can be a difficult challenge given pressures from short-term incentives which encourage businesses to extract value for themselves through processes such as the destruction of pristine forests. To counteract this trend, collaboration models must go beyond individual projects by including local communities as integral operational partners in extended collaboration models.
Notable Collaborations
Successful collaborations transform shared visions and individual passion into action plans that provide immediate returns, such as cost savings or incremental revenues from selling greener packaging products. Such initiatives allow companies to justify sustainability investments to investors and boards that govern them.
Retailers operate at the end of long and complex supply chains, which means that retailers cannot effectively implement sustainability practices without their suppliers also playing their part. For instance, 95% of greenhouse gas emissions associated with retail are Scope 3 indirect emissions which cannot be addressed without supplier participation (Kang, Germann & Grewal 2016).
Sustainable Apparel Coalition stands out as an outstanding retail/supplier collaboration. They created the Higg Index as a measurement tool to enable apparel brands and their suppliers to compare environmental performance outcomes such as energy efficiency, fabric waste reduction and sustainable raw material sourcing. This index drives improvement on all levels - company, product and factory level, while creating an incentive for “race to the top”.
Industry-wide initiatives are another effective means of driving sustainability forward. The Breakthroughs 2030 Retail campaign, for instance, encourages retailers to set ambitious carbon neutrality and responsible sourcing goals - Walmart and Best Buy have joined this initiative as founding members, hoping that by sharing data, providing leadership support, and taking advantage of supplier networks they will have more success with reaching climate goals faster.
Many extended collaborative models also involve noncorporate stakeholders, such as local communities and NGOs that represent them, in their operation, which can result in innovative partnerships to reduce emissions, protect biodiversity, improve water resources and develop alternative energy sources.
Technology Companies
As sustainability issues become more complex, companies must partner together to find solutions. Walmart works with suppliers to establish sustainability goals and help them meet them using various tools; one such tool enables suppliers to measure their carbon footprint while also seeing the effects of reduction. Furthermore, Walmart offers calculators which identify areas for improvement while making a case to management for change implementation.
Retailers sometimes work with innovators in product or technology spaces to find creative ways of meeting sustainability challenges. Carrefour, Metro, Kroger and Australia’s Woolworths teamed up with Loop, an industry pioneer for reusable packaging programs, to reduce waste generated when purchasing consumer products such as shampoo, dishwashing tablets, jam or beer from retailers like Loop; customers then return their packaging back to Loop so it can be reused again - creating a collaborative effort to cut costs while encouraging responsible consumption practices.
Collaborations are crucial because they enable retail brands to take actions which would otherwise be impossible on their own. Specifically for large retailers with extensive supply chains located around the globe, complying with social and environmental standards can be daunting task.
These challenges won’t go away any time soon. Younger consumers increasingly expect companies to treat people and the planet fairly, investors increasingly prioritise investments with strong ESG records, and regulatory pressure continues to mount. Retailers understand sustainability as a core value that drives differentiation for their business - yet too often sustainability initiatives don’t receive adequate ownership by commercial or operational teams, making orchestrating change at scale difficult.
Facilitating Green Retail Innovations
Retailers play an essential role in sustainability chains, yet many find it challenging to effectively address issues beyond their control. Therefore, retailers must work collaboratively with suppliers and other players along their value chains in order to make progress.
Collaboration must extend into sourcing offices, where brands and retailers collaborate with vendors who operate factories that share one goal: manufacturing products at the lowest possible cost while meeting consumers’ increasingly stringent environmental impact requirements. Walmart recently instituted a program that helps its suppliers assess their own sustainability efforts through calculators that measure carbon emissions (with targets set for further reduction) from each activity taken by suppliers.
Technology companies play a pivotal role in protecting the environment. Advanced point-of-sale systems can monitor plastic bag use at checkout and reward those who bring in their own reusable bags, while supply chain digitisation tools enable businesses to assess environmental performance of products, their ingredients, production processes and production locations as well as any adverse impacts they might have on endangered species.
At times, the biggest obstacles to reaching sustainability goals can be internal retail teams and customer demand. Many retailers struggle to convince shoppers that sustainable options exist - until they can show that sustainable options are readily available they won’t change their shopping habits.
Consumer goods companies are making strong commitments to sustainability that require collaboration with retailers, such as phasing out plastics and reducing food waste. Retailers will need to provide shelf space for alternatives as part of a recycling loop; and for food waste reduction they’ll work with suppliers on redesigning product designs and packaging reengineering projects.
In Conclusion
Collaboration is key to achieving sustainability goals in the retail industry. Retailers cannot effectively implement sustainability practices without their suppliers also participating. Successful collaborations transform shared visions and individual passion into action plans that provide immediate returns, such as cost savings or incremental revenues from selling greener packaging products.
Going forward, retailers need to continue to work collaboratively with suppliers and other players along their value chains to make progress. Many challenges remain, including the need to convince shoppers that sustainable options exist and the need to address internal retail teams and customer demand. However, the increasing importance of sustainability to younger consumers and investors, combined with mounting regulatory pressure, means that retailers cannot afford to ignore sustainability. By working together, retailers can make progress towards a more sustainable future.