THE RETAIL industry must work harder and faster to deliver on climate change commitments, a report warns.
Survey management consultancy Boston Consulting Group (BCG), in partnership with the World Retail Congress, polled 37 major retail businesses with annual revenues from $1—$500 bn. Grocery, fashion, and homeware and electronics sectors around the world were canvassed.
There appears to be widespread understanding of the competitive sustainability advantages. The survey found that half of the respondents believed their companies would invest “whatever it takes” to reach their goals.
“There may be an inclination to wait for perfect data on sustainability drivers and constraints before starting to act, but that would be a mistake,” said Shalini Unnikrishnan, managing director and partner at BCG, and a co-author of the report.
He says the findings reveal a disconnect between retailers’ ambitions and their progress on sustainability. Few companies could claim sustainability as “core to the company’s strategy, decision making, and value creation”, the consultancy says.
While 60 percent of respondents believed their company’s goals were bold and differentiated, more than half had not set any sustainability key performance indicators (KPIs) — and less than 20 percent were on track to meet limits set at the Paris Agreement.
Many appear stuck at “sustainability basics” — doing enough to comply with regulations and meet minimum shareholder expectations.
The report highlights the need for a shift in attitudes and business processes to place sustainability at the core of corporate strategy, decision making, and value creation. Firms need to accelerate their responses to packaging, which accounts for 40 percent of global plastic use.
BCG presented a three-pronged strategy:
- Retail sustainability targets should carry as much weight as other parameters when embarking on new business opportunities. Leadership must not only sponsor the journey, but be involved and accountable.
- Retailers should strive for end-to-end integration, with sustainability-related KPIs at all levels. Companies should embrace digital technologies and technology to support transparent decision-making.
- Companies must re-imagine their value chains by localising or vertically integrating. Closer interactions with suppliers will be essential, as will collaboration with industry peers.
“As the industry moves in the direction of greater sustainability, a focus on progress, rather than perfection, will be critical,” said Ian McGarrigle, chairman of World Retail Congress.
Companies should focus on small steps and quick wins to drive steady, meaningful change, BCG advises. Industry-wide collaboration will be critical to progress, with “laggards able to learn from leaders”.
Read the BCG report