The retail industry landscape has rapidly developed and also faced some challenges like globalization, which introduced new competitors, and the digitalization that created an online sales dependency. The surge of Covid-19 aided this rapid digital transformation and retailing businesses moved to online transactions. This also led retailers to integrate ESG (environmental, social, and governance) data for adopting sustainable measures within their retail processes.
In a survey carried out by Deloitte Global, it was found that almost 32 percent of retail consumers are adopting a more sustainable lifestyle. As more consumers move towards adopting sustainable practices in their daily life; retailers need to address this growing mindset to stay relevant. Statistics show retailers having ESG strategies aligned to their business goals are most likely favored forward-looking by potential investors. Progressive CEOs across all sectors of the retail industry are implementing ESG as a solution for less wasteful, cleaner, and more efficient practices.
Sustainability in Retail
Retailers that focus on sustainable practices can attract Gen X, i.e. the younger generation consumers, and drive long-term brand loyalty while protecting the environment. According to the Depop and Bain & Company report on Gen Z revealed, Gen Z’s shopping behaviors are strongly influenced by the brand's commitments to social and environmental sustainability.
Sustainability is beyond product transactions, it creates relationships and allows a variety of authentic stories to be depicted. This will help retailers to increase their audience and connect with more people. Sustainability isn’t the only aspect that matters but it is crucial that it is implemented throughout the entire business ecosystem - from raw materials to product preparation, production chain, and sales.
When all these stages are achieved in a holistic approach, it helps the business to become more efficient while reducing energy consumption. While integrating sustainability, retailers need to focus on all the four aspects, i.e. corporate governance, impact on society, economic and environmental.
Leverage Sustainability in Retail with Integrated ESG Data
Amid rapid developments in the ESG space and increasing demand for improved sustainability practices, it’s significant for retailers to adopt the holistic approach while integrating ESG in the business operations. With every year passing the requirement for reporting ESG is becoming more stringent, retailers need to review both their performance and ESG reporting.
Let’s take a look at some ESG data that will help retailers hit their sustainability targets:
• ESG data helps retailers understand carbon emissions and accurately measure energy consumptions across processes, locations, facilities, and thousands of connected devices. The data of carbon emissions empowers retailers to implement and optimize sustainable measures while tracking the progress in the future which will help to deliver real reductions.
• ESG data has numerous opportunities that help retailers to identify and address pain points like inventory planning and inaccurate demand, supply chain sustainability problems, product surplus waste, packing, manufacturing inefficiencies, etc. This data enables retailers to understand the underlying problems with real-time visibility while helping them drill down into key metrics such as mitigating risks, setting a standard for their progress against competitors, improving the overall quality of production, etc.
• ESG data unlock deep insights that help the retailers with a better decision-making process. These insights aid retailers to track how their business will be affected by climate change and how current processes impact the environment now as well as in the future.
Supply Chain Management in Retail
Supply chain management is one of the most integral parts of retailing. By incorporating an efficient and sustainable supply chain management, retailers can find efficient ways to reduce the overall cost (infrastructure, process, and execution). This can also integrate seamless ways of delivery of products, so that consumers can have quicker access to end products; whilst ensuring there’s a constricted control over inventory, production, sales, distribution of product, and outside vendor company inventories.
Scope 3 emission management in the supply chain has the potential to allow enterprises with limited direct-emissions footprints to make a global influence. It's important to determine which of the GHG Protocol's scope 3 categories apply to the organization company and which of these will have a significant impact on the overall scope 3 emissions footprint. Targets should be aggressively cascaded via companies' supply chains.
Supply chain management overall creates process hygiene within the retailing ecosystem. And implementing sustainable practices within the supply chain goes way beyond just following a green movement. Sustainable practices help us evaluate the best practices and enforce humanitarian processes that look after the world we live in.
Creating a balance between growing consumer demands and sustainability is crucial. There’s a global impact that tips the scales towards a well-recognized global imprint that can potentially destroy the habitat we live in. Implementing a sustainable supply chain helps deliver productivity of work while also cutting down on business process costs. Sustainable practices don’t just aim to integrate environmental and financially attainable practices within the supply chain ecosystem; from product development, packaging, material selection, raw material usage, manufacturing, packing, transportation, and delivery of the product; they ensure the environment doesn’t suffer through our actions.
Let’s look at some benefits of implementing sustainable prices within the retail supply chain ecosystem:
Reduces the Global Environment Impact - Most business owners don’t realize that implementing sustainable practices doesn't mean you have to create an additional effort towards the proper implementation of the process. Most times the only thing required is to create an input and output balance; where the environmental impact is also measured while ensuring high profitability of products.
Supply Chain Seamless Continuity - Improves the overall efficiency of the end-to-end process within the retail supply chain ecosystem.
Attractive for Global Partners that Actively Participate in Sustainable Practices - The world is shifting towards a sustainable mindset, where consumers are being careful about what they invest in. This also means businesses are evolving with the consumer needs to provide for this growing trend.
Faster, More Efficient, High Profits; Better Business - Streamlining a lot of supply chain processes can help improve business efficiency. This can positively impact your total product output. Efficient processes and implementations means you can fast track a lot of the work and meet consumer demand even faster.
ESG reporting for retailers is interconnected with their production and business operations, hence the historical data still plays a significant role. However, the new data is equally valuable as it allows retailers to go beyond the set standard for reporting, enables them to be more forward-looking as well as differentiate themselves.
In the past, the retail industry has been adaptable as well as resilient. However, with changing times and an increase in demand for sustainable practices, the retail industry has to rebuild and evolve again with new ambitions to be more environment-friendly towards the planet, shareholders, employees, and its consumers.