In our recent white paper, we noted that some cautious optimism in regards to retail sustainability had emerged in the early stages of the coronavirus outbreak. As economic activity has dropped in the midst of COVID-19, so too have carbon emissions. This year, the drop is expected to be between 4% and 7% globally.
Rightly, this has been seen as good news at a time of bad news. But on closer inspection, there are a number of worrying caveats.To keep the earth’s mean temperature less than 2°C above pre-industrial levels, net emissions of greenhouse gases must fall close to zero by mid-century. And if a 4% to 7% drop has demanded the biggest collapse of the global economy for a generation, much bigger thinking is sorely needed.
The global economy, and retail business models, might need to be completely reconfigured.
A problem that shouldn’t be ‘offset’
A great example of the problem with sustainability in retail is the huge popularity of carbon offsetting. Thousands of retailers invest in carbon offsetting, which involves giving money to a green charity that takes some sort of action to lower emissions, such as planting trees or building solar panels.
But the problem with this approach is that it has quickly become a way for businesses to clear their conscience. And the effectiveness of offsetting is murky at best. In 2016, the European Commission found that 85% of offsetting initiatives had almost no environmental impact.
Offsetting is just one example of a typical problem in retail sustainability: box ticking. Brands often hope to find a way of passing the problem to someone else. This approach simply will not change the world; and nothing short of changing the world is required.
However, there is hope for retail sustainability. And like in so many aspects of retail, data could be the answer.
Digitising – and shortening – the supply chain
The pandemic-fuelled e-commerce boom has had many effects on the retail landscape. And significantly, it’s ensured that retailers are even more focused on data throughout their business.
Put simply, with more data – related to products, supply chain and customers – and by using it more effectively, retailers can become more efficient. And efficiency is where the opportunity lies for sustainability.
A retailer that makes better informed, data-driven decisions reduces waste throughout its supply chain – from manufacturing and transport to energy use and waste management. In this sense, better use of data can have an exponential impact on retail sustainability; a markedly different outcome from simply ‘offsetting’ the problem.
Until recently, a big barrier for data’s potential to tackle sustainability was a lack of complete carbon emissions information. Retailers could often see their direct footprint, but couldn’t account for the emissions produced by manufacturers and other suppliers. This is starting to change. Microsoft, for example, plans to launch an emissions reporting standard for suppliers later this year. Other major retailers are already trying to tackle the same issue. If retailers can get hold of emissions data related to their entire supply chain, huge opportunities await. First and foremost, they can become more efficient, reduce waste, and quickly identify where in the supply chain the biggest environmental problems lie.
But also, carbon labelling could become common practice. Placed on foods and goods, labels could guide consumers towards buying greener products. It’s also worth noting how the pandemic is making retailers rethink the length of their supply chains. For obvious reason, supply chain crises erupted soon after COVID-19 broke. And that has seen an inevitable shortening of supply chains for some. It’s even seen growing consumer appetite for brands looking to ‘re-shore’ their manufacturing operations.
Focus on the back-end
Retailers are forever looking for a solution to sustainability that gets the public excited. And all too often this leads to a single-issue focus, like plastics, that doesn’t get to grips with the scale of this crisis.
Better use of data isn’t an easy concept for brands to turn into a green PR stunt. That’s precisely why it matters – it’s a back-end solution, rather than a front-end one.
And it’s in the back-end where real change can happen. Retail needs new supply chains, new business models, and new strategies built around a complete end-to-end view of all of its data.