A new report states that the retail industry must “work harder and faster” to make a meaningful impact to deliver on climate change commitments. Research from Boston Consulting Group (BCG) in partnership with the World Retail Congress, found that less than 20 percent of major retailers are on track to hit the Paris Agreement climate targets.
The ‘Sustainability In Retail Is Possible – But There’s Work To Be Done’ report polled 37 major retail businesses, including fashion firms, grocers, and those selling homeware and electronics, with annual revenue ranging from 1 billion to 500 billion US dollars.
It found that most large retailers have yet to put in place comprehensive sustainability agendas and that less than 20 percent were currently on track to cut Scope 3 emissions to meet targets for limiting the rise in global temperature to 1.5 degrees. This is significant as Scope 3 emissions, the greenhouse gas emissions that occur in a company’s value chain, typically account for more than 90 percent of a company’s total environmental impact.
When it comes to Scope 1 and 2 greenhouse gas emissions, which covers emissions within a company’s control, the report notes that 40 percent of retailers were on track to meet those targets.
The report notes that the retail sector has a long way to go before it can claim it is truly sustainable, and that there is a need for a “seismic shift in attitudes and business processes to place sustainability at the core of corporate strategy, decision making, and value creation”.
There is also a clear disconnect between retailers’ bold ambitions and their progress on the sustainability journey, added BCG, as only a select few of the companies had reached the stage where they could claim sustainability was core to the company’s strategy, decision making, and value creation. While many retailers conceded that they don’t know how to improve their performance.
Less than 20 percent of Retailers are on track to meet their sustainability targets
According to BCG, firms need to do more to augment and accelerate their responses to tackling climate change, especially plastic packaging. Retailers are one of the biggest contributors to plastic use, accounting for 40 percent of global use. Additionally, retailers are also responsible for more than 25 percent of global emissions, mainly through scope 3.Shalini Unnikrishnan, a managing director and partner at BCG, and a co-author of the report, said in a statement: “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.”
The survey did reveal that around 70 percent of respondents agree that sustainability is a priority for their boards and executive committees and that their leaders are sufficiently empowered to create the change required to meet their goals. Companies were also “nearly unanimous” in believing that sustainability initiatives would drive value in the next five to ten years. With about half believing their companies would invest “whatever it takes” to reach their goals.
However, the report states that some companies are stuck at “sustainability basics,” simply doing enough to comply with regulations and meet the minimum expectations of investors and other stakeholders.
Ian McGarrigle, chairman of World Retail Congress, added: “As the industry moves in the direction of greater sustainability, a focus on progress, rather than perfection, will be critical.”