Research Identifies Retail Sustainability Leadership and Innovation

January 26, 2012

The Retail Industry Leaders Association (RILA) released the first ever Retail Sustainability Report today, highlighting key retail sustainability trends and future directions, and discusses retailers’ environmental, social, and community impacts.

Adam Siegel

“As one of the leading industries to embrace sustainability, it is becoming a core consideration for the retail industry,” said Adam Siegel, RILA vice president of sustainability and retail operations. “Retailers are working to incorporate sustainability into their strategy, operations, workforce engagement, and connection to consumers and communities. This report is a first look at the broader industry’s accomplishments, challenges, and future directions. It lays a foundation to determine where we can go from here.”

The following are four key trends identified in the report. Retailers are:

Working across sectors to achieve sustainability goals. Because expertise is not yet available within their respective organizations, retailers are reaching out to nonprofits, academics, and governments, as well as suppliers, consumers and investors to accelerate sustainable innovation.
Turning from sustainability as a cost- and risk-reduction measure to an opportunity for business growth. Retailers leading the sustainability charge recognize that the benefits extend well beyond achieving business efficiencies. Sustainability programs are increasingly viewed as a source of innovation and differentiation and a platform for new product and market development.
Developing systems for continuous improvement. As retailers build sustainability programs, they have developed management, measurement and IT systems for continuous improvement. Such mechanisms include environmental management systems, supplier “scorecarding” and management training, employee training and engagement, energy and waste reduction goals and sustainability reporting.
Fostering transparency in operations and the supply chain. Opportunities for risk mitigation, coupled with increased public scrutiny, are driving the need for additional disclosure. Reporting on financial information alone can no longer articulate the complexities and intricacies of retail operations and global supply chains.

Data for the report was collected from 2011 sustainability reports of 30 RILA member companies, including grocery and drug stores, general merchandise and department stores, and spanning both large and small formats. Information was also compiled through multiple industry surveys, industry meetings, and company interviews, across all segments of retail. Business for Social Responsibility (BSR) was a key partner in the development of the report.

“RILA’s first sustainability report is an important step forward for the retail industry,” Ted Howes, director of advisory services for Business for Social Responsibility. “Our hope is that RILA’s efforts will inspire retailers around the globe to take action and engage in sustainability more deeply and strategically -- to ensure a healthier bottom line as well as a healthier planet. BSR looks forward to collaborating with industry leaders to ensure that sustainability stays top of mind in the years to come.”

RILA members were also invited to submit case studies for the report, and interviews were conducted with 20 companies – Belk, Best Buy, Gap Inc., H-E-B, The Home Depot, Ikea, J.C. Penney, Lowe’s, Meijer, Petco, PetSmart, Publix, Safeway, Sears, Staples, Target, VF Corporation, Walgreen, Walmart and Whole Foods Markets.

The following are future directions retailer’s say they will explore over the next five to 10 years:

Sustainability will become integrated into all aspects and departments of the business;
The drive to manage supply chain impacts will transform retailer-supplier relationships;
Industry collaboration will become the standard; and
Business models will evolve as consumption habits change.

Retailers identify many benefits while pursuing more sustainable operations and products including efficiency, risk mitigation, new innovations, a way to recruit and retain top talent, a means to develop new product and enter new markets, as well as improved reputation with customers and industry stakeholders.

“One of the biggest takeaways from the report is that creating lasting change in retail sustainability is not something the industry can do alone,” Siegel said. “Retailers are reaching out to nonprofits, academics, and governments as well as to their suppliers, consumers, investors, and communities to provide their diverse perspectives and partnerships and help accelerate sustainable innovation for all.”

GRD Views: Kudos to Adam and the entire RILA sustainability team for their leadership in developing this important piece of industry research.-- John Failla for Green Retail Decisions

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