PAID FOR POST
With sustainability an ever-increasing priority for consumers, retailers must ensure they are at the forefront of all change and not left behind when it comes to the green economy. Gowling’s Jocelyn Paulley highlights the key challenges for the sector
For retailers, sustainability has become a core value to ensure that they continue to be attractive to increasingly discerning and ethical stakeholders and see it as a key driver to economic growth.
New legislation is continually being introduced internationally that impacts retailers and their suppliers, driving them to put sustainability and the use of commodities in supply chains at the forefront of their operations. These new pieces of legislation will increase both complexity and cost to doing ‘responsible business’.
We have seen retailers try to manage their environmental impact in a variety of ways, including increasing lifespan of products, traceability, being sustainable in every-day retail practices, switching to sustainable packaging alternatives, transport, collaborating with key suppliers – creating a circular economy.
Yet with change comes some obstacles to overcome.
Challenges with sustainability
- Supply chain – Retailers must be accounting for emissions that are embedded in the supply chain. This can be tackled by working closely with suppliers to accurately measure supply chain emissions, and prioritising sustainable sourcing and transport for their products.
- Cost – The first step will always be to look at low-cost, high impact solutions to lower energy use and looking at whether funds and grants are available for higher-cost solutions.
- Greenwashing – Some retailers over-communicate their goals before they can demonstrate any progress, which can ultimately be damaging to the company’s reputation.
- Transparency and measuring impact – Organisations that fail to record and reduce their emissions risk losing a competitive edge, and ultimately being left behind in the green economy.
- Retrofitting or demolishing – Although retrofitting (making changes to an existing structure) is seen as the more sustainable option, it also comes with challenges related to costs and acceptance of change from the public and existing estate owners.
- Offsetting – Some companies try to reduce their impact by offsetting their emissions without tackling the underlying problems, which is not seen as good practice.
Who picks up the cost?
It is often unclear whether the obligation to pay for net zero initiatives is on the retailer (or its suppliers), or whether it is in fact passed on to the customer.
It seems the case that some customer segments are willing to pay for it, but the appetite of premiums will vary wildly between brands and sub-sectors of retail.
The way forward
Although there are myriad challenges to overcome, there is a sense of desire – and progress – for retailers to reach net zero.
While the issue and solutions still feel quite new, words now need to be replaced with action.
Given the other challenges retail has faced in recent times, plus the inherently low profit margins, only time will tell just how quickly real headway can be made.
Find out more about Gowling WLG’s retail expertise here.
Jocelyn Paulley is co-leader of Retail & Leisure Sector (UK) at Gowling WLG
