Despite the climate emergency being thrust into the global limelight with COP26, new research shows the challenge retailers face with keeping sustainability top of the agenda. By Karen Peattie
While retailers fought to keep customers safe, keep shelves stocked and maintain sales during the pandemic, new research from UK law firm TLT reveals that they were engaged in another significant battle - the one to keep sustainability at the top of the corporate agenda.
After years of progress, and despite the climate emergency being thrust into the global limelight with COP26, the onset of a global pandemic - coupled with other crises - means that for a quarter (25%) of retailers sustainability has in fact gone down the agenda over the last year. 8% would even go so far as to say it has done so "quickly".
The research, based on interviews with 100 leading UK retailers in October (covering the food and grocery, fashion and beauty, home, lifestyle and leisure sectors), reveals that one-fifth (21%) of retailers say sustainability is not currently important to their business, with 9% saying “not at all”.
TLT’s report, titled Sustainability Matters – putting the ‘eco’ in retail economics reveals the impact of the “great storm” of issues retailers are facing following the pandemic. More than half (59%) admit sustainability has had to take a step back due to Covid-19, with the figure rising to two-thirds (66%) of fashion and beauty retailers.
The current supply chain crisis also comes to the fore as retailers continue to fight to keep shelves stocked and fulfil online orders. Some 70% of retailers also say there is a risk that sustainability will fall down their list of priorities if the crisis continues.
Highlighting the need for sustainability to be embedded from the top down in an organisation, only two-fifths (40%) of retailers say the main person responsible for sustainability in their business has “significant” or “high” influence on company decisions and projects.
Sustainability, meanwhile, is also in a “battle of the priorities” with profits, with the vast majority (77%) of retailers saying their shareholders look at profits before sustainability, and 78% believing that sustainability will never be of equal importance to profit.
In addition, 44% of retailers admit their business sees sustainability more as a cost centre than a cost saver, despite sustainable initiatives – such as shared logistics – having the potential to improve efficiencies, reduce environmental impact and cut costs in the long-term.
More positively, over half (58%) of retailers say sustainability is important to their business, and 35% say it has moved up the agenda over the last year, while 60% say their approach to sustainability is becoming less organic and more strategic. Three-quarters (72%) have announced sustainability improvements, one-fifth (21%) are giving customers a choice between standard and sustainable deliveries, and 13% have launched a new line of sustainable products separate from their standard offering.
The increasingly high-profile area of rental and resale also comes to the fore, with 19% of fashion and beauty retailers and 13% of retailers in the lifestyle and leisure sectors launching their own rental or resale service.
Howard Beach, partner at TLT, comments: “Our research reveals just how vulnerable sustainability is to other priorities facing the retail sector at the moment.
“These other pressures – like the supply chain crisis and staff shortages – are likely to continue for some time, so there’s an urgent need to find a way of balancing these demands. Retailers need to appoint people with the right expertise who can set the right strategy and oversee its implementation. They need to have credibility and a voice that is heard at the highest levels of the business.
“At the same time, this isn’t something that can fall to just one person or team. It needs to be part of how the business operates, and people need clear communication and support in their roles. Simply put, sustainability cannot afford to lose this battle of the priorities to the extent that it has done for a quarter of retailers over the last year.”
Meanwhile, just 16% of retailers – and 10% of grocers – are “very confident” they will meet the expectations of the Competition and Markets Authority (CMA) when it investigates misleading green claims this year.
The finding comes as 62% of retailers say they are under pressure to make their position on sustainability more visible, and 59% are becoming more vocal about their sustainability credentials – despite 52% admitting it’s impossible for retailers to know if they’re doing enough to say they’re sustainable.
TLT’s Sustainability Matters – putting the “eco” in retail economics report identifies three types of retailer:
- Safe bets (38%) are increasingly vocal about sustainability and confident about the CMA
- High risks (21%) are increasingly vocal but not confident about the CMA
- Slow movers (41%) are not becoming more vocal
The report also highlights the fact that the biggest pressure to be more sustainable is coming from the Government and regulators (58%), closely followed by customers (56%), shareholders/investors (55%) and the media (45%).
Some 59% of retailers are becoming more vocal about their sustainability credentials, while just one-fifth (19%) have taken the bold move to position themselves as a “sustainable business”.
Highlighting the growing legal risks associated with green claims, three-quarters (73%) of retailers say customers misunderstand claims about sustainability, while one-fifth (20%) suggest they do so “often”.
TLT’s research also reveals that many retailers are significantly more concerned about the PR risks (62%) of “greenwashing” than the legal risks, with only 11% worried about civil claims and 11% worried about regulatory prosecutions.
According to retailers, the biggest barrier to preventing greenwashing is competing priorities (45%, rising to 54% for home retailers), followed by the time it takes to do what’s needed (39%, rising to 60% for grocery) and a lack of budget (33%).
One-quarter (27%) of retailers blame a lack of accepted benchmarks and definitions for terms such as “green”, “ethical” and “sustainable”, while one-fifth blame a lack of in-house skills (20%) and a lack of board-level support for sustainability (19%).
Mr Beach points out that the messaging from the CMA has been very clear. “The CMA has already announced that it is prioritising the fashion industry as part of its full-scale review this year," he notes.
“The review should be a concern for all retailers who arenot only promoting their own businesses but also repeating or relying on the sustainability claims of their suppliers. Retailers who haven’t already done so need to familiarise themselves with the CMA’s Green Claims Code and its list of 14 questions.
“They should review their internal procedures to identify where the risks might be and what changes might be needed.”
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