Consumers are demanding real action on climate, and they're becoming more and more discerning about what 'real action' means. For retail and consumer goods companies, there is a unique opportunity to tell their environmental success stories to the public, highlighting the progress achieved on the sustainability front.
These stories of sustainability hold profound significance, contributing to the larger narrative of transformative change across the value chain and fostering positive impacts.
There are four essential action areas to consider:
- Strategy and execution
- Supply chain and transformation
- Sustainability management
- Product innovation
Given the retail industry accounts for over 25% of global emissions and 40% of global plastic usage (due to its vast Scope 3 footprint), now is the time for action with “sustainability considered a business imperative,” according to the latest insights in the Cognizant Building a Sustainable Future for Retail & Consumer Goods report.
Data is the key. For each action area, there are opportunities to put data to work measuring baselines and finding opportunities to reduce waste and unlock savings. Accurate, insightful and auditable sustainability data is critical for retailers and consumer goods companies to succeed in a market calling for greater transparency and accountability.
With sustainability efforts now proving their value in business performance for environmental leaders, investments in data tools will deliver benefits throughout organisations well into the future.
Top internal benefits include enhanced sustainability performance, risk mitigation, cost savings and long-term confidence and resilience. Externally, RCG businesses can see gains in investor and stakeholder confidence, regulatory compliance, positive brand image, and more.
But Australia has some ground to cover when it comes to aligning with international counterparts in the realm of sustainability initiatives. According to the report, 58% of global IT leaders are focusing on supply chain, operations, products and services to deliver sustainability improvements. In contrast, only 43% of Australian IT leaders have embarked on similar sustainability-focused endeavours.
At the same time, 59% of global counterparts indicate that they regularly evaluate the sustainability performance of suppliers, while only 47% of Australians are engaging in the same activity, the report said.
To counter the lack of sustainability momentum, Australian retail and consumer goods companies can take a number of practical steps to make progress across the four action areas.
- Strategy and Execution
A fruitful data strategy will enable companies to evolve across four domains: data, people, process and technology. This will establish integrity in metrics for the market. Our report suggests businesses can adopt two approaches:
- Develop a sustainability data strategy to manage and govern relevant data. Accurate, accessible and trustworthy environmental data is critical to all stakeholders in the value chain to achieve their sustainability outcomes.
- Implement streamlined data processes, prioritising accessibility for relevant stakeholders to drive informed decision-making.
2. Supply Chain Transformation
Transforming operations means reimaging supply chains, and reengineering systems. Our report suggests companies consider these two approaches:
- Connect sustainability data and provide transparency across the supply chain: RCG companies must take leadership in driving transparency and standards from their suppliers and partners.
- Drive sustainability collaboration and education, and set SMART targets and actions with suppliers and partners.
- Large retailers should work with the rest of the supply chain to provide an industry solution that everyone can use. With many small and medium players unlikely to afford investment in improvements, major retailers can achieve quality insights and ultimately cut costs by leading the industry forward.
3. Sustainability Management
Embedding sustainability in the enterprise involves measuring and reducing carbon consumption, reducing waste, and optimising processes. The report suggests companies adopt these two strategies:
- Build new capabilities to measure, monitor, report and model sustainability data: Growing focus on environmental data claims and greenwashing demands for a solid reporting structure across the value chain.
- Understand sustainability data journeys and assess the gaps through them, facilitated by investments in shared Data platforms.
4. Product Innovation
Creating new business opportunities involves inventing and designing new products and services. Our report recommends businesses implement these two measures:
- Provide transparency and invest in circularity to remain relevant to consumers: Increasingly conscious consumers will demand greater transparency and more sustainable products.
- Make accurate, data-based claims on sustainability measures to maintain social license, and rethink products and business models to drive sustainable outcomes.
Future Commitment
These four action areas represent the critical path for every RCG company's commitment to sustainability, resilience and intelligence. With effective data-driven execution, these initiatives not only demonstrate a commitment to environmental and social responsibility, but also serve as a powerful catalysts for long-term success.
