Sustainability has leaped to the top of the agenda for retailers. The expectations of consumers, investors, regulators, and other stakeholders are rising—and rightly so, given the scale of retail operations and the number of customers they touch. Covid-19 upped the ante further.
Moving from sustainability commitments to action is hard, however. First and foremost, the sector faces a funding gap: Sustainable supply chains and food systems can be more costly than existing ones, which don’t acknowledge the full cost of carbon emissions and other previously ignored externalities. The thin margins of retailers and many of their suppliers make this extra cost a genuine barrier to progress.
Shoppers are a conundrum, too. They say they want progress, but most aren’t changing their shopping behavior; nor are they prepared to pay more for sustainable options, especially amid today’s cost-of-living squeeze. It’s little wonder many C-suite retail leaders don’t feel fully in control of sustainability, particularly when macroeconomic turbulence is putting extra strain on stretched investment budgets.
Yet our work with retailers globally suggests it is possible to accelerate progress on sustainability. Moving from “why” to “how” via the pragmatic approach described below won’t just satisfy the moral and social imperative to act; it will also unlock new sources of value in the long run.
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