RILA report identifies retail industry trends in sustainability

The Retail Industry Leaders Association (RILA) has released its second report on sustainability efforts in the retail industry. The "2013 Retail Sustainability Report" highlights the retail industry's progress toward achieving its sustainability objectives and identifies the characteristics of top-performing companies in that area. The project was undertaken with the consulting firm Ernst & Young.

The report presents the results of a survey of RILA's membership regarding the industry's adoption of sustainability programs. Respondents indicated that those programs have produced a wide range of benefits, such as improved customer loyalty, lower costs, and more resilient supply chains. The survey's respondents collectively represent more than 65,000 locations and $1 trillion in global revenue.

The study identified six significant trends:

1. Sustainability teams are growing. Most companies surveyed have full-time sustainability teams. These teams are growing in size, and their reporting levels are gaining seniority.
2. Companies are requiring payback on their sustainability investments of two to three years. Most companies act on sustainability investments that can be expected to yield a two- to three-year payback.
3. The breadth of sustainability activities is increasing. Respondents predict that the sustainability function's responsibilities will significantly increase in scope over the next two years.
4. Tracking of sustainability metrics will increase. Most retailers currently measure energy, fuel, material usage, and waste generation. More than one-quarter of retailers said that over the next two years, they would begin to measure code-of-conduct compliance, water usage, suppliers' compliance with social responsibility standards, renewable energy generation, and usage of chemicals of concern.
5. Three key stakeholders are applying pressure. Pressure for retail sustainability efforts is strongest from employees, competitors, and regulators.
6. There are identifiable attributes of top-performing companies. Certain concrete attributes contribute to the growth and success of a retail sustainability program.

The report is divided into two sections. The first section, "Managing Sustainability," outlines the structure of sustainability teams as well as companies' investment, planning, measuring, and reporting strategies. The data showed that most respondents have full-time sustainability teams, which have been growing in staff size over the last four years. The reasons for that growth are twofold: to keep pace with the increase in teams' responsibilities, and to gain the primary benefits respondents attribute to their sustainability programs, namely reduced costs, brand enhancement, and risk management. Nevertheless, sustainability budgets have essentially remained the same, respondents reported.

Section two, "Implementing Sustainability," discusses operational strategies for buildings and supply chains, as well as stakeholder engagement. Waste and energy reduction are the most common facility-related improvements retailers are undertaking now, but respondents said they expect to pay increasing attention to managing greenhouse gas emissions and water usage, as well as building with green techniques. Supply chain improvements have focused on transportation fuel efficiency, materials (including chemicals of concern), and packaging design. Managing all aspects of the product life cycle, from design through use and disposal, will become an increasingly prevalent practice over the next two years. The survey also found that transparency—that is, disclosing the social and environmental impacts of product supply chains—is a growing practice and remains a key trend.

One of the primary takeaways from the research results is that sustainability programs clearly benefit not just consumers and the environment but also the retailers. "RILA members are committed to implementing sustainability across their organizations because they recognize the inherent business value that those programs generate," says Adam Siegel, RILA's vice president of sustainability and retail operations, in announcing the report's release.

"Sustainability is a business imperative," agreed Craig Coulter of Ernst & Young LLP's sustainability practice. "This report demonstrates that companies are developing the operational strategies and the systems and infrastructures—personnel, metrics, goals, tracking systems, reporting, etc.—to effectively manage and implement sustainability."

Click here to read the full report.