Retailers tackle climate change

Faced with unique challenges, retailers invent and implement pragmatic solutions

Business, nonprofit and political leaders are addressing climate change at virtual and in-person meetings this week during New York City’s Climate Week. The meetings support preparations for the 26th United Nations Climate Change Conference, taking place in Glasgow the first two weeks of November. At COP26, individual countries, communities and businesses will make or update pledges to mitigate climate change.

While global attention focuses on the most significant sources of carbon emissions — oil and gas, coal, cement, steel, aluminum, and automobiles and transportation — leaders in other less carbon-intensive industries are developing and deploying their own voluntary approaches.

The retail industry, one of the most innovative sectors of the economy and by far the largest, is doing its part. The industry includes large multi-national, mid-sized regional and small independently owned single-store retailers and restaurants. In addition to directly employing 32 million workers, supporting one in four U.S jobs and contributing $3.9 trillion to the U.S. economy, retailers are also inventing and implementing pragmatic climate change solutions.

Sustainability

Learn more about the different ways that retailers are incorporating sustainability into their businesses.

What’s retail doing to help?

With 4.2 million retail and restaurant businesses, it is impossible to identify every effort. There are, however, several broad categories:

Making store operations more energy efficient
It is simply good business for everyone to reduce energy use. Installing more efficient lighting, refrigeration, and heating, ventilation and air conditioning saves money and reduces contributions to climate change. Some businesses use part of the savings to buy renewable energy. Others invest the savings in electric vehicles to reduce vehicle maintenance and operating costs while improving their environmental footprint.

Working with suppliers
More than 90 percent of most retail and restaurant climate impacts originate in their supply chains and are driven by how products are made and transported to stores. As retailers focus on these issues, they are asking suppliers and logistics companies to report and improve their climate and broader sustainability performance, and then selecting these partners based on their progress.

Giving customers more options
Making it easier for customers to buy more sustainable products that are healthier, more durable and energy-efficient, made from and packaged in better materials, and recyclable or compostable is another retailer climate strategy. Retailers sell what customers want to buy. When customers want to lower their own carbon footprint, retailers are happy to help them do it.

Reporting on progress
Three-quarters of the largest retailers provide information on their sustainability efforts on company websites with half addressing specific climate-related activities; 60 percent provide publicly available reports for investors and customers who want to learn more. Some are developing, reporting and tracking progress toward science-based climate targets to guide their efforts.

What complicates the ability to do more?

An individual retailer or restaurant’s ability to address climate change depends on what it can afford, what it can control directly and what it can influence through its purchasing decisions. As a result, different retailers have different options and make different choices about how they address climate change. The solutions that retailers adopt reflect the full diversity of the industry and are as distinctive as the individual businesses and business owners. There are no one-size-fits-all solutions.

Strategies adopted by large multi-national companies are not practical or even possible for independent, single-store owners. Larger retailers that own their own buildings, truck fleets, distribution centers and factories or farms have a broader range of opportunities to directly address climate change than smaller retailers that lease their store space and rely on others to make and deliver products.

Retail Gets Real

Watch a recent episode of our Retail Gets Real podcast on a sustainable brand breaking barriers in the industry.

When a retailer is a supplier’s largest sales channel, the retailer can have significant influence on how those products are made and the resulting climate impacts. Smaller retailers are less likely to be any supplier’s largest sales channel, and even the largest retailers do not always have the influence they would like.

Retailers focused on specific product categories or consumer types also have distinct opportunities to address climate-related issues. Fashion retailers, for example, have different opportunities to address environmental and social impacts in their supply chains than appliance, paint, electronic, or toy and game retailers. Luxury retailers must respond to very different consumer demands than retailers focused on price-sensitive value-based (i.e., cost-driven) consumers or socially minded values-based (i.e., social, political and environmental values) consumers.

What’s next?

As retail and restaurant owners have demonstrated throughout the COVID-19 pandemic and in response to recent severe weather events and wildfires, the retail industry is innovative, adaptable and resilient when presented with global or regional challenges. Retailers are already part of the solution to limit climate change impacts and lead the efforts to mitigate it. We will continue to do so.

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