goals is a key ingredient for a successful retail
Sustainability goals signal commitment, provide strategic direction, and
stimulate innovation. As with all business functions, well-articulated goals
can drive progress, excite internal associates, and engage stakeholders.
There are several important elements for developing and achieving retail sustainability goals: focus on material topics; set science-based, absolute, and long-term goals; publicly articulate and track goals; align with business goals, and quantitatively link to profit goals.
Material topics. There is a current trend away from incremental goals on a long list of topics, and instead channeling efforts into ambitious, long-term goals for a small number of material topics. Many retailers are taking up this trend, or even leading it outright. Retail's most important topics arise within its supply chains, far beyond its direct operations. With vast, complex supply chains, it is highly efficient to focus on topics where retail can drive large scale changes, such as responsibly sourced commodities, eliminating certain chemicals from consumer goods, or reducing emissions from electricity and fuel.
Science-based targets. The
retail sector ranks fourth in the number of companies that have signed on to set science-based targets for greenhouse gas emission reductions. Setting science-based targets is an explicit acknowledgement of the need for business to: operate within certain environmental boundaries (such as emissions that limit global temperature rise to 2°C) and social foundations; consider longer timelines; and take a broader understanding of
To select material issues, Gap Inc. assesses the importance “to society and our interested stakeholders” and relevance “to Gap Inc.’s scope of operations and ethical commitments.” At Best Buy, material issues are those at the intersection of where “stakeholders want Best Buy to lead” and the issues “that significantly affect our business.”
To set science-based (also known as context based) targets, companies set targets “aligned with the level of reductions science says is necessary to prevent the worst impacts of climate change.” The group
Sciencebasedtargets.org—which aimed to enlist 100 companies to set greenhouse gas reduction targets based on the latest climate science, and now has 160 companies signed-up—supports companies with a series of guidance documents and
Retailers committed to establishing such targets include H&M, Marks and Spencer, Woolworths, and Kingfisher. Industry collaborations and leadership initiatives increasingly emphasize science-based targets, such as the
We Mean Business coalition of 589 companies and investors.
Public goals. Improving reputation and increased consumer loyalty are among the top benefits for companies that publically report on their sustainability goals. These benefits are particularly important for retail. Starbucks, for example, recognized the link between sales and consumers' access to information on its sustainability initiatives. The company ensures baristas can speak knowledgably about its ethical sourcing program and other commitments. The number of retailers publicly reporting on sustainability goals, per the
GRI guidelines, increased twenty-fold between 2001 and 2013. Seventy-five percent of S&P 500 companies report on sustainability today, a sharp increase from twenty percent in 2011.
Ambitious, long-term goals. Companies with more ambitious goals achieve the
largest impact reductions, yet have a lower rate of success (below sixty percent, relative to pragmatic goals). Given the potential for greater impact reduction, meaning, and positive attention,
aspirational goals are finding a place in retailer's strategies—from powering an entire company or supply chain with renewable energy, to farming methods that restore the land and the climate, to others still. As RILA's Leadership Model illustrates, many retail leaders have set aspirational goals. Kroger, for example, committed to move all retail locations toward zero waste. While companies may face short term investment barriers when instituting long term goals, there are benefits to meeting commitments. According to the CEO of the fish processor
Espersen Group, the initial loss of some of its supply when it committed to use only legally caught fish was outweighed by its ability to demonstrate that it was a trusted supplier to customers such as Tesco and McDonald's.
Link to profit goals. Business objectives often link directly with sustainability goals on water, energy, and sustainable product sales, among others.
Guidance from the 43 companies in the UN Global Compact
LEAD group recommends linking each sustainability goal to revenue generation, productivity, or risk management. Flooring manufacturer Mohawk reports progress on its 2020 goal to reduce water intensity "because water conservation initiatives… also contribute to expense reduction—a key
How Do Retailers Set Sustainability Goals?
Identifying material, high priority topics is a critical first step. Retailer's goals address the supply chain, product attributes, and even business practices such as innovation and employee engagement. Sustainability goals set by thirty of the
largest retailers touch on one or more of seventeen topics. Most goals focus on climate impacts and energy use, with goals on food and agricultural impacts second in popularity. One-third of goals focus on the retail supply chain, while retail operations were the focus of two-thirds of the goals. Ninety percent of the retailer goals analyzed were absolute, with only a small proportion of relative or intensity-based goals.
RILA offers guidance and important considerations for retailers when setting sustainability goals:
As one example of how to achieve goals, Alcoa’s business units each create a roadmap—an outline of what they must do today to succeed on a particular goal by 2030. This helps to break long-term goals into actionable steps, and help align the organization. Alcoa’s roadmaps include “known technologies, unknown technologies that still need to be invented, and the capital costs and the operating impact of getting to the goals.”
enable retailers to benchmark their goal setting, RILA and the CRC’s Retail Sustainability
Management Leadership Model
includes a specific dimension on sustainability goals:
relevant resources, case studies, and collaborative opportunities are listed
below. RILA’s Sustainability Executive
more resources on governance and executive engagement.
Retailer deployment examples
Collaborative opportunities & other resources
www.rila.org/sustainability for more tools and resources.