Can retail solve its indirect carbon emissions problem?

Discussion
Photo: Getty Images/panaramka
Apr 15, 2022

A survey of major global retailers finds that less than 20 percent are on track to cut their Scope 3 emissions — those related to activities outside their operational control — by enough to meet the 2015 Paris Agreement targets for limiting the rise in global temperatures to 1.5 degrees.

Scope 3 emissions typically account for over 90 percent of a company’s total environmental impact, according to the report from Boston Consulting Group (BCG) in partnership with World Retail Congress.

Scope 3 emissions are more challenging because they include all the emissions generated to make the products that retailers sell (upstream emissions) and the emissions that customers create by using and ultimately disposing of the products that they purchase (downstream emissions),” Scot Case, VP of corporate social responsibility and sustainability at the National Retail Federation, wrote in a blog entry last fall.

To reduce upstream emissions, suppliers are being encouraged to increase the energy efficiency of their operations and use more sustainable materials for products and packaging.

When it comes to downstream emissions, some retailers are making it easier to buy more energy efficient products. Some are also offering more durable products that last longer, making it easier for customers to return used apparel for recycling or resale, or exploring reusable and refillable packaging, according to Mr. Case.

In a recent blog entry, Kathleen McLaughlin, chief sustainability officer, Walmart, noted that the retailer has helped suppliers learn about energy purchases. Walmart also provides enhanced financing and early invoice payments available for private brand suppliers who set science-based emissions targets in line with the Paris Agreement.

Ms. McLaughlin noted, however, that Scope 3 emissions are “notoriously difficult to measure” given that the calculation takes in “multiple variables at every stage of the production, transportation and consumption of millions of items.”

BCG urged closer collaboration with suppliers and industry peers as well as prioritizing sustainability targets at the same level as costs and profits. BCG’s survey found that 54 percent of retailers have not set sustainability key performance indicators (KPIs) across their businesses. The consultancy wrote, “Retailers that perform well along the governance dimension do two things consistently: they regularly publish KPIs internally, and they embed sustainability metrics in their business reviews.”

DISCUSSION QUESTIONS: What advice would you have for retailers around reducing their Scope 3 or indirect greenhouse gas emissions? What are the quick wins versus the harder-to-address challenges?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Transparency will be on the increase in tandem with stakeholder expectations and this is a clear opportunity for leadership that can pay dividends, literally and figuratively."
"The magnitude of the problem is largely in the hands of the fashion industry and the consumer."
"In a way, it’s going to require a blockchain of data with hundreds and thousands of suppliers to commit to, which will be extremely arduous."

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8 Comments on "Can retail solve its indirect carbon emissions problem?"


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David Spear
BrainTrust

Most organizations have done a decent job with Scope 1 and 2, but few have attempted Scope 3. It’s incredibly difficult because, in essence, it’s the Full Monty — the entire life cycle — requiring both upstream and downstream data provenance. In a way, it’s going to require a blockchain of data with hundreds and thousands of suppliers to commit to, which will be extremely arduous. My advice would be to develop your strategy, gain agreement on a few KPIs with your vendors and then start to gather and collect data against those metrics. Each year, refine the strategy with your vendors and agree on a couple more KPIs that make sense for the vendor community. Over time, Scope 3 data will become more rich and new opportunities will arise from this coordinated collaboration with vendors.

Mark Ryski
BrainTrust

This article contains a number of good ideas, and I would add including an environmental manager on the senior leadership team. For smaller firms, designate a manager to allocate time to focus on ways to improve environmental sustainability. Retailers could/should also get input from their customers about their own environmental sensibilities. This could help inform the retailer of the kinds of areas that would likely be supported by their customers. All stakeholders need to play a role in helping to reduce environmental impact.

Brian Delp
BrainTrust
7 months 22 days ago

Buy-back and resell programs are picking up steam recently. This is a clear tactic to impacting downstream emissions by extending the lifecycle of the product and diverting materials from landfills. Target announced ThredUp recently, following Nuuly from Urban Outfitters, and IKEA’s buyback program as some examples. I expect to see more of this as marketplaces also rise in influence.

Phil Rubin
BrainTrust

For the sake of their businesses, including compliance with the Paris agreement and, equally important, their future customers, they need to make a more concerted effort to reduce emissions across their supply chains. Transparency will be on the increase in tandem with stakeholder expectations and this is a clear opportunity for leadership that can pay dividends, literally and figuratively. With so many in the industry lagging, there is a low bar for leadership in this critical area.

David Slavick
BrainTrust

I wish it was a HIGH bar!

Gene Detroyer
BrainTrust

The magnitude of the problem is largely in the hands of the fashion industry and the consumer. I won’t give retailers a pass, but consider it is estimated that the average American throws away about 81 pounds of clothes every year — that’s the weight of an 11-year-old child. Can we cut that by 50 percent, 60 percent, 70 percent? What do you think that number was 20 years ago? To give you an idea of how big the global textile waste crisis is, imagine a garbage truck fully filled with textiles and clothes being thrown into landfills every single second of the day, every year.

The fashion industry overproduces products by about 30-40 percent each season, contributes 10 percent of all global carbon emissions and is the world’s second-worst offender in terms of water and plastic pollution.

To solve this problem, all offending parties must take it seriously. It must start with the consumer.

Liza Amlani
BrainTrust

My advice to retailers: rethink the way you create product by enabling digital tools across development, reduce physical sampling and partner with your vendors to test product at factory. Allocate time, resources, and effort in sustainable textile and material development.

Enable 3-D printing in-house, implement smart and predictive planning tools, increase in-season planning capabilities to help react to customer shifts and trends and eliminate redundant approvals and multiple product iterations. So many processes can be done digitally as we have many more tools at our disposal. Brands need to get on board and sustainability will drive many of these shifts in forward-thinking product creation and merchandising strategies.

Craig Sundstrom
Guest

I think it’s telling that the phrasing of the InstaPoll was “do you think it will be much talked about?”
As opposed to actually accomplished.

wpDiscuz
Braintrust
"Transparency will be on the increase in tandem with stakeholder expectations and this is a clear opportunity for leadership that can pay dividends, literally and figuratively."
"The magnitude of the problem is largely in the hands of the fashion industry and the consumer."
"In a way, it’s going to require a blockchain of data with hundreds and thousands of suppliers to commit to, which will be extremely arduous."

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