Retail suppliers are hearing a lot about sustainability lately. Recent news include the Sustainability Consortium, Walmart’s Sustainability Index, the Sustainable Apparel Coalition and other major industry initiatives. But given a history of industry plans and programs which proved to be more trendy than durable, suppliers might be forgiven for wondering, “Is this just another fad, or something we should take seriously?” We found answers at three large U.S. retailers.
When determining whether the tide of sustainability is rising or falling, it’s tempting to look at these short-term variations for evidence because what’s recent is easily recalled and always seems more real. However, just as measuring the tide at 6 a.m. gives a very different reading than measuring it at noon, short-term swings can be misleading. The greatest danger for business leaders whose long-term viability depends on predicting the future (which is to say, almost all business leaders) is that short-term variations can mask clear long-term trends—like the slow but inexorable rise in sustainability awareness, along with interest and action among governments, consumers and retailers.
What’s driving this? Three major trends are converging to shape what many have described as a “new normal” for business. Escalating resource scarcity generates new business risks and raises costs. Increased transparency makes good things easier to share, but bad things (like toxic products or unsustainable manufacturing practices) are harder to hide. And growing consumer sensitivity to the sustainability impacts of products they buy is raising expectations for “good company behavior” and infusing a new sense of responsibility into buying behavior in general.
Business in the 21st century is changing, and strategies which worked to create wealth in the past will not necessarily work in the future.
Many leading retailers are awakening to this emerging reality and realizing that, in the words of Scott Lercel, Director of Social Responsibility & Sustainability at Target Corporation, “Sustainability is good for business … All major retailers seem to be looking at the sustainability space and how to integrate it into their current business model.” Why? One reason is that “driving operational efficiencies within your supply chain makes you more competitive and reduces operating costs.”
Moving Retailers to Collaborate
These leaders are not acting in isolation; the massive scale of the challenge has moved several retailers to collaborate in unprecedented ways. For the past few years, such unlikely bedfellows as Target, Walmart, Kohl’s, JC Penney, Nordstrom and Safeway have built uncommon partnerships like the Sustainability Consortium, the Sustainable Apparel Coalition and collaborations to get on the same page on sustainability. The result is what one participant (Walmart) describes as "a new retail standard for the 21st century."
This promises major benefits not only to consumers—through more sustainable and ultimately affordable products—but also to suppliers—through reduced redundancy, contradiction, waste and frustration. Historically, suppliers working hard to comply with the responsible sourcing expectations of multiple retailers have faced what can most politely be described as a morass of different definitions, values and compliance mechanisms -- all of which have caused audit fatigue and raised costs for suppliers, retailers and ultimately consumers. "Doing it consistently across the industry," Lercel said, "can drive efficiencies and if we're all asking the same thing across our industry we can drive change faster."
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Next page: The view from Kohl's and Walmart