Australia’s retail sector plays a pivotal role in the country’s economy: it’s one of the biggest private sector employers, a gatekeeper of goods and services, and holds major influence over consumer behaviour. It also significantly contributes to climate change: according to the World Retail Congress (WRC) report, retail sector emissions make up over 25% of global emissions, most of these occurring in the supply chain (scope 3 emissions). In Australia, although the retail sector contributes only 5% of the overall emissions, compared to the Transport sector which makes up 19% of Australian’s emissions, it stands as one of the country's most energy-intense industries.
The sector has been through big changes in recent years, with the rise of ecommerce, the recent spike in inflation along with rising interest rates and uncertainty whether downward trends in retail spending will continue. If Australia wishes to meet its 2050 net-zero target, cutting emissions, setting targets and moving towards decarbonising retail will be critical.
Committing to achievable emissions reduction targets presents retail businesses with major opportunities, to not only improve their sustainability, but also their bottom line. A recent TEADS study shows that 75% of people want companies to take a stance on sustainability. Recent surveys by the National Retail Federation also show an increasing number of consumers are willing to pay a premium for a more sustainably produced product.
However, cutting down emissions in a sector with deep, and highly complex supply chains comes with challenges that require the attention of company directors, stakeholders, employees, and consumers alike. This guide explores some strategies to help measure, manage and mitigate emissions in the retail industry.
1. Understanding and decarbonising your supply chain
Most Australian retailers have large and diverse product portfolios with a deep and wide, global network of suppliers, which makes gathering and tracking emissions data from the supply chain difficult. The WRC report states that 40% of retailers are on track to meet their scope 1 and 2 emissions targets, but less than 20% are meeting their scope 3 targets.
However, scope 3 emissions, which include upstream and downstream activities like transport and distribution, can make up over 90% of a total business carbon footprint.
Before you get started, make sure you have developed a comprehensive supply chain map: this will help you assess and compare your suppliers against a variety of factors, for example in emissions context like we are doing here.
A good starting point when looking at decarbonising your supply chain is to look at variables where you have the most control.
- Optimising and electrifying transport and logistics: Are there opportunities in your operations to optimise and cut down transportation costs, e.g. find more locally placed transport partners, pick external delivery partners who are committed to reducing their carbon emissions, like Sendle a 100% carbon neurtal shipping service or consider streamlining product lines with the most complex transportation operations?
If you operate your own transport fleet, looking at ways to go electric or hybrid, or choose fuel efficient options that help you lower logistics emissions. Use route optimisation software to efficiently plan and track deliveries to avoid unnecessary shipments.
- Engage and collaborate with supplier partners with sustainability practices: Prioritise supply partners with transparent and accurate emissions reporting. Close collaboration with suppliers is the cornerstone of supply chain sustainability; they can also improve product quality and cost. Sustain.Life helps you to assess your suppliers’ carbon footprint, as well as in other ESG factors.
2. Cutting down the carbon footprint of materials
There are many ways to look for more climate friendly options when it comes to choosing, producing and processing materials.
- Reused and recycled materials: Are there suppliers offering recycled resources suitable for integrating into your product manufacturing? Initiating a sustainable procurement strategy serves as an excellent initial measure. It involves pinpointing opportunities and risks, establishing quantifiable key performance indicators (KPIs), researching and appraising suppliers, and consistently seeking avenues for improvement.
- Environmentally friendly sourcing of raw materials: Prioritise the use of materials that are produced using renewable energy sources and with a light impact to the environment. Look into your supply chain and origin of materials, making sure the sourcing of your raw materials isn’t contributing unnecessarily to deforestation or taking place in environmentally vulnerable and protected areas.
- Choosing materials with product lifecycle in mind: Consider the whole lifecycle of your products when choosing materials and make sure you are using the most efficient and long-lasting options. Take Citizen Wolf, which employs a zero-waste manufacturing methodology to creatively repurpose fabric remnants from their custom made t-shirts into new, unique products.
3. Measuring and understanding product carbon footprint
Product carbon footprint (PCF) compromises the total GHG emissions generated by the product during its entire lifecycle. Tracking and comparing the footprints of your product range is important when considering your overall carbon footprint and setting emissions targets for the future of your retail trade.
For a permanently more sustainable retail industry, businesses need to develop net-zero products. Terms “carbon neutral” and “net-zero” often get confused when talking about GHG emissions, but they have one clear difference when it comes to offsetting emissions. “Carbon neutral” products mean businesses measure their product’s emissions, and then compensate them by financing outside offsetting projects. Net-zero product development requires a business to thoroughly evaluate its supply chain emissions, and move towards removing emissions from the procurement and production processes.
Net-zero retail help is out there for businesses willing to do the work. There are many simple strategies to help you get started.
- Embrace a holistic approach to sustainability within your business. Your business comprises various systems, processes, policies, and products, all intricately interconnected and interdependent. Instead of constraining sustainability to a single department, explore ways to integrate sustainable practices into every facet of your business. For instance, establish processes that encourage all employees, regardless of their role, to contribute their ideas and suggestions for enhancing sustainability practices, thus fostering a culture of innovation and continuous improvement in sustainability.
- Prioritise and promote products with low emissions: When looking at your product range, are there products with significantly higher environmental impact than others? Look for opportunities to improve or replace these products with other alternatives. Cutting down your product range is another option to move towards decarbonisation, and a way of supporting consumers in transitioning to products with lower emissions.
- Recyclable packaging material and end-of-life care: There is an increasing array of compostable and recyclable packaging materials available for retailers in Australia. Companies like noissue and Biogone offer home compostable packaging plastic alternatives. Ensure that you provide customers with up-to-date and accurate information with clear, transparent labelling on how to dispose and recycle your products. Australian retailers can also consider joining Australian Packaging Covenant Organisation (APCO) in their work of creating a circular economy for packaging, and working towards Australia’s 2025 National Packaging Targets.
- Lifecycle assessment: Conduct thorough assessments of the environmental impact of your products throughout their entire lifecycle. This includes production, transportation, use and end-of-life stages. Aim for a comprehensive understanding of your products' carbon footprint.
4. Search for climate-friendly store and warehouse options
When considering your store and warehouse operations, review your scope 2 emissions: purchased electricity, heating and cooling. Whether your business operates in leased spaces or owned stores and warehouses, there are many factors to look at when searching for low-emission store operations.
- Sustainable electricity options: When considering your electricity suppliers, assess how they record their emissions data and if they use renewable sources to produce their electricity. In Australia, GreenPower lets you look for providers with a GreenPower Accredited product that sources electricity from a renewable source. In shared spaces this can prove complicated, but collaborating with other retail businesses that operate in the space, and engaging with landlords on their emissions tracking and climate initiatives can help move everyone towards a low carbon store environment.
- Creating renewable energy: If you operate in owned stores and warehouses, consider renewable energy opportunities like solar to incorporate into your buildings. This has the additional potential of saving in costs and protecting your business from electricity price volatility.
- Waste management: Provide accurate recycling information and resources for both employees and customers. Food retail can look into local composting and food waste options to avoid biodegradable waste ending up in landfills.
How to accurately measure and manage your retail carbon footprint
One of the Australian Retail Association (ARA) net-zero targets is “increasing the quantity and quality of emissions data, to enable data-driven decisions”. As we’ve now explored, arguably the biggest challenge in decarbonising retail is the lack of easily accessible emissions data from across the supply chain.
Sustain.Life eases the process in bringing together the data from your supply partners into one platform. Our platform allows you to connect utility providers and other technology platforms into your carbon accounting system, and compare, track and share emissions data.
Sustain.Life also helps you set science based targets for your emissions reduction plans, and allows you to easily see how you’re progressing. We also help you create reports in line with CDP and TCDF reporting frameworks.
How to improve your retail carbon footprint?
To effectively move towards a climate friendly retail sector, companies have to take a cross-organisational approach into tackling their carbon footprint, and engage stakeholders, suppliers, employees and customers in their efforts.
Starting from actionable and achievable initiatives, like reconsidering transport and energy options, assessing your product range or changing some supply partners to ones with clear emissions data, will all slowly help reduce retailer emissions. To avoid falling into greenwashing traps, companies must accurately and transparently report their emissions data both internally and externally.
Developing a net-zero retail action plan is a great way to start, and Sustain.Life is here to help you reduce emissions in retail by allowing you to measure, manage and report on your carbon footprint, and play your part in building a sustainable retail industry for the future.
1. World Retail Congress, Boston Consulting Group, “Sustainability in retail is possible but there’s work to be done,” https://web-assets.bcg.com/4e/32/7851688444388cfff3ae6993d9f7/wrc-bcg-sustainability-in-retail-is-possible-but-there-is-work-to-be-done-april-2022.pdf Accessed on November 3, 2023
2. Australian Department of Climate Change, Energy, the Environment and Water, “Goverment priorities: Vehicles and fuels,” https://www.energy.gov.au/government-priorities/vehicles-and-fuels Accessed on November 3, 2023
3. TEADS, Magna Global, Project Drawdown, “Sustainability Speaks,” https://magnaglobal.com/wp-content/uploads/2023/09/Teads-PD-Sustainability-Speaks.pdf Accessed on November 3, 2023
4. National Retail Federation, Pure Strategies, “The Carbon Footprint of Retail Products: A Review of Greenhouse Gas Emissions Hotspots and Reduction Levers for Consumer Decision Making,” https://cdn.nrf.com/sites/default/files/2023-02/The_Carbon_Footprint_of_Retail_Products.pdf Accessed on November 3, 2023
5. National Retail Federation, “Consumers care about sustainability – but will they pay more?,” https://nrf.com/blog/consumers-care-about-sustainability-will-they-pay-more Accessed on November 3, 2023
6. Australian Packaging Covenant Organisation, “Australia’s 2025 National Packaging Targets,” https://apco.org.au/national-packaging-targets Accessed on November 3, 2023
7. Green Power, “Find a provider,” https://www.greenpower.gov.au/get-greenpower/find-provider Accessed on November 3, 2023
8. Australian Retailers Association, “Helping retailers address climate change with the ARA’s Net-zero Roadmap for Australian retail,” https://www.retail.org.au/news-and-insights/helping-retailers-address-climate-change-with-the-aras-net-zero-roadmap-for-australian-retail Accessed on November 3, 2023