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Best Environmental Practices of Leading Retailers from Around the WorldBest Environmental Practices of Leading Retailers from Around the World

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Executive Summary

Because of its broad reach, the retail sector has the potential to effect significant change in society in a way that no other industry can. Virtually all Canadians are impacted by retail, whether by our weekly trip to the food store, or to fashion stores, home furnishings stores, the corner convenience store, or the country general store. Retail is perhaps the greatest purveyor of culture in Canada, as it is in most countries around the world.

With more than 1.2 billion square feet of space in Canada and sales of $425 billion in 2008, there is no doubt about the size and importance of this sector. Corporately, retailers can define environmentally oriented purchasing requirements; they can educate consumers at the store level; they are the gatekeepers for goods and services consumers are offered. Thus retailers have the ability to influence behaviour and consumption patterns on many levels.

The initial Greening Retail study, published in 2006, showed that Canadian retailers and their suppliers were responsible for over 40 million tonnes of carbon emissions, 6 million tonnes of waste annually, and millions of kilometres traveled by trucks, rail and air delivering merchandise from around the world to every corner of Canada.

The Five % Solution: If just 5 per cent of retailers and their suppliers reduce their energy consumption by 10 per cent, the estimated energy savings in one year would be equivalent to the energy required to power half a million homes—all of Ottawa, our nation’s capital—and would result in a reduction of 1.4 million tonnes of greenhouse gases, the equivalent of removing 233,000 cars from the road for a year.

The objective of the research project described herein was to examine the environmental best practices of 15 of the leading retailers in the world to identify in detail their strategies and tactics, and communicate these to other retailers. This initiative is designed to assist the industry in adopting sustainable practices, and demonstrate that undertaking these initiatives can enhance their bottom line and thus makes good business sense.

In selecting the retail leaders to interview, every effort was made to obtain a representative sample that reflects the broad spectrum of retail in terms of merchandise, size, format, ownership structure and geography. It included retailers in North America as well as in Europe and Asia, where sustainable practices appear to be more advanced. Personal interviews were conducted with key executives of the participating companies in Canada, the United States, England, Ireland, France, Australia and Japan. Most took place in person, while a few were by telephone. (Table listing corporate participants omitted - see page VII of the report)

The scope of the study makes it a challenge to distil the breadth and depth of information from each retailer; however, we believe that the following are the most salient themes and findings:

One size does not fit all. Company strategies varied widely according to such factors as merchandise category, number of stores, format, size and ownership structure.

First at the plate. The earliest adopters of environmental best practices tended to be the grocery chains, followed by department stores and other large space users, and then specialty stores. Other companies embraced sustainability from the outset. It was ingrained in their culture, often from the founder.

Common threads. Although the framework for achieving best practices varied among the retailers, there were common threads including:

Governance models. Successful models vary from formal to informal. Franchise and international companies have adopted different models to implement best practices.

Key sustainability strategies. Three strategic focuses have emerged, either individually or in combination: operational, market transformation and supply chain.

Corporate social responsibility (CSR) reporting. Thirteen of the 15 companies produce CSR reports and the other two will be doing so in the near future.

“What gets measured gets managed.” Over 80 per cent of the companies measure and track energy usage, waste produced and diverted, CO2 emissions, transportation and water usage. Energy and waste top the list. Many publish goals for reduction and track progress from benchmarks.

Return on investment. ROI is a central focus of environmental best practices. Both large and small leading retailers realize that sustainability provides a very healthy return on investment and further differentiates their businesses. There were three main approaches to measuring success:

The low-hanging fruit. Many companies began the sustainability journey by undertaking the least expensive actions and subsequently graduated to the more costly measures. The top three ROI actions for most are as follows:

The Three R’s—Reduce, Reuse, Recycle. Retailers acknowledge that major savings can be realized from waste reduction and recycling, but many have just begun to explore the options available in this significant area of opportunity. Monetizing waste is a profitable business.

Supply chain. Managing the supply chain is critically important because research indicates that between 80 and 90 per cent of the retailer’s total footprint comes from the products that are carried.

Procurement policies rule. Virtually every retailer has established a procurement policy that contains specific environmental standards.

Green products. Over half of the companies have developed their own private brand green products.

Incentives and staff training. With some exceptions, most companies do not employ incentives to reward staff for sustainability achievements. Most hold workshops and training sessions on environmental programs.

Customer education and marketing. Most retailers communicate their environmental policies and information to customers and find this a valuable way to develop and promote their brand and build customer loyalty.

Energy efficiency and conservation. The four focal points for retailers in conserving energy are lighting (changing habits, reduction of wattage and retrofits), various building improvements, refrigeration, and tracking usage and reductions.

Green energy. Almost all retailers are interested in developing their own green energy sources, but consider the expenditure too high. Over half purchase green energy produced off-site.

Transportation. Improved logistics and modal shifts top the list of transportation carbon emissions reduction.

Water quality and conservation. With increasing water shortages, more retailers are beginning to focus on using water more efficiently.

Environmental charity giving. All the retailers report supporting charitable causes and forming partnerships with environmental nongovernmental organizations (NGOs). Participation in local community environmental projects is effective for staff retention and creating good will in the marketplace.

Recommendations and next steps.

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