Awareness for sustainability is increasing within society as well as in the economy. The standard of future action is changing in many areas – including retail. While insolvencies have been making the rounds in system-irrelevant retail concepts such as textile retailing, system-relevant local supply such as food retailing has recently developed well. At the same time, it is important for consumers to make their purchases consciously and sustainably. We have summarised how ESG criteria play an indispensable role in this process and what the supply sector still has to do to achieve this.
Retailers have to master numerous challenges in the field of tension between inflation, rising energy costs, supply chain problems and growing sustainability requirements. Not only society has a great interest in this, also investors see supermarket chains and discounters as having a responsibility and therefore a debt to pay. A well-developed ESG strategy can help.
Real estate as an important factor for the ESG turnaround
The call for sustainable products and environmentally friendly business practices is getting louder and louder among consumers. And the willingness to pay more for it is also gradually increasing in society. Many retailers are listening and addressing the issue of sustainability and responsible business practices. With the help of sophisticated ESG consulting, retailers are already implementing various measures and can thus achieve ESG goals in the long term. In addition to issues such as the use of renewable energy, reducing packaging, promoting recycling and improving working conditions in the supply chain, one important topic belongs on the table: the real estate.
When looking for the appropriate locations and properties, it becomes evident that the real estate industry has a clear key role in achieving the climate goals. Properties that do not meet ESG standards are becoming increasingly unattractive to retailers. The most important ESG criteria when choosing a location are considered to be energy efficiency, the use of renewable energies and good public transport connections.
The economic sense of energy-efficient refurbishment of existing properties also plays an important role for investors who want to comply with ESG standards. However, since local retailers often have a longer total useful life, supermarkets and discounters are welcome tenants and an ESG-compliant conversion is a sensible investment.
Sustainability in retail: organic boom, changes and ideas
The real estate portfolio is considered a key factor by ESG consultants who enter into the long-term ESG strategy with retailers. Even small changes to real estate, such as the installation of a photovoltaic system, charging infrastructure for e-mobility or an insect-friendly flowering meadow, can generate big effects.
However, with the increasing importance of sustainability aspects, issues such as organic food, regional products, packaging and animal welfare have also become more central. Consumers are buying more consciously and selectively. This is why decision-makers in local supply companies need to keep a 360-degree overview. In addition to the aspects visible to consumers, other ESG factors should also be covered. Among other things, the supply chain plays an important role. Considerations such as fleet sharing and, of course, e-mobility in retail are keywords that are coming up more and more often. But Cradle to Cradle (C2C) is also on everyone’s mind and should not be missing from an ESG strategy in retail. With C2C, products should already be developed in the manufacturing process in such a way that all ingredients are chemically harmless, separable by type and decomposable. This means that after use, they serve as raw materials for new products and a cycle is created – packaging, for example, goes back into the biological cycle. This avoids downcycling.
ESG consultancy also focuses on people
In the new sustainable strategies that retailers are developing with ESG consultants, compliance with social standards also plays an essential role. In addition to a fair and transparent supply chain, local suppliers must ensure that they offer their employees good working conditions. This includes fair wages, secure jobs and appropriate working hours. In general, responsible corporate governance is essential for long-term success. Responsible management includes adherence to ethical principles, fighting corruption and promoting diversity and inclusion.
Future opportunities open up for innovative companies
For a long time now, ESG criteria have not been dreams of the future, even in the retail sector. Companies are listening to the requirements and taking them seriously. The Rewe Group, for example, has been focusing on resource-saving stores since 2008. The Green Building concept has set a new standard for sustainability in the basic retail segment. More than 275 Rewe Group stores are now built to this sustainable standard. And Tegut… has also been setting new benchmarks: since the beginning, the supermarket chain has firmly anchored the topics of sustainability and regionality in its corporate DNA. With the new “tegut…teo” concept, a digital self-service shop, the company is focusing on a new type of local supply and offers customers the possibility to shop around the clock.
Which ESG area in retail would you optimise first? Feel free to contact us about this.