Getting better all the time? Retail sustainability practices
One of our hard-hitting polls this week: Do chain store buyers look at the sustainability efforts of their suppliers when choosing what firms to give more orders to?
After 67 votes and just one day of voting:
Yes: 21%
No: 61%
Unsure: 18%
Most voting so far are not convinced that retailers reward suppliers for their sustainability investments.
First, let’s talk to Claude about the history of sustainability as a topic of conversation.
When did sustainability become part of our common vocabulary?
Claude: Sustainability as a concept and part of our common vocabulary gained significant traction starting in the late 20th century, though its origins can be traced back further. Here's a brief overview of how sustainability became more mainstream:
1960s-1970s: The modern environmental movement raised awareness about issues like pollution, deforestation, and resource depletion. Books like Rachel Carson's "Silent Spring" (1962) highlighted environmental impacts. The 1972 UN Conference on the Human Environment in Stockholm introduced the idea of eco-development.
1980s: The term "sustainable development" was coined and popularized by the World Commission on Environment and Development's report "Our Common Future" (the Brundtland Report) in 1987. It defined sustainable development as "meeting the needs of the present without compromising the ability of future generations to meet their own needs."
1990s: The 1992 UN Conference on Environment and Development in Rio de Janeiro helped bring sustainability into the global mainstream. Agenda 21 was a comprehensive blueprint for sustainable development adopted by 178 nations. Corporations also began adopting environmental management systems like ISO 14001.
2000s: Sustainability transitioned from a fringe environmental concept to broader economic, social and corporate realms. The triple bottom line (economic, environmental, social) framed sustainability for businesses. Climate change and carbon footprint became widely used terms.
2010s: Sustainability became a commonly used qualifier preceding many terms - sustainable agriculture, energy, cities, etc. The UN Sustainable Development Goals (2015) solidified sustainability as a global priority across all sectors.
Today, while interpretations vary, sustainability is deeply embedded in our vocabulary - from individual lifestyle choices to government policies to corporate social responsibility initiatives. Its mainstreaming reflects the increasing prioritization of environmental and social impacts alongside economic growth.
Do chain store buyers look at the sustainability efforts of their suppliers when choosing what firms to give more orders to?
Claude: Yes, chain store buyers do consider the sustainability efforts and practices of their suppliers when making purchasing decisions. Sustainability has become an increasingly important factor in supply chain management and procurement for many large retail chains and corporations. Here are a few key points about how sustainability influences chain store buyers:
Environmental Impact: Buyers evaluate suppliers' environmental footprint, such as greenhouse gas emissions, water usage, waste management, and use of renewable energy sources in their operations and manufacturing processes.
Social Responsibility: Issues like labor practices, workplace safety, human rights, and community impact are considered to ensure suppliers meet ethical standards.
Sustainable Sourcing: The sourcing of raw materials, especially for products containing commodities like palm oil, timber, cocoa, etc. is scrutinized to avoid sourcing from suppliers linked to deforestation or exploitative practices.
Packaging: Use of recycled/recyclable packaging materials and minimizing excess packaging is preferred.
Transparency: Suppliers are expected to provide data and reporting on their sustainability metrics and initiatives for evaluation.
Cost Savings: Sustainable practices can reduce costs through improved efficiency, less waste, and lower energy/resource consumption - an incentive for buyers.
Major chains like Walmart, Target, Costco and others have supplier sustainability standards and scorecards that factor into purchasing decisions along with traditional criteria like cost, quality and delivery. Suppliers demonstrating a strong sustainability commitment can gain a competitive advantage for securing larger purchase orders.
Is this true for all goods, including fresh produce and other food? Some in the industry don't believe buyers reward suppliers' sustainability efforts.
Claude: You raise a good point - the consideration of sustainability efforts by buyers can vary across different product categories, including fresh produce and other perishable foods.
For non-food items like apparel, household goods, and general merchandise, major retailers tend to have more robust sustainability supplier standards and auditing in place that factor into purchasing decisions. However, for fresh produce and other foods, the dynamics can be somewhat different:
Shorter supplier relationships: Fresh produce sourcing often involves shorter contract periods and more frequent switching of suppliers based on season, availability, and pricing. This can make it harder to evaluate longer-term sustainability initiatives.
Food safety prioritized: For perishables, food safety is the prime concern for buyers. Sustainability can take a back seat if there are any perceived risks to safety or shelf-life.
Price sensitivity: The fresh produce market is highly price-competitive. Buyers may overlook sustainability if it means notably higher costs passed to consumers.
Traceability challenges: Tracking sustainability metrics is easier for manufactured items versus agricultural products with complex supply chains.
Regional variations: Sustainability standards adoption varies by region, with some markets being further ahead than others in implementation for fresh foods.
So while sustainability is gaining importance for food suppliers, some industry experts argue that buyers don't sufficiently incentivize or reward sustainability efforts for perishables compared to other categories yet. Cost, quality, and food safety remain the highest priorities for most fresh produce buyers currently. But the long-term trajectory seems to be toward more accountability.
Is there any measure of sustainability scores of food retailers such as Walmart?
Claude: Yes, there are several organizations and initiatives that evaluate and score the sustainability efforts of major food retailers like Walmart when it comes to their policies, practices and supplier engagement around sustainable food sourcing:
Green Score by HowGood: HowGood rates grocery retailers based on their sustainable sourcing policies across categories like produce, dairy, meat, seafood etc. Their 2021 rankings placed Walmart relatively low at #15 out of 25 major U.S. retailers.
Supply Chain Sustainability Insight (BCSI): BCSI provides sustainability scorecards grading retailers on areas like sustainable procurement practices, supply chain traceability and environmental impact. In their 2022 Food Retail Scorecard, Walmart scored 5.8 out of 10.
Sustainability Monitoring Rating Tool (SMART): This tool by the World Wildlife Fund assesses retailers' public commitments and transparency around sustainability issues like palm oil, soy, beef, wood/paper sourcing. Walmart received medium-high scores in their latest public rankings.
Greenpeace Seafood Sustainability Scorecard: Greenpeace periodically ranks major grocers on their sustainable seafood policies and supply chain management. Walmart has historically scored average to below-average ratings.
Oxfam's Supermarket Scorecard: Oxfam evaluates food retailers on labor rights, gender equality and treatment of supply chain workers. Walmart has ranked near the bottom in their past assessments.
While Walmart has made public sustainability commitments, most third-party scorecards find their implementation and transparency around sustainable food sourcing still lags behind some of their peers in the grocery retail industry. But these public ratings aim to push major corporations like Walmart to make more robust improvements.