According to research for Harvard Law School, 78% of Fortune 500 companies set sustainability benchmarks and report their achievements. The research states that sustainability reporting has shifted from the reporting of individual environmental or social efforts to integrated reports that show how companies create shared value for all—including investors, employees, suppliers, communities and the environment.
When 32 leading fashion brands signed an agreement to improve sustainability in the sector, it wasn’t merely a fulfilment of each company’s commitment to the environment – it is also a reflection of the change leading enterprises across sectors need to drive as a top priority.
Fashion isn’t the first sector to act towards driving more responsible operations. UK supermarket chain Tesco has pledged to work with a food redistribution charity to reduce waste from its shelves. The move was timely; months earlier a report suggested a third of all food produced globally – an incredible 1.6 billion tons – is wasted each year, about a quarter of it by shops.
Driven by regulatory, consumer and investor pressure and challenges that are deeply inherent to the sector’s operations and competitive landscape, retail is recognizing the significant impact it has on the environment. Single-use plastic used to package products; huge amounts of water required to produce beef for supermarket shelves; non-degradable microfibers shed from garments and which accumulate in rivers and oceans; energy wasted in keeping shops illuminated during closing hours: these and many other problems highlighted by ecologists are now being tackled by brands.
The changes stem from far more than the need to fulfil a regulation or comply with local legislation – retailers are leveraging this opportunity to institute positive change not only within their organizations but also across the value chain.
A decade ago, such action might have been considered unworkable. Coordinating sustainability policies across complex supply chains would have been almost insurmountable. But data-driven technologies, interconnectivity and digital ecosystems that connect partners, suppliers, vendors, clients, and even companies outside an industry that can complete the circular economy paradigm are enabling companies to deliver change and stay true to purpose.
Backed by powerful artificial intelligence and algorithmic software, blockchains and networks of monitoring devices in the internet of things (IoT) are helping retailers fuel next-generation global sustainability programs that transform the entire value chain – from reducing energy use and carbon footprint, optimizing supply chains, sourcing responsibly and reducing waste. The World Economic Forum estimates that 84% of IoT systems in use already have the potential to meet the United Nations’ Sustainable Development Goals. For enterprises that are leveraging the IoT, the purpose of technology is to fuel sustainable business operations and growth, driving closer integration between the company’s commercial growth and environmental commitments.
Smarter energy management
The fashion industry’s sustainability pledge, signed during the G7 Summit in France, commits signatories to a number of goals. Key among them is to cut carbon emissions by obtaining 100% of companies’ energy needs from renewable sources.
The key to the growing use of renewable energy lies in the IoT, with sensor-based technology and data from connected systems, devices, and plants enabling retailers to leverage hydro, wind and solar power. Spanish fashion retailer Inditex, whose brands include Zara, and Massimo Dutti, says half its energy already comes from renewable sources and the figure will rise to 80% by 2025. The company is also committed to sending zero waste to landfill by 2025.
Many manufacturers, Apple included, are already moving production to solar- or wind-sourced microgrids, and now some retailers and their suppliers are taking similar measures.
By harnessing the power of IoT, retailers are driving connectivity across the value chain, identifying opportunities to drive efficient energy management. In Dubai, leading retailer Landmark Group has transformed much of its warehousing throughout the emirate to run on solar power, fitting thousands of panels on facility roofs in order to provide 40 MW of electricity, half of its total energy needs.
Where programs have been implemented, they’ve benefited significantly from IoT systems. Sensors and smart technologies, in particular, have enabled connected stores, factories, and fleets to ensure the effective and efficient use of power.
The British Retail Consortium indicates the results can be substantial. It said that last year, the leading companies signed up to its Better Retail Better World initiative forged ahead of their goal of cutting their carbon footprint by a quarter by 2020. By using renewable-power providers, replacing old machinery and lighting with energy-efficient alternatives and switching to biofuels in delivery fleets, they reduced energy-related carbon output by 35% and halved transport-related emissions.
Intelligent supply chains
While the price of goods at the point of sale reflects the cost of production and supply, it doesn’t necessarily account for the less tangible environmental costs of those processes. The price of delivery fuel will be factored in, for example, but not of the carbon footprint that leaves. To create leaner, more efficient and responsive supply chains, retailers are looking to drive improvements, from the farm, mine or factory to consumer.
By integrating IoT-led connectivity across logistics, retailers are achieving efficiencies that are also reducing the impact their businesses have on the environment.
By better matching and streamlining transactions, creating leaner and shorter supply chains, implementing just-in-time manufacturing and improving warehouse management strategies, they’re helping reduce energy use, fuel consumption, and waste. With warehouses and stores equipped with smart sensors to track humidity, temperature, pressure and other environmental factors, retailers are actively managing contamination and spoilage to minimize waste production and disposal.
Retailers must be able to trust their suppliers’ sustainability claims if they are to feel confident about their own credentials. Blockchains, digital ledgers that are theoretically tamper-proof, and the IoT are helping in this.
The Tesco Fare Share project uses a Cloud application to identify which stores have surplus food and then to track consignments to the 9,000 charitable organizations in the UK and Ireland who benefit.
The solution, from Dublin-based non-profit Food Cloud, can also interrogate retail stock control systems to identify where surplus food may be available ahead of it becoming available.
Purpose of technology: a commitment to positive change
Retailers are taking their sustainability responsibilities seriously. They are beginning to see it not as an afterthought or credibility-winning part-time program; they are making it core to their business models, and an integral part of their decision-making process.
Doing so doesn’t simply make environmental sense; it makes commercial sense. The World Economic Forum points out that the advantages the IoT brings in terms of sustainability also confer a financial benefit by increasing efficiencies and reducing waste.
More than that, however, retailers understand that consumers also want to live sustainably and will shop accordingly. Supermarket Aldi recognizes this in its $1.6 billion plan to incorporate smart and green building innovations in more than 1,000 of its stores. The costs – on the face of it – may be high, but the German company, like other responsible retailers, knows these costs will be well and truly balanced by the price the environment would have otherwise paid.