Retailer Corporate Strategies in Sustainability

July 2022

Despite the economic challenges, sustainability remains firmly on the agenda for the long-term success of businesses. It is increasingly important for consumers, too. This briefing looks at eight key global retailers – IKEA, Target, H&M, Carrefour, AEON Group, Zalora Group, Lojas Renner and Tesco – and reviews how they are adjusting their business models and setting ambitious goals to become more sustainable and demonstrate progress on climate action.

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Key findings

Climate action

Environmental sustainability remains top of mind for businesses in 2022, and with consumers, investors and governments increasing the pressure to disclose and minimise climate impacts, retailers and brands are embracing low-carbon strategies to reduce their emissions. Coherent international sustainability legislation is, however, lacking, which increases the complexity of the operational environment.

Circular economy

To create a more competitive economy, policymakers are looking into mechanisms to move away from linear models of production and consumption. Some retailers, like IKEA and H&M, have already boldly committed to be fully circular by 2030, and many are taking steps in the right direction in terms of rethinking packaging, promoting reusability and embracing ethical production.

Sustainable e-commerce

E-commerce has become the primary shopping channel for many consumers, driven to a significant extent by the COVID-19 pandemic. This channel shift has, however, raised environmental concerns, amid growing urgency for climate action. With rapidly changing consumer expectations and stricter regulation looming, a transition towards sustainable e-commerce appears inevitable.

Supply chain transparency

Many consumers want to better understand the sourcing and supply of the products they purchase, from ingredients’ origin to production methods. Retailers are responding by trying to provide greater transparency in the supply chain of their products, while also working with their suppliers in order to reach collective targets on reducing greenhouse gas emissions.

Case studies

As companies assume their roles in driving towards a more sustainable future, they are setting more targets and publishing more sustainability and climate action reports as they announce more initiatives. This raises questions about the current corporate sustainability strategies of key retailers, and how much progress has been made, which in this report will be reviewed through the lens of eight specific retailers.

This report comes in PPT.

Key findings

Climate action

Environmental sustainability remains top of mind for businesses in 2022, and with consumers, investors and governments increasing the pressure to disclose and minimise climate impacts, retailers and brands are embracing low-carbon strategies to reduce their emissions. Coherent international sustainability legislation is, however, lacking, which increases the complexity of the operational environment.

Circular economy

To create a more competitive economy, policymakers are looking into mechanisms to move away from linear models of production and consumption. Some retailers, like IKEA and H&M, have already boldly committed to be fully circular by 2030, and many are taking steps in the right direction in terms of rethinking packaging, promoting reusability and embracing ethical production.

Sustainable e-commerce

E-commerce has become the primary shopping channel for many consumers, driven to a significant extent by the COVID-19 pandemic. This channel shift has, however, raised environmental concerns, amid growing urgency for climate action. With rapidly changing consumer expectations and stricter regulation looming, a transition towards sustainable e-commerce appears inevitable.

Supply chain transparency

Many consumers want to better understand the sourcing and supply of the products they purchase, from ingredients’ origin to production methods. Retailers are responding by trying to provide greater transparency in the supply chain of their products, while also working with their suppliers in order to reach collective targets on reducing greenhouse gas emissions.

Case studies

As companies assume their roles in driving towards a more sustainable future, they are setting more targets and publishing more sustainability and climate action reports as they announce more initiatives. This raises questions about the current corporate sustainability strategies of key retailers, and how much progress has been made, which in this report will be reviewed through the lens of eight specific retailers.

Introduction

Scope
Companies profiled in this briefing
Key findings

Global trends in sustainability

Environmental sustainability remains a top priority for businesses in 2022
The pressure on retailers and brands to act on climate change increases
Three key topics are most important in retailers’ corporate sustainability strategies
The circular economy is set to become a major focus area for retailers and brands by 2027
Shift towards sustainable e-commerce to accelerate amid growing urgency for climate action
Supply chain transparency helps retailers and brands gain trust and the right partners

Strategies of leading retailers

AEON Group: Key company facts
AEON Group’s sustainability initiatives
AEON Group’s sustainability strategy in context
Carrefour SA: Key company facts
Carrefour’s sustainability initiatives
Carrefour’s sustainability strategy in context
Hennes & Mauritz AB: Key company facts
Hennes & Mauritz AB’s sustainability initiatives
Hennes & Mauritz AB‘s sustainability strategy in context
Inter IKEA Systems BV: Key company facts
Inter IKEA Systems BV’s sustainability initiatives
Inter IKEA Systems BV’s sustainability strategy in context
Lojas Renner SA: Key company facts
Lojas Renner SA’s sustainability initiatives
Lojas Renner SA’s sustainability strategy in context
Target Corp: Key company facts
Target’s sustainability initiatives
Target’s sustainability strategy in context
Tesco Plc: Key company facts
Tesco’s sustainability initiatives
Tesco’s sustainability strategy in context
Zalora Group: Key company facts
Zalora’s sustainability initiatives
Zalora’s sustainability strategy in context

Key takeaways

Sustainability growing in importance for consumers and retailers
The outlook for sustainability in retail (1):
The outlook for sustainability in retail (2):

Retailer corporate strategies in sustainability

About Euromonitor International’s Syndicated Channels Research

Retailing

Sales of new and used goods to the general public for personal or household consumption. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts, fuel. Also excludes foodservice, rental and hire and wholesale industries (Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retailing is the aggregation of Store-based retailing and Non-store retailing. Retailing excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, ie retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer which is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retailing. In relation to click and collect purchases (i.e. where purchases are made over the internet but picked up at store) where the sales data is attributed depends on where the payment is made: If payment is made in store, then the sale is included in store-based sales. If payment is made over the internet, then the sale is included in internet retailing.

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