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ESG is not only about regulations. Consumers have made up their mind about sustainability, and they are willing to pay a premium for it. In our 2023 Global consumer survey, more than 70% of respondents said that they were willing to pay more for sustainably produced goods ‘to some or to a great extent.’ Retailers must accommodate this trend to stay relevant. As a result, retail industry CEOs are leveraging ESG to establish less wasteful, cleaner, and more efficient practices.
The importance of data
Let's look at how ESG data can help retailers on their path to sustainability transformation:
ESG data provides visibility and understanding of carbon emissions and energy use across operations and locations. The data then enables retailers to establish and improve sustainable practices, leading to meaningful reductions.
ESG data helps to pinpoint and quantify issues like incorrect inventory planning, demand inaccuracy, supply chain sustainability challenges, surplus waste, and other operating inefficiencies. It provides real-time visibility, facilitates deep dive into key metrics, risk mitigation, competitor benchmarking, and overall production quality improvement.
ESG data provides deep insights into both long-term climate change impacts and risks associated with rising temperatures, unpredictable weather, flooding, biodiversity, and other macro-level trends.
The above translates into more effective operations, cost effectiveness, stronger brand reputation and ultimately increased business performance.
How to integrate the data
Every company needs a slightly different set-up to integrate the data and enable effective ESG analytics and reporting. However, the logic of underlying architecture is mostly similar. Every retailer needs 3 layers of solution:
Industry-specific solution for capturing and calculating carbon footprints across the value chain, as well as for risk management (such as Sphera, SimaPro, Enablon, Microsoft Sustainability Manager)
Modern data platform for integrating and orchestrating the data, potentially based on Cloud services like Azure, Google Cloud, or AWS.
A reporting and analytics layer implemented using various Business Intelligence (BI) tools.
Regardless of technology selection, there are three critical considerations to ensure the effectiveness of the data and technology architecture:
Scalability - the system must be able to handle a growing volume of data.
Integration - it must be capable of connecting to a variety of internal and external data sources.
Flexibility - it should be easily adaptable to new regulations as well as dynamic business demands.
Additionally, an effective data strategy is key. It should outline data governance, storage standards, integration protocols, security, access rights, archiving, and other essential elements of maintaining any data platform.
The retail industry has always been adaptable. Be it digitalization, eCommerce, or C-19 fallout. With the increase in demand for sustainable practices, the retail industry must adopt once again and evolve with new ambitions to be more environment-friendly towards the planet, shareholders, employees, and its consumers. And integrated ESG data is the key for all that.
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Krzysztof Badowski
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