A more holistic approach to sustainability is allowing retailers across Europe to make ‘significant progress’ with green procurement.

According to a Coca Cola Europe-sponsored report by Forum for the Future – a sustainable development charity – greater engagement with suppliers and the embracing of formal sustainability standards, is turning the industry into a market leader.

Some of Europe’s largest retailers, including Asda, Delhaize, Intermarche, Metro and Tesco, were interviewed in a report which outlined the considerable progress made in recent years, and the challenges that still remain.

“The big retailers are taking sustainability into the mainstream and they’re bringing the smaller players with them,” said Shannon Carr-Shand, sustainability advisor, Forum for the Future.

“What we’re starting to see is that even the larger retailers had previously taken a rather siloed approach to sustainable sourcing and focused on particular areas, rather than looking at the bigger picture.” 

That appears to be changing, with companies now looking beyond areas such as sustainably managed forests and now examining the carbon intensity of the transportation to the manufacturer or the distributor.

“They’re starting to have a far more sophisticated understanding of what that means,” said Carr-Shand. “A great example is Wal-Mart’s sustainability scorecard, they started with the packaging scorecard, now their thinking has evolved.”

The report found that carbon management is still the top priority for retailers, with packaging, waste and the wellbeing agenda also remaining key focus areas.

The study also argued that procurement and supply chain management will become increasingly central to retailers’ sustainability targets.

“Many commentators, both inside and outside of retail, expect a closer relationship between the retailers and the supply chain – to enable greater transparency and control throughout the value chain,” the report said.

Jeff Hittner, corporate social responsibility consulting leader for IBM, tells Sustainable Sourcing that benchmarking, collaboration and simplicity hold the key to sustainability success

We hear a lot about targets – but how many companies are actively benchmarking their sustainability achievements? 

We’re seeing a lot of high-flying goals from the board of directors and the CEO about reducing carbon by ‘X’ percent and water by ‘Y’ percent, but the majority of them don’t have any metrics to track the data related to this. First and foremost it’s essential to identify what metrics should be measured and how they relate back to a company’s sustainability goals. 

What is IBM’s own research telling you about the sustainability market?

From our survey findings – where we’re asking companies around the globe at a c-suite level about their sustainability needs from a supplier standpoint – over half (of respondents) are telling us that they’re being required by their business partners to adopt standards relating to carbon management. A further three quarters are being asked to adopt standards relating to ethical labour standards. This shows that there is a genuine awareness of the kind of issues that companies really need to start tackling.

To what extent is the lack of a common and coherent approach to benchmarking holding companies back? 

Standards for sustainability are immature and, in many respects, are competing with one another. There was a recent story in the Financial Times that claimed that within the FTSE 500 companies there were 35 different methodologies for counting carbon. You’ve also got competing standards on green buildings, you have competing standards for best in class of all sorts of products. The real challenge is to look at the best in class performers and figure out what the best measurements and metrics for sustainability are going to be.

How close are we to producing a standard set of metrics?

Simplicity is always desirable but from the standpoint of a single set of standards I don’t think we’re there yet. That’s not necessarily a negative thing. We’re seeing industries getting together, competitors even getting together, and saying that we need standards around things like water because there are none out there and we’re all measuring it differently. That sort of discussion starts a dialogue and we’re increasingly seeing collaboration being driven by the need to talk about best practice in areas such as water conservation.

What’s the best example you’ve seen in action? 

The beverage industry got together and created the Beverage Industry Environmental Roundtable, which includes companies like Diageo, InBev, Coke and Pepsi. Those companies are real competitors, but they’re working together to develop standards for measurement and they’re working together to develop best practices around conservation. We’re seeing something similar with things like the Wal-Mart supplier index. So even though there’s not a global standard, we’re seeing some really big players and some really key industries getting together and developing a set of standards. It’s almost like the quote  ‘politics makes strange bedfellows’ – the same could be said of sustainability. 

How much of this is being driven by the need to overcome the kind of environmental taxes and legislation that will undoubtedly be levied over the coming decade? 

I think that’s part of it but I don’t think that that’s necessarily driving the a lot of the standards’ efforts that are existing right now. If you go back to the water example, then Coke or Pepsi can’t open up a plant in India unless they’re addressing water shortage and water as an issue. And the same is true of a company that wants to open up a business in Brazil, they have to address social issues there if they want to get the implicit acceptance to succeed there from customers and stakeholders, so I think legal and legislation is definitely a driver but it’s the not only one. In particular, we see a lot of these standards efforts being driven by what I would consider some of the leaders in these different industries, so they’re doing it for an entirely reason. They’re doing it for opportunism – they see sustainability as an opportunity to get ahead and to lead and drive the change that’s going to encompass their entire industry. 

Are some companies ahead of the rest when it comes to sustainability?  

Undoubtedly. In fact I think the majority of the business world is made up of laggards when it comes to leaders and laggards on the topic of sustainability. So in that sense the legal side of things will give everyone a huge push. 

IBM has recently launched a new Sustainable Supplier Information Management Consulting offering. More details can be found here