Sustainability has shifted from a peripheral concern to a fundamental cornerstone of achieving success in any enterprise - and data is the key.
For retail and consumer goods companies, the move to align around sustainability principles is no longer just a matter of ethical responsibility. Impacts on the climate hold direct impacts on business success, with retails managing impacts on everything from farming yields to supply chain interruptions when climate disaster strikes. In 2023, it has become a business imperative that requires greater transparency and accountability through the responsible and intelligent use of data, according to the latest findings from the Cognizant Building a Sustainable Future for Retail & Consumer Goods report.
By investing in systems that gather, analyse, and report on sustainability-related data, retail and consumer goods companies can ensure that all sustainability claims are grounded in reality, fostering trust and credibility among consumers, investors, and stakeholders.
Indeed, this holds immense significance in a world where actions carry great weight. Report findings concur, showing 54% of Australian consumers have reduced purchasing or boycotted companies they believe acted inappropriately on environmental or social issues..
But are Australian businesses heeding the message? Recent figures suggest not. Our data indicates that “sustainability is now recognised to deliver better business performance,” with 95% of retail and consumer goods companies in 2023 considering it a pivotal component of their corporate strategy (compared to 70% in 2021 and 90% in 2022), yet Australian businesses still lag behind their global counterparts when it comes to taking substantial sustainability action.
On a global scale, retail and consumer goods companies have accomplished a 43% success rate in reaching sustainability goals over the past two years, whereas Australians have achieved 35%, the report notes.
Additionally, the international cohort places greater emphasis on enhancing sustainability through supply chain, operations, products, and services (58%), whereas the emphasis on these aspects within Australian stands at 43%.
Data is key to enablement
Investment in accurate, insightful, auditable sustainability data systems can drive real results across the entire business value chain. From design to manufacturing, supply chain to end of life management, data is the essential element that measures business impact on the environment. Data is the path to uncovering every opportunity to reduce environmental footprint and create new, auditable savings.
We have seen international retailers like Walmart reduce food waste through smart connected solutions that also saved $18M in operating costs and $5.25M in energy consumption cost. Closer to home, in other industry we have worked with a leading resources company to build a data platform to monitor their emissions, enabling near real-time reporting processes that detect anomalies and improve their strategic progress on sustainability goals.
Stakeholders are demanding action, and data is the bedrock for verifiable sustainability progress.
The Greenwashing Conundrum
Compounding the problem is the situation where companies propagate false and misleading environmental claims without substantial evidence to support their actions – ‘greenwashing’.
As the pursuit of establishing sustainability credentials gains momentum, consumers and regulators are paying close attention. Regrettably, “rather than being known for progress, the Australian retail and consumer goods sector is getting a reputation for greenwashing,” the report finds.
In fact, the report notes that the ACCC has several active investigations underway across the packaging, consumer goods, food manufacturing and medical devices sectors for alleged misleading environmental claims.
“These may grow, as we continue to conduct more targeted assessments into businesses and claims identified through the sweep,” said ACCC deputy chair, Catriona Lowe, in the report. “We will take enforcement action where it is appropriate to do so as it is critical that consumer trust in green claims is not undermined.”
Given the surge in deceptive claims, consumers and regulators are demanding that environmental claims be backed by transparency and accurate data to prove real action. Furthermore, it’s also worth noting that regulatory pressures are on the rise across all sustainability pillars in Australia.
So how can retail and consumer goods companies contribute to mitigating the issue of ‘greenwashing’ while fortifying and strengthening their data position?
Meaningful Action: Invest in Data-Driven targets
The first step towards meaningful action is for retail and consumer goods companies to review and rethink most aspects of the overall value chain.
The demand for authenticity is prompting industry stakeholders to reevaluate the traditional approach to sustainability, and increasingly consider investing in data-driven solutions that can transform their performance across the entire business spectrum.
Achieving this requires reevaluating the entire value chain through a new lens and integrating data as a critical element. This approach revolves around six essential pillars:
- Embrace Circular Design: Innovate products and raw materials that can find their way back into the economy.
- Practice Responsible Sourcing: Assess suppliers across all tiers and understand the ethical risks of the end-to-end supply chains.
- Adopt Sustainable Manufacturing: Minimise use of natural resources (for example: energy, water, and raw materials), and employ ethical labour practices.
- Optimise Logistics: Adopt AI enabled consignment planning and routing to reduce carbon footprint of transport.
- Ensure Customer Transparency: Educate the customer on product carbon footprint, provenance and end-of-life.
- Strive for Zero Waste: Define the Reverse Supply Chain to be effective and efficient.
Incorporating data-driven sustainability solutions into these six pillars can provide companies with actionable insights, informed decision-making, and enhanced sustainability practices throughout their supply chains.
The sense of urgency is unmistakable – and intelligent data is the way forward. As consumer awareness grows and regulatory scrutiny tightens, businesses that embrace these data-driven environmental strategies stand to gain a competitive advantage, enhance their brand reputation, and contribute to a more sustainable future.
