Special Report: Go for the Green

For some retailers, environmental sustainability has been built into their company's core values from the beginning; for others, it's been embraced more recently. Regardless of its origin, environmental sustainability is becoming a core consideration for the retail industry, one that affects strategy, operations, workforce engagement, and connection to consumers and communities.

In March, the Retail Industry Leaders Association (RILA) released its 2013 Retail Sustainability Report. The report provides a snapshot of activities and trends across the retail sector, portraying a detailed view of the industry's adoption of sustainability programs. The data compiled for the report was drawn from responses to a survey completed by RILA member companies. The survey's respondents collectively represent more than 65,000 locations and $1 trillion in global revenue.

Overall Program Development
A key takeaway from the report is that retail companies' sustainability programs are following a continuous development curve. They begin with a simple project, often waste or energy reduction, and then refine the program by developing and implementing strategies, tracking the progress over time. These activities uncover a range of benefits, from improved customer loyalty to decreased costs to more resilient supply chains. The measured business benefits fuel further investment and, in turn, create continuous strategies to strengthen environmental sustainability programs over time.

Managing Sustainability
As companies start to focus on sustainability, initiatives must be implemented and managed just like any other business program. Most of the survey respondents have full-time sustainability teams, which have been increasing in size to keep pace with the growing breadth of responsibilities. This growth can, in part, be attributed to the primary benefits that respondents perceive as derived from their sustainability programs, namely cost reduction, brand enhancement and risk management. However, despite the gain in staff, sustainability budgets remain the same for most retailers.

The need for larger team sizes is justified when a strong business case exists for sustainability programs. Retailers most commonly seek a return on investment for sustainability projects that's similar to any of the company's other investments. Across the industry, the average minimum payback period for a sustainability project is two years to three years. Top performers, however, plan over a longer time period and often pursue projects with paybacks as far out as three years to five years.