As a core strategic focus, sustainability has escalated quickly over the last five to six years, with retailers and suppliers recognizing the importance of sustainable practices and their impact on the environment, society, and profitability.
Most businesses have set their sustainability agenda and are beginning to make good progress on implementing initiatives (e.g., reducing their carbon footprint) to meet targets developed by the government or themselves. The focus in this area was not unduly slowed by the pandemic, underscoring the importance that it now holds in boardrooms.
However, much of the work being done in this area is through the efforts of individual companies working on unilateral plans. There is an emerging opportunity to amplify the positive impacts of sustainability initiatives for trading partners by working together within their one-to-one relationships or across industry groups.
Despite the positivity and focus on sustainability, it ranks near the bottom in correlation with overall supplier-retailer relationship engagement, showing that there is a gap between the importance of sustainability as a strategic focus versus how sales and category leaders view its importance and effectiveness in driving engagement between retailers and suppliers.
The complexities of managing sustainability when dealing with multiple trading partners can present significant challenges. Often, sales-focused individuals manage the relationship between retailers and their suppliers, but these individuals may not prioritize sustainability initiatives. Therefore, the challenge is ensuring that all parties involved in the trading process integrate, understand, and support the sustainability agenda.
The pathway to implementing a sustainability engagement program
One solution to this challenge is to implement a sustainability engagement program. This could be initiated by either a retailer or supplier, as the purpose of such a program is to encourage retailers and suppliers to work together to develop and implement sustainable practices that benefit both parties. The program should include a clear set of goals and objectives that help trading partners understand the benefits of sustainability and how it can help drive business growth.
The first step in creating a sustainability engagement program is to build awareness among all stakeholders. This includes educating sales-focused personnel who may not have a background in sustainability and the importance of sustainable practices. It also involves working closely with suppliers and retailers to ensure they understand the expectations regarding sustainability and its impact on their business.
Once awareness has been established, the next step is to develop a set of sustainability guidelines that all parties involved in the trading process must adhere to. These guidelines should outline the expectations for sustainable practices, including reducing waste, implementing renewable energy sources, using sustainable materials, and reducing carbon emissions. The guidelines should also explore opportunities for shared, sustainable initiatives that can benefit all parties involved.
Part of building an effective sustainability engagement program is identifying KPIs that are monitored and managed regularly. The KPIs should focus on measuring the environmental and social impact of the sustainability initiatives and the progress toward achieving the program’s goals. By measuring and monitoring progress, it becomes easier to demonstrate the value of sustainable practices and adjust the strategy accordingly.
One first possible step is to conduct research via multiple programs run with retailers and suppliers globally in the past 12 months. This research can indicate that communication is the most crucial aspect of the sustainability engagement program. Companies prioritizing sustainability must regularly communicate with their trading partners about sustainability initiatives, progress, and challenges. This communication should be two-way, allowing both parties to share their experiences and feedback.
Establishing KPIs is a crucial next step in any business strategy. KPIs help to track and measure progress toward achieving specific goals or objectives. Once KPIs are established, they need to be tracked and reported regularly.
Why engagement programs are key to bridging the gap and achieving sustainability goals
Tailored engagement programs are key to helping retailers become increasingly sustainable.
One example case could look like this: Via a survey, you can aim to understand the supplier’s perspective on sustainability, including assessing their readiness, priorities, and view of the retailer’s engagement on the sustainability agenda.
The results inform operational strategy and may be used as input to a sustainable materiality assessment and build the foundation for collaborative relationships with suppliers in elevating the sustainability agenda. .
An engagement programme also has the potential to gauge where the suppliers’ minds are in relation to retailers sustainability agenda. This is key to making impactful change across the supply chain that is mutually beneficial. .
It’s an exciting time to work in this area of relationship development with sustainability engagement between trading partners, which is critical to driving change across the supply chain. Retailers and their suppliers must work together to develop and implement sustainable practices that benefit both parties and reduce environmental impact. Sales-focused personnel must be included in these initiatives to ensure they prioritize sustainability in their decision-making processes. By building awareness, developing guidelines, monitoring performance, and communicating openly with trading partners, retailers can effectively drive sustainability initiatives and achieve sustainable business growth.