Holland & Barrett Benelux

Jeroen Faro

In January 2023, the EU’s Corporate Sustainability Reporting Directive (CSRD) for external reporting of sustainability for companies entered into force. While a major step, that is all it is; a mere step in the long and continuing journey towards a more sustainable future. CSRD is relevant to a large number of firms, many retailers included.

As retailers, we receive an ever-growing number of questions from customers on sustainability. Our workforce, especially the younger population, considers it more important. Most importantly, unsustainability threatens not only our business model but the very place we call home, our Mother Earth. In short, it is hard to understate the importance of sustainability to our business model and our licence to operate.

CSRD attempts to measure a company’s sustainability health like a classic annual report measures its financial health. In that sense it is quite clever as both are meant to inform stakeholders about a company, foremost its (would-be) investors. We know that investors pay a premium for environmental, social, and corporate governance (ESG) performance, just as they do for healthy cash flows. We can also use it as a force for our intrinsically-driven sustainability efforts. CSRD helps with this, because it starts with a materiality assessment. In the assessment we find not only what we ourselves think is important called the inside-out view, but include what our stakeholders, customers, suppliers, investors consider relevant, called the outside-in view.

Both outside-in and inside-out views need to be data-driven, especially for retailers. After all, how can we properly assess customer views without asking many? The only way to gather insight from this is to do it quantitatively in a scalable manner with tools like surveys. The same, ofcourse, goes for inside-out. Retailers typically have many employees at many locations. The only way to engage them is through data and technology.

"Unsustainability threatens not only our business model but the very place we call home, our Mother Earth. In short, it is hard to understate the importance of sustainability to our business model and our licence to operate"

Once you know what your external and internal stakeholders consider important, we need to start measuring these fields to  improve upon them. Again, data takes the lead. This will pose a major challenge for any retailer as a whole new world of data has to be extracted and transformed into something useful and stored for use. Parameters likely to come out of a materiality assessment like CO₂-equivalent emissions or grams of plastic used in packaging have to be added to the financial data we captured before.

With the clean data available, the interesting work of setting targets and actually improving can commence. A key enabler for improvement is – what else – the data. There are examples abound throughout the retail value chain. Beyond the starting point of responsible sourcing, there are many ways throughout the own supply chain to create a positive impact for our surroundings, with a better bottom line as a bonus. For example, with more efficient routing algorithms for store deliveries, we can  save money and emit less greenhouse gases. With better, data-driven warehouse management, we can keep the highest-selling goods at shelves easiest to reach, so the bodies of our warehouse pickers will be strained less. The list goes on.

Beyond the supply chain, the opportunities are equally great. We can, for example, nudge consumers to healthier or more sustainable choices using personalisation. A different, concrete example is  a retailer extending their loyalty programme to a paid membership with a flagship feature of discounted organic produce. A move that benefits the world, brand image, and customers, through increased loyalty and sales.

From the reporting side, the earlier the data gathering starts, the better. Once that is in order, driving impact where it matters most is the next step. Becoming more sustainable is a journey and we must let the data be the guiding light.