Consumer demand for more sustainable products from more sustainable companies continues to grow, but different consumers focus on different aspects of sustainability and use different language to talk about it. As a result, it is important for retail executives to recognize how the language around sustainability is evolving so they can meet the needs of consumers, employees and investors.
Understanding the following five sustainability terms — what they mean, how they evolved and how they connect with each other — is vital for success with sustainability-focused consumers and other stakeholders.
1. Sustainability
The National Retail Federation defines sustainability as “generating economic value while creating net positive environmental, social and community benefits.” NRF celebrates how different retailers prioritize different aspects of sustainability based on the demands of their consumers, the size and scale of the retailer, and the types of products they sell.
The most cited definition for sustainability was introduced by the United Nations Brundtland Commission report “Our Common Future” in 1987. The report defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” The definition is intentionally broad and incorporates human health, environmental, social, cultural and community needs.
Notably, the report also acknowledges the vital role of profit-motivated businesses to generate the capital necessary to invest in the needs of the future. When this aspect of sustainability was at risk of being overlooked, the business community, led by consultant John Elkington, began framing sustainability around the “triple bottom line” of “people, planet and profit.”
2. Corporate social responsibility
CSR is a vital component of any retail sustainability strategy because it addresses the direct connections between retailers and the communities they serve. CSR initiatives predate modern understandings of sustainability, dating to concerns about worker well-being in the mid-to-late 1800s. As retailers and others in the business community began integrating sustainability considerations into their business strategies in the 1990s, CSR initiatives were a natural place to begin because they focus on people.
Modern CSR priorities include charitable donations to local communities and supporting causes like local school sports teams, community improvement efforts, veterans’ issues, literacy campaigns, access to healthy food within inner-city neighborhoods, community beautification projects and other social and community issues.
3. Environmental, social and governance
By the early 2000s, more companies were integrating sustainability considerations into their business strategies, including efforts focused on environmental, social and community issues. Nonprofit organizations and investors, however, want evidence that those efforts are producing beneficial results. They want the ability to measure progress, to calculate returns on investment, cost savings and risk reduction, and to ensure companies have governance structures in place to manage the issues. ESG reporting became an important measurement tool for analyzing the effectiveness of sustainability strategies.
4. Circularity
Circularity is another sustainability framework attracting significant consumer, investor and retailer attention. As defined by the Ellen MacArthur Foundation, a truly circular system mimics nature, where there is no waste because one species’ waste becomes the raw material for other species to thrive.
Circular retail business models, including resale retail and refillable packaging solutions, attempt to replicate natural systems and eliminate consumer and manufacturing waste. They keep products circulating from one consumer to the next, reusing and repairing products rather than throwing them away, and recycling them when they are no longer needed so the recycled materials can be used to make new products.
5. Regenerative
The original definition of sustainability — meeting the needs of future generations — means ensuring that future generations have access to needed resources. In some parts of the world, this requires regenerating and restoring natural systems so they can continue providing for human needs long into the future.
Companies like Walmart, Target, Ahold Delhaize (owner of Giant Foods, Food Lion and Hannaford), Levi Strauss & Co. and Madewell are working with suppliers to improve farming, forestry or fishing practices in ways that restore and regenerate natural systems for the future. Encouraging organic and no-till farming techniques, for example, restores soil health, enhances biodiversity and improves long-term productive capacity. Regenerating ocean reefs, forests and other natural habitats protects entire ecosystems that provide valuable resources that will be needed in the future, including food, clean air, clean water and a stable climate.
The language around sustainability will continue to evolve as different stakeholders emphasize different aspects of sustainability. It is important for retail executives and others to understand that, like the blind elders exploring an elephant for the first time, they are all exploring sustainability even when they are focusing on different aspects and using different language to describe it. Helping consumers, employees, suppliers and investors see the entire elephant can help eliminate confusion and accelerate progress.
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