Sustainability helps retailers and brands achieve better financial results, a new report has shown.
Adopting sustainable practices can be responsible for approximately 20% of a business’ financial results, supply chain data expert Supply Pilot found in recent research.
The group said that supplier collaboration is the most effective sustainable practice in terms of driving environmental, operational and financial performances.
This means retailers and brands who are proactively engaging with their suppliers, sharing data, establishing mutual measuring methods, raising conversations around sustainability requirements and responsibilities, and working together to develop products that support environmentally-friendly goals tend to do better financially.
Supplier collaboration practices were more effective in driving positive impact than other practices such as product design and customer collaboration, the white paper titled ‘From Intention to Action’ showed.
“The study indicates that further improving sustainable performance can have a positive impact on financial performance,” said Supply Pilot CEO James Butcher. “The best way to overcome the complexity of becoming more sustainable is through supplier collaboration.”
He added that the data in the survey backed up what the company has seen from its work alongside retailers such as John Lewis Partnership, Co-op and Walgreens Boots Alliance in terms of “just how beneficial sustainable practices can be for businesses’ bottom lines”.
The research’s findings did not support the “prevailing view that there is a trade-off between environmental performance and financial performance”, Supply Pilot said.
Nevertheless, around 88% of companies said the biggest driver behind embracing sustainability was “moral motivation” rather than financial.
The retail data expert’s paper found that a people-centric approach to sustainability will have the most success in the long term as consumers become increasingly more concerned with environmental and socially damaging practices.
Several retailers are starting to make changes across their supply chains to increase both environmental and social responsibility.
The John Lewis Partnership has recently published its 2021 ‘People in Supply Chains’ report, which detailed the company’s work with organisations such as Fairtrade Foundation, The Environmental Justice Foundation and Oxfam to protect and improve the rights of global supply chain workers.
Sainsbury’s is also making its supplier lists publicly available as it looks to increase supply chain transparency to “shine a light on environmental and social issues in our supply chain and inform our approach to ethical sourcing”.
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