How SMEs will drive retail’s 2040 net zero goal

This week, 63 leading retailers came together with the British Retail Consortium (BRC) to set an ambition to reach net zero emissions by 2040.

“Climate change is a threat that none of us can afford to ignore,” said Helen Dickinson, chief executive of the BRC. “By 2040, we want every UK customer to be able to be able to make purchases – in store and online – safe in the knowledge that they are not contributing to global heating.”

The BRC’s landmark Climate Action Roadmap outlines steps needed to decarbonise the retail industry and its supply chains, including moving to net-zero logistics operations, increasing sustainably sourced products and putting decarbonisation at the core of all business decision making.

“Retail is the critical gateway between vast international supply chains and every one of us as citizens. We have a fantastic opportunity to make a real global difference if we can all work collectively,” Helen said.

The retail industry accounts for 5% of the UK economy and employs three million people, and as the BRC’s report says, “virtually all aspects of retail contribute to emissions”. However, this also means that retail is in a unique position to catalyse change: “The industry can influence emission reductions of both suppliers and customers, and mobilise considerable action to address the climate emergency,” the Climate Action Roadmap says.

“A less harmful way of retailing”
Collaboration is certainly key to the BRC’s plans, and many SMEs are already playing a role in lowering emissions for the retail sector. Farm shops that stock produce grown in their own communities, fine food retailers that carefully consider the brands they import and cheesemongers that champion locally made farmhouse cheeses are not only contributing fewer emissions themselves, but they are also providing consumers with a more socially responsible choice.

This concept represents one of the BRC’s main decarbonisation pathways, and with the shift to local shopping seen during the pandemic, smaller retailers may have a bigger part to play in future.

Edward Berry of independent food consultancy The Flying Fork, says sustainable credentials are now an assumption among fine food businesses. “It’s been at the front of their mind for a long time, because the sorts of people who run and operate these businesses are quite close to their customers.” Farm shops run by farmers, for example, may have “a closer appreciation of the importance of their land. And when it comes to waste, for example, they’re the ones who have probably led in many ways, whether it’s through biomass or processing waste,” he said.

Another key reason that independents are primed to drive change is because of their small size, which allows them to be more agile than the multiples. “If you’re running a small shop, and you want to go packaging free, you make that decision today, and you act on it tomorrow,” Edward said.

Megan Adams, the founder of zero-waste shop Re:Store, said the industry-wide effort was a “significant positive step. To get the biggest retailers on board, who contribute more to carbon emissions, is promising,” she said.

However, as a business that’s already committed to significantly reducing its environmental impact – and that of its customers – Megan said 2040 didn’t feel soon enough. “If more people support small independent businesses that already have in place zero emission policies or are actively reducing their impact, more of these businesses will survive and thrive, and we can move towards a less harmful way of retailing in this country,” Megan said.

The challenge going forwards is the consumer, Edward says, not because they don’t buy into the sustainability message – in fact, consumers are increasingly demanding more sustainable food options, and the coronavirus pandemic has only accelerated this trend. By Kantar’s estimate, there is $382 billion worth of spending power locked within the sustainably-minded consumer market.

But for consumers, it still takes a more concerted effort to ensure their shop is environmentally friendly. To that end, Edward suggests businesses make sustainability part of their USP. “Make it part of your business and shout loudly that you are a low-carbon or a zero-carbon business, on the basis that there’s a customer out there who will shop with you for that reason,” he said.

Top business groups call for a “just transition”
Following the BRC’s report, the UK’s top five business groups wrote a joint letter to the government calling for a “joined-up, effective” approach to policies

Smaller firms are “enthusiastic” about green initiatives, and “there’s never been a better time to empower SMEs to make the shift,” wrote the groups, including the Federation of Small Businesses, the Confederation of British Industry, Make UK, the Institute of Directors and British Chambers of Commerce.

“Big corporations have big budgets for green initiatives, but smaller firms need support to make sure they don’t get left behind. At a time when all political parties support the target that the UK should be carbon free by 2050, it’s now down to the government to ensure businesses aren’t disproportionately hit.”

While large companies stand to make a big impact when they reduce their environmental impact, SMEs are well-positioned to begin leading the charge.