Our Supply Chain Briefing series looks at how technology is transforming the various stages of the retail supply chain. Below, we illustrate the seven major components of the retail supply chain and some of the technologies that can support processes at various stages—from product design to end consumer. [caption id="attachment_98053" align="aligncenter" width="700"] Source: Coresight Research[/caption]   What Is Sustainability in the Supply Chain? Sustainability encompasses how supply chain processes, logistics and technologies help companies to meet current and future business goals whilst limiting their impact on the environment and upholding social responsibilities. Factors affecting sustainability include the ways in which raw materials are sourced, goods are manufactured and waste disposal is managed. Companies that have sustainable supply chains can build positive recognition among consumers, minimize their impact on the environment and improve long-term profitability. Consumers Are Placing Increasing Focus on Sustainability As consumers become more educated on how supply chains can impact the environment, they are embracing businesses that care about the environment and are expecting an increasing number of companies to address sustainability and adopt eco-friendly practices. According to a 2019 Coresight Research survey, 23% of US consumers try to buy from brands or retailers that have a good record on environmental issues, and 18% are willing to pay more for clothing produced in an environmentally friendly way. According to another study conducted by Nielsen in 2018, 81% of global consumers strongly feel that it is a company’s duty to help improve the environment. Business Case for Sustainability in the Supply Chain Companies are now placing sustainability high on their agendas, not only to withstand pressure from customers to be more sustainable but also to improve their recognition and long-term profitability. According to a 2018 survey conducted by HSBC, 84% of companies that plan to make sustainability-related changes to their supply chains do so in order to enable cost efficiency and improve revenues and financial performance. In addition, the same survey indicated that 85% of surveyed companies want to achieve a sustainability standard recognized by their sector or market, so that they can be seen as sustainable from a consumer’s perspective. In the following sections, we outline how a number of major businesses spanning the retail, consumer packaged goods and apparel industries are adopting sustainable practices through different means, including sustainable sourcing and production, the use of technology and practices to reduce greenhouse gas emissions and waste. Gap and Inditex Group Adopt Sustainable Sourcing and Production This year, Gap announced plans to accelerate its use of sustainable materials throughout its brands in honor of Earth Day on April 22, which was an annual global event held to demonstrate support for environmental protection.

• Banana Republic will source 100% of its cotton sustainably by 2023, through partnering with global non-profit organization Better Cotton Initiative and using recycled or organic sources to obtain cotton.
• Old Navy plans to create all of its denim products with methods that decrease the company’s water usage by 20% or more in the washing stage of product garments compared to conventional techniques.

According to Gap’s press release on April 22 , these initiatives represent the company’s latest steps to integrate more sustainable product innovation and technology across its portfolio. Meanwhile, Zara's parent company Inditex pledged that by 2025, all of its eight brands will only use sustainable (organic or recycled) cotton, sustainable linen and recycled polyester. Through this pledge, Inditex aims to offer fashion that complies with the highest environmental, health and safety standards. Blockchain and Analytics Are Technologies That Help Brands Achieve Sustainability In addition to productivity benefits, implementing various technologies in supply chains are helping companies to achieve sustainable practices, enabling better visibility throughout the supply chain and better access to data. For example, we are seeing companies such as Unilever and Stella McCartney trialing blockchain and data analytics to enhance the sustainability of their operations:

• Unilever trialed blockchain for one year in 2018 for its tea supply chain, which involved recording information about farmers’ produce—such as quality, unit price and crop production metrics—to a blockchain. The information can then be used to validate the sustainability of the tea farmers’ agricultural practices and to reward them appropriately. According to Keith Weed, Unilever’s Chief Marketing Officer and Head of Sustainable Business, using blockchain would help Unilever to increase sustainable sourcing and enhance the livelihoods of farmers it works with.
• In May 2019, luxury fashion brand Stella McCartney announced its collaboration with Google Cloud on a pilot of its new supply chain tool, which, with the help of data analytics and machine learning, could help brands better estimate the environmental impact of their own items of clothing at the sourcing and design stages. Upon success of the pilot, Stella McCartney and Google Cloud will pioneer the future of sustainability in the fashion industry by making the tool open with industry-wide accessibility.

P&G and Clorox Are Adopting Measures To Reduce Gas Emissions and Transportation Another aspect that relates to sustainability is how companies are making efforts to reduce their gas emissions in order to minimize their impact on the environment.

• Clorox, in its 2019 analyst day presentation, announced a new supply chain for its litter products, Fresh Step and Scoop Away, which will eliminate 7 million over-the-road miles, 1 million gallons of diesel fuel and 23,000 metric tons of carbon-dioxide emissions.
• Procter & Gamble (P&G) announced its Ambition 2030 plan in 2018, through which the company is aiming to cut greenhouse gas emissions in its manufacturing sites by half by 2030. P&G will also use renewable electricity to power its plants. The company stated that it has achieved its 2020 environmental goals of reducing energy use and truck transportation.

Retailers and CPG Brands To Reduce Waste through Sustainable Packaging To reduce waste, retailers and CPG brands are starting to decrease the use of non-recyclable product packaging.

• Walmart announced in March 2019 that, together with its suppliers, it will seek to use 100% recyclable, reusable or industrially compostable packaging by 2025; eliminate non-recyclable PVC packaging material in general merchandise by 2020; and reduce private-brand plastic packaging where possible. According to Laura Phillips, Senior VP of Global Sustainability at Walmart, the company is aiming to lead the way in reducing plastic waste by increasing packaging circularity.
• Clorox announced in early October 2019 that it intends to make all its packaging 100% recyclable, reusable or compostable by 2025. Furthermore, Clorox is aiming to reduce virgin plastic and fiber in packaging by 50% by 2030. According to the company’s 2019 analyst day presentation, this initiative will enable Clorox to achieve its environmental sustainability goal.

Key Insights Consumers are placing higher importance on sustainability to live eco-friendlier lives, and companies from the retail, consumer packaged goods and apparel industries are adopting sustainable practices in response. As consumers continue to place an emphasis on purchasing products from companies that “go green,” sustainability can be a competitive differentiator. Retailers and brands can achieve sustainability through technology, by reducing gas emissions and waste and by employing sustainable sourcing and production practices.