Incredibly, climate action barely rates a mention in this year’s election campaign, yet a significant national survey undertaken during the heart of the pandemic revealed that – even in the midst of that crisis – Australians were more concerned about climate change than Covid-19. Those Australians are of course voters, customers and workers who power our economy. Despite the absence of climate action – or even climate rhetoric from politicians, as business leaders, we must take that chal
hallenge very seriously.
We’ve seen through Covid the power of pulling together as a community, of working closely with government around a shared and mutual goal. We have also, unfortunately, had a glimpse of the dark side of our future with climate disaster events such as the record flooding and bushfires that have devastated communities and businesses.
And we’ve seen the rise and rise of consumer expectations. Research shows 64 per cent consumers buy or boycott brands for their position on a social or political issue, around a quarter (24 per cent) of consumers are willing to pay more for recycled materials in clothing or home goods – and even 25 per cent of luxury consumers now buy pre-owned goods. Incredibly, the second-hand clothing sector is expected to grow faster than fast fashion in 2022 and the resale market is expected to grow 11 times faster than the broader clothing sector by 2025.
Aside from our moral compulsion, businesses will not survive the customer onslaught if we do not act. Sustainability must now flow through everything we do – from ethical and transparent supply chains to energy-efficient stores and warehouses and sustainable consumption.
Retail has a lot to contribute to the world’s climate change solutions. And we have good foundations to build on within the Australian retail community. In December last year, the Australian Retailers Association (ARA) launched Australia’s first Retail Roadmap to Net Zero – amongst the first of its kind in the world, and we became the second retail body globally to commit to the UN-backed Race to Zero campaign.
ARA members who have already set their own net-zero targets and signalled their commitment to join the global Race to Zero include: Amazon, Bunnings, Coles Group, Cotton On Group, JB HiFi, KMD Brands, Kmart Group, L’Oréal, Country Road, Officeworks, The Iconic, David Jones and Woolworths Group. We are confident there will be many more members in this group in the coming months as we progress our retail climate action plan.
We know the rewards are great if we act. A recent survey of global retail leaders from Boston Consulting Group (BCG) found an almost unanimous belief that sustainability initiatives will drive value in the next 5-10 years – with about half believing companies will invest “whatever it takes” to reach their goals.
The BCG retail leaders survey also found that harnessing sustainability is now seen as a competitive advantage which can unlock sources of value, reduce costs, grant access to new revenue pools, and reduce the cost of capital. And this pays out in the longer term, with average revenue and earnings growth 47 per cent and 36 per cent higher respectively with market capitalisation growing faster as well.
In a transparent world, our younger consumers don’t distinguish between the ethics of a brand and its network of partners and suppliers. Increasingly, our customers demand that our actions must match our ideals, and those ideals must permeate the entire stakeholder system.
Sitting on the fence on social and environmental causes is not enough – Gen Z in particular values authenticity above all, and will call out brands that “virtue-signal” or exaggerate their ethical credentials
We need to act decisively, and we need to measure our success. Who in our business is responsible for sustainability – and have we empowered them to act and act swiftly? Without clear accountability among those responsible for operational performance, sustainability will not gain traction.
The time for talk has passed. It’s time for active leadership that inspires all in our business stakeholder community to do the same.
Regardless of the outcome on 21 May, as businesses, we know our customers and future team members will vote for change with their feet and with their wallets. The question is, ‘is your business ready?’