AI could accelerate retail sector Net Zero goals

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Accelerating their net zero ambitions has been top of retailer’s agendas for a number of years, with the sector considering itself one of the most ambitious when it comes to tackling climate change, but the real picture is alarming. According to research from Microsoft, only 28 per cent of UK retail organizations are currently on course to be net zero by 2050 – in stark contrast to the national average of 41 per cent.

About the author

Ali Rezvan is Retail Director at Microsoft UK.

Furthermore, as 74 per cent of organizations within all sectors describe a ‘one foot in, one foot out’ approach on sustainability, whereby strong ambitions have yet to be translated into meaningful action, retailers can’t afford to be left behind. Harnessing available technology, such as data analytics and AI, to accurately record their progress is one of the fundamental steps to securing their continued success, in an ever more competitive marketplace.

Sustainable = relevant

Contributing to the protection of the future of the planet is obviously the core reason for improving the sustainability performance of any business, but aside from that, retailers should view boosting their sustainability credentials as a way of remaining competitive and relevant in a fast-changing world.

Several areas of the sector, including the fashion industry, have come under fire for unsustainable business practices in the last few years, with recent research from Deloitte offering a taste of things to come. As one in three consumers claim to have stopped purchasing certain brands or products due to ethical or sustainability concerns, retailers can no longer afford to ignore the issues at hand. Many brands have capitalized on this perspective, such as Levi’s with its ‘Buy Better. Wear Longer.’ initiative, which focuses on helping customers go green and forgo fast fashion.

From within the industry, also, comes pressure to reform. According to Microsoft research, 70 per cent of UK retail staff believe that environmental sustainability should be a top priority for businesses over the next five years, while 47 per cent prefer to work for an employer with a clear sustainability plan in place. But despite the clear mandate both within the sector and consumer pressure from outside it, many companies are falling behind with executing their sustainability strategies and just 21 per cent of industry workers believe their employer currently implements its sustainability plan efficiently.

The retailer’s roadmap

The current picture is one of stalling action, with many companies falling behind on executing their sustainability strategies. For example, 40 per cent of UK retailers are still yet to apply environmental standards in their supply chain while the same number (40 per cent) admit to not taking the role and value of natural capital into consideration in planning and operations.

Yet amid these challenges, there have been encouraging decarbonization trends within the sector – with the British Retail Consortium (BRC) reporting that its overall carbon footprint has improved with total emissions having nearly halved since 2005.

The future roadmap is clear: reducing energy usage, decarbonizing the supply chain and particularly logistics, promoting sustainable sourcing methods and encouraging and facilitating greener consumption habits. All of which can be facilitated by the innovative technology now available to retailers, such as cloud and data analytics, to make the change happen, as quickly as it needs to for the good of the climate – and their bottom line. We saw how retailers pivoted during the height of the pandemic – capitalizing on digitalizing their offerings for an e-commerce market and investing in technology to enable their successes, so businesses must now capitalize on their learnings from this time to drive change forward.

Using tech to drive sustainability goals

With the knowledge that retail leaders have set their goals either in line with the government’s 2050 net zero target or even mean to exceed it to reach net zero by 2035 (70 per cent), organizations must now harness the power of technology and embrace digital disruption to amplify and accelerate their sustainability strategies. The appetite for increasingly sophisticated technology to reduce carbon emissions is there, with retail leaders keen to capitalize with more intensive use of Robotic Process Automation (RPA, 56 per cent), machine learning (54 per cent) and ‘digital twin’ technologies (56 per cent) – a rapidly growing territory for digital simulation of business processes and strategies at scale, without the real-world waste.

Whether it’s using cloud and data, or advanced solutions like AI, RPA, machine learning and digital twins, technology can accurately record an organization's environmental footprint, as well as facilitating the changes needed to create a sustainable infrastructure. From supporting in-house upskilling, mapping out the risks and benefits of sustainable strategies and creating a resilient supply chain, to enabling decarbonization by monitoring and measuring emissions, cloud technology helps companies to take control of their environmental initiatives by offering comprehensive, integrated, and automated insights.

This also facilitates accurate reporting to stakeholders and the reduction of resource usage by aggregating sustainability data in an actionable way, embedding climate-conscious action within their operations. In short, technology offers retailers the opportunity to intricately manage everything they must now measure, in order to fulfil their net zero goals.

Naturally, each organization will move at their own pace to decide which steps they take and it what order, but whatever they decide to focus on first, importantly, they must look beyond their own four walls. Through cross-sector collaboration, public-private partnerships and shared learnings, retailers can create lasting change at scale, by driving action and accountability at an individual, company and ecosystem level.

In a world where retail is at the heart of our everyday lives, the sector has a fantastic opportunity to make a real difference on climate change. The passion for change and strategy is there, so with intent and collaboration a cleaner, brighter future is within our grasp.

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Ali Rezvan is Retail Director at Microsoft UK.