Innovation in the UK Retail Sector - Nesta

. Promoting innovation in sustainability
Innovation in the UK Retail Sector
8.21 One of the biggest areas of uncertainty for retail businesses at present is the area of
sustainability and for this reason we devote a separate section of the report to this topic.
Competing standards, a growing number of independent agencies and organizations
seeking to claim legitimacy in solutions provision, rapidly evolving (and sometimes
conflicting) Government policy, quickly changing consumer sentiment and potentially
high costs create an atmosphere in which innovation in sustainability can be seen as risky,
short-term or simply cosmetic. This perception is not just reflected at the national level.
The Corporate Leaders Group on Climate Change (whose retail members include the
John Lewis Partnership, Tesco and Kingfisher) have called for a binding agreement on
climate change at the Bali summit, in order to encourage businesses to innovate and
invest in low-carbon technologies 26 . Larger firms are facing increasingly significant
international challenges in terms of seeking innovative solutions to managing carbon
emissions and whilst smaller firms with correspondingly smaller carbon footprints have
quantitatively smaller objectives, they are often equally challenging.
8.22 Government itself is very rapidly expanding its involvement with sustainability and
policies and programmes to combat climate change. A number of important Government
initiatives are directly relevant to the potential stimulation of sustainable innovation in the
retail sector:
● In terms of sustainable consumption, the Government provides £2.1mn via
EPSRC for a Green Logistics project which aims to improve the environmental and
social sustainability of the UK freight transport industry (of which retail logistics is a
significant component), while maintaining or improving its economic sustainability.
The research involves a consortium of universities lead by the University of Leeds
and supported by Cardiff, Heriot-Watt, Westminster, Southampton and Lancaster
Universities. The project started in June 2006 and will lasts for 4 years. For example,
one of the areas of interest is in determining the most sustainable channel through
which to sell different products (such as digital games versus loaves of bread).
● In relation to low-carbon technology, Government investment in commercialising
such technologies in the UK will exceed £370 million from 2008-2010, with an
increase of £170 million for the cross-Government Environmental Transformation
Fund (ETF). The retail sector could potentially benefit from the scheme’s interest in
low carbon buildings. An Energy Technologies Institute will raise up to £1.1 billion
to spend on low carbon energy technologies over the next ten years.
● In relation to energy efficiency and the financing of sustainable innovation, 25% of
the UK’s carbon output is emitted from non-domestic buildings, with 10-15% of
carbon output incurred during construction and 10% during decommissioning. For
retailing, this means working more closely with the development and construction
sectors and highlights the potential of mixed use developments. For small and
medium-sized retail businesses, interest-free energy efficiency loans are available.
SMEs in England and Scotland, and all businesses in Wales that have been trading for
at least 12 months, can borrow from £5,000 to £100,000 in the form of a loan
repayable over a period of up to 4 years.
26 http://www.balicommunique.com/index.html. Other retail and retail-related signatories include: the Body Shop, eBay, Gap Inc., Lend Lease,
Marks & Spencer, Nike, Sainsbury’s and the Warehouse.
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