Innovation in the UK Retail Sector - Nesta

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Innovation in the UK Retail Sector • In terms of packaging and waste, data from the Environment Agency show that in the UK the amount of retail waste increased from around 8.5 million tonnes in 1998/99 to 12.5 million tonnes in 2002/03. WRAP suggests that as much as 50% of household waste, which ultimately ends up in landfill, has originated from a purchase from the top 5 retail supermarket chains. Packaging and waste is a very visible aspect of sustainable consumption and one over which consumers express most concern (70% of global consumers expressed similar levels of concern about packaging waste) 27 . This is one area in which innovative solutions by the retail sector have abounded. For example, in relation to plastic carrier bag use, Waitrose has trialled ‘carrier bag free’ stores and checkouts; Tesco has pledged to reduce packaging by 25% and provide on-pack information on recyclability; Asda has committed to reducing own label packaging by 25% over the next year, but only Netto have moved beyond trials to charge for bags everywhere. Yet the evidence in relation to, for example, in relation to plastic bag levies is still unclear (Lamb, 2005), tensions still exist between commercial and environmental objectives and there is a lack of good practice in non-foods where 1mn tons of textiles are thrown away each year. • In relation to standards, BSI and the Carbon Trust’s draft product carbon footprinting standard, just out for technical consultation, is hoped to provide a reliable and consistent framework for sustainable product innovation by retail firms, although product carbon footprinting is not without its challenges. Recently, Tesco announced that it would work with the Trust to assess the carbon footprint of 30 own-brand products. • In relation to skills, research by the Australian Greenhouse Office identified several years ago that training of retail staff on the awareness of environmental issues so that they were “equipped and motivated to handle customer questions” is key, for example, to the development of innovative environmental systems that promote cocreated recycling solutions. Work by the Resource Efficiency KTN has supported this finding in the UK and the KTN has been working with SkillSmart Retail and the Basingstoke College of Technology to develop a 1-day basic level environmental awareness skills programme. • Finally, the ‘horizontalisation’ of policy (to create an appropriate infrastructure for sustainable innovation) is illustrated by the Department for Transport’s recent consultation paper on a new low carbon transport infrastructure (Department for Transport, 2007). 8.23 This is just a small snapshot of the widespread consultations, initiatives and projects in relation to sustainability, all of which have complex and interlocking implications for the retail sector. But what should be the priorities for retailers’ attention? Care must be taken to avoid ‘initiative-itis’, which can risk adding to the uncertainty of retail firms, rather than providing the kind of integrated, authoritative guidance that will provide the retail sector with a framework within which it can pursue innovation with confidence. It is important that the retail sector can have confidence in the long-term direction and integration of Government policies on sustainability in order to secure the sector’s willing participation in both projects and consultations. 27 AC Nielsen, 2007. Page 66
Innovation in the UK Retail Sector 8.24 With a few notable, widely publicised, exceptions, retailers’ innovation in relation to sustainability has tended to be somewhat piecemeal. In part, again, this reflects a lack of resource – both financial and human – within the sector; but it also reflects the difficulty in positioning this kind of innovation in relation to more explicitly commercial demands on the business, alongside a relatively low awareness and - even when aware - a degree of uncertainty in relation to the relevance of Government policy and initiatives in this area. It will be critical to identify the most important priorities not just for large, higher profile, retail businesses but also for SMEs. 8.25 Much of this uncertainty has to do with the absence of appropriate standards. For example, one of the chief barriers cited to innovation in relation to environmental objectives was the persistence of an accounting methodology that fails to recognise the triple bottom line: which accounts for the costs but fails to distinguish the environmental benefits that lead to carbon footprint reduction. Standards in relation to accounting practices are needed to permit the correct attribution of spending towards environmental goals. There remain inconsistencies in accounting practices in relation to environmental outlays, which are primarily due to lack of sufficient and uniform authoritative accounting standards and ever-changing public policy and regulatory standards. 28 8.26 The SIGMA Project (a collaborative exercise between BSI Global, BERR and the notfor-profit organization AccountAbility) launched guidelines in 2003 to assist firms in developing a standards-based framework for managing sustainability. Alliance Boots and Marks & Spencer have been the only retail partners in this initiative: “The Boots Group has a long standing commitment to incorporate sustainable development principles into its business operations. Collaboration with the Sigma project is a natural progression of this philosophy. Using the latest thinking, Sigma has provided the stimulus to develop new processes, enabling us to remain a leading edge sustainable business and reinforce the trust our customers place in the Boots name.” But there are still significant challenges, as AccountAbility comments: “There are now over 300 standards aimed at assisting businesses in meeting the goal of sustainability. Convergence towards a global architecture of standards that are not just compliance or risk management mechanisms is crucial.” (AccountAbility) 28 Razaee, Z. et. al., (1995), ‘Corporate governance and accountability for environmental concerns’, Managerial Auditing Journal, 10(8), 27-33. Page 67
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Report for NESTA December 2007 Inno
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Contents Innovation in the UK Retai
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Innovation in the UK Retail Sector
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2. The nature and contribution of r
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Innovation in the UK Retail Sector - Nesta

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