Case study CloseThe client’s challengeThe internal audit committee of a national retail company engaged PwC to develop an approach for identifying and integrating CSR risks into the enterprise-wide risk management strategy and methodology.Our approachPwC professionals: Identified key CSR issues across stakeholder groupsQualified compliance and reputational liabilities related to CSR issuesAnalysed existing controlsConducted a competitive review to identify peer approaches to CSRBenefits to the clientPwC's work considerably expanded the client's understanding of the scope and complexity of CSR issues and inspired board level commitment to implementing a CSR strategy capable of mitigating risk while serving as a competitive differentiator.
Serving up sustainability report guidance to beer giantPwC was retained by a major brewing company to provide strategic counsel on developing the company's 2007 sustainability report. To ensure that information was credible and robust, PwC followed Global Reporting Initiative (GRI) G3 guidelines and other relevant industry and accounting standards.
Large retail companyPwC designed a code of conduct, implementation framework, and whistle-blower protocol for a large Latin American retail company. To inform policy development, we benchmarked retail industry best practices and analysed the client's culture and operations.Contact a specialist
Building to win
As more consumers, particularly in developed countries, go green, their purchasing behavior is evolving quickly and dramatically. So the challenge of sustainability affords enormous opportunities and presents profound risks for the retail and consumer sector. Sector participants that are first to understand the change can seize competitive advantage and remake themselves for the new landscape. Consumer company executives have been particularly quick to appreciate the benefits of responding to climate change. Significantly more than other sectors, they are taking action to reduce the risk and are anticipating paybacks for their efforts within a year, according to PwC’s latest CEO survey.
Comprehensively redesigning a retail or consumer product business model to respond to the sustainability agenda requires addressing an array of risks throughout the value chain. These include environmental, labor and human rights considerations throughout the supply chain, life cycle impacts of products including carbon emissions, water and generated waste, and the health implications of products. Rather than trying to tackle every issue, many consumer product companies are focusing on “signature issues,” – those issues most germane to their products. Retailers might take visible steps to reduce the carbon footprints of their stores, for example. Consumer goods company executives, for their part, might address the risk of water scarcity – 56% of consumer company executives anticipate that the scarcity of fresh water will impact their businesses in the long term, according to the CEO survey. Leading soft drink companies, for example, are focusing on water scarcity.
The current uncertainties of consumer preferences make the sustainability agenda daunting nevertheless for the entire sector. While growing numbers of consumers are interested in sustainable products, there is strong resistance to paying high premiums for them. But, consumer resistance also varies depending on the type of product. Another consideration is whether consumers will pay more for some sustainability attributes, but not for others, such as for farmers’ living wages but not for reducing carbon emissions. Both retailers and consumer product companies also have to grapple with uncertainty about the depth of consumer commitment.
Retail and consumer companies face additional complexities in pursuing the sustainability agenda as they increasingly focus on emerging markets in a trend intensified by the economic downturn. Many consumer products companies that have long had local presences in emerging markets and are now recentralising as major retailers move into these markets must develop new relationships with suppliers, distributors and others in their supply chains. As both retailers and consumer product companies adjust to new organisational structures in emerging markets, they must incorporate their sustainability agendas into varying cultural and legal contexts and along altered and extended supply chains.
Establishing company-wide social responsibility programmes whose standards meet those of the most exacting of the jurisdictions in which a company operates can maximise the efficiency of implementation and foster consistent values. Setting standards for suppliers and internal stakeholders on sustainability related issues can help to disseminate best practices. And, companies can find new efficiencies by collaborating with competitors in areas that need not undermine their competitive advantages, including, in some cases, their transport networks.
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The retail & comsumer sector sustainability agenda
Assess and mitigate supply chain risks
- Evaluate environment, social and human rights risks among raw materials and sourced parts producers, in packaging and in transport
- Set sustainability goals for suppliers
- Collaborate with competitors to realise supply-chain efficiencies where possible
- Assess your water usage, carbon emissions, waste production and labor practices
- Devise and implement plans to make operations more efficient, to reduce resource use and to address employment issues
Adapt your strategy for the new landscape
- Decide your product mix and your market segment
- Formulate a pricing strategy
- Develop your message to consumers
- Educate your work force about the importance of sustainability
- Engage employees to support and execute the agenda
- Demonstrate that your company is serious about sustainability