Retailers on a low-carb diet?

Shed the fat has taken on new connotations in the retail world. Not just going lean - but going green is in!

According to a recent survey 44% of consumers would switch to a product or service with a lower carbon footprint, even if it were not their first preference. The present heightened environmental awareness of consumers represents a new challenge to manufacturing and retailing enterprises worldwide.

Capitalism is a central feature of modern industrial societies; the larger retailers, and many of the not-so-large, are in continuous competition to find new ways of making profits. That said, over the past few years, one has seen that investing in sustainable and green supply chains can have enormous long term cost benefits while reducing the damage on the environment.

Studies conducted, however indicate there is much work to be done by retailers and manufacturers to convince the public of their green credentials. Consumers remain skeptical of the green claims currently being made by retailers.

While that might be the case, there are indeed lots of initiatives being taken by retailers to manage their impact on the environment. Research conducted by Expicient, Inc. (see figure) shows that there are three areas where retailers have made big improvements:

Building and Resources

According to the United States Environmental Protection Agency, about $40 billion is spent annually in the U.S. to air condition buildings—one-sixth of all electricity generated in a year. A lot of best in class retailers have successfully implemented strategies to reduce their energy consumption. Simple investments for e.g. in efficient HVAC (Heating, Ventilation & Air Conditioning) systems can help a lot. The use power obtained from renewable sources of energy can go a long way as well. Harvesting daylight by better building design, use of alternative sources of energy – Solar, wind and hydro and ensuring reduction in water consumption are some of the methods being employed.

Some retailers in the US also utilize recycled materials for construction. Preservation of natural resources, avoidance of the use of landfill space, reduction in environmental damages caused by incorrect disposal and reuse of substances which would otherwise be classified as waste are some other measures being implemented.

Transportation and logistics

Moving goods and people from place to place accounts for one-third of U.S. global warming pollution. The rising cost of fuel is driving changes in transportation. Many innovative programs to cut fuel use and green house emissions such as Green Fleet (hybrid trucks) are being developed. These programs aim at reducing climate impacts by measuring emissions, improving efficiency and purchasing carbon offsets.

Newly developed telematic systems are increasingly being used to cut costs and improve service. Telematics can combine diagnostic software, wireless communication and location trackers to enable real-time remote monitoring of vehicle location, fuel efficiency and emissions status. Managers can improve vehicle reliability and slash fuel consumption by eliminating idling and speeding.

Many businesses are making it easier for employees to work at home, enabling office downsizing and a reduction in energy costs. At Sun Microsystems, 55% of employees have chosen to spend at least part of their time working at home, resulting in an estimated 29,000-ton reduction in carbon emissions.

At the same time, more companies, like Framingham based Staples Inc., are using technology to reduce the need for business trips. Telepresence, the high-definition videoconferencing systems enable virtual face-to-face meetings with natural audio and no delays. Cisco estimates that the use of Cisco Telepresence internally has saved nearly $80 million in travel costs, with a corresponding increase in productivity, faster decision making and improved quality of life for employees.

In another example, Wal-Mart ended up saving close to $75 million in fuel costs and eliminated an estimated 400,000 tons of CO₂ pollution in one year alone by buying diesel-electric and refrigerated trucks with a power unit that could keep cargo cold without the engine running.

Waste Reduction / Recycle / Reuse

Recycling is the process of collecting used products, components, and/or materials from the field, disassembling them (when necessary), separating them into categories of like materials (e.g. specific plastic types, glass, etc.), and processing into recycled products, components, and/or materials. In this case, the identity and functionality of the original materials are lost (Thierry et al., 1995).

Computers and other electronic devices for example become obsolete so quickly, e-trash is an enormous solid waste problem, clogging landfills and leaking toxic substances into the soil and water supplies.

Staples Inc. again, is the first national retailer to offer a recycling program for consumers who want to do something about it. The office-supply store invites customers to recycle any equipment — except TVs and floor-model copiers — at any of its 1,400 locations, regardless of brand or where the item was purchased. Staples charges $10 for large pieces but takes smaller computer parts for free. In the first year, Staples expects to recycle 400,000 tons of tech products.

Retailers, irrespective of the business they are in, can provide a similar facility to their customers to return e-trash for recycling.

End Note

Going green by developing new energy sources may take years to perfect and even longer to deploy. With gas prices falling, the immediate need to switch to alternative sources of energy has somewhat diminished as well.

The ill effects of careless consumption – and environmental disregard are however as pertinent as before. A low “carbon diet” is order of the day, now more than ever!