How retail and CPG companies drive sustainability strategy with technology – Part 2
Sustainability is no longer a side project for the C-suite and boardroom agenda—its importance is growing. One indication of this trend comes from the fact that 92% of the S&P 500 companies published a sustainability report in 2020, up a staggering amount compared to the 20% reported in 2011. To that end, companies are depending on technology to measure, report, and provide solutions for sustainability goals. McKinsey’s State of Fashion Technology report says, “Retailers are leaning into technology not only to become more resilient to supply chain and other disruptions, but also to become more responsible and transparent as the world seeks sustainability solutions.”
In collaboration with Incisiv, an industry insights firm, Amazon Web Services (AWS) set out to understand how consumer goods and retail leaders are thinking about technology as it relates to their sustainability strategy. We interviewed more than 300 leaders across the United States, United Kingdom, Australia, New Zealand, and India to understand different perspectives related to technology usage to drive progress toward sustainability goals. We also investigated how artificial intelligence (AI) and machine learning (ML) are used in the effort. In our first blog post, we discussed three key insights from our research:
- There is a gap between the intent and execution of using technology and analytics to improve sustainability.
- Poor data quality and the inability to integrate data from multiple sources are both cited as reasons that companies aren’t using AI/ML to improve sustainability efforts.
- Retailers and brands see that there is an opportunity to leverage AI/ML to accelerate progress against sustainability goals.
In the second part of our two-part series, we will expand on our recommendations and map options for a path forward. Here are three recommendations on how you can take action:
#1 Build a sustainability roadmap that incorporates data and technology
Sustainability is a journey, not a destination. It requires companies to set ambitious, long-term goals with the right checkpoints. Some of our customers that are making significant progress against sustainability goals are doing so by taking a structured approach. These brands set a vision, identify areas of greatest impact, scope and launch pilot projects, and scale when pilots are successful.
The first step is to create a clear sustainability vision. Build a sustainability vision that is unique to your brand, stakeholders, company values, and culture. While there are common initiatives across the industry, a sustainability vision should connect a company’s unique brand DNA to specific areas the company wants to improve. Since sustainability should be part of a company’s day-to-day operational and financial goals, the entire C-suite should be involved in determining the strategic areas to focus sustainability efforts.
Secondly, determine areas for the biggest impact. Baseline where your company is today and determine specific goals and objectives for improvement. This may require integrating data across business units and functions to obtain a clear view of the current state. Determine the business value of improving specific areas and the difficulty of driving change to help drive priorities. Develop a roadmap that accounts for the difficulty, cost, time, and value for your business and consumers. This can help create a balanced roadmap to achieve your long-term goals.
Once you’ve identified those initiatives, create pilots to test and learn. Create a small, focused team across functional areas to test ideas. Many of these initiatives can be supported with technology though automation and data-driven insights. You can contribute to your sustainability goals by simply operating more efficiently, like deploying improved forecast capabilities or optimizing delivery routes, for example. Technology can help facilitate the monitoring and measurement of these goals on an ongoing basis. From there, you can understand clearly what’s working and what’s not and course correct in real time.
Once you’ve piloted a project and measured success, scale initiatives that demonstrate potential value. Use pilot data to determine what projects to scale and implement company-wide. Scaling these initiatives may require a change in technology. Most importantly, it may demand that you change organizational business processes to ensure clear ownership for ongoing success.
This structured approach can help your company make incremental and measurable progress toward your sustainability goals. While technology plays an important role, creating the right approach can unlock lasting change needed for your consumers, your business, and the environment.
AWS enables customers to build sustainability solutions ranging from carbon tracking and energy conservation to waste reduction by using AWS services to ingest, analyze, and manage sustainability data. AWS offers the broadest and deepest set of capabilities in AI, ML, Internet of Things (IoT), data analytics, and computing to reach your organization’s sustainability goals.
#2 Collaborate and share sustainability data
If we are going to limit global warming to 2 degrees Celsius by 2050, we have to work together. No single organization can achieve this, nor any other worldwide sustainability goals. We need industry-wide collaboration when it comes to sharing data, technology, and best practices on sustainability.
Manufacturing a product involves a long and complex set of processes. The first hurdle in a company’s sustainability journey is often collecting the right data. We see that sustainability data is often collected manually via email or spreadsheets and is outdated, or simply doesn’t exist. What’s more, it is often not actionable or inconsistent. This leads to companies making decisions without a complete picture or real-time insights on what’s working and what’s not.
In retail and consumer packaged goods (CPG) industries, competing organizations often use the same suppliers. This means that some sustainability data can be shared. Data collaboration can provide visibility in a faster and more efficient manner and achieve sustainability goals faster, too. However, collaboration doesn’t have to stop at data sharing. Coordinated sharing of technology and best practices across organizations can amplify industry-wide impact.
AWS Data Exchange makes it easy to find, subscribe to, and use third-party sustainability-related data in the cloud. This includes datasets made available via the Amazon Sustainability Data Initiative and the Open Data Sponsorship Program.
#3 Invest in sustainable technology
Sustainability is increasingly important not only for business, but also for every element of leadership in retail and CPG organizations. But sustainability isn’t only part of the C-suite agenda. Many people and organizations consider sustainability to be a critical factor in deciding who they work for, work with, invest in, and buy from.
Many consumers are rooting for their favorite brands to adopt more sustainable practices so they can feel good about their purchases, instead of switching to a more sustainable brand. Consumers are open to their favorite brands experimenting with sustainability initiatives and setting targets. But that attitude won’t last forever. The consumer demand for sustainable products as well as proof of achieving tangible sustainability results is only going to increase in the years ahead. The time to invest and innovate is now.
We know that environmental, social, and governance (ESG) disclosure standards are the future. Companies that wait to incorporate technology into their sustainability strategy risk a constant game of catch-up, which will likely be expensive and not on their own terms. If you incorporate technology now, your sustainability strategy can become a competitive, with benefits like driving customer loyalty, attracting top talent, and identifying cost savings.
AWS provides knowledge and tools for organizations of all sizes and across all sectors to build and implement solutions that meet sustainability goals.
Building a sustainability roadmap that incorporates data and technology, collaborating and sharing sustainability data, and investing in sustainable technology now are three ways to shift your sustainability strategy away from a risk mitigator and into a competitive advantage.
Download the full report here. This joint research report examines where retail and consumer goods companies stand with incorporating technology into sustainability strategies, breaks down nuances across regional US, UK, Australia, New Zealand and India results, and maps out the top use cases in using AI/ML to improve sustainability.