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Making sustainability the core focus of the retail business model

  • News
  • July 2, 2019
  • Sarah Dunn
Making sustainability the core focus of the retail business model

Liza Schillo, senior manager, global product sustainability at Levi Strauss & Co, is one of the keynote speakers at the Retail NZ Summit on July 23 at Sky City Convention Centre in Auckland. We asked her for her thoughts on sustainability ahead of the event.

Tell us about Levi Strauss & Co.’s sustainability journey. What were the highlights?

Our first highlight would be when we formally launched our sustainability journey in 1991, with the creation of the industry’s first Supplier Terms of Engagement.  This included global effluent standards (requirements for quality of the water that leaves our factory partners).  It cost us in the short term as some factories no longer wanted to do business with us and have to meet the requirements, but overall we came out on top, establishing the industry standard for water quality, worker rights, and apparel factory health and safety.  

A second highlight for me was the development of the industry’s first Lifecycle Assessment (LCA) – a wonky term for a simple concept: our LCA answered the question of what kind of impact do our products have on the planet?  We learned that jeans are water- and energy intensive products, and that most of the resources used to make and use our jeans occurs at points outside of our direct control – at the cotton growing phase and the consumer phase. This finding enabled us to adapt our programs to be more impactful.

Are there any ‘golden rules for sustainability’ which all retailers should follow? Or must each retailer make up their own rules?

The more we can all move to industry standards, the better, especially as it relates to the supply chain (where the majority of a retailer’s environmental and social impact is likely to be).  The apparel industry is very interconnected – the suppliers who make our denim are also making denim for all of our biggest industry peers.  So if I could name one thing to be The Golden Rule, it would be to collaborate, collaborate, collaborate.  The concept of ‘supplier fatigue’ is very real; before coming up with your own rules for sustainable engagement with your supply chain, check and see what best practices may already exist in the form of industry standards or standards for an industry similar to yours.  

Collaborating with other brands/retailers by adopting similar commitments will not only streamline the message to suppliers but it will result in outsized impact through the engagement of multiple parties for one common goal. 

Many retail categories, such as recreational goods and hardware, have not yet come under much pressure from consumers as to sustainability, but apparel is increasingly subject to a compliance-style framework applied by third-party organisations like Baptist World Aid. What’s your opinion on the value and effectiveness of external validation of sustainability for retailers?

The role of external stakeholders is critical to our success as an industry in moving forward on sustainability.  NGOs bring a perspective that is free of the business lens, and they can often offer opinions in areas of expertise that retailers simply do not employ.  For instance, we engage the World Wildlife Fund on our efforts in water conservation to help shape our thinking with the latest scientific findings, and Ceres to keep us informed of environmental policies we should be tracking.  Sometimes, the pressure of an outside force challenges the business to think differently in a positive light.  As long as all parties remain focused on a common goal, and in exchanging perspectives and aligning priorities, then true gains can be made. It is when there is no listening from one side or the other that the difficulty arises.  

Do you think these frameworks will become popular across other categories? (I.e, is it just a matter of time before intense scrutiny is across every retail category?)

It is only a matter of time before there is a framework for sustainable operations in place for every category.  Generation Z is demanding greater transparency in its products and a higher code of ethics from the companies whose products they buy.  Further, we are at a point in the climate crisis where every government is having the discussion of how to influence industry impact on the planet – perhaps not at the federal level in the U.S., but these conversations are ongoing at the state level. Coloradojust passed a bill increasing its renewable energy footprint, for instance. Massachusettsjust allowed behind-the-meter energy storage to qualify for incentives. And Washingtonjust became the fourth state to set a target date for carbon-free electricity. 

More and more non-profit entities are capitalizing on the democratized nature of information sharing to launch high-profile social media campaigns as the world grows smaller.  A savvy industry player would be wise to get involved in these kinds of conversations now, before its mode of operations is shaped instead by a third-party framework, policy, or fee structure.

Where do you think consumers will next focus on regarding sustainability? In New Zealand, plastic bags have just been phased out, and I see internationally that plastic straws are now under the spotlight.

The war against plastic bags, bottles, and straws is raging in the US and around the world.  Last I read, more than 60 countries have introduced a ban against single-use plastic bags, and 30 now impose a fee for their use. I expect this appetite for going plastic-free will continue to expand, which will have positive effects not only on waste reduction efforts but on the demand for fossil fuel-based materials. LS&Co. is exploring different options for product packaging that phases plastic out.  We aren’t there yet; it is a work in progress, but today your in-store purchase does come in a recycled paper bag.  

How deeply should retailers be engaging on matters of sustainability? Do they need to understand all the science and quantify all the costs/benefits to their operation before acting? 

 As retailers, we do not need to have all the answers to make decisions that take the greater effects into consideration.  What isimportant is that we ask the right questions and remember to look beyond the short-term deliverable when we make strategic business decisions.  Social and environmental sustainability must be integrated considerations in the process of business development, not simply economic gain. The good news with sustainability today is that there are endless numbers of entities across sectors looking into solutions for the questions we’ve all got.  The solutions exist today to do exactly what we need to exist sustainably, it is now simply (well, perhaps not simply!) a matter of adoption.  

Understanding the greater impact of your operations is important to making a well-informed decision. The concept of systems thinking is what we employ on the LS&Co. sustainability team. Before adopting a new practice or new material, we look at the system change this would result in. Sometimes we find that a “sustainable” material that reduces water in the product finishing process actually increases water usage in the fabric manufacturing stage.  If a retailer does not have this level of expertise, it may be easily found in consultants for lifecycle analysis, systems thinking, scenario planning, and materiality assessment.

Hear more from Liza Schillo of Levi Strauss & Co at the Retail NZ Summit on 23 July at SkyCity.

Find out more about the Summit and book your ticket now.

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