Atreus in the media

Sustainability in retail and the consumer goods industry: Responsibility and Cost-Effectiveness

In Haufe Sustainability, Atreus Director Martina Becker elucidates the increasingly important role of sustainable corporate governance in today’s world. Thereby, she outlines the importance of economic, ecological and social aspects for companies and makes it clear that sustainability offers advantages, especially in difficult times.

Challenges for companies: Sustainability in times of high inflation and legal requirements

The ongoing high inflation and legal requirements such as the Supply Chain Due Diligence Act pose major challenges for companies to make their operations and processes more sustainable. Companies that do not rely on ESG factors and invest in sustainable innovation and digitization risk being left behind.

Data quality as the key to success

The German Supply Chain Due Diligence Act places high demands on companies, especially with regard to data availability, quality and accessibility. The aim of the law is to protect human rights and the environment. It is clear that sustainable processes cannot be implemented overnight. In order to anchor sustainability as a strategic corporate goal, a long-term rethink is required.

Sustainable supply chains: Knowledge and transparency are the deciding factors

For customers, it is of increasing importance where and how the products consumed are produced. It is of utmost importance to them if they have been produced under fair conditions and with appropriate remuneration. However, many companies lack transparency in their entire value chain. In order to fulfill their due diligence obligations and reduce CO2 emissions, companies must therefore increase their efforts towards digitization and automation along the entire supply and value chain. The challenges are particularly high for globally active companies. It requires changes in purchasing, adjustments to supplier contracts and audits to ensure that sustainable suppliers are selected. Digitalization plays an important role in this, as it enables end-to-end visibility and predictability. Real-time data management is crucial for a transparent supply chain and the reduction of CO2 emissions.

The path to climate neutrality and the black box in the value chain

In order to determine the CO2 balance of a company, the so-called Corporate Carbon Footprint (CCF) is calculated. The emission sources according to Scope 1, 2 and 3 are recorded.

Companies can achieve climate-neutral Scope 1 and 2 production by investing in new plants and switching to renewable energy. However, Scope 3, indirect CO2 emissions in the value chain, poses the biggest challenge. The sustainable transformation requires not only the change of the company’s own production processes, but also of the packaging and contents. Sustainably oriented companies are aiming for complete Scope 3 climate neutrality by 2030, which requires a comprehensive transformation of the supply chain. Effective interaction between production processes, packaging and product design is crucial. One solution can be the circular economy, in which companies recycle their products and reduce CO2 consumption during transport.

The challenges of sustainable product development

Sustainably oriented manufacturers use the principle of the 4Rs (Reuse, Reduce, Recycle, Replace) for the development and optimization of new products. However, in the first step, according to the cradle-to-cradle principle, the question of eco-effectiveness is always asked in order to decide what is right.

In order to ensure sustainable product development, the circular economy must already be taken into account in strategic planning and not only at the end as an afterthought. The implementation of the circular economy should be integrated into the entire business process to ensure consumer-centric and sustainable product development. Examples of climate-neutral products are those whose plastic packaging and formulation are made from recycled materials or biodegradable substances. However, due to a lack of recycling systems, a lot of plastic packaging cannot be optimally recycled everywhere and must therefore be incinerated.

Another important aspect is that consumers are often unwilling to spend more money on sustainable products due to the tense market situation. Investments in sustainability are often necessary, for example for the switch to renewable energies and the use of climate-neutral logistics. Sustainable raw materials are often more expensive than conventional ones, which affects the final price. Despite this, recycled plastics account for only one-tenth of the greenhouse gas emissions of virgin plastic, underscoring the importance of sustainability. Manufacturers of sustainable brands are therefore concerned about the growth of low-cost private labels, which often do not meet sustainability standards.

Sustainability as a competitive advantage

Successful companies remain true to their sustainability agenda despite the tense market situation. However, the current cost inflation is a hurdle, as the costs have to be forwarded to retailers and consumers. A certain portion of investments must always be focused on sustainability and thus it should be integrated into business processes and corporate culture in order to remain credible. Only companies that are geared towards a sustainable future will end up having an easier time attracting new employees and talent.

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