Issue link: https://resources.tangoanalytics.com/i/1507482
Despite hurdles in altering current operational strategies, prioritization of sustainability will create a competitive advantage, future-proof your assets, and allow you to better navigate the complex landscape of net zero commitments, regulations, reporting requirements, and incentives across local, national, and global regions. There is a strong business case for prioritizing sustainability for retail firms. Sustainable practices can result in cost savings, increased customer loyalty, improved brand reputation, and reduced risk of regulatory non-compliance. Retail firms can also gain a competitive advantage by demonstrating their commitment to sustainability. WHY PRIORITIZE SUSTAINABILITY A V O I D I N G R I S K R E G U L A T O R Y C H A N G E From extreme weather events that damage brick-and-mortar to heat waves that cause energy bills to spike, to geopolitical disasters disrupting supply chains, real estate assets face a diverse set of threats from climate change. Do not fail to consider the monetary impacts of insurance, maintenance, and repair costs associated with physical damages from extreme weather or a suddenly forced transition to new technology in order to comply with regulations. Combatting the rising risk of greenwashing litigation claims by shoring up on commitments to sustainability will also be important. As governments have already decided to be carbon-neutral by 2050, they'll start imposing regulations sooner rather than later to reach that target. The EU is planning to introduce "mandatory sustainability labeling and disclosure of information to consumers on products along value chains." One area where there has been action on disclosure in the U.S. is from the Securities and Exchange Commission, which has proposed rules that would, among other things, require disclosures on scope 1, 2, and possibly 3 emissions for companies who set targets or those for whom the information would be "material" to the business. The difficulty in collecting comprehensive, accurate information on supplier emissions is the main concern for retailers who meet the criteria outlined by the SEC for those who must comply. Regardless, ensuring compliance with reporting and benchmarking requirements, as well as emissions reduction mandates will be important going forward for retailers. Complying with certain voluntary standards requested by investors—such as the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB) can help prepare retailers for future regulatory change. G E N E R A T E V A L U E Consumer research suggests that consumers are willing to pay a premium for environmentally friendly products, sometimes as high as 60 percent. Furthermore, even if there is uncertainty around willingness to pay, an emerging view expects that the transition to a low-carbon economy will create new value pools and that demand for low-emissions products and services will continue to grow. Sustainability & Energy Management Simplified