Five key climate action tips for the retail and FMCG sectors March 2023

As national delegations meet in Sharm-El-Sheikh for the annual Conference of the Parties (COP), it’s a perfect time to reinvigorate climate action within your organisation.

The retail sector has a significant carbon footprint, in the UK contributing approximately 215 MtCO₂e (metric tons of carbon dioxide equivalent) annually from production, sale, and end use of products sold, as well as the energy used for heating, cooling and lighting, transport and packaging. This is more than the annual greenhouse gas (GHG) emissions of Peru!

Whether you’re a large or small retailer the following tips will help you contribute towards the rapid decarbonisation needed in the sector.

1. Take stock of your current emissions

Understanding your current contribution to climate change is a crucial step in implementing an effective carbon reduction plan. You’ll need to have a good idea where your emissions are before taking to target actions and investment.

In the retail sector, as with many sectors, the vast majority of greenhouse gas emissions take place within the supply chain and after the products are sold (> 75% according to the British Retail Consortium). This category of indirect emissions is known as Scope 3. If you’re unsure of the difference between scope 1, 2, and 3, check out our explainer.

To begin with, you can estimate your upstream and downstream Scope 3 emissions using standard CO₂e emissions factors, progressing to direct data capture from your suppliers in future. For more information, the British Retail Consortium has recently published guidance on calculating your Scope 3.

Combined with the fuel use in your operations and logistics (Scope 1), and your purchased electricity (Scope 2), this will make up your carbon footprint or GHG inventory. Using this, focus on emissions hotspots, areas of greatest influence, and technological feasibility to target your carbon reduction actions. Check out our Scope Busting guidance for more information.

2. Link to other sustainability goals 

There are plenty of positive relationships to be found in the retail sector between tackling GHG emissions and other sustainability goals. For food and drink product lines, agricultural supply chains present great opportunities for climate, waste, water and biodiversity to be addressed with the same actions.

Increasing the proportion of plant-based products, for example, will reduce embodied water consumption and risk of deforestation alongside GHG emissions. Packaging is another important focus for FMCG: minimising waste in this area will help progress towards net zero as well as reducing pressure on natural ecosystems where raw materials are extracted.

3. Take advantage of available technologies

For every retail-oriented company starting out on a climate change mitigation journey there will be quick wins in the operational sphere due to the availability of low-carbon technologies.

A great place to start is with your Scope 2 electricity: moving from a standard to a green electricity tariff instantly lowers your carbon footprint. Different types of green tariff exist, supporting development of new renewable capacity to a greater or lesser extent. This guidance from the Centre for Sustainable Energy is a good place to start to figure out the best option and avoid misleading green claims. Even better: install renewable technologies on site, such as heat pumps and solar panels.

Though a less obvious climate change contributor, leakage of refrigerant gases such as HCFs is often a material part of retailers’ GHG inventories. These gases can have a big impact even when only small leaks occur due to their high global warming potential: up to 12,400 times more potent than CO₂. To tackle this, make sure equipment is efficient and well-maintained, and consider replacing HFCs with natural refrigerants such as propane and ammonia.

Logistics is also a prime candidate for carbon savings: switch out your petrol- or diesel-fuelled light commercial vehicles and replace them with electric vehicles. Various grants for carbon reduction actions, like installing electric vehicle charging points, are available in the UK.

4. Collaborate and learn from others

Following a common approach will make it easier for supply chains to support decarbonisation actions. The British Retail Consortium’s climate action roadmap, supported by over 60 organisations in the sector, is a great example of this.

The roadmap sets out actions which tackle whole life cycle carbon emissions, looking at data measurement and reporting, site operations, logistics, sourcing and customer choices. BRC members can commit to the targets within the roadmap if measuring and reporting emissions.

If you’re in need of inspiration, the climate action roadmap showcase includes several best practice case studies from retailers, from encouraging carbon reduction on farms to textile take-back schemes.

To skill up on carbon, take advantage of the wide range of resources on the Supply Chain Sustainability School website, which include guidance on conducting a carbon footprinting exercise.

5. Communication is key

Transparency is central to meaningful engagement of stakeholders and effective collaboration across the sector. When reporting on carbon, follow an established standard such as the Greenhouse Gas Protocol. Within your supply chain, clearly communicate your ambitions and expectations, work with suppliers to map risks and opportunities, and make sure robust and anonymous whistleblowing mechanisms are available.

Organisations of all sizes can and should set emissions reduction targets, preferably using the recognised pathways of the Science-Based Targets initiative (SBTi) such as the Net Zero Standard. In addition to their standard commitment route, the SBTi also has a simplified, lower cost route for SMEs to set and verify targets. Once you’re working towards your target, share learnings through case studies to help the sector move forward together.

Interested in how we can help your organisation with your climate change & carbon strategy? Get in touch with our Head of Carbon James Cadman.