The Human Element: People Need To Be Front And Center In Retailers’ ESG Commitments

One of the biggest takeaways from the recent census numbers is that for the first time in census history, the number of white people shrank. American citizens who identify solely as white now make up 61.6% of the U.S. population, down 8.6% in the last 10 years. 

For many retailers, these numbers simply reaffirm a trend they have been tracking and adjusting to for some time now. In the wake of the pandemic and a nationwide racial awakening, companies have committed to doing better by all stakeholders—employees, customers, investors and partners. As companies deepen the ways they integrate environmental, social and governance (ESG) factors into their businesses, the social—or human element—must take center stage.   

The risks of doing nothing are substantial. In today’s ‘employee market’ where labor shortages have become a dominant theme, workers can choose where they want to work in the future. And today’s employees want ethical, responsible companies. People increasingly care about workplace culture and believe their environment plays an important role in helping them thrive professionally (as reported by 77% of women and 67% of men).  

Furthermore, customers are also demanding to see companies’ commitments in action. And if they don’t, they will make their voices heard by spending dollars elsewhere.

Transparency and Traceability

When it comes to the s in ESG, it’s crucial for companies to embrace transparency. With many people spending on average 12 hours per day in front of a screen, customers can research anything they want. It’s as though each business lives in a glasshouse. With a few strokes of the keyboard, anyone can find out if an organization has unethical labor practices or unfair hiring standards. They can also prove if a retailer fails to adhere to the values that it preaches. And within minutes, customers can share such harmful information with thousands—perhaps millions—of other people. Today’s consumers shop with their values and reward companies that take these principles seriously. And evidence suggests that inclusive, diverse and environmentally sustainable companies have an even better chance of taking a share of consumer spend. 

Customers want more details about the products they are buying than ever before. In the food world, the farm to fork movement has been popular for some time. Recent research proved that this will only continue: More than two-thirds (68%) of consumers agree that they are going to continue to limit food waste post-crisis.  

A similar mentality is migrating into apparel and home goods as well. Consumers demand information about their clothing and bedding, including the raw materials to make them, where they were manufactured and how they were transported. Having a digitally connected supply network that leverages technologies like artificial intelligence, Internet of Things and other traceability solutions is not only more cost-efficient and less wasteful, but can also communicate sustainability details directly to the customer. Such technological platforms possess the power to become a new form of marketing unto itself. 

Sensitivity 

The experiences over the past 18 months have shown that we are all connected and, despite our differences, the things that make us human remain the same. Retailers can bring this level of sensitivity to how they treat their customers and there are some fantastic examples. Beauty companies such as Ulta,Sephora and even some startup brands are expanding their palettes to suit more skin shades and make commitments of support to African American and Black-owned brands.  

Building a truly diverse and inclusive brand is not always easy to pull off. To support smaller brands, companies must relax that consideration for terms, minimum quantities and service-level agreements that they typically apply to larger brands. What is clear is that retailers who push their supply network to be more diverse will be able to meet the needs of our diverse population. 

While these concepts are not new, companies that put more effort into their ESG in the coming years will emerge as the winners. The secret: These changes cannot just be marketing taglines. They must happen at every level.