The challenges of achieving environmental, social, and governance resilience (ESG+R) at a level accepted and capable of impacting change have become a definitive focus by retailers. The industry has taken a broader stance to shrink its impact, prioritizing sustainability and its cohort amid global concerns about protecting and preserving natural resources and the environment.

The retail and real estate sectors combined account for roughly 60% of global emissions, attributed to the retail supply chain and the operational and infrastructure materials of the built environment. Each industry has taken steps to eliminate its carbon footprint. According to a study conducted by BAIN and Ecovadis that primarily represents heavy hitters in the industrial and office, followed by retail, most companies that try have seen an increase in revenue and earnings.

The effort has not been without its challenges. In general, retail and the fashion industry have been slow to adapt for fear of adversely impacting their bottom line. As retail executives become more aware of the financial commitment needed to bring about change, there has also been a shift in thinking about technological innovations, new market opportunities, and financial rewards. Over the last decade, many global retailers have developed science-based targets to add transparency and credibility to their efforts to reduce carbon emissions. The European Union, in particular, is very serious about corporate sustainability; it has set a law requiring all large and listed companies to report their social and environmental impact in a scientifically proven way, starting in 2024.

Colliers Insight
Anjee Solanki
“Sustainability is a crucial factor in this industry, and we are continually learning and striving to identify the most cost-effective and efficient methods of implementation.”

“From a sustainability perspective, the retail industry encompasses numerous areas that require attention. Sustainability is a crucial factor in this industry, and we are continually learning and striving to identify the most cost-effective and efficient methods of implementation,” shares Anjee Solanki, National Director of Retail Services.

Let There Be Light, Benefits of Solar

Environmental responsibility initiatives are often the most visible and measurable–recycling, energy efficiency, and low-emission logistics. However, social and governance responsibility initiatives often significantly impact people’s quality of life and the opportunity to transform global business models.

Over the past decade, retailers and shopping centers worldwide have achieved important environmental responsibility milestones. The transition to LED lighting has been a game-changer for many retailers, resulting in copious energy savings while optimizing efficiency with modern lighting systems. IKEA, one of the most progressive retailers for climate positivity, recently launched two sustainability initiatives to underscore its commitment to clean energy. They plan to install solar and energy storage systems in seven stores and fulfillment centers. The program also includes other large-scale renewable heating and cooling projects.

Rooftop solar is one of the solutions used by a large proportion of Australian retail shopping centers. The benefits far outweigh the initial investment, providing management and operations with an economical energy supply passed on to tenants. For example, food stores and supermarkets can achieve high energy consumption self-sufficiency through advanced technical solutions. Refrigeration is the biggest energy user in grocery stores, and solar panels effectively produce this energy locally. In colder countries, excess heat from refrigeration systems is used to heat the building during winter. Retail owners often outsource the operations of solar installation to a third party, fueling the local economy and job creation while also providing an alternate revenue stream for the landlord, who can charge rent on the solar panels.

Ultimately, the advantage of solar positively impacts the overall value uplift of its retail assets. Surplus energies can be easily distributed within local communities, an often overlooked by-product of ESG programs. Within the last five years, the shopping center has evolved into a community-centered ecosystem and touchstone for vulnerable community members due to climate anomalies like severe drought, flooding, bushfires, and the COVID-19 health crisis. 

The Added Value of Decarbonization

Decarbonization has a significant impact on emissions in commercial real estate. Property owners can significantly reduce their greenhouse gas emissions by reducing or eliminating fossil fuels. Building retrofits offer critical solutions to improving energy efficiencies with insulation and lighting upgrades and investments in energy-efficient appliances and equipment. In addition, using electric-powered equipment will eliminate dependence on fossil fuels and significantly improve everything from heating and cooling systems to transportation fleets. The added value of decarbonization efforts includes reduced energy costs and improved air quality for all stakeholders. Decarbonized commercial buildings are also more attractive to tenants and buyers, which can lead to increased property values.

Retailers like Walmart and Amazon have made the most headway with decarbonization, if only by sheer square footage. Walmart is using a variety of measures to decarbonize its stores, including installing solar panels, using energy-efficient lighting, and switching to electric vehicles. Amazon is on track to achieve net-zero carbon emissions by 2040, investing in renewable energy, electrifying its transportation fleet, and reducing emissions from its operations.

Products and The Circular Economy

The circular economy is transforming retail in terms of ecological tissue fabrication, repair, and reuse. New tissues are produced from biomass and piles of trashed textiles that otherwise would be landfilled or burned. Second-hand clothing and accessories have become increasingly popular and are seen as more sustainable and eco-friendly than buying new. Vintage clothing, in particular, is also a way to express personal style and individuality – one of modern society’s fundamental values and megatrends.

We know these are lofty goals, and here at Colliers we’re taking a proactive approach. Our advisory board works with clients to create a tailored ESG plan that aligns with available resources, establishes an actionable and quantifiable framework, and fosters stakeholder trust.