When it comes to embracing ethical commerce and moving corporate social responsibility (CSR) strategies forward, Amazon Web Services (AWS) research shows that retailers and CPGs identify three primary hurdles to success.
Across all organization sizes and market locations in our survey, cost placed highest (53%) on the list of challenges. But while financial outlays have long been an obstacle in the business world, the survey shows they’re no longer the only barrier organizations face as they work to tackle CSR initiatives that align with their mission and their customer bases.
2. Access to data and technologies
A lack of access to data ranked No. 2 across all respondents (32%), though UK-based brands put it lower on the list (23%). More firms under $20 million (35%) report struggling with gaps in technology to track CSR goals. These data and technology access concerns reflect brands’ desire to link their CSR plans and track their progress against a clear set of KPIs.
A likely follow-on victim of inadequate data and technology availability is greenwashing, which came in third in all segments (30%) but presents a bigger challenge for firms over $1 billion (38%). Greenwashing typically refers to inaccurate or ambiguous claims about sustainability measures or a product’s environmental benefits. However, brands that lack strong data to support their CSR claims may worry that consumers, investors or regulators could slap the greenwashing label on otherwise honest efforts.
Enterprises can now leverage powerful technology solutions to gather, analyze, measure and act on meaningful datasets, giving them an array of options for increasing their data access and visibility. Transparent data can also help businesses address greenwashing concerns and demonstrate credibility and authenticity in their goals with customers.
3. Legal and regulatory
Legal and regulatory requirements were cited by survey respondents at 25% overall, with large brands (35%) and UK-based firms (30%) seeing more obstacles. Laws related to environmental protections and sustainability mandates, for example, are among the elements impacting how sellers and manufacturers carry out their operations to minimize negative impacts.
Though these challenges may seem daunting, industry innovators are already helping show the way forward with their own initiatives. And by breaking the retail and CPG landscape into a handful of sectors, we can gain some clarity around the difficulties — and the potential solutions — that make up the modern CSR environment.
This category includes discount stores, mass merchants (“big box stores”) and businesses focused on specialty hardlines. The volume of product moving through their operations creates ample opportunities to reduce product waste and support more sustainable product packaging.
Waste reduction is an essential element of a general merchandiser’s CSR strategy. That’s why retailers like Best Buy are upping their zero-waste game. Best Buy partners with Rubicon, a B Corp-certified software provider, to use analytics to improve waste diversion. By managing all waste and recycling through Rubicon, Best Buy has diverted 78% of its waste away from landfills.
Grocery and convenience
Grocery and convenience stores, along with other food outlets, comprise this sector. These firms typically use equipment to maintain food and other items at cold temperatures, and their stores frequently operate 24/7. When factored alongside other operational considerations, electricity is often a main driver of emissions for these businesses.
For example, the latest Amazon Fresh location leverages CO2-based refrigeration technology to reduce greenhouse gas emission. It also features flooring that relies on steel byproducts rather than carbon, thereby reducing carbon usage. A technology solution designed to measure the real-time impacts of these upgrades delivers data on the store’s CSR metrics and its progress toward achieving net-zero carbon certification.
Emissions reduction targets aren’t just “the right thing to do” and what many consumers expect from companies today — they also mitigate risk. We continue to see public policies introduce new costs and constraints, such as regulations around emissions or single-use plastic. The right technology platforms can help retailers and CPG companies understand how to adjust current operations to align with upcoming mandates. For those organizations already in compliance, strong data serves as a valuable proof point in discussions with auditors and regulators.
This category includes department stores, specialty and softline brands. Elements within their transportation and logistics operations, ranging from cost management to environmental impacts, are major objectives for CSR initiatives.
According to the NRF, the total rate of returns in 2021 was just over 16% — up 6 percentage points from 2020 — and the online portion accounted for almost 21%, or about $218 billion. Innovative technologies such as augmented reality enable consumers using the Amazon Shopping App to visualize digital objects in their space and confirm which products will best fit into their unique lifestyles.
Those efforts can help increase customers’ satisfaction with purchases and translate into fewer returns, which leads to reductions in transportation and packaging and creates a smaller carbon footprint. Fewer returns also may drive cost savings that can help fund AR experiences and other CSR initiatives.
Digital Pure Play
Amazon, eBay and merchant wholesalers — including durable goods brands such as Graybar and non-durable goods brands such as Performance Food Group and US Food Service — comprise this sector. Packaging is often a primary CSR area of focus.
To help manufacturers reduce packaging waste and develop sustainable alternatives for online fulfillment, Amazon introduced Frustration-Free Packaging. The program’s technology enables vendors to analyze and optimize their packaging strategies, resulting in more sustainable materials and design, increased efficiency and reduced costs.
Across the Wider Industry
Though many CSR strategies focus on reducing environmental impacts and trimming waste, retail and CPG brands are also turning their attention to the industry’s vast human element. Efforts vary widely and include improving the lives of workers and community members along the consumption chain.
For example, at least every three years and in line with industry best practices, Amazon reviews its organizational Supply Chain Standards against policies developed by industry associations (such as the Responsible Business Alliance and the Consumer Goods Forum) and in consultation with external stakeholders, including Nest, Business for Social Responsibility, Impactt Limited and Verité.
Technology such as blockchain for supply chain can provide end-to-end visibility to track and trace the entire production process with increased automated efficiency. This strategy delivers a unified view of data while enabling transaction verification such as production and transport updates.
The Next Best Step in CSR Initiatives
The democratization of technology has made solutions available to a wider range of retail and CPG enterprises. From setting carbon emissions targets to tracking progress against recycling, waste elimination and other goals, businesses at every end of the spectrum can now apply key data processing and analytics tools to identify meaningful metrics and demonstrate their CSR results.
Contact your local AWS rep, who can help you apply our technology expertise to support your tailored CSR journey.
Robyn Hill leads Amazon Web Services’ Retail & CPG strategy in Asia Pacific, where she focuses on thought leadership, strategy and partnering with customers across the region. Hill has over 18 years of CPG, Retail, and Data Analytics experience spanning merchant buying, category management, product development, analytical consulting and executive leadership. Previously, Hill was an executive at Quantium within the Fast Moving Consumer Goods consulting practice, and has held category management roles at Coles, where she focused on the Health, Beauty, and Baby segments. Prior to Coles, Hill was Group Category Development Manager for L’Oreal Australia’s Consumer Products Division, and has held various sales and category roles within Unilever in both Australia and South Africa.
Madeline Steiner leads Amazon Web Services’ Retail & CPG worldwide strategy and thought leadership for Ethical Commerce. In partnership with the AWS Retail and CPG leadership teams, Steiner works to shape and deliver go-to-market strategies and innovative partners solutions for consumer enterprises looking for guidance on how to integrate environmental and social initiatives into their business operations. She has eight years of experience in retail and retail technology, including five years of merchandising and fashion product development roles at Gap, Inc. and three years in customer success at Trendalytics, a consumer intelligence platform for data-driven product decisions.