There's no getting away from the fact that sustainability is a hot topic for the retail sector and there's certainly lots of talk and more and more activity. But I do sometimes question whether we are moving fast enough for the significance of the changes we are going to see in the future.
Sustainability is a broad topic that means many different things to different people but whatever its exact definition, as a concept, it has important implications for many different aspects of the retail industry.
And it’s not always the most obvious things that present some of the biggest risks. For example, although water covers about 75% of the Earth’s surface - both in liquid and frozen form – only around 3% is fresh and able to be used. This means that a growing population, rapid development in the emerging markets and climate change form a trio of pressures on water’s future.
One reason that the issue of water gets less profile and focus in the retail sustainability arena is that it is low cost. But while it may be cheap, that in itself represents a risk – after all, what’s the alternative?
The Water Resources Group, an industry body, says water supply will fall by 40% globally before 2030. Even allowing for a margin of error, that has profound implications on the retail supply chain. The drinks industry is a visible and intensive user of water, but others are equally at risk – food and consumer goods manufacturers are also heavy water users, and any industry which relies on silicon chips or paper-based products will face a knock-on effect.
No single business sector is exempt from the risk of water scarcity. Neither is any region. While many countries in the Middle East have spent heavily on desalination, the World Wildlife Fund (WWF) says the situation is “critical” in India, Australia and South Africa.
The Water Footprint Network estimates that the full life cycle of a glass of apple juice includes 190 litres of water, while a T-shirt uses 2,700 litres. Such estimates are open to question, but there is little doubt that intensive production processes, including industrial agriculture, are a major drain on water resources.
A number of the global Fast Moving Consumer Goods businesses are talking about the issue and taking various actions, some more strategic and others more tactical – and with varying responses. For example when brewing giant SAB Miller tentatively released its “blue sky” plans in 2010 for a floating brewery that could be towed from port to port depending on where water was most plentiful, the business press immediately leaped on the idea of a “beer ship”. Many dismissed it as fanciful, or a publicity stunt but what SABMiller and other multinationals have realised is that water scarcity is becoming business critical.
Restricted access to water, or higher costs to use it, is every bit as vital to their future planning as the better known issues surrounding oil.
Retailers need to know that the companies they are working with understand the real value of water and the associated economics that have an impact which include capital investments for new or retrofitted infrastructure and added operational costs for supply, treatment and disposal.
Those who see water as the “new oil” should consider this: some of the finest scientific minds are working to develop viable alternatives to oil. There is no substitute in the pipeline for H2O.
