Department stores face growing CSR challenges
Like countless companies and fashion labels, department store chains too are committed to reducing their impact on the planet. The International Association of Department Stores (IADS), which represents 12 international department store groups*, has provided an assessment of the work carried out by its members in this field, highlighting the difficulties involved. “Now that department stores have all implemented the most basic CSR measures, the complexity of the subject is growing, going hand in hand with a need to collaborate with a growing number of stakeholders, so that department stores are currently forced to adapt at an increasingly fast pace,” said IADS.
The first prerequisite on which all IADS members agree is that “top-down decision-making and execution cannot work as a way to build and drive CSR.” IADS members believe it is therefore necessary to involve all employees and stakeholders in defining and prioritizing actions in this area, but also to involve people outside their organisations, such as consultants and specialist NGOs (for example Oxfam, the WWF, the Sustainable Apparel Coalition and others).
IADS described for example the progress made by Galeries Lafayette, which set up a dedicated CSR office in 2012 before introducing, in 2018, a specific label, Go For Good, identifying the more sustainable products in its assortment. Danish group Magasin du Nord began its journey towards greater sustainability by working on its own brands, while German group Breuninger released its first CSR mission statement internally in 2019.
The topic of how to communicate the department stores’ CSR efforts to customers is also crucial. IADS members are “expected to influence their customers’ behaviour towards buying more responsibility, while at the same time avoiding being accused of greenwashing,” said IADS.
With regard to emissions reduction, Scope 1 emissions (relating to company facilities and vehicles) and Scope 2 emissions (sourcing of electricity, steam, heating and cooling) “are easier to control, and were the first steps taken by department stores, with regards to energy consumption and transport,” according to IADS. El Corte Inglés, for example, claims to have reduced its Scope 2 emissions by 78% compared to 2017, and is planning to reach zero emissions by 2050.
The task is more difficult when it comes to Scope 3 emissions, those caused by department store suppliers. Chains are compelled to ask suppliers for this information, then to evaluate it and, where appropriate, try to orient their partners towards more sustainable practices. Or change supplier if need be.
Different national regulations
“Collaboration and exchange of information between retailers helps, but it is limited by the variety and complexity of national regulations, meaning there is not a single fit-for-all strategy, and also that, naturally, all strategies will evolve over time,” said IADS.
The association underlined that ESG criteria, which measure the degree to which corporations invest in CSR, besides relating to environmental impact also relate to societal aspects (labour legislation for example) and corporate governance issues, like transparency of directors’ remuneration, relations with shareholders, and more. According to IADS, “when it comes to governance, the question is not if ESG factors will affect credit ratings, but how. (...) Bank loans can be linked to the achievement of sustainability targets. Retailers are forced to succeed, since they will be sanctioned if their commitments fall through.”
Not all department store chains are at the same stage with regards to the strategy they need to adopt in order to reduce their impact on the planet, notably because they are located in different regions of the world, each with a more or less restrictive regulatory framework in terms of CSR.
*The 12 members are Centro Beco (Venezuela), Beijing Hualian Group (China), Breuninger (Germany), El Corte Inglés (Spain), El Palacio de Hierro (Mexico), Falabella (Chile), Galeries Lafayette (France), Lifestyle International Holding (Hong Kong), Magasin du Nord (Denmark), Manor (Switzerland), The Mall (Thailand) and SM Store (Philippines).
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