Circular economy examples: Learn the brands that are leading the way to a more sustainable future, and how they're doing it.
Sustainability has become a top priority for many consumers, and retailers are responding. A Deloitte report showed that 55% of consumers surveyed recently bought a sustainable product or service. In response to growing demand for eco-friendly products, retailers are trying to reduce their impact on the environment. They’re working to combat the effects of climate change, reduce waste, and eliminate their carbon footprint.
The sustainability trends for 2023 go beyond eco-friendliness, however. They also include measures aimed at improving working conditions and employee well-being.
In order to meet these sweeping goals, companies rely on data and technology.
Sustainability trends 2023 reshaping retail
The United Nations World Commission on Environment and Development defined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
In other words, it’s a way to preserve resources, care about the environment, and build a better, safer reality for all.
Here’s our breakdown of some of the biggest sustainability trends impacting retail in 2023:
- Greater transparency, increased regulation
- Focus on improving delivery to reduce the carbon footprint
- Rise of the circular economy
- Eco-friendly, fair workplaces
- Ethical supply chain
- Growing role of data and AI in sustainability efforts
- Reliance on cloud technology
1. Shining a light on sustainability practices
As a result of growing customer interest in how products are manufactured, brands are striving to become more transparent. This applies to not only materials used but also working conditions and animal welfare practices.
To monitor the process, Germany has passed the Supply Chain Due Diligence Act, which, starting next year, will enforce the implementation of “greener” supply chain practices. However, Germany isn’t the only country to have introduced such measures.
McKinsey has surveyed 30 countries worldwide and found that 28 of them set up extended producer responsibility (EPR) regulations, ensuring that manufacturers make their businesses more sustainable.
Moreover, 75% of these countries either have implemented or are working to impose penalties for regulatory noncompliance.
2. Better delivery, fewer emissions
As online sales soared during the pandemic, so did carbon emissions from delivery vehicles. This growth has pushed industry leaders to search for more environmental delivery methods, making it a top sustainability trend in 2023.
To make the last mile – the final stage of the shipping and delivery process – more ecological, brands are switching to electric vehicles, drones, and cargo bikes to avoid fossil-fueled cars. Some examples:
- General Motors launched BrightDrop, a startup that uses the latest technology to offer “all-electric first -and last- mile products and services.” FedEx, Walmart, and Verizon all use their services.
- In partnership with Mercedes-Benz, Amazon has been adding electric vehicles to its European fleet.
- Ocado, a UK online grocer, invested $13.6 million in Wayve, a self-driving technology startup, and began to outfit its delivery vehicles with Wayve’s technology.
At the same time, online shopping can help the environment by reducing consumer trips to the store. Some retailers moved their businesses online during the pandemic and aren’t reopening their physical locations. Fashion brands like Nike have already started shuttering some of their stores. UBS forecasts that 80,000 retail stores will close in the US by 2026.
3. Get circular: Reuse and recycle
Retail generates a lot of waste – a problem that’s only getting worse. The average e-commerce return rate is, as of now, at 23.44%. That means that one in four parcels are returned! Packaging waste is at an all-time high as well. Cutting down on this waste is a top sustainability trend for 2023.
European retailer Zabka announced plans to make all its packaging recyclable by 2025. Many fast-fashion brands, such as Zara, implemented demand planning – an approach that helps accurately predict demand for seasonal items to fight waste.
Another way to reduce waste is with a circular economy. This model encourages the reusing and recycling of existing materials and products. Ikea pledged to become fully circular by 2030. McDonald’s and Starbucks joined the trend and seek to expand their reusable cup programs.
Many others also employ circular strategies; Accenture predicts that this model will generate an additional $35B of value from reduced costs in the consumer-packaged goods industry by 2030.
4. Sustainability in 2023: Eco-friendly, fair workplaces
To comply with sustainability regulations, brands are analyzing how their workplaces operate and the impact on their communities. More and more retail players, such as IKEA and Prada, embrace the Leadership in Energy and Environmental Design (LEED) standard — a globally recognized third-party metric.
Many retailers also are ramping up their focus on occupational health and safety. For example, Germany-based supermarket chain Aldi said its committed to improving conditions for workers in its global supply chain.
Diversity, equity and inclusion (DEI) initiatives are advancing as well. In 2021, Target established a Racial Equity Action and Change (REACH) committee, creating racial equity for Black team members, guests, and communities.
Target was among several retailers named in DiversityInc.‘s 2022 top 50 companies for diversity. Others include Walmart, CVS Health, and Walgreens.
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5. Ethical supply chain
Changing the way business is conducted via an ethical supply chain is another essential aspect of sustainability trends 2023.
Companies are trying to ensure that their vendors, partners, and suppliers uphold ethical standards for environmental stewardship, sourcing, and worker conditions.
A few examples:
Consumers expect more from the brands they buy from, and an ethical supply chain is now a requirement. Learn what it means and how to get started.
6. Data and AI boost environmental projects
Data and efficient use of technology are helping fuel a sustainable future. For instance, AI has proven essential in reducing greenhouse gas emissions. As reported by PwC UK, it enables precision agriculture, enhanced weather and disaster prediction and response, and much more.
PwC estimates that AI could reduce worldwide greenhouse gas emissions by 4% in 2030.
Many retailers recognize these benefits; Amazon is actively using AI for their machine learning-based systems.
Google’s AI/ML Earth Engine provides public sector agencies and researchers with data to improve climate resilience. And when firms can’t properly analyze their footprint because they don’t have all the information, companies like sweep.net are stepping up to help brands gather all the data needed – and promote climate change action.
7. Cloud drives sustainability in 2023
In addition to AI, cloud technology, such as Amazon Web Services (AWS), also is widely used to help companies meet their sustainability goals.
According to Accenture, cloud computing leads to a greener tech transformation. Due to their focus on optimization and efficiency, cloud providers design and operate sustainable and low-cost workloads. This technology can help brands battle carbon emissions, lower energy consumption, and support their overall waste reduction efforts.
For instance, AWS is working to achieve Amazon’s goal of switching to 100% renewable energy by 2025. The Nature Conservancy, a global environmental nonprofit, uses AWS services to increase tree cover in underserved communities. AWS is also pioneering water stewardship initiatives promoting a more efficient use of water resources.
Amazon isn’t the only cloud technology provider to contribute to the cause. Microsoft has created Microsoft Cloud for Sustainability, which assists companies in managing their environmental goals. Google reported that their cloud-operated data centers are twice as energy efficient as typical enterprise data centers.
Working towards a greener, fairer world
At DataArt, we consider ourselves a part of the society that accepts a wider responsibility towards each other, the communities in which we operate, and the planet we all live on.
More and more brands are developing sustainable strategies. They’re ramping up efforts to reduce their environmental impact, switch to more efficient technology, ensure the wellbeing of their staff, and conduct business responsibly and transparently. In 2023, brands that don’t make sustainability a priority will find themselves left behind.