European retailers to “lose market share” if they fail to address sustainability  

11 January 2008:

Only 28 percent of international retailers in Europe claim to have a policy on Corporate Social Responsibility, despite the fact that 38 per cent of those interviewed in a survey believe that consumers will increasingly differentiate between those retailers with a CSR policy and those without.

US retailers with European operations are most likely to have a CSR policy (44 per cent) and Southern European retailers least likely (12 per cent), with social inclusion followed by ethical trading being the most common features to be included in such a policy.

The results appear in the 2007 Sustainability Retailers’ Survey, commissioned by REP (Real Estate Publishers) in association with the International Council of Shopping Centers (ICSC), and produced by global real estate consultant Cushman & Wakefield. The survey interviews property executives responsible for international expansion at 250 retail companies from 23 countries across Europe. It is part of the annual 2007 International Retailers’ Survey, which covers a broad range of issues facing retailers expanding in non-domestic markets (see press release: ‘Moscow, St Petersburg and Prague top list of retailer destinations’), and is published in Retail Space Europe 2008.  This is the first year that sustainability is included in the survey. Dr Yvonne Court, Head of European Retail Research & Consultancy at Cushman & Wakefield, and the survey’s author, says “There is clearly an awareness among retailers of the importance of sustainability and its’ likely effect on the retail sector, but this is not necessarily being matched by action. Sustainability is a global issue, and retailers and players in the retail property sector stand to lose market share if they fail to address issues such as ethical shopping, levels of energy and water consumption, and waste disposal.” Ermine Amies, Managing Director of ICSC Europe, adds: “The retail sector is a key employer of people and user of utilities. In such a competitive business, market share gained from responding to consumer awareness and savings made from a more efficient use of utilities will make a real difference to the bottom line. Sustainability will become a key differentiator.” Marinus Dijkman, President/CEO of REP continues; “The results of the survey show a big disparity across Europe regarding retailers’ attitudes towards CSR.

The UK and US retailers with European operations are ahead of the rest of the pack on CSR issues, followed by other Western and Northern European countries, then Central and Eastern European countries, with Southern Europe lagging behind.” When asked about the affect of introducing CSR-focused policies, the retailers believe that the greatest impact will be to increase service charges to tenants. Dr Yvonne Court of Cushman & Wakefield adds: “Evidence indicates that a CSR-friendly approach reduces energy costs, while retailers will benefit from energy labeling of retail buildings by gaining a clearer indication of how much they are spending on electricity and water, which after staff and property are a key costs for retailers.” Dr Yvonne Court adds: “We need to be aware that companies deal with CSR and sustainability issues in different ways. Responsibility for such issues may lie within a specific, CSR team, or within Marketing, and almost certainly not within the property team. As such, the survey’s responses are likely to be influenced by the level of awareness of such issues within the company itself, and the effectiveness by which these issues and corporate policy are communicated across the company.”

Other key findings:

69 percent are unaware of the European Union (EU) directive on the energy performance of buildings, due to come into force across all EU countries, and already in force in some, by the end of 2009. This is despite the directive introducing energy performance certificates which in turn are likely to have an immediate knock-on affect in terms of how property is occupied, including how it is fitted out. However, not all the retailers in the survey are based in EU countries.

57 percent do not monitor the usage of energy, water and waste, despite utility usage being a key cost to retailers after staff and property. The UK’s Carbon Trust, an independent company funded by government to help business and the public sector reduce carbon emissions, estimates that savings up of the 20 per cent across the sector are possible.
 
82 percent do not adhere to the EU directive on Waste Electrical and Electronic Equipment, which aims to reduce the amount of electronic waste from homes and businesses that ends up in landfill sites. This is arguably not relevant to all retailers. Once again, not all retailers in the survey are based in EU countries.
83 per cent    Do not have an environmental or sustainability development policy which is separate from their CSR policy. Of those that do, packaging is the factor most frequently covered.
 
47 percent did not believe that their company’s CSR policy was increasingly influencing leasing decisions.
 
74 percent had not heard of any of the key certifications (namely ISO14001, BREEAM or LEED).
 

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