Skip to main content
Marsh logo

Article

Sustainability in retail: Why retailers and brands must act now

Discover why sustainability is vital for retailers to meet consumer demand, comply with regulations, and build a resilient, eco-friendly brand today.
Person's name and title

By Edmund Woolcock , 

Senior Managing Consultant, Marsh Advisory

02/12/2025 · 6 minute read

Sustainability is no longer a “nice to have” for retailers - it’s a business essential and a strategic priority. The retail sector is being challenged to rethink its environmental sustainability and social footprint across the full value chain. This covers evolving consumer values, tightening regulations and increased scrutiny from investors. Uncertainty continues to rise. But some businesses are culturally embedding sustainability initiatives into their retail operation and strategies. They will be the ones that remain competitive and resilient, gaining a competitive edge in the market. Contact our experts to discuss how they can help support your businesses future development.

Rising consumer expectations

Consumers’ awareness of the climate impact and social impact of their purchasing decisions is increasing. They’re demanding more transparency. Some are willing to pay on average 9.7% more for sustainable products that meet specific environmental criteria, including:1

  • Sustainable sourcing,
  • Made from recycled or eco-friendly materials
  • Produced in a supply chain with a lower carbon footprint.

This shift in consumer behaviour, especially among Gen Z consumers, puts pressure on your business. You need to be able to demonstrate a genuine commitment to sustainable practices, not just lip service.

 Sustainability should be embedded into your business model. It should be supported by measurable actions and honest, transparent reporting. The days of vague sustainability claims are over. Today’s global consumers want proof and actions, not promises.

Consumers expect brands to act responsibly. This could be by reducing carbon emissions and waste. Or by adopting circular economy principles and plastic packaging alternatives. However, over-communicating your sustainability goals risks your business being accused of ‘greenwashing’. This can quickly damage trust, loyalty, and market share.

Investor and stakeholder scrutiny

Retailers are also facing growing pressure from investors, banks, and corporate partners who are integrating sustainability in retail criteria into their decision-making. These stakeholders are no longer content with vague ambitions, they want:

  • robust strategies;
  • credible set targets;
  • and tangible progress.

All of this needs to demonstrate a high degree of commitment to cut emissions and improve customer satisfaction.

If you fail to keep up, your business risks losing out on access to investment, financing, and strategic partnerships. On the other hand, if you can demonstrate leadership in sustainability, you may gain a competitive advantage. Potentially opening doors to new markets and responding to the growing demand for sustainable choices. This is especially important as other retailers and brands in the fashion industry are stepping up their efforts. They're making sustainability a priority.

The regulatory landscape is evolving fast

Regulators are making it increasingly difficult to avoid environmental responsibility. New policies and directives are emerging that mandate action and increase reporting demands:

  • Extended producer responsibility (EPR) rules. These apply to organisations that supply or import too much packaging.2
  • Deposit Return Schemes (DRS) for drinks containers. 3
  • Mandatory Task Force on Climate-Related Financial Disclosures (TCFD)-aligned sustainability disclosures. Companies are required to disclose information on their governance, strategy, risk management, metrics and targets related to climate change. 4
  •  The EU’s Corporate Sustainability Reporting Directive (CSRD). This has UK economy implications. Particularly for larger, listed companies with international operations.5
  • The International Sustainability Standards Board (ISSB). This is rapidly being adopted across many developed countries, including the UK where it will replace TCFD over the coming years. This expands the reporting requirements placed on large UK businesses.

A significant regulatory shift is the requirement to report not only Scope 1 and 2 emissions (direct operations and energy use), but also Scope 3 emissions. This covers the supply chain upstream and product use downstream. This places a clear responsibility on retailers to understand and manage their entire value chain.6 Small and medium enterprises will also come into the CSRD scope further down the line. This indicates the need for strategy development and implementation now.

In addition, introducing the UK Green Taxonomy will play a critical role in shaping future regulatory expectations. It's designed to provide a common framework for defining what counts as ‘environmentally sustainable’. The taxonomy aims to help financial markets identify and support genuinely green activities. This means you should align your efforts with clear technical criteria that classify activities as ‘taxonomy-aligned’, such as:

  • Renewable energy
  • Plastic packaging alternatives
  • Supply chain energy efficiency
  • Reduce emissions.

As outlined by the British Retail Consortium (BRC), adoption will initially be voluntary. However, it's expected to influence reporting obligations and investor scrutiny. This means organisations should make early alignment a strategic priority and take a step in the right direction now.7

Sustainability efforts in supply chain management: visibility is vital

Achieving sustainability goals requires visibility across the entire supply chain. This includes understanding where products come from, how they’re made, and what environmental impact they carry. This is particularly important in relation to water usage and human rights considerations.

Sustainable supply chain practices include:

  • Local sourcing
  • Energy-efficient logistics
  • Circular models
  • Supplier emissions reduction.

Given the growing Scope 3 focus, tracking emissions and risks associated with suppliers and customers is vital. This upstream and downstream transparency is no longer optional - it’s a regulatory and reputational necessity. It reflects key regulatory changes impacting the sector.

Building resilience in the retail sector during uncertain times

Today's economic and geopolitical climate is volatile. So you should also look at sustainability through a risk and resilience lens. Boards and executive teams are under pressure to remain responsive. They're also expected to anticipate emerging threats that could affect high streets, stores, and the availability of essential goods.

While business continuity plans (BCPs) are essential, resilience is more than a document. It’s a culture and an operational discipline that runs throughout the organisation. This includes regular scenario planning to respond to typical situations, including:

  • Greenwash accusations
  • Regulatory breaches
  • Supply chain shaming
  • Disgruntled employee sabotage.

Future-focused capabilities

Keeping pace with current and future challenges is vital. You'll need to invest in capabilities that help you:

  • prioritise sustainability efforts;
  • navigate regulatory changes;
  • and embed climate awareness into strategic planning.

This includes:

  • Data and analytics tools. To track emissions and supply chain impact, helping to identify significant costs and opportunities for improvement.
  • Internal governance structures. Elevate sustainability to board level, ensuring good practice is embedded across all functions.
  • Collaborations with industry bodies. For example, the BRC, to stay ahead of evolving standards and promote economic growth through sustainable development.

The BRC’s Climate Action Roadmap sets an ambitious target for the UK retail industry to reach net zero by 2040. It provides a framework that can help guide action and compliance.8

Act now, lead tomorrow

For the retail industry, sustainability is no longer a choice—it’s a requirement. You’ll need to go beyond compliance and think of sustainability as a core value offering customers more than just products. This is a commitment to live low carbon lifestyles and demonstrate responsible consumption.

If you lead the charge, you’ll not only future-proof your businesses but also win the trust of consumers, investors, and regulators. In an uncertain world, sustainability can be the foundation of resilience and a thriving resale market that challenges the impact of fast fashion on the environment.

If you would like to discuss any of the topics raised in this article further, please contact us.

 

Sources

1. pwc.com/pwc-2024-voice-of-consumer-survey.html

2. gov.uk/extended-producer-responsibility-for-packaging-who-is-affected-and-what-to-do

3. gov.uk/deposit-return-scheme-for-drinks-containers-joint-policy-statement

4. gov.uk/task-force-on-climate-related-financial-disclosure-tcfd-aligned-disclosure-application-guidance

5. finance.ec.europa.eu/corporate-sustainability-reporting_en

6. nationalgrid.com/what-are-scope-1-2-3-carbon-emissions

7. brc.org.uk/uk-green-taxonomy-what-is-it-and-what-does-it-mean-for-retailer-action-on-sustainability/

8. brc.org.uk/climate-action/

Related Insights

Placeholder Image

Article

Exploring supply chain challenges in retail

02/07/2025
Retail Leadres Report 2025

Report

Retail Leaders Report 2025

24/06/2025
Shopping cheque

Webcast

Webinar replay: How to reduce your insurance operating costs in retail and leisure

31/07/2024