Drivers and Barriers

Driving forces are various factors that encourage and enable retailers to initiate their sustainable capabilities through all levels of the supply chain.

Despite the existence of various drivers encouraging retailers to embark on a path to sustainability, a number of barriers exist through all levels of the supply chain that make this a difficult prospect in reality.

• Drivers behind sustainability
• Barriers to sustainability

Drivers behind Sustainability
Driving forces are various factors that encourage and enable retailers to initiate, maintain and expand their sustainable capabilities through all levels of the supply chain.

Download full background paper on Drivers Behind Sustainability (PDF, 96KB)

The existing literature relating to European retailers, as well as surveys and interviews conducted with Nordic retailers establishes that one of the most important drivers are financial incentives. These are found to be a key factor in inducing retailers to increase their levels of sustainability as many have recognised that being environmentally responsible can lead to cost reductions and financial savings.

This is particularly the case in increasing energy efficiency and reducing energy consumption in stores and warehouses, reducing fuel consumption in transport, saving on water cooling costs by recovering thermal energy from coolers, reducing waste volumes and exploring the possibility of selling paper and plastic waste to recycling companies.

The strategic and marketability benefits available for retailers of being involved with 'green products' is also important, including improving the corporate image, responding to pressures from stakeholders and receiving retailer awards. This includes the 'reactive strategy' which sees firms driven towards sustainability through a fear of being exposed as non-compliant in acting in an ethical and sustainable manner.

Regulatory initiatives also play an important role as Nordic retailers seek to conform to international and EU regulations. Within firm cultures there can also be strong drivers behind the shift to sustainability with organisational values and employee concerns often motivating changes at the firm level.

Barriers to Sustainability
Despite the existence of various drivers encouraging retailers to embark on a path to sustainability, a number of barriers exist through all levels of the supply chain that make this a difficult prospect in reality.

Download full background paper on Barriers to Sustainability (PDF, 132KB)

The existing literature relating to European retailers, as well as surveys and interviews conducted with Nordic retailers identifies many of these barriers. Financial considerations are found to be a notable factor through high investment costs, a lack of resources and the company’s own financial situation.

For example, the costs of initiating socially responsible purchasing may be impeded by the need to justify the activity and its cost to the Board of Directors based purely on business benefits or profits for the company. Clearly, market forces dictate that neither private nor public organisations can be run as charitable institutions.

Many firms also lack a clear managerial commitment to make a shift to sustainability. This can mean that changes in organisational culture and increases in organisational training and information levels are also required.

From a strategic perspective, a first mover disadvantage, a lack of sufficient performance indicators and general knowledge about environmental issues are notable barriers. This lack of general knowledge also relates to the market place with many consumers unsure about various social and environmental labels.

The reliability of supply is also a problem as it often means that there is a lack of environmentally and socially sound alternatives to traditional products. Regulatory compliance may in itself also be a barrier as retailers generally do not favour regulations due to cost implications, particularly when regulations differ between countries.