By Robert Wheatley//September 29, 2023//
By: Robert Wheatley//September 29, 2023//
According to a recent comprehensive trend report from PlanetFWD, sustainable brand claims and performance will be a ‘must have’ for retailers. Why? Numerous studies agree that upwards of 93 percent of retailer emissions come from “System 3” sources embedded mostly in the supply chains of brands they carry. Thus, no surprise in Amazon’s recently released 2022 Sustainability Report, the world’s largest e-commerce retailer stated they will begin requiring suppliers to disclose their carbon emissions starting in 2024.
The role brands play in retailer ESG reporting cannot be understated. It only makes sense: brands demonstrating credible, verified ESG progress will drive retail and brand topline growth because shoppers want it. In a recent McKinsey report, their analysis found brands that convey credible ESG claims produce eight percent higher cumulative sales growth compared to brands that don’t. In the grocery industry, food brands telegraphing ESG performance related to reduced carbon emissions drove a 10 percent year over year sales increase.
In many ways this is merely a reflection of changing consumer sentiment. PlanetFWD’s study found shopper urgency around sustainability issues, with 69 percent of consumers saying sustainability is important to them, while 66 percent say they are willing to pay more for sustainable brands. This mirrors consumer sentiments generally around pursuing a more sustainable lifestyle. However, 26 percent state it is “difficult” for them to find and identify sustainable products when shopping.
Increasingly, label communication will play an important role in this trend as 48 percent of shoppers say they want to make sustainable choices when they can. Retailers are responding to consumer preference by supporting brands that seek third-party verification of the ESG claims they make, use science-based analysis to secure data on ESG performance and report on efforts to improve their carbon footprint
This evolving story at retail is occurring because 61 percent of consumers now believe environmental issues could have an adverse impact on their future health and wellbeing.
A recent McKinsey study on growing sustainability demands in the retail sector reported, “cutting back on carbon emissions is a universal mission that everyone in the global food system can rally behind. Unless people reduce CO2, methane and other greenhouse-gas (GHG) emissions, sea levels will rise and catastrophic weather events are likely. Food is an important variable in this equation — what people eat, how people grow it, and how people get it from producers to consumers. One of the biggest challenges in decarbonizing food retail is the key role dairy and meat play in the Western diet, as these products account for almost half of all product-related scope 3 emissions.”
This sentiment applies equally to the food pets consume. In pet food, the vast majority of popular diets emphasize meat-based nutrition as a focus of competitive advantage, supporting animal wellbeing and are symbolic of optimal nutrition claims. While all of this is true, the carbon impacts remain a challenge for the industry at a time when retailers will look to brands as partners in answering their ESG objectives.
The approach to ESG priorities is developing along various pathways. Walmart announced its ambitious plans to target zero emissions across its operations by 2040, which will undoubtedly be reflected in a demand for improvements from the brands (and their supply chains) they stock.
“We want to play an important role in transforming the world’s supply chains to be regenerative,” said Doug McMillon, president and CEO of Walmart. “We face a growing crisis of climate change and nature loss, and we all need to take action with urgency. For 15 years, we have been partnering to do the work and continually raising our sustainability ambitions across climate action, nature, waste and people. The commitments we’re making today not only aim to decarbonize Walmart’s global operations, but they also put us on the path to becoming a regenerative company — one that works to restore, renew and replenish in addition to preserving our planet, and encourages others to do the same.”
What’s next for pet food brands?
The research shows pet brands that demonstrate credible ESG commitments will help drive retailer growth, while likely getting premium in-store placement and support in answer to helping consumers make more sustainable choices.
To get there will require closer integration and coordination between product R&D and innovation teams, and their colleagues across the hall in marketing. New emerging low emission protein solutions like precision fermentation-made meat ingredients, made without the need to slaughter animals, and plant-based foods that replicate the nutritional profile and density of traditional meat proteins, will help the industry create new pet food categories that come with an embedded sustainability story to tell. Meanwhile, brands that work through their supplier networks to require commitments to regenerative farming policies can help secure ESG improvements in the conventional diet products they produce.
Marketing integration will be needed to help craft and tell those stories to pet parents on the hunt for less environmentally taxing, but equally nutritious foods, to feed their pets.
The sustainability ship at retail is leaving the dock. It’s time for brands to get on board with credible, verified emissions footprint reporting, while telegraphing their validated environmental efforts through labeling and education. This will help consumers better understand that important information and enable them to exercise more sustainable choices.
It’s a new era for the industry – a virtuous circle where shared business ambitions and sustainable performance actions between brands and retailers meet to amplify sustainability outcomes.
Robert Wheatley is the CEO of Chicago-based Emergent, The Healthy Living Agency. Emergent can help pet brands erase ineffective self-promotion and replace it with clarity and deeper meaning in their pet parent relationships and brand communication.