Getting the board on board: How to engage business with nature in the retail sector

First published in the February issue of Food and Drink Network

Working to protect nature is an increasing priority for many businesses. In retail, there is a genuine desire to do the right thing, but many feel they do not know where to start. RSK Group Retail, Food and Drink Director Christophe Lavialle explores how the sector can make positive progress on this important issue starting now.

Sustainability and nature concerns have increasingly become a priority for the retail sector. Its close links with supply chains and raw resources, as well as consumer perspectives and buying preferences, make this a crucial issue to act on. Recently, I spoke to representatives and stakeholders of a range of retail businesses at a British Retail Consortium event focused on nature, along with RSK colleagues from Nature Positive and ADAS. The main challenge presented here was how to make sense of what nature means to business and why it’s important to get it right and to act now.

Understanding retail supply chains relationship with nature

Declining nature is anticipated to reduce global GDP by $2.7 trillion annually by 2030. This is well within current business cycles and therefore is a present, immediate risk to address.

For the retail sector, where and how it sources products is the most prominent interface with nature. The sector is diverse; it encompasses everything from supermarkets to fashion, hardware to electricals. As a result, there are varied supply chains that have different nature dependencies, those nature dependencies being where there is reliance on natural resources for raw materials or to deliver a service.

Getting started with nature risk begins with forming an understanding of what commodities, natural resources and ecosystem functions are financially material for business operations and supply chains. Many businesses will have already conducted climate change risk assessments as part off their climate reporting obligations and public disclosures. Through this, they have likely identified and quantified climate-linked risks, such as floods, droughts, increased temperatures or extreme weather events, that may disrupt operations and service delivery. This means that, in reality, when it comes to assessing nature in the business context, most are not starting from scratch, as many of the key steps will have already been worked through, providing a well-informed foundation on which to build.

There are already several regulatory drivers encouraging businesses to look at nature in this way and to consider how they interact with it. The voluntary Taskforce on Nature-related Financial Disclosures (TNFD) in the UK, the Corporate Sustainability Reporting Directive (CSRD) and Europe Deforestation Regulation (EUDR) in the European Union and the anticipated UK Forest Risk Commodity Regulation (UKFRC) all offer a structure to help businesses consider and understand their relationship with nature, and many businesses are already preparing to comply. Some of these frameworks also enable businesses to better understand their interactions, impacts and reliance on nature. The TNFD’s four-step LEAP process provides a comprehensive framework on how to link technical nature assessments to real business risks and opportunities. Many of the emergent regulation is also designed to be interoperable. This means that, done correctly, companies can streamline their assessments and reporting for maximum effect. This also means that nature can be integrated alongside climate or human rights workstreams, enabling companies to develop robust and comprehensive sustainability strategies.

As an example, companies could combine their nature and climate assessments by matching up steps between the TNFD and Task Force on Climate-Related Financial Disclosures (TCFD) frameworks, which were designed to go hand-in-hand. Concurrently, they can start preparing science-based targets for nature (SBTN) because steps 1 and 2 of the SBTN framework are almost exactly aligned to the first two steps of TNFD’s LEAP process. If the business falls into scope of broader regulation such as Corporate Sustainability Reporting Directive, any nature and climate impact and risk assessments can also feed into the environmental reporting pillars.

How retail businesses can act on nature risk

Starting from the foundations laid by existing reporting demonstrates that many businesses already recognise the importance of working with nature and the environment. So, when thinking about taking action on nature now, many will have already made a significant start. The British Retail Consortium is offering its support to take this further by hosting events and campaigns, which I have seen many organisations passionately participating in. To start developing nature risk and opportunity reporting further, businesses can do the following.

• Undertake a preliminary assessment in line with the TNFD guidelines: this can create a baseline understanding of nature and climate ‘hotspots’ across supply chains and the broad business; impacts and dependencies on natural resources and ecosystems, and risks relating to nature; and the opportunities for positive change and impact.
• Engage with stakeholders, internal and external, on the topic: this may involve working with suppliers that share your vision or working together to bring positive change with existing partners.
• Begin to understand across the company and broader value chain where issues may arise: this should include conversations with the board and procurement teams.
• Start making commitments to develop a strategy to address identified business risk and opportunities.
• Explore setting Science-Based Targets for Nature (SBTNs), on land or water, especially if the organisation already has successful commitments to SBTNs for greenhouse gas reductions.

For retail businesses, the need to develop effective nature targets and how to measure action against them will be critical. Nature underscores much of business activity in this vital sector; getting it right is not only possible but also achievable. As we come to understand more about how closely linked core industries are to nature and the environment, it becomes clearer why action is important. Taking action on nature ensures short-term resilience, profitability and long-term business survival. It is not just about businesses doing good but about doing good business.