How retail and CPG companies drive sustainability strategy with technology – Part 1

Retailers and CPG brands are feeling the pressure from regulatory bodies and consumers alike for more sustainable practices. A survey found that 47% of US Gen Z consumers stopped purchasing their favorite brand after discovering it was not eco-friendly. Over a third of Forbes 2000 companies across retail, manufacturing, as well as food, beverage, and agriculture sectors have net-zero targets. In response, retailers and consumer goods companies are taking intentional steps to set and work toward ambitious sustainability goals.

In collaboration with Incisiv, an industry insights firm, Amazon Web Services (AWS) set out to understand how consumer goods and retail leaders are thinking about technology as it relates to their sustainability strategy. We interviewed more than 300 leaders across the United States, United Kingdom, Australia, New Zealand, and India to understand different perspectives related to technology usage to drive progress toward sustainability goals. We also investigated how artificial intelligence (AI) and machine learning (ML) are being used in this effort. Here are three key insights from the report:

1. There is a gap between the intent and execution of technology usage and analytics to improve sustainability. 73% of respondents agree it is impossible to meet their sustainability goals without using technology, while only 21% agree that they are effective in using technology to support their sustainability strategy.

Juggling multiple stakeholders (and their competing priorities) is the number one challenge in incorporating technology into a sustainability strategy. At the core of this challenge is the fact that sustainability doesn’t just apply to any one team—it spans the enterprise. Coordinating consensus, prioritization, ownership, funding, and more is an ongoing challenge.

“It’s not an easy task (building a roadmap). We have many stakeholders and it’s not always clear who owns an initiative or funds it. Just getting a list of all sustainability projects in one place was a challenge.” – Director, Strategic Alignment (Major Global Retailer)

The challenge lies in creating a clear sustainability strategy with metrics, and understanding how technology can support achieving it. The problem doesn’t lie in building a technology roadmap: 83% of retailers and 87% of consumer goods companies have well-defined processes and structures to build and launch technology roadmaps. But since sustainability should be part of a company’s day-to-day operational and financial goals, the entire C-suite needs to be involved in determining the strategic areas to focus your sustainability efforts.

Oftentimes, we can achieve sustainability goals by reducing inefficiencies in a retail or CPG company’s operations. For example, Bayer, a German multinational pharmaceutical and biotechnology company, created the Bayer Carbon Program to help Brazilian farmers adopt climate-smart agricultural practices and reduce carbon emissions in their activities. Bayer uses AWS to centralize and standardize the data received from partners involved in the project.

“Using AWS helped us complete this data integration, understand what methodology to use to look at soil carbon sequestration, prove these methodologies together with partners, and exchange this information with partners who all have different knowledge within the entire chain.” – Vanessa Ginez, Digital Transformation Manager at Bayer

2. Poor data quality and inability to integrate data from multiple sources are both cited as reasons that companies aren’t using artificial intelligence (AI) and machine learning (ML) to improve sustainability efforts.

Sustainability data is often fragmented and sits in silos across the organization. This makes it difficult to see the bigger picture and make impactful decisions. Companies also aggregate this data manually in emails, spreadsheets, and local databases; and sometimes the data simply doesn’t exist. This leads to companies making decisions without a complete picture or real-time feedback. To track, report, and recognize progress compared to defined metrics—and collect the right data on an ongoing basis—is a top priority and requires the right technology talent, processes, and tools to support it.

For instance, Gousto, a leading UK recipe box provider, struggled to collect and manage the data needed to measure its impact and identify strategic opportunities for change. To automate the data measurement, management, and exchange process, Gousto turned to AWS Partner Altruistiq, a software solution that drives real corporate impact in carbon reduction and beyond.

“Because it took so long to gather data, it was only refreshed once a year, and the use of spreadsheets made it impossible to scale. We wanted more real-time and accurate data to help us make better decisions…That’s what led us to investigate alternative ways of data measurement and management, which is what led us to Altruistiq.” – Hugh Lewis, head of sustainability at Gousto

As a result, Gousto is able to calculate and mitigate its impact across the entire business and plan for future efforts, from suppliers and employees to customers. To date, Gousto has cut plastic packaging in its boxes in half and maintained food waste levels below 1% in its facilities.

3. Retailers and brands see that there is an opportunity to leverage AI and ML to accelerate progress against sustainability goals.

86% of retailers and brands in the survey believe that AI/ML can improve sustainability efforts. However, 51% of respondents are stuck in the learning phase, only 13% are experimenting, and just 7% are running projects.

“When it comes to sustainability, we’ll experiment with a few things based on what’s cool or what executives want, but we are ways off from getting a robust plan in place.” – Head of Technology / CIO (Major Grocery Retailer)

To move past the learning or experimentation phase, a successful approach means creating pilots to test and learn, and then scale any initiatives that demonstrate potential value. For example, More Retail Ltd. (MRL), one of India’s top four grocery retailers, used Amazon Forecast to increase its forecasting accuracy from 24% to 76%, leading to a waste reduction of up to 30% in the fresh produce category, an improved in-stock rate of 80% to 90%, and an increase in gross profit of 25%. MRL achieved this success primarily due to its willingness to test, learn, and adjust direction based on results. MRL ran more than 300 experiments on Amazon Forecast, learning from previously unsuccessful models and deploying models only when they were successful.

Consumer packaged goods and retail leaders can overcome the challenges of incorporating technology into their sustainability strategy by creating a clear vision, determining areas for the biggest impact, creating pilots to test and learn, and scaling initiatives that demonstrate potential value.

Download the full report here. This joint research report examines where retail and consumer goods companies stand with incorporating technology into sustainability strategies, breaks down nuances across regional US, UK, Australia, New Zealand and India results, and maps out the top use cases in using AI/ML to improve sustainability.