Retail comprises 25% of global greenhouse gas emissions, yet, it is not nearly as discussed as other high-polluting industries like transportation, building, manufacturing, and agriculture. This is the argument Thierry Gadou, Chief Executive Officer at retail giant SES-imagotag, makes in an opinion piece for the World Economic Forum.
“I find it surprising that retail is relatively absent from the core debate on net-zero even though it’s the largest economic sector and private employer in the world, with over 15% of global GDP and jobs,” he writes.
What is more, he continues, retail’s shift from physical to online platforms further increases carbon emissions. Gadou argues that the current e-commerce direct-to-consumer (DTC) model requires about 1 million square meters of fulfillment centers to reach $6 billion in revenues. And the construction of new physical infrastructure results in CO2 emissions of about 1-1.5 tons per square meter.
With estimated e-commerce growth of 10 to 20% per year and an increase in revenues at about $2 trillion, keeping the traditional DTC e-commerce model would result in about 0.5 giga tons of CO2 equivalent emissions.
To counteract that concerning prognosis, Gadou proposes a new, more sustainable retail development model that revitalizes the existing physical commercial infrastructure.
“There are approximately 20 million stores worldwide – one store for 400 humans – served by an existing supply chain which every day brings all consumer goods no further than a few miles away from any consumer,” the SES-imagotag CEO writes. “This incredible density of stores – and proximity of goods for consumers –– is the obvious solution to a low-carbon e-commerce model. This will not only avoid massive carbon emissions but will dramatically increase customer satisfaction. Tomorrow, consumers will order more and more online, but they will be delivered in less than an hour from a shop around the corner.”
Gadou calls that model “physical e-commerce” of “local e-commerce” and says that while it has a great potential to decrease emissions in retail, it will require the contribution of all stakeholders to create positive shared value for consumers, employees, and the planet.
To speed up this goal, Gadou, together with Peter Brabeck-Letmathe, Vice-Chairman of the Board of Trustees of the World Economic Forum and former CEO of Nestlé, launched the International Board for Retail Sustainability, Transparency and Consumer Protection and the Positive Retail Research Program.