The theme of sustainability, for many businesses, was placed to the side while they reacted to 2020’s economic disruption that was the COVID-19 pandemic. Environmental, Social, and Corporate Governance (ESG), has long been on the agenda for CPG companies and over the last 24 months, the relevancy and requirement for ESG to become part of the commercial agenda and permeate across the value chain has escalated.
Both CPG companies and retailers alike are realizing that they do not have a solid grasp on how to connect ESG priorities to the commercial level of supplier and retailer engagement. Yet we are now at the pivot point where retailers and suppliers simply must move through these challenges and connect ESG matters because it is the way of our future.
While retailer satisfaction of CPG’s sustainability performance at the commercial level has improved in recent years, progress halted in 2021. At Advantage Group International, we have seen firsthand how suppliers want to better understand what it takes to become a valued and collaborative sustainability partner with their retail customers. They want their efforts to be acknowledged while also seeking new opportunities. Ultimately, they want to be relevant and ready for growth against consumer and shopper needs – today and tomorrow.
Become a Sustainability Partner of Choice
The Advantage Report™ shows that CPG’s who are strong partners in sustainability, also perform well at competencies related to Supporting their Customer’s Needs, are strong at Communication as well as Helping their Customers Differentiate from Competitors.
Leading suppliers have been recognized by their retail partners when the strategy of sustainability is planned together – taking the initiative to understand firsthand and collaborating with retail customers has shown to open windows of opportunities for supplier-retailer partners.
A company that is best in class for social responsibility and environmental sustainability communicates. This has been expressed by many retailers when working with suppliers where key initiatives, including packaging, social media, and e-commerce around ESG are discussed and communicated, regularly, by their supplier partners.
Retailers want to hear new ideas and receive trend analyses from suppliers so both can work together to develop innovative, and exclusive products for their consumers. Everything they are doing revolves around having a sustainable advantage, meaning there is a willingness to integrate standout ideas that will benefit both sides of the business.
Be Authentic and “Walk the Walk”
Retailers appreciate when suppliers are authentic in how they embody ESG through their organization and are pursuing ESG initiatives with genuine motives. They want to move forward with their supplier partners by taking actionable and measurable steps. Suppliers need to make their sustainability proposition clear and relevant by asking themselves questions such as:
- Are we proactively communicating our sustainability initiatives to our customers?
- Are our ESG developments and activities aligned to those of our customers?
- Are we leading the way when it comes to ESG innovations and are we making a clear difference?
Suppliers should ask their customers what they are trying to achieve as it relates to ESG and how they see themselves contributing. By co-creating and executing initiatives together, retailers and suppliers can help one another meet shared ESG objectives. Tracking and monitoring progress will ensure momentum and the need to follow through. Suppliers who share their organization’s innovative commitments will help retailers better serve shoppers as well differentiate themselves from other CPG companies.
Contact your local Advantage Advisor to learn how you can move your sustainability strategies from the boardroom to the shelf by understanding how your customers perceive your performance on the critical competencies that support successful sustainability efforts.