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Are Australian retailers on-board with the CSR agenda?

Rick LambellThe recent furore surrounding Coles, milk prices and the social responsibilities of the supermarket giants provides  a useful opportunity to reflect on the state of CSR in the Australian retail sector.

An online review of some of Australia’s largest retail and consumer goods companies paints a decidedly mixed picture.

Controversies aside, the two retail conglomerates – Wesfarmers and Woolworths – are clearly well on the sustainability journey.  Wesfarmers is the only Australian retailer to be listed in the Dow Jones Sustainability Indexes, while Woolworths is mid-way into an ambitious seven-year sustainability strategy.

Beyond the two big retailers, however, the picture is much less encouraging. The websites of some of Australia’s largest brand retailers, including Myer, David Jones, Harvey Norman, JB Hi-Fi, Just Group and Pacific Brands suggests only a limited commitment to CSR, minimal reporting, and little evidence of integrating CSR into core business.

As a whole, Australian retailers have been slow to seize the opportunities of CSR and sustainability as a competitive differentiator in comparison to global peers.

UK retailer Marks & Spencer, for instance, aims to become the world’s most sustainable major retailer by 2015. The company’s high profile sustainability program, “Plan A”, delivered £50m in profits in 2009/10 from cost savings and the introduction of new sustainable product lines. While Wal-mart, the world’s largest retailer, has committed to eliminating 20 million tons of greenhouse gas emissions from its supply chain by 2015 as part of a long-term commitment to use 100% renewable energy.

The risks of inaction are also growing.

Investors are increasingly asking retailers how they are responding to CSR risks and opportunities in their global supply chains.  A July 2010 report by Citigroup suggests that Australian retailers are  lagging international leaders in their management of labour and human rights risks.

Failure to address supply chain concerns has also drawn the attention of NGO campaigners. The Just Group has become the latest Australian retailer to feel the heat. In April, Oxfam launched a campaign claiming The Just Group has failed to provide fair wages and working conditions in Australia and overseas and lacks transparency in its supply chain management. The Just Group action follows a similar high-profile campaign targeting Pacific Brands in 2009.

So what is holding Australian retailers back?

Consumer demand clearly remains an issue. The Australian Food and Grocery Council’s Green Shopper survey (June 2010) found that while 84% of Australian shoppers said they were concerned about the environmental impact of their purchasing decisions, only 13% of the 1,000 shoppers surveyed actually purchased a product based on its environmental credentials. Recent research by the Melbourne Business School, however, suggests that better product labelling, along with consumer education, may be the key.

Australian retailers and consumer goods companies need to make a step-change in their attitudes and response to CSR. The risks of inaction are mounting and opportunities for leadership, brand differentiation and new product development are being missed. The time for action is now.

Rick Lambell is a Consultant with the Australian Centre for Corporate Social Responsibility (ACCSR)

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