A quarter of Australian retailers will miss net zero by 2050.

A quarter of Australian retailers with 2050 net zero targets expect to miss them, according to a new report into progress on sustainability from Microsoft Australia and New Zealand and a research team led by Dr Chris Brauer, Director of Innovation at Goldsmiths, University of London.

Accelerating the journey to net zero: The retail experience shows that while 72 per cent of retailers have committed to net zero emissions by 2050, many are struggling to operationalise their ambitions.

For 41 per cent of retailers, this inertia is due to the lack of a clear, enterprise-wide sustainability strategy to guide their organisation’s efforts. Another 37 per cent say they are held back by a shortage of in-house sustainability expertise, while 29 per cent cite their business’s inability to access technology such as emissions measurement and reporting software.

“Our research indicates that retailers are overwhelmingly committed to a more sustainable future, but many simply don’t have the resources or direction they need to get there,” says Brett Shoemaker, Sustainability Director, Microsoft ANZ.

As a result, challenges like the green skills shortage are holding back progress in every dimension we surveyed, from decarbonisation to low-carbon supply chains.

Retail versus the rest

Microsoft ANZ’s retail-focused report comes on the back of its recent Accelerating the journey to net zero: A blueprint for Australia report.

This country-wide survey, which took the pulse of thousands of organisations across sectors, found that 34 per cent of all Australian organisations with 2050 net zero targets expect to miss them. With just 25 per cent of retailers expecting to miss their targets, this industry is making better progress than many others.

Unlike sectors such as energy and resources, the retail industry’s Scope 1 and 2 emissions (direct emissions from on-premises energy use and staff business travel, for example) are relatively small.

The largest portion of retailers’ carbon footprints comes from Scope 3 emissions. These emissions account for the upstream value chain – including the raw materials extracted to make a product as well as the manufacturing process – and the downstream value chain, which includes activities such as transportation and warehousing.

Sobering for retailers, Microsoft ANZ’s country-wide report showed that the transport, logistics and warehousing industries, where many of these Scope 3 emissions originate, are among Australia’s worst performers on sustainability.

The innovation investment gap

Accelerating the journey to net zero: The retail experience suggests that retail’s emissions-intensive supply chain could be better managed with the right technology.

According to the research, 88 per cent of innovative Australian retailers say that technological innovation has a key role to play in improving their sustainability performance. Yet less than half that figure – 39 per cent of these leaders – are investing in logistics and transportation innovations that could make a real difference to their emissions, such as electric vehicles for low-carbon transportation.

Similarly, most retailers understand that tools like carbon mapping software and emissions visualisation dashboards will be vital in enabling them to understand, manage and mitigate their emissions along the supply chain. Again, however, fewer than half are making the necessary investments.

Only 47 per cent of retailers are buying solutions that will help them view and manage emissions in their supply chains, and just 44 per cent are buying innovative technology that will help them reduce warehouse emissions.

Dr Brauer says this sustainability innovation gap, which is not unique to the retail sector, presents a major hurdle to Australia reaching its 2050 net zero emissions target.

“The research reveals that innovation and technology are at the forefront of the leading Australian organisations’ approach to tackling sustainability,” he says.

For Australia to achieve net zero, it needs smart technologies working together with a motivated and energised community of corporate energy citizens.

Next steps for net zero

Microsoft’s report offers a seven-step blueprint to help retailers achieve their net zero goals, based on survey findings, insights from the organisations leading on sustainability and in-depth interviews with sustainability experts.

“Our study shows that leaders are struggling to operationalise their sustainability plans,” says Shoemaker. “So we have created a blueprint using insights from leading experts, academics and Australian organisations, to help them accelerate their progress.”

Access Accelerating the journey to net zero: The retail experience.

Accelerating the journey to net zero: The retail experience is based on a survey of 75 business leaders and 115 full-time employees of retail enterprises with 200 employees or more. The results are unweighted and within statistical confidence and numbers have been rounded for simplicity.