Why Making Good on Green Promises Can Be a Win for Retailers

Evolving labor expectations have forced retailers to reassess long-held beliefs about employee values and contemplate their cultures.1 Along with a fair wage, employees seek employers whose values are consistent with their own. Providing a clear purpose, offering flexibility, and making authentic commitments to diversity and sustainability are important means of engaging a growing part of the workforce. For instance, 40% of employees across industry sectors said they would consider leaving their job if they couldn’t trust their employer to fulfill its diversity, equity, and inclusion commitments, and a quarter (26%) said they would consider switching jobs to work for a more sustainable company.2 This reflects employees’ growing demands of their employers, particularly around openness and authenticity.

Given that there were 1.1 million unfilled jobs in the U.S. retail market as of April 2022, cultivating an attractive work culture is no longer a “nice to have.”3 When it comes to sustainability, embedding it into the DNA of organizational culture is not just the right thing to do for the planet — it can also be a key component in employee attraction, retention, and satisfaction.

In a recent study of 750 U.S. retail employees, we explored the perceptions of senior managers (including the C-suite, directors, and vice presidents) of their companies’ sustainability initiatives and how front-line workers see these efforts playing out.4 (See “The Research.”) The data shows that retailers demonstrating authentic sustainability efforts might have better success attracting and retaining labor.

Retailers Leading on Sustainability

Retailers in the “leader” category clearly spell out sustainability policy goals, make substantial sustainability investments, and rank highly among employees on environmental progress and effort relative to competitors.

Authenticity also matters. Leaders are perceived as being genuine in taking action to reduce the company’s impact on the environment. “Laggards,” on the other hand, were perceived as taking action to cut costs or to simply check a box in order to comply with regulations. Authenticity goes a long way in building trust within the workforce, which is an important factor in cultivating employee motivation, reliability, and loyalty.5

Indeed, we found that employees at retailer leaders are much more likely to be highly engaged and satisfied and are less likely to turn over than those at laggards. (See “Leading on Sustainability Gives Retailers an Edge With Employees.”)

For example, 84% of employees who work for retail leaders said they are inspired by the company’s vison and values compared with just 22% of employees working at laggard retailers. By acting with authenticity and a commitment to vision, retailers can inspire their employees to adopt sustainable practices as well because it’s fulfilling rather than due to outside motivation.

Bottom-Line Benefits of Sustainability Engagement

An alignment in values between retailers and their employers clearly influences retention, which in turn has an effect on companies’ bottom lines and culture. Significantly, 7 in 10 employees who work for sustainable retail leaders say they rarely think about looking for another job (compared with only 40% of those at laggards), and 8 in 10 see themselves working for that same employer in two years’ time. Lower turnover rates not only help with productivity and culture but also have the added benefit of reduced safety incidents, given that new hires are five times more likely to be injured on the job than experienced workers.6 And although not specific to retail, some data has found that employee churn can cost one-half to two times the employee’s annual earnings.7

When it comes to talent acquisition, employees at leader companies are almost twice as likely to refer friends and family for open positions. Across industries, analysis has shown that referred workers are four times more likely to be hired, have higher productivity levels, and tend to stay longer at the company — resulting in potentially thousands of dollars in savings per referral.8

Developing a culture of sustainability also provides benefits that extend beyond the walls of the company. Leaders are more likely to influence their employees to live more environmentally sustainable lives. Eight in 10 employees (82%) working at companies in the top quartile said they had changed to some more sustainable behaviors in the past 12 months (compared with 42% of those working for laggards), citing their employer as one of the main influences.

The data shows that leadership teams in retail could benefit from recognizing the cyclical benefits of driving sustainable behaviors for employees. Only 3 in 10 cross-industry C-level executives feel that their current sustainability efforts would have a positive impact on employee recruitment and retention.9

An Inconvenient Truth

In an industry where the objective is to promote consumerism, it’s no wonder that retailers often struggle with how to join the climate change fight.10

While 80% of retail executives say the government and businesses should do more to address environmental issues, only 1 in 4 top retailers have made net-zero commitments or set definitive near-term targets to reduce carbon emissions.11 In addition, two-thirds of employees we surveyed called out retailers for falling behind in some straightforward sustainability efforts such as waste management and resource efficiency.

To complicate matters, understanding the progress made against those goals depends on who you ask. (See “How Retail Employees View Employer Progress on Sustainability.”) For example, 8 in 10 senior managers believe their organization’s progress bests the competitions’. Meanwhile, only half of middle managers (48%) and those on the front line (52%) feel the same way. Given this delta, there is an opportunity for organizations to level set on what sustainability means in practice and to work with employees throughout the organization to set attainable goals.

Engaging Retail Employees as Sustainability Ambassadors

To be fair, sustainability initiatives are often highly complex, require intricate planning, and can take several years to fully implement.12 However, retailers have a huge asset and potential advantage on their side — their employees.

As one of the largest employment sectors in the U.S., retailers are uniquely positioned to affect downstream activities by creating a sustainability-focused culture where employees can become ambassadors to the customers they connect with every day. A Swedish study found that consumers are influenced and motivated more by the messages delivered to them in-store than by general corporate sustainability communications.13 Forward-thinking retailers can harness in-store marketing, merchandising strategies, educational campaigns, and guidance from customer-facing staff members in order to influence consumer beliefs, behaviors, and purchases.

Most retail employees we surveyed (60%) said that customer interest in sustainable products has increased in the past two years. Our survey also found that employees are eager to take action on the sustainability front, even in situations where the pandemic has brought added burdens and expanded job duties for many workers. Four in 5 retail employees said they are concerned about environmental issues and want to adopt a more environmentally sustainable lifestyle, while two-thirds said they have spoken with coworkers about adopting sustainable practices at work in the past year.

Supporting Culture Change Through Communication and Training

In order to activate the workers to become ambassadors of sustainability goals, retail companies should look to the actions of leaders, especially those related to communication and training.

Consistent and effective sustainability-related messaging from top management and immediate supervisors can be key to driving change, particularly when it comes to employees understanding their role in supporting organizationwide sustainability goals. Not surprisingly, employees at different levels perceive their company sustainability efforts differently. Senior managers tend to have a better understanding of their organization’s sustainability goals and the practices adopted to achieve them (83%, compared with 56% of those in nonsupervisory roles). Our analysis found that retail leaders focus on bridging this gap through better communication. For example, they are receptive to upward communication, where employees can share their thoughts and suggestions to help the business become more sustainable. This two-way dialogue pays off, as these employees are five times more likely to understand how their job matters to the company’s sustainability goals.

If the idea is to influence employees and customers, training is a natural extension of communication to help educate employees on tangible actions that can affect the company’s overall climate goals. However, when employees ranked the top three sustainability-focused areas (out of nine) that need more attention from retailers, employee training and engagement ranked second behind waste management and recycling. Leaders, however, prioritized training to ensure that employees know how to act sustainably at work (79% of retail leaders, versus 18% of laggards) and also to ensure that their employees can pass that knowledge on to their customers. For example, some focus on conducting training to address recycling, energy efficiency, and food waste, and they incentivize employees to take part in such training through reward programs.

Retailers that refuse to believe that the market is moving toward sustainability might end up on the wrong side of history. To heed the lessons of retail leaders, sustainability should become a mindset — not solely a directive. It comes down to commitment, communication, and the right knowledge and tools for employees throughout the organization to act.

Companies must understand that their employees are an important connection for customers when it comes to sustainability — by informing customers on sustainable practices and potentially influencing future behaviors. While some obstacles will always be evident in the journey to reduce carbon emissions, focusing on employees first can be the most useful tool in the arsenal to help overcome sustainability shortfalls.