How Retailers are Advancing Sustainability in the Supply Chain
Key Points: Retail Sustainability
- Consumer expectations have shifted sustainability from a brand differentiator to a purchase driver, with transparency, ethical practices, and environmental impact now shaping trust and loyalty at scale.
- The largest sustainability challenge sits in the supply chain, where Scope 3 emissions account for the vast majority of a retailer’s footprint, making supplier collaboration, shared data, and ESG accountability essential.
- Retailers are taking action through sustainable sourcing, low-emission transportation, smarter packaging, and circular models that extend product life while lowering cost and risk across the value chain.
- Technology is accelerating progress, with AI-powered forecasting, route optimization, and real-time insights helping retailers cut waste, reduce emissions, and align growth with long-term resilience.
How Retailers are Advancing Sustainability in the Supply Chain
Today’s consumers are more attuned than ever to the environmental, social, and economic impacts of the products they buy – and the companies behind them. Ethical and sustainable practices are no longer fringe concerns, but rather, they’re driving purchasing behavior. In fact, over 70% of consumers say they will pay more for sustainable products, and more than 80% demand transparency from the brands they support.
Meanwhile, the retail industry contributes approximately 25% of all global greenhouse gas emissions, with a significant portion originating in the supply chain – the systems that source, manufacture, and distribute goods. As global retail sales are projected to exceed $37.9 trillion by 2030, the scale and urgency of this footprint cannot be ignored.
For retailers committed to meaningful change, the path forward begins behind the scenes. Reengineering supply chains for measurable sustainability has become a competitive benchmark for earning trust, building brand loyalty, and securing long-term growth. Below, we discuss how retailers are advancing sustainability.
Supply Chains’ Hidden Footprint
Nearly 98% of a retailers carbon footprint stems from Scope 3 emissions – indirect impacts from sourcing, production, transportation, product use, and disposal. While retailers don’t control these activities, they remain accountable.
Because Scope 3 emissions reflect the operational emissions of suppliers, building trust and fostering collaboration are essential for data-sharing. Retailers increasingly use ESG scorecards to guide decisions on sourcing, packaging, and logistics. Estée Lauder, for example, evaluates suppliers across sustainability, quality, and innovation using scorecards, supplier reviews, town halls, and a supplier portal to “understand and evaluate the performance of their suppliers in a tangible, consistent and scalable way”.
But this isn’t just about reporting. It’s about retailers strengthening supplier partnerships, meeting rising transparency demands, and embedding sustainability throughout the value chain to drive long-term resilience and market relevance.
Where Retailers Are Taking Action
Sustainable sourcing is now central to brand reputation and stakeholder trust. Retailers assess suppliers based on ESG disclosures, use of renewable materials like organic cotton or bamboo that regenerate quickly and leave a lighter footprint, and ethical business practices. J.Crew, for instance, has pledged to sustainably source 100% of key fibers (cotton, polyester, and wool) by the end of 2025, positively contributing to our planet.
Transportation and distribution are also evolving. Retailers are embracing EV fleets, last-mile carbon tracking, route optimization, and warehouse decarbonization through measures like solar power, cold chain efficiency, and LED retrofits. In January 2025, Amazon surpassed one billion US deliveries via electronic vehicles, underscoring its deep investment in sustainable logistics. These efforts lower fuel costs, reduce maintenance, and cut total cost of ownership while advancing zero-emission goals.
Sustainable route planning and load consolidation are additional key strategies for retailers to reduce greenhouse gas emissions. By optimizing delivery routes, companies boost fuel efficiency, improve operational performance, lower transportation costs, and stay aligned with regulatory standards. As logistics move toward AI, IoT, and data-driven platforms, retailers gain real-time insights that enable predictive planning and environmental impact.
Packaging is another critical lever. With many U.S. states regulating single-use plastics, retailers are cutting back. A 1% reduction equals 1 billion fewer bags used and discarded annually in the U.S. Fewer single-use bags means lower costs, easier inventory management, better customer engagement, and stronger brand reputation.
Circularity is also gaining momentum in retail, shifting from a make-sell-discard model to a closed-loop approach that extends product life through resale, repair, refill, and durable recycle design. Retailers like JCPenney are partnering with companies like ThredUp to offer secondhand fashion through Clean Out programs and branded resale shops. ThredUp has kept over 200 million garments in circulation and powers resale for brands via its Resale-as-a-ServiceⓇ (RaaSⓇ) platform, embedding circularity into traditional retail models.
Retailers responding to sustainability are also embracing sustainable forecasting to cut waste and optimize inventory. AI-powered demand planning analyzes historical data, market signals, and real-time trends to align inventory with actual demand. More precise forecasts help retailers avoid excess stock, reduce spoilage, and prevent overproduction – cutting costs while supporting sustainability goals.
Looking Ahead
From cutting waste and rethinking supplier relationships to reinventing delivery and product design, sustainability starts in the supply chain. For retailers, the most powerful lever for change? Reimagining how products are made, moved, and maintained across their entire lifecycle.
