As the world’s leaders came together in Glasgow for COP26, a raft of commitments and deals were made in a bid to limit global warming and stop a climate change catastrophe. Retail Week explores some of the implications for retail’s sectors.

Cop26 protest

What COP26 means for… fashion

Fashion’s key climate initiative, the UN Fashion Industry Charter for Climate Action upgraded its commitments during COP26.

The charter includes 130 signatory brands such as Primark, H&M and Inditex, and brought luxury conglomerate LVMH on board last week following years of reluctance.

Under the new pact, signatories must reach net-zero emissions by 2050, and either halve their emissions by 2030 or set science-based targets by the end of 2023.

H&M

Previously, the charter laid out plans for signatories to cut emissions by 30% by 2030, representing a significant step up.

Fashion retailers now have 12 months to submit their action plans to achieve the new targets - which will include elements such as switching energy in their supply chains entirely to renewable sources, eliminating coal, and ensuring that garments are made from net-positive materials that can be recycled numerous times.

A new element of the charter is that retailers will need to work with their suppliers to implement the changes - coal must be phased out of tier one and two suppliers by 2030, including avoiding the use of any new coal power by 2023. Suppliers will need to put in place science-based targets to meet wider climate objectives by the end of 2025.

Some retailers have called for further changes to trade policy which would favour those using recyclable or organic materials, and help stop greenwashing by outlining the specifics of these “favoured” materials.

At COP26, NGO Textile Exchange presented a policy request with the support of 50 brands including Gap and H&M to use incentives such as lower tariffs and import duties for such materials, as price can often be a key blocker for converting to more sustainable practices.

“Degrowth” was also discussed as a potential answer to fashion’s waste problem.

Ralph Lauren revealed at COP26 that it is actively trialling a concept whereby it fuels “financial growth through degrowth of resources” - essentially by separating production from profits it could maximise the amount made from fewer products, with fewer then sent on to outlet stores.

While this idea may take some time to filter through the fashion industry and become popular, it marks a shift in the norm that could guide future fashion retailers’ strategies.

What COP26 means for… grocery

Sainsbury_s_Local

Five supermarkets - Tesco, Sainsbury’s, Waitrose, the Co-op and Marks & Spencer - have pledged to halve the environmental impact of the weekly shop by 2030.

The grocers made promises as part of COP26 to reduce carbon emissions, food waste, packaging, and deforestation connected to the food they produce.

The chief executives of the food groups, which together serve more than half of UK food shoppers, said in a joint statement: “We recognise that a future without nature is a future without food. By 2030 we need to halt the loss of nature.”

All five said they would set science-based targets to help limit global warming to under 1.5 degrees, and their efforts will be monitored by environmental organisation WWF.

More than 100 countries also signed up to end and reverse deforestation by 2030, which will mean a crackdown on deforestation related to the production of foodstuffs such as soya, cocoa and beef in countries such as Indonesia and Brazil, which are imported cheaply to Western countries.

That could mean higher prices for groceries – costs that will either need to be absorbed by supermarkets or consumers.

What COP26 means for… home and DIY

Kingfisher head of sustainability Caroline Laurie recently told Retail Week that the DIY giant has a unique position to influence sustainability in consumers’ homes from the outset.

While the retailer has made switches such as ensuring all lightbulbs are LED and all taps are low-flow, solar panels and heat pumps may soon become standard in people’s homes, and new builds will need to be constructed out of low-carbon alternatives to cement and concrete.

A zero-carbon home was presented to attendees at the conference, using home-grown timber and other locally sourced materials, to showcase how affordable, desirable and sustainable homes could be made.

The home was designed to store more carbon than it produced in construction, and will only require heating at the coldest times of the year because of its insulation.

Heating when required uses infra-red panels which warms people and objects rather than the air, while every element of the home has been designed to be dismantled and recycled when necessary.

The home design could have future implications for builders’ merchants, such as Wickes and Screwfix, to create lower carbon and regenerative homes.

What COP26 means for… shipping

shipping

Shipping is one of the most polluting industries in the world but is the go-to for most international retail supply chains.

In a landmark “aggressive” target, nine companies including Amazon, Inditex, Patagonia, Ikea and Unilever committed to only move cargo on ships using zero-carbon fuel by 2040.

Cargo shipping produces one billion tonnes of pollution every year, equivalent to the whole of Germany, but there has so far been little effort to regulate and reduce emissions.

Decarbonising the shipping industry could cost upwards of $2trn (£1.49trn) of investment in cleaner fuels, as well as the production of new ship designs.

22 countries also signed up to the Clydebank Declaration, aiming to create six green travel corridors for ships by 2025.

Each corridor would be a zero-emission route along which ships can travel using zero-emissions fuels.

The signatories are committed to developing the technology, expertise and port infrastructure to enable that, as part of a plan to decarbonise the entire shipping industry by 2050.

The first two routes of focus are the iron ore route from Australia to Japan, and container shipping from Asia to Europe - which would have a big impact on retailers sourcing in the Far East in terms of shipping costs.

However, the switch to greener shipping would have a knock-on effect on a retailer’s own carbon footprint, reducing overall emissions.

What COP26 means for… retail property

According to research released by Savills at COP26, 83% of retail property space fails to meet energy efficiency standards, and could become unlettable as soon as 2023.

1.4 billion sq ft of UK retail space across the UK will need to be improved by 2030 to meet the minimum requirements for a Grade B Energy Performance Certificate, as set by the government in its 2021 Net Zero Strategy.

Of this space, 185 million sq ft could be unlettable as soon as 2023, as targets will ban commercial buildings with an F or G rating from being let.

As part of COP26, Savills has begun research how the sector is adapting to meet climate change challenges, given that real estate is responsible for 40% of carbon emissions.

The findings indicate that 25% of retail property carbon emissions are generated by units within shopping centres, retail parks and high street blocks, while 75% are generated by smaller premises in secondary and tertiary locations and owned by private landlords - and these are most likely to be impacted by new regulations.

Smaller retailers and retail landlords may struggle to invest in the improvements needed, meaning some properties may soon become obsolete.