Tools and best practices retailers can use to strengthen product safety and sustainability efforts
Retailers face mounting pressure to provide greater transparency into their supply chains in terms of both product safety and sustainability. Collecting and analyzing pertinent data from suppliers is necessary not only for compliance purposes but also to address questions from customers and investors related to sustainability. Chief among them: How responsibly are product materials sourced? Are products free of materials potentially harmful for health or the environment? Can products be disposed of in an environmentally responsible manner?
Retailers are not the only node in the supply chain dealing with an increasing consumer and non-governmental organization (NGO) demand for more transparency and sustainable products. Still, retailers are at the forefront of this trend and are aggressively ramping up their product compliance and sustainability programs to meet these challenges.
In this article, UL experts share tools and best practices to help retail organizations keep pace with changing regulatory needs and build scalable product sustainability programs. This summary will review how best-in-class organizations are working to comply with regulations, develop clear sustainability goals and programs, building supply chain transparency.
TRANSPARENCY MEANS MORE THAN PRODUCT COMPLIANCE
For many retailers in the UK and worldwide, ongoing efforts to meet regulatory requirements now overlap with the need to address sustainability concerns. In many cases, the same product attribute data that retailers use to generate accurate regulatory classifications for product compliance can also help evaluate product sustainability attributes and establish sustainable product curation programs.
Drivers for greater sustainability efforts among retailers include emerging regulations, NGOs and investors, stronger consumer preference and evolving market opportunities. These all create a cumulative effect in terms of retailers boosting their supply chain transparency. Increased product transparency can yield benefits for retailers, such as:
- Meeting complex regulatory requirements to maintain product compliance
- Building out product compliance to develop sustainable product curation programs
- Boosting environmental, social and governance (ESG) programs and sustainability profiles via more sophisticated and responsible product curation programs
However, building transparency into complex global supply chains is not without significant challenges, especially when dealing with multiple suppliers, product lines and regulators. Relying on unverified claims of product safety and sustainability can increase a retailer’s reputational risk and drive consumers more and more interested in sustainable goods elsewhere, as manufacturers’ product claims have not always proven reliable.
CRITICAL COMPONENTS OF SUPPLY CHAIN TRANSPARENCY
What does effective supply chain transparency mean, and what does such an approach look like?
Formulation management is a foremost concern for retailers dealing with chemicals and chemical components in consumer goods. Retailers selling such products require adequate formulation or product data from manufacturers to ascertain whether any ingredients in the products they sell contain chemicals of concern or otherwise appear on restricted substance lists—which would trigger compliance issues as well as impact retailers’ sustainability claims. Access to product data, including material composition information, helps alert retailers if any transportation, storage, disposal or related requirements come into play.
However, as product formulations and component data have become increasingly important for retail supply chain transparency, retailers often find their suppliers reluctant or unwilling to disclose full product formulations to protect their proprietary information. Retailers require aids to support practical assessment of their product assortments based on the full material composition of those products.
To help enable the sharing of critical product information without disclosing critical confidential business information (CBI) on products, retailers have partnered with UL, a third-party intermediary, to collect, evaluate and deliver essential data for decision-making.
UL’s PurView® program, for example, allows retailers to collect and assess sustainability-related attributes for products they sell in stores or online. Suppliers and manufacturers only share information about product compliance and chemicals of concern while their proprietary data remains protected.
SUSTAINABILITY-FOCUSED PRODUCT CURATION
Retailers with established chemical data management policies and processes can better position themselves to actively source and curate product lines that meet growing customer and stakeholder demands for sustainability.
These curation efforts involve custom evaluation frameworks consisting of retailers’ restricted substance lists. Such lists go beyond baseline regulatory requirements, allowing retailers to make their customers’ concerns about safety and sustainability a higher priority.
In addition, retailers with validated product data can perform complex product evaluations, which allows them to prioritize different sustainability attributes in their product lines and brands. Target’s Target Clean program provides a good example: using UL software, Target Clean performs complex evaluations in order to curate product lines that meet the retailer’s requirements for safer formulation and improved sustainability.
The Target Clean product curation program features products more prominently on Target’s website and in the retailer’s stores—typically in special displays. As a result, products participating in the program have experienced an increase in sales of about 30% on average, providing quite an incentive for manufacturers of such products.
DEVELOPING SUSTAINABLE PRIVATE-LABEL PRODUCT LINES
Using tools and programs to support sustainability-focused product curation can ultimately lead to retailers developing their own sustainable, private-label product lines. These efforts, in turn, enable retailers to gain the necessary data transparency to drive the development of safer and more sustainable own-brand products.
Building transparency into supply chains has become more than a compliance issue for retailers. To address demands from consumers, stakeholders and investors, retailers have access to a growing array of tools and best practices to evaluate suppliers, bolster curation capabilities and establish their own safe and sustainable product lines.
Contact UL to learn more about resources available to drive supply chain transparency.
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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.