Mandatory Sustainability Disclosures and your Retail Estate

New sustainability regulations such as the ISSB, CSRD and CSSB are taking the world by storm.

The International Financial Reporting Standards (IFRS) introduced the International Sustainability Standards Board (ISSB) sustainability standards, which aim to provide interoperability when it comes to climate and nature-related disclosures.

In Europe then, we saw the first alignment with the emerging ISSB in the form of the Corporate Sustainability Reporting Directive (CSRD), which places new requirements on over 50,000 businesses to report and disclose climate-related material risks.

Now in the USA in March 2024, the Securities and Exchange Commission (SEC) have placed new requirements on publicly listed companies to report on and disclose information around climate-related risks that may be deemed as material topics. Likewise in Canada, the Canadian Sustainability Standards Board (CSSB) will see disclosures made mandatory from 2026.

For grocery retailers, understanding the environmental impacts of their refrigeration systems and having performance data to hand on actions and initiatives taken to mitigate and control those impacts is paramount when it comes to emerging regulation.

What does that look like in practice, however? And what should grocery retailers be looking at as they tackle mandatory sustainability disclosures?

Let’s have a deep dive!

What is changing in regulation?

Across the globe, sustainability regulation is mounting and placing new requirements on businesses in different jurisdictions.

This new form of regulation places mandated requirements on businesses to report on energy consumption, waste management, biodiversity, people, and social commitments and so much more.

At the top of the reporting pyramid, the ISSB standards finalised last year aim to promote interoperability in sustainability reporting - simply a fancy way of saying each jurisdiction should have standardised reporting structures worldwide.

The ISSB have set two standards:

• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2 – General Requirements for Disclosure of Climate-Related Financial Information

Following these standards, businesses should now prepare and disclose performance reports that cover four key areas – their governance processes, their strategy to mitigate risks and exploit opportunities, their risk management processes and their metrics and targets.

These ISSB standards are now being used to inform jurisdictional regulation worldwide, and through this adoption, we’re starting to see the ISSB’s impact on a global scale. Regulation in the EU, Canada, America and soon the UK all now will follow and align with the ISSB guidelines. If you’re unsure how this impacts your business, or whether you must comply, we recommend having a check on your jurisdictional requirements via the links below.

We recommend you familiarise yourself with each of your jurisdictional reporting requirements. You can find each below:

• EU – Corporate Sustainability Reporting Directive (CSRD).
• USA – Securities and Exchange Commission (SEC).
• Canada – Canadian Sustainability Standards Board (CSSB).
• UK – Sustainability Disclosure Standards (SDS) – note, these are not in circulation or finalised, due July 2024.

How does regulation impact your retail estate?

Retail businesses rely heavily on bricks and mortar estates which in turn rely on high energy consumption through their assets such as refrigeration, HVAC, and lighting systems.

As mandatory regulations are introduced, retailers need to ensure that they have data to hand on their performance for disclosure, but they also need to report and disclose on what action they are taking after capturing that data and being informed by it. With such a large and varied estate with millions of datapoints across siloed assets, challenges emerge in centralizing data flows and taking back control of a staggeringly large business portfolio.

Typically, retailers are facing challenges such as:

• Scattered data in each store with no automated processes to capture data at a store level up.
• Sustainability teams chasing departments for information in attempts to visualise energy performance and consumption.
• Limited to no way to enact mass control to achieve energy reduction, and in turn achieve the mitigation requirements outlined in regulation.

What can retailers do?

As businesses face more requirements and concerns finding new ways to overcome these challenges is essential for risk mitigation. For complete reporting, retailers need to consider the whole ESG scope looking at their people impact, supply chain, their impact on the environment and climate and their commitments to bettering them.

As part of that process, retailers should:

• Conduct an updated and in depth materiality assessment and understand priority areas in their business.
• Ensure they understand their estate in detail:
  • What assets do they have in each store?
  • How are those assets controlled?
  • What systems exist, or perhaps are missing?
  • What is the current position of the company – look at really understanding your energy baseline before you look to reducing it.
  • Thereafter, what initiatives can you implement to take back control of your estate and ensure you can provide compliant reporting.

Any approach to sustainability however starts at home, and that lies for retailers within their business estate. Retailers should consider ways to capture data at scale, enable two-way control and in turn mitigate and lower the environmental impact of their assets estate-wide.

Luckily at LoweConex, we’re empowering retailers with software to do just that with some impressive results so far. If you need a helping hand, get in touch with us to see how we can help!