Events of the last year have brought about an increased focus on sustainability, environmental and ethical concerns.
This is seen across all sectors, but particularly retail, with a wide range of stakeholders – including investors, governments and consumers - concerned with a number of issues – from environmental and carbon footprint, ethical supply chain management, sustainable packaging, animal welfare to food waste all making the headlines and also board agenda.
Green consumerism is sharply on the rise, with many surveys showing that customers prefer to shop with, and work for, brands and businesses that can demonstrate the values that they share. According to our Retail Forecast Report¹, 60% or consumers say they are often/always influenced by brand familiarity and level of trust in that brand. A further 40% mentioned the importance of ethics and social responsibility in their buying decision.
Environment, Society, Governance (‘ESG’) in retail
The Environment, Society, Governance (‘ESG’) agenda is being seen across the sector. Blackbetty and Vinted.com are just two examples of new brands who are putting ESG at the forefront of their business model. Blackbetty is a flash sale site, allowing people to shop for discontinued or out-of-season high-street fashion at hugely discounted prices, reducing waste while giving consumer good deals. Meanwhile, Vinted.com takes the second-hand approach, providing an online space where users can buy and sell unwanted clothing, giving them a second lease of life. Both companies operate entirely online with a commitment to making fashion more sustainable.
As part of this agenda, ‘Responsible Tax’ is increasingly being recognised as an ESG metric. A number of global brands for example, including Unilever and Vodafone, have endorsed the B Team Responsible Tax Principles – which are formulated around the underlying principle that “Modern, inclusive economies depend on fair, effective tax systems. These help create the conditions necessary for responsible investment and sustainable growth”.
An increasing number of businesses are therefore taking the decision to take an increasingly transparent approach to tax – making public their tax principles and, importantly, the wider contribution they make to society through the taxes they pay in each of the jurisdictions in which they operate. This approach enables businesses both to enhance (and protect) the reputation that is so vital to their overall operations, as well as recognising the direction of travel in regulation and compliance – with governments and taxation authorities taking an ever greater interest in good tax governance and risk management.
For more information on how you can take a transparent approach to tax view our article: Tax as an essential part of your ESG Agenda, or contact Martin Callaghan.
At BDO we play a leading role in the retail market and work with many of the biggest brands in the industry. We understand the challenges and industry issues our clients face. Our retail team aim to deliver an integrated, full service offering, to provide practical financial advice on everything from mergers and acquisitions and tax planning to auditing and accountancy. We are also well connected with a wide range of retail professionals and works closely with banks, private equity houses, brokers, as well as lawyers and property professionals who specialise in the retail sector. To find out more visit our retail hub.
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¹BDO | Retail forecasts report 2021