Building the Sustainable Enterprise at Macy’s

Back in May, I had the opportunity to sit in on a roundtable discussion on sustainability at the American Supply Chain Summit. It was a lively conversation among sustainability executives, led by Keelin Evans, Macy’s vice president of sustainability. It was clear that sustainability has become integral to supply chain management. For her part, Evans’ message was that sustainability is one of the pillars of Macy’s modernization as the department store leader reinvents its models and processes to build a sustainable business.

That holistic approach is different than the conventional focus on reducing CO2 emissions, carbon footprint and the amount of waste that goes to the landfill, strategies we associate with being sustainable. It also highlights that sustainability is a broad term these days, one that is interpreted differently at every organization, depending on their vertical and how they go to market.

For instance, a starting point for many beverage companies is water usage, a critical but precious resource used in production, while logistics companies often begin their focus by reducing the miles traveled, minimizing the use of diesel or adding alternative fuels into the mix and piloting electric vehicles. How then does a major retailer like Macy’s define sustainability, and what are the levers it is pulling to meet its goals?

“Each company defines sustainability in a way that enables their business to be successful,” Evans began. “Our goals are around taking care of people, managing our environmental impact and bringing sustainable products to life for our customers.” Just as the supply chain organization () is guided by principles, sustainability is guided by four principles the flesh out Evans’ priorities:

• A commitment to the environment;

• Human rights and social compliance policies and practices with its private brand suppliers and their factories;

• Expanding the assortment of sustainable products, which must be authenticated by at least one third party certification or other traceable means, under four focus areas of preferred materials, preferred practices, people first or designed for less waste;

• And finally, governance enabled by disclosure, data analytics, reporting and stakeholder engagement.

Macy’s calls this approach Mission Every One. As part of that initiative, the retailer has committed to direct $5 billion of its spend through 2025 “to people, partners, products and programs to create a more equitable and sustainable future.”

Jeff Gennette, Macy’s chairman and CEO, has stated that sustainability is embedded into the company’s business model, not separate from it, and that “we seize every opportunity to raise social expectations, reduce environmental risk and build a culture that benefits everyone.”

During our chat, Evans walked through representative projects of each of the four pillars, starting with the environment, where Macy’s has committed to setting near-term company-wide emissions reduction targets in line with the Science Based Targets Initiative, according to Keelin. Key goals include a 10% reduction in energy consumption from a 2018 baseline by 2025. To get there, Macy’s is mapping its own energy consumption around Scope 1 and Scope 2 emissions and is gathering baseline data for Scope 3 emissions.

Editor’s Note. This is the second of two articles on the reinvention of Macy’s, Inc.’s (www.macysinc.com) retail supply chain. In this one, we look at the role sustainability is playing at Macy’s. Read part 1: Reinventing Retail Supply Chain at Macy’s

More specifically, it is now hosting more than 95 active solar sites nationwide and has partnered with Volta Charging to offer free electric vehicle charging to customers at 49 locations. To date, Macy’s decreased its Scope 1and 2 greenhouse gas emissions by 20% from 2018 through 2021. It has also reduced its box volume by up to 50% through the use of fit-to-size box making technologies for certain fulfillment orders and is now using 100% recycled polyester in its private brand care labels and 55% certified sustainably sourced materials in the fliers it sends to customers. “We’re excited about those,” Evans said.

When it comes to sustainable products, the retailer has committed to adding an additional 5,000 product pages to the Macys.com sustainability sitelet, with merchandise from all of its product categories. “One of our goals is to use 100% preferred materials in our private brand products managed by Macy’s sourcing team by 2030,” Evans said. Products that meet that description must be authenticated by at least one third-party certification under one of four categories: Designed for Less Waste, People First, Preferred Materials and Preferred Practices. Currently, Macy’s accepts more than 40 certifications. Other initiatives: Macy’s joined the Ellen MacArthur Foundation, which is focused on accelerating and enabling the transition to a global, circular economy. Through its reverse logistics team, Macy’s works to find the best use of damaged or returned products in order to keep them out of the landfill.

As to protecting human rights and social compliance, Evans said “We’re building on our priorities of human rights, best practices around social compliance and investing in worker well-being programs in our factories.” One example is a financial management program that helped one factory worker in an emerging area identify spending areas she could reduce or eliminate in order to open a savings account for her daughter.

Macy’s has established two key goals to strengthen its culture and create opportunities to support the well-being of the workers in the third-party factories making its private brand products. To the first, Macy’s has set a 2025 goal to establish a supplier culture that, among other things, ensures the health and safety of workers, reasonable working hours, empowers women and eliminates child or forced labor. To that end, Macy’s has implemented social compliance auditing programs that track violations amongst its suppliers, creates corrective action plans and remediation and tracks progress throughout the supply chain. Macy’s Mission Every One commitment to spend $5 billion to create a more equitable and sustainable future includes goals to invest in under-represented designers, brands and business partners; directs grant funding to advance human rights, racial justice, workforce development and economic opportunity; and accelerate the diverse representation of Macy’s leadership by achieving 30% ethnically diverse representation at all levels director and above by 2025.

Finally, Macy’s has embedded environmental, social and governance management, or ESG, at all levels of the company, with management taking a leadership role in the development and implementation of the ESG strategies and programs.

“The Macy’s sustainability journey is anchored on our commitment to care for our people and manage our environmental impact,” said Evans. ”By embedding sustainability across the business and providing our customers with more sustainable products, we believe our customers will see our sustainability work under Mission Every One as progress, feel positive societal change and in turn, drive our business into the future.”

SC
MR