The differences in the climate change strategies of UK and Japanese retailers can, at least in part, be explained by differences in the business and cultural context in which they operate
One of the central questions in the corporate responsibility literature is the extent to which national circumstances – regulation, competitive pressures, consumer behaviours, cultural norms – influence corporate action and performance on social and environmental issues.
We have recently reviewed the climate change strategies of the largest UK and Japanese supermarkets. In both countries, we have seen consistent and sustained improvements in energy efficiency in buildings and in transport over the past decade.
Retailers have adopted broadly similar actions – installing more efficient equipment, improving monitoring and control systems, and educating employees about the importance of energy efficiency.
This focus on energy efficiency reflects the concerns about rising energy prices in both countries, as well as regulatory efforts directed at improving energy efficiency in buildings and in the transport sector.
When we move beyond buildings and transport, a different picture emerges. We see the major UK retailers setting long-term (to 2030 and beyond) absolute emission reduction targets, whereas we see the Japanese retailers setting shorter-term targets directed at improving their relative (ie per unit of turnover) rather than absolute performance.
We see the UK retailers explicitly talking about the efforts they are making to reduce greenhouse gas emissions in their supply chains but the Japanese retailers providing limited information about their work with suppliers.
Finally, we see the Japanese retailers emphasising tree planting and emissions offsetting as integral parts of their carbon reduction strategies, but we see the UK retailers saying relatively little in these areas.
What are the reasons for these divergent approaches? Our review points to four factors.
First, reputational concerns manifest themselves in quite different ways. For Japanese retailers, it is critically important to be seen to be doing the right thing. The result is that there tends to be a strong focus on symbolic actions (eg tree planting) that enable the retailers to demonstrate their commitment to action.
In contrast, the UK retailers see that their credibility depends on the actions that they take within their business or in their supply chains.
This approach to reputation management reflects the differences in the definition of and approach to corporate responsibility between the two countries. While the UK retailers see corporate responsibility as being, centrally, about the manner in which they run their businesses and engage with their stakeholders (eg their focus on reducing emissions in their supply chains that is seen as both helping suppliers’ improve their businesses while also helping reducing costs to the retailer), Japanese retailers see corporate responsibility more in philanthropic terms.
Second, peer pressure manifests itself in quite different ways. UK retailers compete on the basis of their approach to corporate responsibility, with a strong emphasis on leadership.
In contrast, Japanese retailers seem to cluster, with relatively little active differentiation on the basis on corporate responsibility. In practice, this means that if one Japanese retailer adopts a new innovation, its industry peers tend to copy that innovation but do not go further.
Third, and related to the point about peer pressure, most Japanese retailers have limited exposure to European markets. The consequence is that the Japanese retail market – in terms of its approach to corporate responsibility – tends to be relatively insular.
It is interesting those Japanese companies with a more international focus (eg Fast Retailing – the owner of Uniqlo – which has a significant presence in Europe) tend to have a similar focus to the UK retailers in terms of the subjects they cover in their corporate responsibility reports and other communications.
Fourth, consumer and NGO pressures are very different. UK consumers are very concerned about climate change and the UK has an active and effective NGO community.
In contrast, climate change does not appear to be a major issue for Japanese consumers, with consumers’ expectations of companies being correspondingly low. Moreover, Japanese NGOs are relatively weak and lack influence and capacity to hold companies to account.
This may, however, be changing with thanks to the activities of the Japanese branches of international NGOs such as Friends of the Earth and Greenpeace, and the emergence of more effective domestic NGOs such as the Japan Renewable Energy Foundation.
The final point we wish to make is that we have focused here on the actions that have been taken by companies, and the reasons why these actions differ. The question we have not been able to answer (because of the limitations in the data being provided by companies) is whether UK or Japanese companies actually perform better in relation to their greenhouse gas emissions or in terms of the emissions reductions that they are able to achieve.
Kazutaka Kuroda is social media director at the Network for Sustainable Financial Markets and a senior investment analyst at Eiris.
Dr Rory Sullivan is a senior research fellow at the University of Leeds, a strategic adviser to Ethix SRI Advisers and a member of the Ethical Corporation advisory board.
Prof Andy Gouldson is director of the centre for climate change economics and policy at the University of Leeds.
The material presented in this article is based on information gathered as part of a wider project – Non-State Actors and the Low Carbon Economy – being run bythe ESRC Centre for Climate Change Economics and Policy, a joint initiative between the University of Leeds and the London School of Economics.climate change credibility Japan Japanese retail market retailers Rory Sullivan supply chain reputation
May 2014, London, UK
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