Ten Steps for Retail Businesses to Prepare for the Product Environmental Footprint (PEF)

Each quarter, our parent company TradeBeyond publishes its comprehensive Retail Sourcing Report, which is filled with timely research, facts, and analysis to help brands and retailers make the most informed sourcing decisions. In addition to critical updates on economic indicators and commodity prices, the new Q4 2023 Retail Sourcing Report also features an extensive, new breakout section on traceability. 
 
In our last blog post, we shared eight approaches that apparel brands and retailers are using to implement traceability. In this post, we break down the Product Environmental Footprint (PEF), an initiative from the European Commission that aims to standardize how businesses measure and communicate on the environmental performance of products (goods and services) throughout their lifecycle.  
 
The ultimate goal of the PEF is to reduce the environmental impact of products and encourage more sustainable consumption and production. The PEF’s influence extends beyond Europe, as international companies and markets often look to such benchmarks when considering their own environmental strategies. The PEF is rooted in the principles of life cycle assessment by evaluating all environmental impacts through the product's entire life cycle. This includes impacts associated with resource extraction, manufacturing, transportation, usage, and end-of-life treatment.  
 
The PEF considers a variety of impact categories like climate change, ozone depletion, water depletion, land use, and many others. Each category will assess a specific type of environmental damage. The results of a PEF can be used for various communication tools, such as ecolabels or environmental product declarations, which can guide consumer choice and promote environmentally friendly products. 

Ten Steps to Ensure PEF Readiness 

For retailers and brands, preparing for PEF means adapting to new standards of transparency and sustainability. Based on TradeBeyond and Pivot88’s experience supporting leading global retailers and brands with compliance and through the supply chain, below are some steps and best practices to help prepare for and integrate the PEF. 

1. Education and Training: Familiarize key team members with PEF requirements and its implications and allocate resources and designate champions or teams to lead PEF initiatives. 
2. Product Life Cycle Analysis (LCA): Conduct a full LCA on top-selling or representative products to understand the environmental impacts at each stage. 
3. Supplier Collaboration: Communicate expectations and collaborate with suppliers and manufacturers to gather necessary data and improve the performance of products at each stage. 
4. Implement Data Management Tools: Integrate or upgrade ERP or source other software systems that can track and report on the required PEF data effectively. 
5. R&D and Product Design: Focus on eco-design principles to reduce the environmental footprint from the outset and consider using alternative, sustainable materials, or processes. According to McKinsey & Company, 80% of a product’s lifetime emission are determined at the design stage. 
6. Marketing and Communication: Educate customers and consumers with simple information on packaging or through marketing campaigns about the environmental footprint of your products and highlight any improvements or certifications achieved. 
7.  Establish Continuous Improvement Protocols: Set targets and regularly review and update processes, products, and methodologies based on new insights, technologies and regulations. 
8. Engage in Industry Groups and Associations: Work collaboratively with peers and industry groups to share best practices, insights, and to collectively address challenges. 
9. Stay Updated on Regulations: Monitor EU (or other relevant body) updates on PEF requirements and recommendations. Many service providers to the retail sector (including TradeBeyond and Pivot88) provide updates on regulations to help avoid potential penalties and protect brand reputation. 
10. Preparedness for Third-party Verification: Some PEF initiatives may require third-party verification or certification. Be ready to provide necessary documentation and facilitate verification processes. Software Pivot88 and TradeBeyond helps immeasurably by centralizing this documentation and making it available to all stakeholders. 

By proactively addressing PEF requirements, retailers and brands not only ensure compliance but also potentially gain a competitive advantage, demonstrating to consumers that they prioritize sustainability and are committed to reducing their environmental impact 
 
For more extensive ESG and traceability insights, including more details about the PEF, download TradeBeyond’s Q4 2023 Retail Sourcing Report. If you’re interested in learning how Pivot88 can help your company better understand and prepare for the PEF and other traceability requirements, contact one of our traceability experts any time.