Financial Management for Retail Sustainability

Retailers invest significant resources in identifying opportunities to improve energy efficiency and reduce environmental impacts across their operations. However, implementing these initiatives often requires navigating internal capital constraints and competing investment priorities.

Accessing capital for energy projects can present significant barriers for retail energy managers. Some professionals may not have the financial background needed to communicate the full value of sustainability projects to internal finance teams, while others lack dedicated funding streams to accelerate project implementation.

Even with many innovative financing options available, external financing mechanisms are often not widely understood beyond traditional utility incentives and rebates.

Program Overview

RILA, with support from a cooperative agreement with the U.S. Department of Energy, is working with Deloitte, Environmental Defense Fund (EDF), the Institute for Market Transformation (IMT), and the Massachusetts Institute of Technology (MIT) to develop educational resources and advisory opportunities designed to reduce financing barriers for energy projects.

These resources are intended to help retailers better understand financing strategies, communicate the value of sustainability investments, and accelerate the implementation of energy projects that deliver both cost savings and environmental benefits.

Program partners are working to develop implementation models, educate the industry, and support broader adoption of successful financing approaches.

Implementation Model Case Studies

Retailers across the industry have implemented innovative financing and operational strategies to advance energy efficiency and sustainability initiatives. These case studies highlight approaches companies have used to overcome financing barriers and accelerate project adoption.

adidas Group

Established a dedicated greenENERGY fund to finance energy efficiency and renewable energy projects. Between June 2012 and December 2016, the company invested $10.8 million across 61 projects, achieving a forecast internal rate of return (IRR) of 29% while overcoming traditional project financing barriers.

Belk

Reduced in-store energy consumption by more than 27% at a pilot location after retrofitting the store’s lighting system with LED fixtures. After observing the results, company executives approved a chain-wide redesign of Belk’s lighting infrastructure.

Best Buy – Plug Load Analysis

Used a leading-practice load analysis process to better understand plug load energy use across operations. The analysis identified operational changes and new technologies that could deliver up to $3 million in annual energy savings.

Food Lion's

Built strong collaboration between its energy management team and finance leaders. By aligning long- and short-term financial planning with stakeholder engagement, Food Lion has strengthened internal support for energy investments. View the Workflow and Approval Process that guides project approvals.

H&M

Evaluated the impact of keeping exterior doors open versus closed on both energy use and customer traffic. The study found no measurable impact on foot traffic, while delivering average savings of 77,522 kWh and nearly $10,000 per store annually, leading the company to implement a closed-door policy across stores.

Best Buy – Portfolio Lighting Program (DOE)

Implemented a rolling portfolio-wide lighting retrofit program funded through maintenance budgets rather than capital expenditures. Since 2012, more than 13,000 lamps have been replaced with efficient LED or fluorescent alternatives across Best Buy’s store portfolio.

Kohl's – Emerging Technology Budget (DOE)

Worked with its finance team to establish an Energy Finance Strategy and create an annual emerging technology budget. This program enables Kohl’s to pilot two to three new energy technologies across 10–20 stores each year, accelerating innovation and improving project approval timelines.

Leading Practices for Retail Energy Teams

RILA research and interviews with finance professionals and retail executives identified several leading practices that can help sustainability teams collaborate effectively with finance, investor relations, and other business units.

• Review 7 Keys to Collaborating with Your Finance Team, as informed by RILA's research and interviews with senior retail finance professionals, as well as a version to share with your Finance team: Keys to Collaborating with Other Business Units. Access a full summary of the interviews, The Evolving Role of Retail Finance. 
• Review 5 Ideas for Collaborating with ESG-Minded Investors and Ideas for Collaborating with Your Investor Relations Team, as informed by RILA and HIP Investor's research and interviews with retail industry IR executives and investment firms. Share Ideas for Collaborating with the Sustainability Team with your own IR colleagues. 
• Compare the Workflow and Approval Process graphic to your own process to identify opportunities to better navigate internal competition for funds, short- and long-term budget cycles, and cross-departmental buy-in. Get ideas from learning how Food Lion has incorporated many of these concepts in the full Workflow and Approval Process Guide and Implementation Model. 

Visit the #CapitalizeGreen page and consider how your projects most directly impact the company's bottom line and investor relations: two key benefits of energy and sustainability, from the finance team's perspective. 

Internal Financing Strategies

Internal financing strategies can help retailers accelerate sustainability investments by creating dedicated funding streams, improving internal approval processes, and strengthening collaboration across departments.

• Internal Carbon Pricing - Establishes a cost for the carbon dioxide emissions or CO2 equivalent generation from company operations. May be set as either a real price to create a fund or as a price signal. 
• Capital Investment Fund - Dedicated budget replenished annually to finance energy projects rather than requiring project-by-project approval. 
• Revolving Loan Fund (RLF) - Leverages one-time, initial funding to support continuous rounds of projects, for which energy cost savings accrued replenish the fund. 
• Expedited Approval - Creation of a specific internal process, such as integration with finance or updated proposal templates, to decrease the time required for review and approval of projects. 
• Cross-Departmental Collaboration - Relationship-building to help other departments understand how they benefit from energy projects and why they may want to leverage their own budgets to fund projects if capital is otherwise unavailable. 

External Financing Options

When internal capital is limited, retailers can explore external financing mechanisms to fund sustainability and energy projects.

• Green Bond – Issued by a retail company and provides a stable channel for investors to provide capital specifically for projects that promote sustainability or mitigate climate change. 
• Tax-Increment Financing (TIF) – Uses expected future gains in state or municipal property taxes from a development or redevelopment project to finance improvements that will create those gains. 
• Energy Performance Contract (EPC) – Executed by Energy Service Companies (ESCOs) who coordinate the installation of new equipment and split the value of energy savings with the customer throughout a contract term.  
• Energy Service Agreement (ESA) – Executed by a provider as a pay-for-performance, off-balance sheet financing solution with no upfront capital expenditure. 
• Property Assessed Clean Energy (PACE) – Building owners take on debt for energy efficiency or renewable energy improvements that are repaid through an assessment on their property tax bill. 
• On-Bill Financing/Repayment (OBR/OBF) – Utility or lender supplies capital to a utility customer to make energy efficiency improvements and is repaid through regular monthly loan payments on an existing utility bill. 

Why Financial Management Matters for Retail Sustainability

Energy efficiency and sustainability initiatives can deliver meaningful operational savings and environmental benefits, but implementing these projects requires careful financial planning and collaboration across organizations.

By developing stronger financial strategies and improving internal communication around project value, retailers can accelerate sustainability investments while maintaining operational and financial discipline.