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EXECUTIVE PERSPECTIVE: A global retailer sees reducing emissions as good for business

At a time of great geo-political change, we sat down with Fred Bedore, Senior Director of Business Strategy and Sustainability at Walmart, to find out more about Walmart’s approach to climate change and business risk over the long term.

7 March 2017

Why is reducing your GHG footprint important to your business strategy?

We know that global climate change can pose a threat to our country’s economy and global supply chains — threats such as lower crop yields, increased health costs, and disaster-caused property losses. As a retailer, we would face a number of challenges if the complex supply chains upon which we rely were weakened by climate change. We also know businesses are uniquely poised to help address the challenge of climate change.

Walmart continues driving forward toward its aspirational commitment to 100 percent renewable energy. In 2015, representatives attended COP 21, also known as the 2015 Paris Climate Conference, where Walmart committed, as part of the We Mean Business coalition, to set science-based GHG targets for its business operations and supply chain.

By taking the steps to reduce GHG emissions now, we can mitigate risks, while lowering costs and increasing resiliency of global supply chains. As a retailer, we have a specific opportunity to use our broad reach to affect change across the global supply chain and, also to educate about the importance of GHG reduction.

A few important ways Walmart is working on our GHG footprint include:

  • Walmart is committed to expanding the development of on-site and off-site solar power, wind power, fuel cells and other technologies to meet our goal of producing or procuring 7 billion kilowatt hours (kWh) of renewable energy by the end of 2020. At the end of 2015, we had more than 470 on-site and off-site projects in operation or under development in seven international countries and 17 U.S. states, helping us achieve millions of dollars of cost avoidance. Together with renewable electricity from the grid, 25 percent of our electricity needs globally are supplied by renewable sources.
  • In 2005, Walmart committed to a momentous goal: doubling the efficiency of our fleet by the end of 2015. By working with our associates to establish more efficient techniques for loading, routing and driving, as well as through collaboration with tractor trailer manufacturers on new technologies, we have achieved this goal on schedule. With these new efficiencies, our year-end results were a 102.2 percent improvement over our 2005 baseline, with associated savings of nearly $1 billion annually, and avoided emissions of almost 650,000 metric tons of CO2.

For Walmart, it’s a win-win: reducing emissions is good for society and good for business.

Do you report your GHG emissions scope 1, 2, and 3? Aside from meeting regulatory requirements, why is this important?

Yes we disclose our scope 1, 2 and 3 emissions annually as part of our CDP Climate Investor Response. Our disclosure is voluntary and is not a regulatory requirement. We believe participation is important for our stakeholders and the industry and we know transparency is expected now, more than ever. This data is also used to benchmark across industries and sectors and between companies and helps us and others understand trends, recognize achievement and gain visibility into environmental stewardship.

Can you provide an update on your aggregate GHG emissions since 2010?

The below chart comes from our 2016 Global Responsibility Report.

wallmart

Walmart continues to demonstrate significant decoupling of business growth from total GHG growth. Since 2005, Walmart’s total GHG emissions – which includes new facility growth and transportation emissions, as well as the existing 2005 baseline fleet of buildings – grew at just one-quarter the rate of sales and square footage growth. From 2005 to 2011, total GHGs grew 11 percent, while sales and square footage grew 44 percent and 40 percent, respectively.

Does this performance since 2010 meet or exceed a science based target?

Our emissions intensity (CO2e per area and CO2e per revenue) has dropped consecutively each year since 2010, indicating that we have decoupled business growth from emissions growth. Our absolute scope 1 and 2 emissions have remained relatively flat since 2010. We have been working since 2005 towards our 100% renewable energy commitment, and have been relying upon the expertise of many stakeholders to set benchmarks and milestones, such as our 20MMT goal. Science based targets, as we know them today, had not been defined in 2010.

Do you set targets for future reductions to 2030 and 2050 based on science based target guidance (e.g. Reducing 1.4% per year from a 2010 baseline?)

Walmart committed to:

  • Reduce absolute scope 1 and 2 emissions 18 percent by 2025, from 2015 levels
  • Work with suppliers to reduce CO2e emissions from upstream and downstream scope 3 sources by one billion tonnes (1 Gigaton) between 2015 and 2030

In addition, we have committed to 50% renewable energy for operations by 2025.

These targets were approved by the Science Based Targets initiative. We’ll track our progress each year in our Global Responsibility Report. We have also committed to review and evaluate our targets every five years to ensure alignment with the best available science and political cycles adopted in the Paris Agreement.

What benefits have you seen because of your carbon management strategy?

Our customers are recognizing that sustainability is a priority for Walmart and many of them are becoming more aware of environmental topics related to the products they purchase. As a retailer, we have the opportunity to empower our customers to make a positive difference in their homes and communities.

By selling sustainable products and in some cases, transforming total categories, like LEDs and compact laundry detergent, we are able democratize sustainability so customers don’t have to choose between what’s good for the planet and what they can afford.

We are also working with our suppliers to encourage them to make high volume items more sustainable, like our opening price point cotton t-shirt for $3.88. Some of the changes in reduction to GHG and other impacts, may not be overtly apparent to our customers, but are still the right thing to do. In this instance, the supplier is manufacturing the product where 30% of the water is reused and 20% of the energy is from renewables. They also sourced the cotton from the Mississippi delta.

Setting science-based targets has also pushed us to be even more innovative in our sustainability journey. That innovation comes in many forms, such as policy innovation to allow for expanded renewable energy use and of course, innovations in efficiencies across our business and supply chain. We believe these efficiencies are a major benefit, because they can protect our supply chain from risks associated with climate change, while at the same time resulting in overall savings for our company.

To be a leader in climate performance, what advice would you give to other firms about GHG management and planning?

One piece of advice for other company’s following in our footsteps is that collaboration is key.  When you’re looking at things like science-based targets, a number of variables have to come into play: aligning supply and demand, having trusted business partners, knowing what technologies are coming out, and identifying which ones have the greatest potential. Aligning on these variables is a complex process that requires the collaboration of suppliers, NGO and industry partners.

We believe that driving meaningful change, when it comes to sustainability, requires embarking on the challenge of convening industries, competitors and often conflicting perspectives. To gain a true systems change, we must all work together to identify the root of major problems and drive new, collaborative action that spurs lasting change.

Any opinions Expressed in "Executive Perspectives" are those of external parties and not those of Thomson Reuters.

Topics

Climate and Energy, Corporate Governance, Executive Perspective

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