Walmart Cut 230 Million Tons of Emissions, With Supplier Help
(Bloomberg) -- Walmart Inc. has cut 230 million metric tons of greenhouse gases out of its supply chain in the past three years, putting the world’s largest retailer on track to achieve its 2030 emissions goal.
The company, which aims to reduce its cumulative carbon footprint by a billion tons by the end of the decade, says it’s trying to think more systemically about the impact it is having on people and the planet. Tackling that means compelling suppliers to rethink their operations, since about 95% of Walmart’s emissions stem from its supply chain.
“Ultimately we want to transform the underlying systems that create problems, whether it is climate change or human rights,” Kathleen McLaughlin, the company’s chief sustainability officer, said in an interview.
The emissions reduction is part of a broad set of actions to address environmental, social and governance goals from a company that a decade ago was a frequent target of ethical complaints around issues such as working conditions and unequal pay for women. As detailed in a 140-page ESG report released Wednesday, Walmart has made it a priority to hire more women and people of color, reduce packaging waste and use less energy.
Walmart, which counts on a vast supply chain to support its roughly 12,000 stores, released 18 million metric tons of greenhouse gases in 2018 across its own operations, known as Scope 1 and 2 emissions. Those don’t include suppliers’ emissions, called Scope 3, which account for the overwhelming majority of greenhouse pollutants in the supply chain.
The company doesn’t routinely disclose Scope 3 emissions, which obscures comparing the company’s progress with its peers or with science-based goals that require companies to cut emissions to zero by 2050 or sooner.
Walmart is putting pressure on suppliers to keep the cuts coming by using more clean energy and shifting toward environmentally friendly product design and packaging. The company would also like to see its suppliers take on “a lot more ambition around agriculture and forests,” McLaughlin said.
About 29% of Walmart’s electricity now comes from renewable sources, and McLaughlin said she expects that figure to hit 35% by the end of the year.
It still has a way to go to reach its goals of 50% by 2025 and 100% by 2030 -- and the achievements trail those of one of its chief rivals, Amazon.com Inc. The online giant’s renewable share was 42% in 2019 and the company aims to be at 100% by 2025.
Walmart said it reduced its own emissions by 7.7% between 2015 and 2018, a figure that doesn’t include supplier cuts. The company has been focusing on decarbonizing its fleet of trucks, eliminating polluting refrigerants, and shifting to more sustainable packaging.
Packaging waste has become a top priority amid increasing pressure from investors and customers, McLaughlin said. The company is looking at more reusable and refillable packaging models, and has created playbooks for suppliers about alternative materials or more sustainable plastic options.
The retailer is looking for places it can eliminate gratuitous packaging, such as trash cans it sells that were once packaged in cardboard boxes and can now just be banded together, McLaughlin said. Walmart said its reusable bag sales are up 42% globally.
Despite strides in Walmart’s environmental efforts, the report revealed limited progress on some social issues. The company reported incremental progress in hiring and promoting women and people of color, but the overall statistics mostly held around the same levels as in previous years.
Going forward, Walmart said it would break down the way it measures minority workers so that it can focus more specifically on charting career paths of Black employees, and the retailer said it would move to reporting its diversity data two times a year.
“We start with mapping out outcomes and systems, and then think about what levers we can pull,” McLaughlin said. “If you think about financial inclusion and workforce development, the role a company can playing in hiring, development and up-skilling is huge.”
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