Walmart Sets Goal to Reach Zero Emissions, Encourages Suppliers to ‘Take Action’

Walmart broke down its approach to climate change initiatives during an ESG-focused discussion for investors earlier this month, committing to reducing its emissions company-wide to zero by 2040 and actively assisting its suppliers with climate-positive innovations. According to Kathleen McLaughlin, Executive VP and Chief Sustainability Officer & President of the Walmart Foundation, the company has already reduced emissions by 17.4% which means it has reached its midpoint target and is on track to hit its ultimate goal by 2040.

Part of the company’s efforts include directing brands and suppliers to tools that will help reduce their own emissions, in turn, removing them from the retailer’s supply chain.

The Scenario-based Approach

In 2017, Walmart conducted a climate risk assessment to determine how environmental disruptions including heat, wind, precipitation, and flooding would impact its retail operations, supply chains and communities. The assessment determined risk in terms of scenarios, finding that if the global temperature raises 1.5 degrees, two-thirds of Walmart facilities would incur increased energy costs, 11 out of 25 of its commodity crops would face significant issues with yields or quality and half of the communities it serves would experience a climate-related disruption by 2050.

According to McLaughlin, the company was the first retailer to set science-based emission reduction targets back in 2016, and has continued to integrate climate change initiatives as part of its corporate growth strategy through three pillars – mitigation, adaptation, advocacy – across its operations and supplier network.

“Our approach to the climate focuses on getting to zero emissions in our own operations and engaging with our suppliers to help move toward net zero in society by 2050,” said McLaughlin. “[We are doing this] through philanthropy, through advocacy, the way that we govern our climate strategies, and really being a part of creating a movement to take ambitious action now to help avoid the worst effects of climate change and also to help the world adapt.”

Reducing Emissions

Within its own operations, the company is focused on reducing two types of emissions: Scope 1, linked to refrigeration and transportation, and Scope 2, which come from operations like powering its stores and facilities and which represent the company’s largest source of emissions. McLauglin said that, as of 2020, 36% of energy used to power Walmart stores and facilities comes from renewable sources and the company currently has over 550 projects in the works to continue increasing that rate.

Though Walmart has reduced Scope 2 by 33% since 2015, cutting Scope 1 emissions will likely be more gradual. The reduction of Scope 1 emissions is mainly driven by energy-efficient innovations – that can replace conventional equipment when it reaches the end of its life cycle: think electric trucks and refrigerated trailers running off renewable energy.

Improving Supply Chains

Walmart’s Project Gigaton was launched in 2017 to address Scope 3 emissions – those contributed by its supply chain – by engaging with its suppliers through a goal setting and recognition model. The retailer is projected to remove 1 billion metric tons of greenhouse gas contributed by its supply chain by 2030 through targets set with suppliers.

Project Gigaton is centered around six focal points for the 3,100 suppliers in the program to improve upon including energy, waste, packaging, nature, transportation and supply chains and product use and design. When speaking to the efficacy of this program, McLaughlin highlighted that as of 2020, 60% of Walmart’s sales base was derived from suppliers actively participating in the program and reporting their progress on these initiatives.

“Many of our suppliers don’t have big teams working on this,” added Jane Ewing, Senior VP of Sustainability. “They’re relatively small. They don’t know where to start. They’re not typically a multi-national CPG company. So, our merchant teams directly engage with our suppliers. They encourage them to enroll and take action. And then they keep score. They know which ones of their suppliers have been part of the program and which ones aren’t. And it’s really helping to build momentum.”