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Walmart

Walmart’s ‘Very Strong Business Case’ for Cutting Emissions

WalmartAs the nation’s largest retailer and owner/operator of one of the biggest trucking fleets in the US, Walmart knows that smart environmental management saves money.

The company saves $1 billion a year on its improved fleet efficiency alone: Walmart met its goal to double fleet efficiency in 2015, compared to a 2005 baseline. And two years prior, Walmart met its goal to reduce emissions by 20 percent, according to 2005 baseline, which also saves the company money on electricity bills.

“There’s a very strong business case for that,” Fred Bedore, senior director of sustainability for Walmart, said in an interview. “It’s logic. When you turn off a light when you leave a room, you’re not consuming electricity. If you’re rerouting your trucks to make sure you save fuel, you’ll save on the bottom line. From an efficiency perspective, there’s tons of rational.”

Also in 2015, Walmart moved beyond simply setting environmental sustainability goals. At COP21 in Paris Walmart pledged to set emissions targets for its business operations and supply chain in line with what scientists say are needed to keep global average temperatures below 2 degrees Celsius above pre-industrial levels.

A year later, Walmart became the first retailer to have its emissions-reduction plan certified by the Science Based Targets initiative.

Specifically, Walmart will:

  • Power half of its operations by renewable sources by 2025.
  • Reduce its 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 1 billion metric tons (1 gigaton) between 2015 and 2030.

Walmart says the majority of its scope 1 and 2 emissions come from operating its buildings and fleet, so it’s focusing its efforts on continued improvements to its trucking fleet technology and improving energy efficiency to power stores and facilities while expanding renewable energy use.

“There’s a similar business case for renewables,” Bedore said. “With renewables, you are taking more about cost over the long term and reduction in risk and variability. For any business, if you’re talking about fuel, if you can reduce variability, that makes planning that much easier. When you know what that’s going to be over time, you can plan for it.”

Achieving these Science Based Targets isn’t an easy task, and Bedore has tips for other companies following in Walmart’s footsteps.

“Two clear things stand out,” he said. “One is the need to test and pilot, and to retest and repilot. Very much like traditional business issues.”

Targets and investments in efficiency and new technologies have to meet a pay-back period, and they have to be scalable. “Scale things that matter, and stick with it,” Bedore says.

The second key piece is collaboration.

“It’s this idea of working upstream and downstream,” Bedore said. “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 IDing which ones have the greatest potential.”

This is especially true when it comes to addressing supply chain, or scope 3, emissions, which represent about 95 percent of Walmart’s overall carbon footprint. The company’s pledge to work with suppliers to reduce emissions by 1 gigaton by 2030 will require major collaboration with a huge number of other companies.

“That was probably the hardest part about setting the Science Based Target was the scope 3 emissions because the breadth and depth of the supply chain we have is so massive,” Bedore said. “But it’s also fun to solve big problems.”

When it comes to scope 3 emissions, Walmart is asking its suppliers how they can continue — and expand — emissions reduction initiatives they already have in place. These programs are also saving suppliers’ money: a CDP report published last month found Walmart and other major companies’ supply-chain emissions reduction initiatives saved suppliers a combined $12.4 billion in 2016.

Bedore points to Walmart’s fertilizer optimization program, which works with suppliers to increase nutrient use efficiency while improving crop productivity and cutting emissions, as an example. By 2020, Walmart expects this effort to eliminate about 9 million metric tons of GHG emissions. Its original goal was to reduce fertilizer on 14 million acres of farmland by 2020. “Now we’re beyond 20 million acres,” Bedore says.

“We know there’s huge paybacks in environmental and economic saving for the farmers because you’re applying the fertilizer at the right time, you’ll get more productivity from that plant, you’re not going to get runoff and have to mitigate that, and you won’t have to reapply fertilizer, so there’s cost saving there.”

The initial program focused specifically on row crops. “Is there a similar application in other types of crops? Other geographies? You start to look at how you can build that ripple effect,” Before said.

“This stuff works when there is a draw for it and there’s a draw for it when there’s either a product a customer wants, allows you to get more efficiency out of the supply chain, and the environmental savings go along with that, too.”

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