Costco Wholesale Corporation has stores worldwide, operating as a membership-only big box retail store. It is the fifth largest retailer worldwide and ranked 11th on the Fortune 500. Washington State-based company started up in 1983 and now has 848 warehouses globally.
Sustainability is part of its mission, setting goals to reduce its CO2 level internally and in its supply chain. To that end, it focuses on energy efficiency, energy supply, refrigeration, alternative fuel, and electrification efforts to cut its Scopes 1 and 2 emissions — those linked to its stores and the powers it buys from others. CO2 emissions have decreased by 0.6% since 2020 — a number that it will drive down even further.
Costco — as it is known — is engaging its suppliers, having surveyed its top 500. The goal is to understand their CO2 levels and how they track them. Those suppliers represent 70% of its US sales. The company plans to introduce reduction targets later this year.
“We align our decarbonization objectives with our commitments to human rights, diversity, equity and inclusion, life above land and below water, water conservation, and waste reduction,” the company’s mission statement says. “That’s because we believe our transition to a low-carbon business model also should represent a just transition for our employees, members, suppliers, and the communities we serve.”
How does Costco plan to reduce its CO2 levels?
It will cut Scopes 1 and 2 by greening its energy supply and increasing energy efficiency. It plans to improve its refrigeration, which makes up about 24% of its 2021 emissions, and it will reduce that figure by 30% by 2030. Moreover, the goal is to purchase 80% green electricity by 2030, which involves buying renewable energy credits that guarantee the production of clean power.
It also evaluates electric vehicles, including electric tractors, yard trucks, and terminal tractors. It is also piloting electric equipment and conducting electric vehicle charging tests at multiple warehouses to benefit its “members” or customers.
It says it is committed to converting all of our depot yard trucks from diesel models to alternative fuel models by 2035.
It is also working to give its employees more knowledge to be “greener.” For example, it teaches them about energy efficiency, energy management, and data analytics. It is training 50 employees to become Certified Energy Managers to help the company meet its Scopes 1 and 2 carbon reduction goals in partnership.
It is also preparing to electrify more of its operations and design its sites to be energy efficient and to produce less waste at its warehouses, depots, and manufacturing facilities. To that end, it is increasing the number of recycled materials used in constructing our entire metal buildings, including prefabricated structural steel systems and recycled asphalt in all new parking lots.
It is also optimizing the use of the green spaces at its warehouses by doing such things as planting trees, increasing planting density and drought-tolerant species, and native and ornamental vegetation. It is also evaluating new technologies, such as low-carbon steel and cement, to renovate its buildings potentially.
“Our priority is to purchase clean energy and integrate on-site energy systems when operationally feasible; and acquire high-quality, verified renewable energy certificates (REC) after exhausting all other operationally viable reduction pathways.
“We will source an increasing percentage of contract purchases from low-carbon energy sources through 2030 (and beyond). Additionally, we own and operate more than 100 on-site solar systems, with the intention to expand on-site solar operations where feasible,” it says.
Specifically, it operates in states with renewable portfolio standards requiring utilities to generate a set amount of electricity using sustainable fuels. It also uses power purchase agreements — long-term contracts guaranteeing the production and receipt of green energy. And it buys RECs, which are necessary if the company operates in areas without access to wind or solar power.
Most of the energy it uses in its warehouses is refrigeration, heating and cooling, lighting, food preparation, and heating water. It monitors this closely, performing energy audits and taking energy efficiency measures. One technique is to accelerate the replacement of existing lighting and LEDs in its warehouses by using lower wattage. It uses “Certified Energy Managers’ to review, assess, and manage changes to its energy program.
— LED upgrades
— Skylight insulation
— Switchgear maintenance
— Heat pump water heaters
— Electric ovens, rotisseries, and scrubbers
How is Costco working with its suppliers to cut Scope 3 emissions?
It asks six questions of its suppliers, all related to traceability, human rights, animal welfare, environment and land stewardship, climate, and packaging. It estimates that its Scope 3 emissions in 2020 were approximately 141 million metric tons, representing around 98% of its global CO2e footprint.
It uses traceability, supplier engagement, sourcing strategy, partnerships, and pilots to reduce its Scope 3 footprint. “We must understand where our items come from and the entities in the supply chain, back to the farm or source. We plan to map our priority commodity supply chains to understand areas of risk, including biodiversity impacts, (and) conduct materiality and risk assessments for our business to prioritize our resource allocation.”
After it surveyed its top 500 US suppliers, it found that 64% had yet to start measuring or disclosing emissions. It also discovered that 19% had begun collecting and revealing data while the balance was further along. Costco promises to engage its suppliers, helping them purchase more green energy and setting clean energy goals. Ditto for their packaging and recycling efforts.