Over the past year Boston Common, Trillium, Walden, and Calvert have been engaging Costco on several climate-related issues. Through this engagement, we have influenced the company to adopt normalized GHG reductions goals and to publicly acknowledge the critical importance of climate change and the impact on its business.
Costco has recently included a Climate Statement in its 2015 Corporate Sustainability Report.
We hope Costco’s statement encourages other retailers to follow its example and take steps to become part of the climate solution.
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Costco Wholesale recognizes that the subject of climate change is significant for a number of its customers and its investors. It is also a risk factor for certain aspects of our business. As we have noted in our Form 10-K:
Factors associated with climate change could adversely affect our business. We use natural gas, diesel fuel, gasoline, and electricity in our distribution and warehouse operations. Increased U.S. and foreign government and agency regulations to limit carbon dioxide and other greenhouse gas emissions may result in increased compliance costs and legislation or regulation affecting energy inputs that could materially affect our profitability. In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience. We also sell a substantial amount of gasoline, the demand for which could be impacted by concerns about climate change and which also could face increased regulation. Climate change may be associated with extreme weather conditions, such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels. Extreme weather conditions increase our costs and damage resulting from extreme weather may not be fully insured.
Many scientists, economists and others have concluded that global climate change is a serious environmental, economic, and social challenge that warrants an equally serious response by governments and the private sector. The UN-affiliated Intergovernmental Panel on Climate Change (IPCC) has recommended, and a number of countries (including the United States), through the Copenhagen Accord have agreed to attempt to limit global warming to 2 degrees Celsius. To do so, the IPCC estimates that CO2 emissions in the atmosphere should be stabilized at 450 parts per million (ppm) in 2050.This stabilization requires that greenhouse gas (GHG) emissions be reduced by 85 percent compared to levels observed in 2000.
Costco’s business model and many of its longstanding business practices align with these objectives. The model is, the Company believes, inherently more carbon-efficient than other retailers. The “bulk” emphasis of the Company’s business means fewer trips by customers to serve their needs; and the Company’s highly efficient depot (cross docking) distribution system minimizes the number of trips that are necessary to keeps its warehouses stocked as compared to multiple direct to location deliveries by many suppliers. As a Company striving to bring merchandise to our customers at the lowest cost, we have since our inception focused our reducing expenses in our operations.
The use of electricity, for example, represents a significant expense for our warehouses that we are constantly looking for ways to reduce. We closely track energy usage as part of this effort. Purchased electricity is the greatest source of our carbon emissions, so reducing our energy usage directly contributes to reduced emissions. Specific demonstrations of our efforts that reduce our greenhouse gas emissions and proof of our success in keeping the growth rates of these emissions below the growth of our business overall are detailed below. Tracking and reporting of our GHG footprint are additional evidence of our commitment in this area. Continuing to focus our expertise on reducing costs and improving efficiency is, we believe, the best way for us to reduce our impact on the environment and to seek to assure the values and choices to which our members have become accustomed.
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