Warehouse club retail giant Costco has committed to set climate targets to reduce emissions across its full value chain, according to environment and social-focused investor Green Century, who had filed a successful climate proposal at Costco’s AGM in January directing the company to set net zero-aligned target.
Costco is one of only three of the largest S&P 50 companies that have yet to set a major climate commitment, according to Green Century. The resolution suggested that falling behind its peers in this area may create material risks for Costco, “including restricted market share, inability to meet government mandates, and reputational damage,” noting that retail and food competitors including Walmart, BestBuy, Target, McDonald’s, PepsiCo, Nestle, and Kellogg measure Scope 1, 2, and 3 emissions and are pursuing science-based emissions reduction targets.
The resolution called for the company to “adopt short, medium, and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain, in order to achieve net-zero emissions by 2050 or sooner and to effectuate appropriate emissions reductions prior to 2030.
While Costco’s board of directors recommended that shareholders vote against the resolution, it passed with 70% shareholder support.
Green Century President Leslie Samuelrich, said:
“With this commitment, Costco is no longer a laggard among its peers. So, we congratulate the company on committing to reduce its contribution to climate change.”
To date, Costco has only set partial Scope 1 and 2 targets, targeting areas including the phaseout of hydrofluorocarbons (HFCs) in refrigeration units and renewable energy goals, and committing to 2% annual emissions reductions. The company has yet to disclose its Scope 3 emissions, including from its supply chain, which typically account for the vast majority of retailers’ greenhouse gas footprint.
According to Green Century, Costco has now committed to disclose its aggregate scope 3 emissions and action plan in 2022, and to set scope 3 reduction targets in 2023. The company has also pledged to update its scope 1 and 2 emissions targets and action plans as part of a revised Climate Action Plan in December 2022.
While acknowledging the company’s move to set climate goals, Green Century’s Director of Shareholder Advocacy Annie Sanders called on the company to go farther and to align its targets with the Science Based Targets initiative (SBTi).
“Costco has certainly accelerated its work on this issue and we are pleased that it is heeding the call from shareholders to address climate risk. That said, we are disappointed that the company has declined to pursue alignment of the company’s climate targets with the Science Based Targets initiative, the global body enabling businesses to set emissions reduction targets in line with science. We strongly urge Costco to join its peers in taking this crucial step to avoid the worst consequences of climate change and mitigate climate risk in line with investor expectations.”
Coscto’s Climate Action Plan webpage, last updated in July 2022, says:
“While we are guided by Science Based Targets, we are not in a position to adopt them until we have plans to achieve them that are specific and achievable.”