Large companies see payoffs in sustainability

Economy – PBS NewsHour

MEGAN THOMPSON: This summer, when President Trump withdrew the U.S. from the 2015 Paris climate accord — a voluntary pact to cut emissions of gases that cause global warming — some opposition came from what is perhaps a surprising place: big business.

In response, hundreds of large U.S. companies publicly pledged to reduce their reliance on fossil fuels and increase energy efficiency. In tonight’s signature segment, NewsHour Weekend Special Correspondent Stephanie Sy reports on some big companies leading the way. This story is part of our ongoing series “Peril and Promise: The Challenge of Climate Change.”

STEPHANIE SY: With sprawling supercenters and close to twelve thousand stores worldwide, Wal-Mart, may be best known for low prices that local stores can’t match. Now, the planet’s number one company, by revenue, wants to be known as a leader in the fight against climate change.

KATHLEEN McLAUGHLIN, CHIEF SUSTAINABILITY OFFICER, WAL-MART: At Wal-Mart, Sustainability really is core to our mission.

STEPHANIE SY: Kathleen McLaughlin is Wal-Mart’s Chief Sustainability Officer, she’s charged with selling Wal-Mart’s climate vision to shareholders.

KATHLEEN McLAUGHLIN: It’s critical for business. It’s important for customers and for communities. We’re seeing effects already in things like supply security of different food commodities.

STEPHANIE SY: Wal-Mart’s response to climate change began more than a decade ago. In 2005, then CEO Lee Scott pledged to curb Wal-Mart’s emissions of greenhouse gases like carbon dioxide, which cause the atmosphere to trap heat and warm the earth.

Scott started moving the company toward clean power sources like wind and solar, with a goal of eventually getting 100 percent of its energy from renewables.

KATHLEEN McLAUGHLIN: It was a realization about capability and about scale and about how we can use that for good. Wal-Mart has unique assets as a retailer, just given the reach that we have across categories, the reach we have across countries and across suppliers, and the recognition that we could bring those capabilities to bear on the most pressing social and environmental issues that our customers face in ways that are really relevant for business..

STEPHANIE SY: Wal-Mart, headquartered in Bentonville, Arkansas, began by improving the fuel efficiency of its vast fleet of trucks that deliver goods to its stores.

ERIC BENGE, WAL-MART: So Mike, when you’re ready, we’ll crank it up…

STEPHANIE SY: Using a simulator, Wal-Mart retrains its truck drivers on gear-shifting to increase their fuel savings. Operators can have up to a 30 percent impact on fuel efficiency based on how they drive, and their job performance is judged accordingly.

The company says, improved driving and upgraded trucks have saved the retailer nearly $1 billion since 2005.

MARK VANDERHELM, WAL-MART: Wal-Mart has been the driver of a lot of new technologies in the energy efficiency space.

STEPHANIE SY: Mark Vanderhelm is Wal-Mart’s Vice President of Energy.

Wal-Mart has saved energy and money in its store operations by demanding more efficient equipment from vendors that provide its lighting, refrigeration, and heating and cooling systems.

In its push for more renewable energy, the company has installed solar panels on the rooftops of 364 Wal-Mart and Sam’s Clubs. That only about eight percent of all its stores in the U.S., but the panels make Wal-Mart the nation’s second biggest commercial generator of solar power.

KATHLEEN McLAUGHLIN: The biggest challenge in the U.S. is making it economic. We would love to see more availability of renewable energy sources that is at price parity with other sources.

STEPHANIE SY: In other words, Wal-Mart’s ambitious energy goals aim also to save money.

So, in its home base of Arkansas, where a lack of state government incentives for renewables make conventional fossil fuel power cheaper, you won’t see any solar panels on the local Wal-Mart stores.

While the company has pledged to be 100 percent powered by renewables, it hasn’t said when, and right now only 17 percent of Wal-Mart’s domestic power comes from renewable sources.

To provide guidance in achieving its climate change goals, Wal-Mart has partnered with the Environmental Defense Fund, or EDF. Fred Krupp is the group’s president.

Is Wal-Mart doing enough?

FRED KRUPP, ENVIRONMENTAL DEFENSE FUND: The scale of Wal-Mart is hard to wrap your head around. They have 220 million people shopping there every week. In the United States, they sell about a third of all the food that we buy at retail stores. They can always do more. But what they have shown so far is a serious commitment, and the journey is an ongoing one of improvement.

STEPHANIE SY: Jenny Ahlen is an EDF supply chain specialist based in Bentonville, Arkansas.

JENNY AHLEN, ENVIRONMENTAL DEFENSE FUND: The things that we buy and consume and how they are made and used and disposed of have a huge impact on the planet. So grocery is contributing half of all greenhouse gas emissions in the U.S. retail sector. And that’s due to both the volume, but also the high level of greenhouse gas impacts embedded in that food.

STEPHANIE SY: And Wal-Mart is the largest grocer in the world.

JENNY AHLEN: They are.

STEPHANIE SY: So this is a hot spot.

Wal-Mart’s mission has grown to not only reduce its own stores’ impact on climate change, but to compel its tens of thousands of suppliers to transform their practices.

At Wal-Mart’s urging, EDF helped pork producer Smithfield to optimize fertilizer use on crops used to feed its pigs, reducing the amount of the greenhouse gas nitrous oxide released into the atmosphere.

The reductions by Smithfield and other suppliers contributed to Wal-Mart taking credit for meeting a goal, in 2015, of reducing emissions by 20 million metric tons, the equivalent of taking nearly four million cars off the road for a year.

Wal-Mart’s newest initiative is called “Project Gigaton,” which aims to persuade suppliers to remove 50 times more greenhouse gases — or one billion metric tons — by 2030, about the same amount of pollution as Germany emits in a year.

Wal-Mart, known for squeezing suppliers to keep prices low, is putting a green squeeze on them now, though one that’s voluntary.

FRED KRUPP: It sends a message to their 100,000 suppliers all around the world: If you want your products on our shelves, cut your pollution.

STEPHANIE SY: Ninety percent of Wal-Mart’s overall greenhouse gas impact comes from its supply chain, and dozens of its major suppliers have already signed on to project gigaton. Wal-Mart hopes that encouraging its suppliers to cut emissions will have a multiplier effect.

One of those participating suppliers was already forging its own path to sustainability.

The candy maker Mars, Inc, best known for M&M’s and Snickers bars, has set an aggressive target of using “zero carbon” in its operations by 2040, eliminating all greenhouse gas emissions.

BARRY PARKIN, MARS, INC. CHIEF SUSTAINABILITY OFFICER: Field is actually 18 acres, so it’s pretty big…

STEPHANIE SY: Barry Parkin, Mars’s Chief Sustainability Officer, showed us the vast solar farm in New Jersey the company built eight years ago.

It now provides about five percent of the power used by the Mars chocolate factory in nearby Hackettstown, which churns out half of the M&M’s sold in the U.S.Parkin says the falling price of renewable energy technology, like solar, makes the investments pay off.

BARRY PARKIN: We’ve done this at cost parity or better. In some cases, our costs are now lower as a result of using renewable energy.

STEPHANIE SY:So we’re not going to see the price of M&M’s skyrocketing because Mars has made commitments to the environment?

BARRY PARKIN: No, absolutely not. So this is not just good for the environment. It’s it’s good for Mars. It’s good for consumers, and it’s also good for the landowners that we’re working with.

STEPHANIE SY: Mars has a long-term contract to buy the power produced by this massive wind farm in West Texas – enough to offset the electricity used in its entire U.S. operation.

Parkin believes that global efforts to curb climate change will eventually lead to fossil fuels becoming more expensive.

BARRY PARKIN: We believe there will at some point be a price on carbon. We’re thinking long term, we’re thinking that if we are ahead of the curve here and we’re reducing our carbon footprint in line with the science faster than our competitors, then we can have a competitive advantage.

STEPHANIE SY: Food companies like Mars are also planning for disruptions to their agricultural supplies caused by climate change, including the cocoa for its chocolate.

BARRY PARKIN: Seventy percent of the world’s cocoa comes from a small region in West Africa. And all of the climate models say that that region is going to become drier and that is not good for cocoa. So those millions of farmers there, all the predictions say is they’re going to start to struggle.

STEPHANIE SY: This month, Mars announced it is investing a billion dollars over the next three years, in part, to help its suppliers reduce carbon emissions, including hundreds of thousands of small farmers around the world. Mars hopes the effort will help the company’s supply chain reduce emissions by 67 percent by 2050.

The risks of climate change to business have now led half of the world’s 500 largest public companies to set sustainability goals. And a report released this April by several environmental researchers found energy efficiency projects saved these companies nearly $4 billion last year.

In addition, after President Trump pulled the United States government out of the Paris Climate Accords, Wal-Mart and Mars were among the companies that signed a letter pledging to continue to meet their voluntary targets.

But Wal-Mart’s growing business may be in conflict with its sustainability mission. Wal-Mart’s total retail square-footage has expanded by 43 percent in the past decade, and along with it, its self-reported carbon emissions went up 9 percent, even as the pace of its emissions slowed.

Wal-Mart is still building new stores. It is still increasing its carbon footprint. How do you answer the broader question of whether Wal-Mart can ever be truly Earth-friendly?

KATHLEEN McLAUGHLIN: We’re expanding our footprint, but we believe that our model, so the way we manage our own store operations, the way we work with suppliers, actually optimizes and lowers the footprint to deliver the same amount of product to people. If you look at the scale and ambition of our efforts and what we’ve actually achieved, I’m actually quite excited about it.

STEPHANIE SY: By 2025, Wal-Mart says it plans to reduce its carbon emissions by 18 percent from its 2015 levels. As ever, the company that has transformed communities and consumers is striking a path… and expecting others to follow.

Peril and Promise is an ongoing series of reports on the human impact of, and solutions for, Climate Change. Lead funding for Peril and Promise is provided by Dr. P. Roy Vagelos and Diana T. Vagelos. Major support is provided by Marc Haas Foundation.

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