Costco Commits to Establish Full Value Chain Emissions Objectives

According to the environment and socially-focused investor Green Century, who filed a successful climate proposal at Costco's AGM in January directing the company to set net zero-aligned targets, warehouse club retail giant Costco has committed to setting climate targets to reduce emissions across its entire value chain.

Green Century reports that Costco is one of only three of the largest S&P 50 firms that have yet to make a significant climate commitment. The resolution noted that Costco's 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 suggested that Costco's falling behind its peers in this area could create material risks, including reduced market share, inability to meet government mandates, and reputational harm.

The resolution required the company to "adopt short, medium, and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its entire value chain, in order to achieve net-zero emissions by 2050 or earlier and to implement appropriate emissions reductions by 2030.

Although Costco's board of directors urged shareholders to vote against the motion, it was approved with 70 percent of shareholder support.

Leslie Samuelrich, president of Green Century, said:

"With this dedication, Costco no longer lags behind its competitors. Therefore, we applaud the company's decision to limit its contribution to climate change."

To date, Costco has only established partial Scope 1 and 2 targets, including the phase-out of hydrofluorocarbons (HFCs) in refrigeration units and renewable energy goals, as well as a commitment to reduce yearly emissions by 2%. The company has not disclosed its Scope 3 emissions, including those from its supply chain, which account for the vast bulk of retailers' carbon footprints.

According to Green Century, Costco has now agreed to reveal its aggregate scope 3 emissions and action plan in 2022, and to establish scope 3 reduction goals in 2023. The corporation has also committed to revising its scope 1 and 2 emission objectives and action plans in December 2022 as part of an updated Climate Action Plan.

Annie Sanders, Director of Shareholder Advocacy at Green Century, commended the corporation for establishing climate goals but urged it to go further and link its goals with the Science Based Targets project (SBTi).

Sanders said:

"Costco has expedited its efforts on this subject, and we are delighted that it is responding to shareholders' requests to address climate risk. However, we are concerned that the corporation has chosen not to seek alignment of its climate plans with the Science Based Targets initiative, the global body that enables companies to set emissions reduction targets in accordance with scientific evidence. We strongly urge Costco to join its counterparts in taking this vital action to avert the worst effects of climate change and to minimise climate risk in accordance with investor expectations."

The webpage for Coscto's Climate Action Plan, last updated in July 2022, states:

"Although we are guided by Science-Based Targets, we cannot embrace them until we have clear and attainable plans for achieving them."