iStock.com/Sundry Photography
January 10, 2025
Is Walmart Missing its Climate Change Targets a Big Deal?
Walmart cautioned that it’s likely to miss its 2025 and 2030 targets for reducing planet-warming emissions due to challenges related to energy policy, infrastructure and availability of cost-effective low-carbon technologies.
The big box chain joins a range of companies, including Coca-Cola, Unilever, PepsiCo and Colgate-Palmolive, to acknowledge they cannot meet their sustainability pledges.
Walmart had pledged to reduce greenhouse gas emissions from its operations by 35% in 2025 and 65% in 2030, compared to levels in 2015. Neither of these targets appeared to be in reach, Walmart said in an update published on its website.
Late last year, Walmart said it would not meet its 2025 emissions goal but at the time stood by the 2030 target.
As of the end of 2023, Walmart’s operational emissions (Scopes 1 & 2) decreased 19.3% versus its 2015 baseline, while carbon intensity declined 45% over the same period.
Walmart Explains Reasoning Behind Failure To Meet Near-Term Emissions Targets
The retailer’s annual year-over-year emissions increased 3.9% in 2023 due to three factors. Pollution from refrigerants in air-conditioning rose 5.3% year on year, largely because of leaks from aging equipment in the U.S. and Mexico. Transport fuel emissions rose 10% as Walmart’s U.S. trucking fleet expanded. Finally, expansion of renewable energy slowed relative to its business growth.
Walmart said that it’s continuing to work towards its goal of reaching net-zero emissions by 2040. However, due to many factors beyond its control, including public policy, the availability and cost-effectiveness of low-carbon technologies — and “broad sectoral transitions” in energy systems, transportation, materials and agriculture — progress “will not be linear.”
Kathleen McLaughlin, Walmart’s chief sustainability officer, told The Financial Times, “We were the first retailer to set a science-based target for emissions reduction, and our aspirational goal remains the same: to get to zero by 2040. We’ve made meaningful progress on all of the emissions sources. And as we’ve stated, the progress won’t be linear.”
Among positive developments, Walmart said 48% of its global electricity needs were supplied by renewable sources in 2023, on track for a target of half by 2025.
Walmart also noted that as reported in February 2024, it succeeded on its goal of cutting 1 billion tons of emissions from its supply chain, so-called “Scope 3” emissions, six years ahead of schedule. Walmart does not have firm targets to reduce “Scope 3” emissions, which typically make up the bulk of corporate carbon emissions.
A September report from Bain & Co. found 36% of global companies are behind on their Scope 1 and 2 targets, and 51% are behind on Scope 3 targets.
Climate Change Remains an Issue, But Many Companies Find Themselves at a Crossroads
Bain surveys that arrived at the time showed 60% of global consumers had grown more concerned about climate change over the last two years, often due to personal experiences of extreme weather. However, CEOs’ relative prioritization of sustainability has seen a “sharp decline” with AI, growth, inflation, and geopolitical uncertainty seeing more attention.
A Wall Street Journal article from last August found companies still citing sustainability as “frequently as ever” in financial disclosure, but less on analyst calls as “business leaders have faced political and legal pressure to avoid overstating green claims or appearing to prioritize sustainability initiatives over profit.”
Francois Souchet, managing director of eco-advisory firm Swanstant, told Sourcing Journal that organizations are setting climate targets “without clear roadmaps for achieving them.” He also said growth often runs counter to sustainability wins.
Souchet said, “In a linear system where growth relies on making more products, marginal reductions in carbon emissions are often offset by business growth. Reconfiguring businesses toward more decoupled economic models is increasingly critical for businesses to achieve their emission targets.”
Discussion Questions
Should Walmart’s miss on its near-term carbon emissions reduction targets and other companies pushing back their sustainability targets be expected or a cause for concern?
What advice would you have for retailers in setting sustainability targets?
Poll
Loading …BrainTrust
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Adam Dumey
Global VP - Retail, World Wide Technology
Neil Saunders
Managing Director, GlobalData
Recent Discussions
More Discussions
How Can Retailers Crack the Gen Z ‘Riddle’?
Gen Z is becoming an increasingly important consumer demographic, but an elusive one to map. How…Does Bath & Body Works’ Scented Holiday Campaign Pass the Sniff Test?
Bath & Body Works is kicking off a new campaign with scent being at the fore…Which Tech Will Solve In-Store Inventory Woes?
Three major tech lineups are looking to solve retail inventory problems. Which is most suited?
Does it matter? Well that depends a lot on what one means by “matters”; certainly it matters little in the scheme of things that WalMart itself didn’t meet them: even with its huge size it accounts for a trivial percentage of the world’s energy usage. But as a harbinger of what will certainly be many more (such) annoucements, it might mean a great deal…namely that the goals of emission reduction simply aren’t attainable; at least not in a way that people are willing to undertake.
No big deal that Walmart or any other company will “miss” their climate change targets. Consumers couldn’t care less and if they were paying attention before, most are paying no attention anymore.
Consumers are hearing on the eleven o’clock News that the fires in L.A. have put more CO2 in the air than anything humans have done, worldwide, in 10 years combined. For many, that puts it in an ironic perspective. Ironically, the fires could have been prevented if it were not for the “environmental” decisions made by the governor.
Americans, as well as citizens of other countries, are becoming increasingly cynical about the climate change narrative in regards to CO2.
Except for the results that the narrative fictionalizes, misrepresents, or reports out of context, none of the threats have come true.
This week, more than 50 meteorologists at the American Meteorology Society signed a letter asserting that the tiny amount of CO2 in the atmosphere does not affect the weather.
It is confirmed that the world’s temperature is about 0.08% warmer today than it was 125 years ago, and even that will depend on the accuracy of instrumentation at that time, and weather tracking, but the weather isn’t changing due to humans.
Additionally, meteorologists noted that politicians and media never consult them, nor do they quote them, because their views contradict the narrative. And oh by the way, meteorologists are the only legitimate climate experts.
Environmental initiatives have always faced challenges as they seek to balance organizational values and customer preferences against financial benefit / cost; however, my call out in the article is Walmart’s sophisticated approach to long-term (environmental) goal setting. Spend some time reviewing the noted page on Walmart’s Climate Change activity and you’ll see clear traceability of ambitious targets – like reaching zero emissions by 2040 – with specific interim milestones for 2025 and 2030, creating clear accountability checkpoints along the journey. Progress is published and, as the article notes, deviation is called out. This mature approach of coupling long-term aspirations with interim measurements and honest progress reporting provides a model for how large corporations can credibly pursue environmental goals while maintaining stakeholder trust. It also highlights the type of governance (and administrative overhead) required whenever an organization puts a stake in the ground around long-term objectives.
Sustainability pledges are all well and good, but they need to be realistic and balanced against commercial realities. No company – in retail or otherwise – is going to pursue policies which severely damage profitability or performance. Where sustainability works best is where it saves a retailer money and reduces environmental impact. As for the consumer side, I very much doubt that many consumers shopping at Walmart are going to change their habits as a result of this.
If the sustainability target does not help drive revenue, or lower cost, or improve the shopping experience, or is scientifically measurable, then these goals are nothing more than lofty virtue signaling.