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.”