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Climate change [1]
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Date: 2023-02
Read more about Project GigatonTM.
Adaptation
Our climate strategy includes adapting our operations and sourcing to enhance resilience. Examples include:
Disaster resilience
Walmart’s Emergency Management Department uses predictive analytics to gauge the path and likely severity of seasonal weather events that can impact operations and supply lines. The Emergency Management team helps our operations and supply chain teams prepare for and mitigate the effects of such events. If disaster strikes, the Emergency Management team operates out of Walmart’s Emergency Operations Center, engaging associates, local governments, NGOs and others as needed. The team deploys associates with specialized expertise as well as mobile generators, fuel resources, trucks and other resources to manage crises on the ground. Storms impacting larger geographies, such as the February 2021 winter storm across the southern U.S., contributed to this trend.
Walmart and the Walmart Foundation also work to build capacity for preparedness and response in vulnerable communities through engagement of stakeholders, best practice sharing and philanthropic investments. For example, in FY2022 the Walmart Foundation granted $3 million to build capacity in underrepresented and vulnerable communities to help them prepare and mitigate against the impact of disasters, including to BIPOC-led organizations like the Institute for Diversity and Inclusion in Emergency Management.
Read more: Disaster preparedness & response.
Real estate
When designing facilities in storm-prone locations, we incorporate certain precautionary measures to help facilities withstand storms and recover as quickly as possible with minimal disruption in service. To help sustain access to electrical power when we need it most, we have invested in a fleet of permanent and mobile generators to support our distribution centers, stores and clubs during hurricanes, wildfires, winter storms and day-to-day power surges. For example, given the probability of storms impacting stores in the U.S. Gulf Coast and along the eastern seaboard, nearly all stores within a certain range of the coast have a generator or quick connects for mobile generators. Because permanent generators are not financially justifiable at all stores, we take other measures, including staging mobile generators and refrigerated trailers, to reduce the time it takes to respond to power outages. In 2021, we proactively staged over 1,200 refrigerated trailers at over 700 locations ahead of extreme weather events. Additionally, mobile generators kept stores, clubs and distribution centers powered to serve communities for more than 10,000 hours while grid electricity was not available. These measures not only enable us to serve customers when we would ordinarily need to close stores, but also help to reduce food loss by avoiding hours of power loss. As climate-related events increase in frequency and severity, we aim to stay in front of issues by preparing for what lies ahead. Read more: Disaster preparedness & response.
We have prioritized incorporating energy efficiency into new store designs and upgrading older equipment where economically feasible with higher-efficiency technology which will help us adapt to a warming climate. We also use technology to monitor and optimize energy use in our buildings. Energy—including electric and gas—is one of our top operating expenses and optimizing energy use can help us control both expense and emissions. A few degrees of rise or fall in average temperature can translate to considerable costs, as HVAC and refrigeration systems must work longer and harder to keep temperatures in stores and product cases at optimal levels.
Sourcing: surety of supply
Managing day-to-day disruptions
Our merchants use a variety of tools to manage volatility and surety of supply day-to-day. Our sourcing teams manage food commodity supply risks by building upstream capacity, diversifying our sourcing regions and exploring new technology and innovation. For example, our merchants use predictive weather data to adjust product deployment and replenishment rates in the short term, as well as leverage historical data on sales performance and customer buying patterns to inform product assortment shifts over time. This helps ensure that as the climate changes, we continue to offer the right products for our customers at the right time.
Country of origin strategies
While about two-thirds of what Walmart U.S. spends on products comes from items made, grown or assembled in the U.S. (according to data from our suppliers), globally sourced items face the risk of climate-related disruption. Walmart’s Global Sourcing team regularly reviews risks and opportunities related to the country of origin of the products they source. The Global Sourcing team works with Walmart merchants and third-party experts to develop mitigation strategies, including measures to enhance supply chain resilience within countries of origin, as well as diversification of sources of supply.
Transforming product supply chains for long-term sustainability
Because agricultural commodities can be especially susceptible to weather events and to climate change, Walmart has prioritized strategic initiatives to enhance commodity supply chains sustainability and resilience. Walmart’s efforts include setting sourcing requirements and product specifications for suppliers, engaging suppliers in measurement and best practice sharing, supporting industry collaboration, engaging our customers, public policy advocacy and philanthropy. Read more: Product supply chains: Sustainability Overview.
Managing transition risks
Transitioning to a net-zero economy will bring about regulatory, technological, legal, market and reputational changes that will likely impact companies, including ours. (See Climate risk assessment above.) We evaluate these risks as part of the company’s annual Enterprise Risk Management (ERM) process that considers strategic, operational, reputational, financial and regulatory and compliance risks. The assessments include mitigation plans against critical risks, and ongoing or new issues are addressed through the strategic planning process. The results of these assessments are shared with Walmart’s Governance Risk Committee (GRC) and with the Audit Committee of the Walmart Board of Directors.
In addition to the ERM process, individual business segments and functions also assess climate-related policy issues as part of developing their annual strategic and operating plans. For example, regulation often affects costs in our operations and value chain. Walmart has established policy councils to assess potential new legislation/regulations and commitments within and across key markets. The policy councils include internal stakeholders from various parts of the organization (e.g., Government Affairs, Legal, Real Estate, Communications, Compliance).
Another reputational risk comes from customer perception of Walmart’s climate action, including how we design and run our stores and the products we offer. Our corporate affairs teams monitor sentiment across customers, investors, associates and other stakeholders via digital and traditional media engagement and coverage. Our stakeholders help us understand climate risks and opportunities so that we can develop more effective solutions.
Read more about our climate risk assessment section above and in our CDP Response.
Advocacy
We believe a strong climate strategy across government, business and civil society will help everyone manage the physical and transition risks associated with climate change, contributing to the resilience of our business and the communities we serve. We advocate for climate policy through engagement of policy makers, industry associations and multi-stakeholder coalitions, as well as through corporate communications.
Governance and transparency
Climate policy priorities
Walmart is committed to policy advocacy aligned with the Paris Climate Agreement. Our advocacy has been consistent with that agreement since 2016. In 2021, we memorialized our commitment in a Board-approved Statement on Climate Policy. The Statement frames our advocacy around achieving 1.5° Celsius-aligned, science-based national and international climate policies that are consistent with achieving net-zero emissions by 2050 and that equitably address the needs of all stakeholders.
We believe market-based and economy-wide emissions-reduction policies, like a price on carbon, are critical to achieving ambitious reductions in greenhouse gas emissions while supporting economic prosperity. We also recognize that market-based, technology-neutral approaches for hard-to-decarbonize sectors can play a valuable role in the absence of economy-wide action.
Climate policy oversight
By charter, the Nominating and Governance Committee (NGC) of the Walmart Inc. Board of Directors—a Board committee comprised of independent directors—oversees our public policy strategies and activities, including those related to climate change. Management provides regular updates at least annually to the NGC concerning the company’s public policy strategy and highlights of the committee’s discussions with management are shared with the full Board of Directors. In 2021, NGC/management discussions included Walmart’s planned U.S. federal government affairs and policy priorities for 2021-2022 and a review of 2020-2021 activities, including engagement with and through key trade associations on climate change and other priority topics.
Walmart’s Government Relations Policy (updated in 2022) governs the company’s interaction with elected officials and legislative and regulatory bodies at all levels. As relevant to climate advocacy, the policy:
Delineates roles and responsibilities with regard to interactions with public officials and legislative bodies
Sets parameters on the use of funds for political purposes
Defines the criteria for evaluation of trade association memberships in light of their policy positions and/or political advocacy
Commits the company to annual discussions between management and the NGC
Commits Walmart to annual reporting on policy priorities, strategies, activities and trade association memberships.
Transparency
Walmart is committed to transparency regarding public policy activities, including climate advocacy. Our disclosures include:
Quarterly reporting
Discussions regarding our public policy priorities, advocacy strategy and engagements in our ESG reporting (since 2013).
State and federal lobbying information on our Investor Relations website
Our philosophy on trade association memberships and approach to dealing with trade association policy misalignments (see below and our Engagement in public policy
A list of trade associations
Read more: Engagement in public policy.
Direct engagement of policy makers
Walmart directly engages U.S. policy makers on climate-related policy in line with our Statement on Climate Policy. We employ federal and state registered lobbyists and registered lobbyist consultants and engage in lobbying contacts as defined under the U.S. Lobbying Disclosure Act (LDA). Our quarterly reports to Congress include lobbying expenditures, the specific legislative items and public policy issues that were the topics of communication and the registered lobbyist who lobbied on behalf of the company. Review of Walmart’s reports discloses direct advocacy on climate and other environmental-related topics.
Recent examples of our direct public policy advocacy on major climate policy debates at the federal level in the U.S. include:
Engaging lawmakers to support the Infrastructure Investment and Jobs Act, which our major trade associations also supported, and which includes federal investments in the energy and transportation sectors and to support climate resilience.
Speaking out publicly
Recognizing bipartisan action on climate and submitting a letter of support to the U.S. Senate regarding the passage of the Growing Climate Solutions Act, which provides technical resources to farmers and ranchers to invest in nature-based climate solutions.
Joining members of the Air-Conditioning, Heating, and Refrigeration Institute in endorsing a petition to the U.S. Environmental Protection Agency (EPA) regarding the adoption of national rules to prohibit the use of refrigerants with high global warming potential. We believe this will create a valuable national approach to phasing out the most harmful refrigerants in an expeditious fashion. Walmart also submitted a letter to the EPA supporting regulatory actions for stationary refrigeration equipment that are environmentally effective (e.g., limiting the use of refrigerants in new commercial systems with charges over 50 lbs. to those using refrigerants with a GWP of 150 or less) and nationally consistent.
Collaborating with PepsiCo to release a set of public policy principles
Walmart has also advocated for Paris-aligned climate policy on the global stage. For example, prior to COP26, we joined key public-private sector initiatives led by U.S. Special Envoy on Climate John Kerry. The first, Glasgow is Our Business, showcased strong CEO-level sector support for a successful COP26 agreement. The second, the Clean Energy Demand Initiative, works to convey demand and policy signals from large private sector buyers to drive clean energy investment in crucial global markets. We actively participated in business dialogues during COP26 and represented the official business observer groups in encouraging support and action on measures to solidify global carbon market rules and other policy elements in the Glasgow Climate Pact. And Walmart is active in statehouses across the United States, including joining other businesses to advocate for net-zero emissions in Maryland by 2045.
Corporate communications
Through corporate communications, Walmart regularly engages the public to make the case for climate action and encourage others to raise their ambitions. Recent examples include:
Engagement through trade associations
Beyond direct advocacy on climate-related policy, Walmart is also a member of trade associations and coalitions that the company believes can assist us in achieving our long-term strategic objectives. These organizations and coalitions allow us to work with other companies on issues that impact the retail sector and beyond.
Walmart’s approach to engaging trade associations
Walmart supports trade associations for many reasons, including development and sharing of best practices on matters important to the industry, advocacy on behalf of industry interests, promotion of public policy and/or general support for an organization’s mission. Walmart’s engagement model depends on the role the trade association plays in helping Walmart achieve its strategic objectives, and may include varying levels of financial support, involvement at the board and/or with key committees or targeted financial support for key initiatives within a broader organization.
As Walmart transforms its business and trade associations reevaluate their priorities, misalignments may occur. Where they do, we directly engage our trade associations to help them understand our priorities and positions. We also periodically reevaluate our memberships and engagement models to ensure alignment.
Engagement : We communicate our strategic priorities and perspective on matters of public policy with our trade associations, policymakers and—as appropriate—the public so that our positions are known. For example, we have shared our views on climate policy with key trade associations, the public and lawmakers (see below).
: We communicate our strategic priorities and perspective on matters of public policy with our trade associations, policymakers and—as appropriate—the public so that our positions are known. For example, we have shared our views on climate policy with key trade associations, the public and lawmakers (see below). Membership and financial support reviews: We periodically review our memberships in trade associations and determine if any adjustments are needed in our membership status or the financial support we provide to the organization. Where we generally support the organization’s priorities and the positions the organization has taken on major issues, we may maintain general membership in the organization while working to influence the organization’s direction as necessary. For example, we maintain general membership in the Business Roundtable and work to influence the organization as described elsewhere in this brief. In other instances, we may elect only to provide financial support for particular organizational initiatives. For example, we do not pay general membership dues to the U.S. Chamber of Commerce but financially support certain specific U.S. Chamber of Commerce initiatives including the Institute for Legal Reform, Rule of Law Coalition and Workforce Freedom Initiative. If a relationship—on balance—does not align with our priorities, we would end ties with the organization altogether.
Engagement with major trade associations on climate policy
We have not identified any material misalignments with our major trade associations with respect to climate policy matters. Nevertheless, in line with the overall approach described above, we engage trade associations on climate and related policy issues to help them understand our perspective. Examples include:
Multi-stakeholder coalitions
In addition to working to shape climate strategies and advocacy within the groups discussed above, we are members of other coalitions advocating for an enabling policy environment, including:
Read more: Engagement in public policy brief.
Reporting
We believe that transparency cultivates trust, helps hold ourselves accountable and – we hope – inspires others to act. We provide an annual update on our climate progress here through our ESG Reporting. We also report to organizations such as CDP. Walmart estimates its scopes 1, 2 and partial scope 3 GHG emissions in accordance with the GHG Protocol Corporate Accounting and Reporting Standard and has disclosed this and other climate-related information annually since 2006. See our third-party assurance statement for our CY2020 CDP reporting here.
We encourage suppliers to report to CDP and have integrated CDP and Project GigatonTM to make it easier for suppliers to report on metrics. We also support the Taskforce for Climate-related Financial Disclosure (TCFD) and use its reporting and guidance for climate risk assessment.
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[1] Url:
https://corporate.walmart.com/esgreport2021/esg-issues/climate-change
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