December 15, 2016
In 2005, Walmart announced a goal to be fully supplied by renewable energy sources, and to work to avoid and reduce greenhouse gas emissions. We didn’t set this goal because anyone forced us to.
We set it because we wanted to help address climate change and improve lives, while also strengthening our company and reducing expenses. We thought it would be a win-win: good for society, and good for Walmart.
Eleven years later, that’s exactly what we’ve seen. By investing in solar energy, for example, Walmart has contributed to less greenhouse gas emissions, and helped create thousands of jobs for American solar companies. Walmart is now one of America’s leading commercial solar and on-site renewable energy users, and gets about 25 percent of its global energy from renewable sources.
To give another example, by doubling the efficiency of our U.S. fleet from 2005 to 2015, Walmart avoided the emission of nearly 650,000 metric tons of CO2, while also saving nearly $1 billion in the past fiscal year.
This experience is a big reason why I chose to join the “Risky Business Project,” which is co-chaired by former New York City Mayor Michael Bloomberg and former U.S. Treasury Secretary Hank Paulson.
The Project’s first report, released in 2014, concluded that global climate change posed a serious risk to America’s economy. It detailed pressing dangers to businesses large and small—such as lower crop yields, increased health costs, and disaster-caused property losses.
In December, the Project released its latest report—focusing on how to respond to those risks. It concludes that private businesses have an unmatched opportunity to help the U.S. mitigate the risks from climate change. Because companies have such size, scale, and reach, great progress can happen if they lead the way.
The report also confirms what I and others have witnessed first-hand: by taking action to reduce emissions, a business can save money and create value for itself and its customers.
All this is especially true for sectors like retail and consumer goods, which depend on supply chains—both in the U.S. and internationally. After all, retailers don’t make very much themselves; they predominantly buy items from others. And they will face unique harm if the complex supply chains they rely on are weakened by climate change.
Last month, Walmart CEO Doug McMillon announced a new science-based emissions target: to reduce emissions 18 percent in Walmart’s stores, clubs, distribution centers, and fleet by 2025 compared to 2015 levels. Walmart’s goal is to have 50 percent of operations powered by renewable sources by 2025. Doug had previously submitted this plan to the Board of Directors I serve on, and we were happy to support it. It follows a commitment Walmart made last year in Paris, and was developed and approved by experts inside and outside the company.
Perhaps even more powerfully, Walmart plans to work with thousands of partners throughout the supply chain with the goal of reducing emissions an additional 1 gigaton by 2030. That’s the equivalent of the total emissions of all passenger vehicles in the U.S. over a year. By tracking the progress of the suppliers it works with, and by showing them how serious it is about this issue, Walmart can accomplish exponentially more than it can alone.
When Doug described this announcement last month, he was clear in stating his belief that the plan would strengthen Walmart as a business. He really believes in this, and so do I. A lot of discussions out there are about government regulations, and they are important. But those of us involved with Walmart’s journey can attest that the business benefits of reducing emissions are just as evident as the societal ones.
Risky Business’s data shows that if U.S. businesses make investments now towards a diversified clean energy economy, they and consumers will save an average of $366 billion per year on fossil fuel costs by 2050. There will be many more U.S. jobs overall—particularly in sectors like utilities, construction, and manufacturing. As with any major economic transition, there will be challenges. We will need to work together to help everyone make the transition successfully.
Moving to a renewable energy economy would be highly beneficial to the U.S. and the world—but it will only work if private companies lead the way. I hope more will join the effort at this critical time, and help strengthen the economy at the same time they strengthen their own businesses.
Rob Walton is a member of Walmart’s board of directors. He served as chairman of the board from 1992-2015. He is also one of the Risky Business Project Risk Committee Members.
This op-ed originally ran on December 15th on www.cnbc.com. The original article can be found here.