Behind Walmart's push to eliminate 1 gigaton of greenhouse gases by 2030

Key Points
  • Walmart's "Project Gigaton" is aimed at reducing 1 gigaton of greenhouse gas emissions from their supply chain by 2030.
  • Launched in 2017, the project is part of the company's larger sustainability effort, which has been a focus of the company since 2005.
  • "It's really important to see this race to the top, that there is jockeying for position now that society at large has woken up to the urgency of the climate crisis. … We needed first movers, and Walmart was one of them," Sue Reid, Ceres vice president of climate and energy, told CNBC.
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As the climate crisis facing the planet becomes more immediate — fueled by powerful images that include devastating floods in Venice and uncontrollable wildfires in the Amazon — companies are waking up to the role they play in climate change and announcing plans for ways to reduce their carbon footprint.

But one company was very much ahead of the curve. Walmart has been focused on sustainability since 2005. Following Hurricane Katrina and the devastation left in its wake, then-CEO Lee Scott announced a change in the company's mindset, which included focusing on ways the retailer could become more environmentally friendly.

These goals have continued under Walmart's fifth and current CEO, Doug McMillon.

At CNBC's "Evolve" conference in November, McMillon said the retailer focuses on "close to the core" ways in which it can enact change — selling more sustainable products, for example, and focusing on more efficient packaging methods to reduce waste.

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The Evolving Giant: Walmart CEO Doug McMillon with Becky Quick at CNBC Evolve Summit

One of the company's most recent — and ambitious — initiatives is Project Gigaton. Launched in 2017, its goal is to reduce 1 gigaton of greenhouse gas emissions from the company's supply chains by 2030. To put that number in context, it's equivalent to taking 211 million passenger cars off the road for an entire year, according to estimates from the Environmental Protection Agency.

This initiative is one part of Walmart's overall emissions-reduction program, which was approved by the Science Based Targets Initiative. Backed by organizations like the United Nations Global Compact and World Resources Institute, the Science Based Target Initiative ensures that a company's targets are in line with standards set by the Paris Agreement. Walmart was the first retailer to have its target approved.

Project Gigaton is targeting what's known as Scope 3 emissions. This is typically the trickiest area to control, since it includes the emissions related to a company's entire business operation. So in the case of Walmart, this includes the carbon footprint of its suppliers.

"The kind of commitment and action we're seeing from Walmart with Project Gigaton is exactly what we need to be seeing from the private sector," Sue Reid, Ceres vice president of climate and energy, told CNBC. "Walmart really put itself out early on with strong ambition with some of the more challenging areas of greenhouse gas emission reductions across corporate value chains," she added. Ceres is a nonprofit environmental advocacy organization that has no affiliation with Walmart.

Project Gigaton is a partnership between Walmart and its suppliers, borne from a 2010 project that saw the company aim to eliminate 20 million metric tons of greenhouse gases from its supply chain. It ultimately surpassed that goal.

At the project's outset, Walmart identified six key areas where suppliers could meaningfully reduce their emissions: energy, agriculture, waste, product, forests and packaging. The retailer then built a platform, making it easy for suppliers to develop emission-cutting goals and then track their progress. The company encourages suppliers to focus on "SMART" goals, or specific, measurable, achievable, relevant and time-limited targets.

"The way we designed it is we tried to really make it easy for people to understand how to get started … to making the bold steps that we think are needed to achieve our target," Walmart's sustainability director, Zach Freeze, said to CNBC. "There are actually really easy places to get started, and it really does all add up."

Walmart partnered with a number of NGOs, including the Environmental Defense Fund (EDF), which it has been working with since 2005, to help target areas where the retailer could improve its operations.

EDF+ Business managing director Elizabeth Sturcken said that given Walmart's enormous reach, the NGO identified early on that changes in the retailer's policy could have a significant impact. EDF set up an office in Walmart's hometown of Bentonville, Arkansas, in order to observe operations on the ground and help the company identify actionable initiatives like using energy-efficient lightbulbs, asking food suppliers to optimize fertilizer use and increasing efficiencies in its factories, among other things. EDF is an independent organization that is not paid by Walmart.

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More than 1,000 domestic and international suppliers have signed on to Project Gigaton, including Mondelez.

Christine Montenegro McGrath, Mondelez vice president and chief of global impact, sustainability and well-being, said that Walmart and Mondelez have worked together on a number of sustainability-focused initiatives over the years, including in areas like packaging.

By the beginning of 2020, she said that Mondelez will have taken 65,000 pounds of packaging out of its system and that the company is aiming to have 100% recyclable packaging by 2025. She pointed to shelf-ready packaging as an example of a practice that helps both companies, since it cuts down on Mondelez's packaging and subsequently the amount of waste that Walmart has to deal with.

Mondelez, which had its own sustainability initiatives in place long before it signed on to Project Gigaton, is one of Walmart's largest suppliers, although the project is aimed at suppliers of all sizes.

McGrath said that one of the benefits of the initiative is that it helps smaller suppliers identify and understand ways in which they can institute environmentally friendly policies. She said that Walmart facilitates this by hosting events for suppliers to "lay the groundwork" to establish emission reduction goals, which includes sharing best practices and bringing in experts to explain science-based targets.

Solar panels cover the roof of a Sam's Club store in Glendora, California. 
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"What I'm impressed by with Project Gigaton is that no one company is going to solve things like climate change on their own, and so we really need to partner together, collaborate, share best practices and get everybody involved," she said to CNBC. "Big companies like us, smaller companies … we can all learn from each other, and that's one thing I really like about working in partnership with Walmart."

Each supplier that signs on to Project Gigaton is required to submit an annual report detailing its progress, and the top achievers are recognized on Walmart's sustainability hub website. Walmart does not make the reports from its suppliers public, although in the company's inaugural ESG report, released in May, it said that it has already cut 93 million metric tons of greenhouse gases and that it's on track to meet its 1 gigaton goal.

Suppliers like Mondelez have their data independently verified. Third-party verification is encouraged but not required, according to Project Gigaton's website. The website also notes that emission reductions from supplier-led activities not related to products sold at Walmart can also be counted toward Project Gigaton's goal.

But Reid noted that it's in the company's best interest to make sure that the numbers submitted are as accurate as possible.

"[Walmart's] reputation is on the line, so the company has a natural incentive to ensure that there's integrity with what is being reported into it, and it has a really detailed system," she said.

While more than 1,000 suppliers have signed on, Walmart has more than 100,000 suppliers worldwide, so there's still more progress to be made.

A customer browses products at a Walmart store in Burbank, California
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Andrew Behar, CEO of shareholder advocacy firm As You Sow, said that the "devil is always in the details" and that he would like to see more specificity around some of Walmart's goals, including regenerative agriculture and pesticide policies. He also noted that while the company has targeted being 50% supplied by renewable energy by 2030, they haven't detailed what happens beyond that, or a path to becoming carbon neutral.

But overall Behar said the intention of the project is admirable. "We like to see companies set out ambitious plans that involve their supply chain, and actually hold the supply chain's feet to the fire. And they [Walmart] are asking for real, material change," he said to CNBC.

Walmart acknowledges that there are more steps that need to be taken and that more can always be done. At CNBC's "Evolve" conference, CEO McMillon said that biodiversity is one of the areas in which the company can improve. Freeze echoed this sentiment, saying that the company is "constantly looking at ways we can accelerate our work."

"There's a lot we're taking on as a company … but we know there's an important role that Walmart can take in leading others down a similar path," Freeze added.

Project Gigaton's primary goal is, of course, to reduce emissions, but the company is also hoping to demonstrate that environmentally friendly practices do not necessarily have to come at the expense of profits. Given Walmart's reach — each week almost 265 million customers shop at its stores and online — it has a real ability to enact change, especially if suppliers apply their emissions-reducing practices across all of their business operations.

"It's really important to see this race to the top, that there is jockeying for position now that society at large has woken up to the urgency of the climate crisis. … We needed first movers, and Walmart was one of them," Reid said.