LONDON – When Hurricane Katrina devastated New Orleans in 2005, it was a turning point for Walmart, the world's largest retailer.
While business was doing well at the time, according to CEO Doug McMillon it was focused on customers and employees in a broader environment. "We were a big company, but we didn't fully understand what this meant or what was socially and environmentally required of us," he said at the Climate Week NYC conference in an online broadcast last month.
"We decided to strengthen ourselves," added McMillon. "We have committed our company to 100% renewable energy, a zero-waste strategy, a more sustainable supply chain and an increase in the minimum wage," he said.
Fast forward to 2020, and Walmart has now made plans to become a "regenerative" company, an announcement it made at the climate change conference. The environmental goals focus on decarbonization – where no carbon will be emitted by 2040 – and regenerating the natural world with the promise to "protect, manage or restore" one million square miles of ocean and 50 million acres of land by 2030. There are also plans to zero-waste in its own operations in the US, Canada, Japan and the UK by 2025.
But, like other companies, a lot of Walmart's impact on the environment comes from its suppliers and the way customers use their products, explained Kathleen McLaughlin, chief sustainability officer. "For sustainability reasons, we are trying to fundamentally change the way consumers' supply chains work from source to consumer and end of life," she told CNBC over the phone.
A Walmart in Massachusetts uses wind turbines in its parking lot to power the store.
Renewable energy sources will go a long way in reducing greenhouse gas emissions, and Walmart aims to use 100% solar, wind and other environmentally friendly technologies in its own operations such as stores and warehouses by 2035 – currently, renewables make about 29% of its energy sources. Much of this will come from power purchase agreements (PPAs) where the retailer enters into long-term contracts to buy green energy from suppliers. This practice helped him get 1.2 gigawatts of renewable energy in 2018 and 2019.The solar industry in the US installed photovoltaic capacity of 3.62 gigawatts in the first quarter of this year.
Walmart intends to reduce emissions from its supply chain by 1 gigaton by 2030 as part of its Project Gigaton initiative and is now expanding its purchasing power to its suppliers, who can join forces through the Gigaton PPA program that has been launched, to provide renewable energy buy in September. Smaller businesses can be priced out of the renewable energy market, and according to Walmart's calculations and data from the Renewable Energy Buyers Alliance, only around 100 companies buy renewable energy this way.
"We launched (Gigaton PPA) out of interest from suppliers and we just listen to them:" Oh, we wish we could do more in the renewable energy sector. It's hard for us. We don't have a procurement team , we don't. " I don't know how to do it, "McLaughlin told CNBC.
"It really fits with our overall philosophy and approach to Project Gigaton, which is to encourage higher ambitions and faster and more effective actions by suppliers who are decarbonising the supply chain by giving them access to practical tools," she added. When suppliers come on board, Walmart will report how much power is being purchased through Gigaton PPA.
It's not just retail giants helping smaller businesses source renewable energy – businesses helping local users to buy green power together are emerging. With Ripple Energy in the UK, for example, people can buy shares in a cooperative that is building the Graig Fatha wind farm in Wales, which then supplies households with electricity.
Palm Springs, California
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It is part of a database of sustainable startups compiled by venture firm Rainmaking to meet the United Nations Sustainable Development Goals by 2030 and, according to Alex Farcet, a.a., represents a shift to energy, which is supplied by a number of smaller providers partner with the investment company. "Over the next decade, the way energy is generated and consumed will fundamentally change," he told CNBC via email.
"The market is no longer dominated by an oligopoly of suppliers. As the cost of renewable energy such as solar continues to drop dramatically, we will see a sharp surge in communal energy and 'micro-generation'," he added.
Walmart wants cheaper policies to support the purchase of renewable energy. "We helped shape and support the principles of renewable energy buyers (Alliance), and in so many countries (that is) we have unlocked policies that are cheaper or at least a level playing field for renewable energies. This applies to all utility companies. " , Regulators, energy market operators, trade associations … and we'd love to see more of that, "said McLauglin.
Walmart has publicly expressed its disappointment with President Donald Trump's decision to withdraw the US from the Paris Agreement, and McLaughlin reiterated his position. "We think the US should stay in the Paris Agreement. And that's what we said then, and we still believe that … climate change is one of the biggest crises we face as a planet … and unfortunately it requires it immediate action by all So we need global collective action. "
CNBC's Anmar Frangoul contributed to this report.