The U.S. Food Retail industry is in my view a particularly important industry with respect to climate change, because its wide reach provides the opportunity to affect change across supply chains and to educate consumers. Observing the impact of climate change on the food retail industry, as well as studying the actions of certain players \u2013 here Wal-Mart Stores, Inc. (\u201cWalmart\u201d) \u2013 can provide valuable lessons for sustainability efforts in other sectors.<\/p>\n
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IMPACT OF CLIMATE CHANGE ON FOOD RETAIL<\/u><\/strong><\/p>\n The expected impact of climate change on the food retail industry can broadly be categorized along the three main value chain constituents:<\/p>\n Food suppliers:<\/em><\/strong> A recent study conducted by PWC found that c. 95% of fresh food will be affected by climate change in the future[1]<\/a>. While rising dioxide concentration levels can be beneficial for crop yields in the short-term[2]<\/a>, the resulting increase in temperatures is expected to lead to extreme weather scenarios (droughts, storms), causing the U.S. agricultural system severe damage and a potential overall yield loss of up to 70%[3]<\/a>,[4]<\/a><\/sup>. While in the near-term this will likely have a limited effect on food supply, this might amplify over the longer-term.<\/p>\n Food logistics: <\/em><\/strong>Climate change is expected to result in more frequent extreme weather events, these are likely to cause delays and disruptions in transportation networks in the future.[5]<\/a>\u00a0Because freight trucks, used to transport goods from suppliers to retailers, have contributed about 20% of U.S. transportation GHG emissions, this sector is also expected to experience increased regulatory scrutiny in the future, increasing costs per mile driven.[6]<\/a><\/p>\n Retailers:<\/em><\/strong> Caught in the middle between suppliers and end consumers, food retailers are severely impacted by climate change. As climate change decreases the availability of global food supply, food prices are expected to increase. Additionally, an increased occurrence of disruptions in transportation networks, will increase the number of stock-outs and\/or holding costs (due to preventative stock-keeping). High energy costs associated with food refrigeration are likely to further weigh on retailers\u2019 P&Ls. Heightened consumer-awareness around climate change will lead to higher demand for green products and expectations of environmentally-conscious behavior[7]<\/a>.<\/p>\n <\/p>\n WALMART\u2019S ACTIONS<\/u><\/strong><\/p>\n Recognizing potential reputational and financial damages associated with climate change, Walmart has embarked on an integrated sustainability program in 2005. A selection of actions includes:<\/p>\n Limiting energy intensity and carbon emissions in its supply chain<\/u>: <\/strong>Walmart has established a common platform with its largest suppliers, representing 70% of food sales volume, to report GHG emissions, farm yields and water usage. The objective is to establish common expected baseline levels for these three measures, exchange best practices, and report overall progress towards Walmart\u2019s target to eliminate 20 million metric tons of GHGs by the end of 2015 (goal was surpassed by 15.6MMTs).<\/p>\n <\/p>\n BUT\u2026 HAS\u00a0WALMART DONE ENOUGH?<\/u><\/strong><\/p>\n Walmart has achieved great things, however, if Walmart wants to be a leader in fighting climate change, it needs to AT LEAST address the following:<\/p>\n <\/p>\n [1]<\/a> \u201cWalmart\u2019s Assault on the Climate,\u201d Institute for Local Self-Reliance, http:\/\/ilsr.org\/wp-content\/uploads\/2013\/10\/ILSR-_Report_WalmartClimateChange.pdf<\/a><\/p>\n [1]<\/a> \u201cThe Challenge of a Changing Climate\u201d, PWC\/ASDA report, p. 41, http:\/\/your.asda.com\/system\/dragonfly\/production\/2014\/06\/17\/15_38_19_612_4234_Climate_Resilience_Campaign_a5_Brochure_v10.pdf<\/a><\/p>\n [2]<\/a> https:\/\/climate.dot.gov\/documents\/workshop1002\/workshop.pdf<\/a><\/p>\n [3]<\/a>\u201cRisky Business \u2013 A Climate Risk Assessment for the United States\u201d, June 2014 p.5, http:\/\/riskybusiness.org\/site\/assets\/uploads\/2015\/09\/RiskyBusiness_Report_WEB_09_08_14.pdf<\/a><\/p>\n [4]<\/a> \u201cClimate Change, Global Food Security And The U.S. Food System,\u201d p.109 http:\/\/www.usda.gov\/oce\/climate_change\/FoodSecurity2015Assessment\/FullAssessment.pdf<\/a><\/p>\n [5]<\/a> \u201cClimate Impacts on Transportation\u201d, Environmental Protection Agency, https:\/\/www.epa.gov\/climate-impacts\/climate-impacts-transportation<\/a><\/p>\n [6]<\/a> \u201cTransportation and Greenhouse Gas Emissions,\u201d Transportation and Climate Change Clearinghouse https:\/\/climate.dot.gov\/about\/transportations-role\/overview.html<\/a><\/p>\n [7]<\/a> \u201cMore than Two-thirds of Americans Buy Green Products,\u201d Environmental Leader, http:\/\/www.environmentalleader.com\/2012\/06\/05\/more-than-two-thirds-of-americans-buy-green-products-services\/<\/a><\/p>\n [8]<\/a> Walmart 2016 Global Responsibility Report, http:\/\/corporate.walmart.com\/2016grr\/enhancing-sustainability\/reducing-energy-intensity-and-emissions<\/a><\/p>\n [9]<\/a> \u201cHFCs? Curbing Them Is Key to Climate-Change Strategy,\u201d LiveScience, http:\/\/www.livescience.com\/38519-refrigerant-hfcs-devastating-to-climate.html<\/a><\/p>\n <\/p>\n Word Count: 800<\/p>\n\n
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