Full Disclosure

As the spotlight continues to focus on companies that are reducing their carbon footprints, the value of taking a corporate stance on sustainability is being widely acknowledged by retail executives and shareholders alike. Currently, 85% of U.S. consumer business companies have active sustainability initiatives, according to a study by Deloitte Consulting, with recycling and energy-conservation programs most common. Nearly 2,000 companies, including many retailers, release sustainability reports that disclose information about their environmental, social and governance performance.

At the same time, pressure is growing on those companies that do not disclose information. Dillard’s reported in its September SEC filing that nearly half of its shareholders had endorsed a resolution urging the company to issue a sustainability report.

A total of 42 climate-related shareholder resolutions were filed with U.S. companies as part of the 2007 proxy season, the highest number of resolutions ever, according to Ceres, Boston, a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability. This past spring, in response to shareholder requests, Costco Wholesale Corp. agreed to significantly expand reporting and disclosure on energy efficiency and climate change-related topics.

Similarly, retailers that have achieved success with sustainable initiatives are eager to make their accomplishments known. Office Depot, Delray Beach, Fla., recently touted that it had lowered its carbon-dioxide emissions 10.1% in 2006, while simultaneously adding 1.7 million sq. ft. to its North American portfolio (see story on page 45).

CCA Global Partners, with annual sales topping $10.2 billion, and dual headquarters in Manchester, N.H., and St. Louis, embraced environmental stew-ardship in its recently released 2006 annual report. In the coming year, CCA Global, which operates some 3,600 flooring stores, pledged “a passionate commitment to bettering our environment by our own actions and through our relationships with our member community, suppliers and employees.”

Greenspeak: Carbon Footprint, Carbon Offset

Carbon footprint is a measure of the impact human activities have on the environment in terms of the amount of greenhouse gases produced. The quantity is usually measured in units of carbon dioxide (per year). Carbon offset is the process of balancing a unit of carbon-dioxide emissions with a product that saves or stores an equivalent amount of CO2.

Not to be outdone, the world’s largest retailer has become one of the largest retail advocates for sustainable practices. (See related stories on pages 28 and 110.)

This month, Wal-Mart Canada (Mississauga, Ontario) will introduce a Supply Chain Sustainability Scorecard to “footprint” (assess) its logistics service providers on the basis of environmental impacts, efforts and improvements.

“Retailers need to take responsibility for their entire global carbon footprint, including their suppliers’ impacts,” agreed Mark Armitage, president of The Carbon Neutral Co.-United States (CNC). The CNC, based in London, has been helping corporations and global brands understand and take action on their carbon footprints for 10 years. In August, the company opened offices in New York City and San Francisco.

The factors that drive a corporation to adopt a carbon-neutral strategy can vary from one company to the next.

“If this is a cost-driven exercise, then the CFO is typically champion of the issue,” explained Armitage. “If it is brand-driven or a response to customer perception, then the chief marketing officer may be the leader. However, if it is an issue with investors or shareholders, then likely it is the CEO who takes up the mantle.”

Regardless of who leads the charge, everyone is eager to translate the benefits into dollars. When it announced its Sustainability Scorecard, Wal-Mart Canada also shared the results of a sustainability pilot it had initiated in July 2006.

The company changed the mode of transportation for 10 stores from road to rail, which resulted in a reduction in carbon emissions of 2,600 tons. Additionally, 20 truck generators were converted to electric power, saving 40,000 liters of fuel. Wal-Mart Canada predicted the combined impact of these two initiatives would result in annual savings of more than $2 million.

Wal-Mart Canada also converted some of its shipping crates from cardboard to plastic, which saved $4.5 million and yielded an expected waste reduction of more than 1,400 tons as well as related carbon-emissions reductions of 10,000 tons due to the elimination of cardboard production.

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