Costco Wholesale Corporation

RATING

SECTOR

Retail

WEBSITE

CONTACT

Costco Wholesale Corporation

999 Lake Drive, Issaquah, WA 98027, Seattle, Washington, PO Box 34331, United States

T: (425) 313-8100 F: (425) 313-8103 E: costcocare@costco.com

STOCK EXCHANGE

LISTING

  • As of 2019, Costco is ranked # 14 on the Fortune 500 rankings of the largest United States corporations by total revenue.
  • Greenpeace 2018 Supermarket Seafood Ranking, #15
  • 100-top Most Powerful Brands By Tenet Partners, CoreBrand, 2020 (#76)
  • Brand Finance Best Retail Brands By Brand Finance, 2020 (#8)
  • BrandFinance Global 500 (100) By Brand Finance, 2020 (#77)
  • Fortune Global 500 (100) By Fortune 2020 #33
  • Fortune U.S. 500 (100) By Fortune 2020 #14
  • The 50 Most Innovative Companies By BCG ,The Boston Consulting Group 2020 #30
  • The Top Most Loved Brands By Morning Consult 2020 #42
  • World’s Most Admired Companies By Fortune 2020 #9

EMPLOYEES

254,000

CHIEF SUSTAINABILITY OFFICER

Leesah Blanchard

AWARDS

  • Best Company for Diversity 2019
  • Best Company for Women 2019
  • Best CEO 2019
  • Best Company Culture 2019
  • Best Company Perks & Benefit 2019
  • Best Company Work-Life Balance 2019
  • Best Company Compensation 2019
  • Best Company Happiness 2019
  • Best Leadership Teams 2019
  • Best CEOs for Diversity 2019
  • Best CEOs for Women 2019
  • Best Marketing Team 2019
  • Best Sales Team 2019
  • Best Company in Seattle 2019
  • Best Company Outlook 2018
  • Costco won for Best Company Culture 2018
  • Best CEO 2018
  • Best Company for Women 2018
  • Best Company for Diversity 2018
  • Best Company Work-Life Balance 2018
  • Best Company Perks & Benefits 2018
  • Best CEOs for Women 2018
  • Best CEOs for Diversity 2018
  • Best Company Seattle 2018
  • Best CEO Seattle 2018
  • Best Company Leadership 2018
  • Best Company Managers and Best Company for
  • Professional Development 2018
  • Costco won for Best Company Culture 2017
  • Best CEO, Best Company for Women 2017
  • Best Compensation 2017
  • Best Companies in Seattle 2017
  • Best Company Leadership 2017
  • Best Company eNPS 2017
  • Best Teams and Best Company Outlook 2017

CONTENT SOURCE

FURTHER READING

Report created by Kavita Kripalani  

Costco Wholesale Corporation

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch   Overview

Company Activity

Costco Wholesale is a discounted warehouse club established in Seattle in 1983 by Jeff Brotman and Jim Sinegal, who had a vision to offer consumers discounted merchandise.

Costco’s Success in the warehouse club industry is from their business model which entailed generating high sales volumes and rapid inventory turnover by offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories.

Costco is a membership warehouse club, dedicated to bringing their members the best possible prices on quality brand-name merchandise.

With hundreds of locations worldwide, Costco provides a wide selection of merchandise, plus the convenience of specialty departments and exclusive member services, all designed to make your shopping experience a pleasurable one.

Costco Wholesale is a multi-billion dollar global retailer with warehouse club operations in eight countries. They are the recognized leader in their field, dedicated to quality in every area of their business and respected for their outstanding business ethics.

Despite their large size and explosive international expansion, they continue to provide a family atmosphere in which their employees thrive and succeed. They are proud to have been named by Washington CEO Magazine as one of the top three companies to work for in the state of Washington.

Company Sustainability Activity

Sustainability is remaining a profitable business while doing the right thing. The following principles and responsibilities will help sustain business for the long term as the company continues to grow globally.

Sustainability Principles:

For Costco to thrive, the world needs to thrive. Costco is committed to doing their part to help. They focus on issues related to their business and to where they can contribute to real, results-driven positive impact. They do not have all of the answers, are learning as they go and seek continuous improvement.

Sustainability Responsibilities :

  • Take care of their employees. 
  • Support the communities where their employees and members live and work. 
  • Operate efficiently and in an environmentally responsible manner. 
  • Strategically source their merchandise in a sustainable manner.

Highlights

  • After a 10-year moratorium on teak, in 2015 they began selling a limited amount of outdoor teak furniture that was 100% Forest Stewardship Council (FSC) certified. Today, all teak sold at Costco is 100% FSC-certified.

  • Costco has a transparent Disclosure Regarding Human Trafficking and Anti-Slavery

  • Costco has a Confidential Ethics Hotline for Suppliers – a confidential tool available for use by any supplier who has reason to believe a Costco employee or supplier is in violation of Costco’s policies

  • Supplier diversity – In order to represent a diverse supplier base, Costco is committed to providing opportunities for qualified local minority-owned and women-owned suppliers in the communities where we do business, when possible.

  • Costco encourages anyone who is aware of violations of the law or our Code to notify their management, Costco’s Code of Conduct Compliance team, or utilize Costco’s whistleblower site: costco.ethicspoint.com

Targets

  • Costco’s goals for Kirkland Signature items are that they: provide our members with high-quality products at the lowest possible price; are respectful of the people or animals who produce them; and/or are respectful of the environment in the way they are produced, grown, harvested, processed, transported and packaged. 
  • Goals and Strategy Costco’s sustainable packaging goals are to ensure packaging: protects the product, complies with laws and regulations, reduces materials, and communicates effectively with members.
  • As with all packaging, their first goal is to reduce the amount of packaging while still protecting the product’s integrity. Fiber used for paper-based packaging should come from known sources, should be procured legally from well-managed forests and should not contribute to deforestation.
  • Costco has plans to expand APANA Intelligent Water Management Systems to Australia, Asia and Europe.

Progress

Sustainable Design

Costco is aware of its responsibility to design and construct its sites and buildings in an energy-efficient, sustainable and environmentally responsible manner. Costco’s warehouse designs are consistent with the requirements of Leadership in Energy and Environmental Design (LEED), an internationally accepted benchmark for green building design and construction. In Shanghai, China, Costco’s Minhang building qualified for the Green Building Design 2-star certificate.

Costco continues to improve the design and construction of its buildings, as technological advancements in these areas and building materials improve. Improved engineering and design has resulted in the use of less materials, such as columns and I-beams, while providing more strength. Costco prefers full metal buildings in order to use the maximum amount of recycled material and reduce construction and maintenance costs.

Recycled Materials

To reduce the use of virgin resources, materials are selected that utilize high percentages of recycled content. Examples include:

  • The prefabricated structural steel system is comprised of 80% recycled content.
  • Costco often incorporates existing structures into its designs.
  • Metal building insulation utilizes ECOSE® Technology, which contains an average of 76.98% recycled content.
  • Recycled asphalt is used in some new parking lots with recycled concrete as a base material.

Other Sustainable Features

When and where it makes sense, Costco incorporates other features into its buildings to reduce the use of resources and to save money, such as:

  • Roofs maintain a reflectance rating of .68, emittance of .25 and SRI of 63, lessening the heat gain on the roof.
  • The erection efficiency of the structural system and envelope reduces the overall construction duration, saving time and money.
  • High-efficiency restroom fixtures save 40% more water.
  • Mechanical heat from refrigeration systems is captured to preheat hot water tanks.

Sustainable Landscaping

Site designs take into account the surrounding environment and ecosystems, are mindful of wetlands and habitats, and preserve natural wonders. Examples include:

  • Landscapes exceed minimum requirements in order to create high impact and beautiful landscapes appropriate to the location.
  • In comparison to typical development standards, Costco provides larger trees, greater planting density, drought-tolerant species, native vegetation and less manicured lawns
  • In 2017 Costco piloted a program in Covington, Washington, to use goats to remove unwanted vegetation around the water retention pond. This saved the company money in landscaping costs and eliminated the need for herbicides to kill unwanted vegetation. Costco continues to look for opportunities to expand this program where it makes sense.

WATER EFFICIENCY

Comprehensive Water Management Systems

By installing Apana water metering systems, Costco locations can now:

  • Detect, in real-time, mechanical failures that can be resolved quickly and can now better track operational water waste to allow more efficient water use and/or reduced water usage
  • Use less water so that less energy is needed to operate water systems, which in turn reduces Costco’s carbon footprint and expenses
  • Create an enhanced awareness of water use and stewardship throughout all facets of operations

Groundwater and Irrigation Systems

While landscaping is important for the beauty it provides, as well as the preservation of natural habitat, Costco also understands the need to be responsible regarding irrigation, and managing stormwater and water quality.

Costco uses the APANA platform to reduce water waste and protect assets such as parking lot surfaces, retaining walls, and building foundations. This helps to avoid costly repairs by detecting issues early and making timely repairs. Other structural and operational enhancements include:

  • Integrating native and drought-resistant landscaping materials to minimize irrigation
  • Utilizing smart technologies and subsurface irrigation to improve efficiency and to reduce water waste in irrigation systems
  • Installing bioswales to preserve groundwater and to prevent runoff in some locations

Vertical Integration Facilities

In 2019, Costco began selling chicken and romaine lettuce produced in new vertically integrated facilities, which are described in more detail in our Kirkland Signature™ and Environmental Impacts pages. Both facilities have been designed with water preservation, re-use, efficiency and treatment in mind.

Costco worked with the City of Fremont to expand the City’s wastewater treatment plant in order to ensure that the wastewater generated at the chicken plant is treated before returning to the local watershed. In addition, through a process of air chilling, we anticipate substantial water savings in comparison to typical water chill processing. The APANA Intelligent Water Management System was also installed at this facility.

At the romaine lettuce greenhouse, we anticipate that 80% less water will be used in comparison to conventional farming and that there will be 0% wastewater runoff.

Car Washes

Costco exceeds the requirements and is a member of WaterSavers®, a designation by the International Car Wash Association awarded to car washes that meet strict water usage criteria. When Costco began monitoring daily water usage in 2015, significant reductions in water used per wash were realized immediately. The net result was a 50% reduction as a result of:

  • Installing simple digital water meters to help graph gallons used per wash and spikes to identify leaks or equipment malfunctions that are wasting water
  • Installing water main shut-off valves after recognition of discrepancies between closing and next-day opening readings that indicated a significant amount water use when the car wash was closed

ENERGY EFFICIENCY & ALTERNATIVE ENERGY

Costco continues to implement new and improved systems and technologies in order to save energy and reduce its carbon footprint throughout our locations worldwide. Examples include:

  • Energy Management and Lighting Management Systems are used throughout North America to allow operators complete control of heating and cooling set points, lighting schedules, and system troubleshooting.
  • Since 2017, facilities have been installing high-volume, low-speed fans to ceilings on the sales floor and in the tire shop. These fans work in conjunction with existing HVAC systems to decrease temperatures in the summer by up to 10 degrees. In the winter months, warm air is circulated from the HVAC lessening run time.
  • In FY19, Mexico implemented a new energy measurement project that provides real-time monitoring showing energy savings for refrigeration, HVAC and lighting.
  • In FY19, Taiwan exceeded its goal by over 100% to decrease its usage of electricity, gas, and water through training, better use of energy systems, and better conservation practices.

In order to stay abreast of changes, Costco:

  • Participates in the U.S. Department of Energy’s Better Building Alliance, the National Renewable Energy Lab and other conferences to evaluate and share new energy efficient technologies with both government and private industry.
  • Held training sessions worldwide in 2019 to share and learn from each other best practices, to increase awareness about the importance of climate change, and to learn how to reduce our carbon footprint and save energy, all of which in turn save money.

Solar Power

Costco continues to increase the number of locations using solar photovoltaic systems. At the end of fiscal year 2019, Costco has 111 warehouses using solar power in Arizona, California, Colorado, Hawaii, New Jersey, New Mexico, New York, Ohio, and Puerto Rico, plus in Spain, France, the UK, Taiwan, and Japan. Some locations use solar power in the parking lots. These systems are projected to generate 92 million kilowatt hours (kWh) per year.

Lighting Systems

As of the end of FY19, the conversion to LED in older U.S. buildings that began in 2016 is mostly completed, with an estimated energy savings of over 235 million kWh per year. In addition, LED conversions continue for locations outside of the U.S. All lighting in new construction utilizes LED technology.

Fuel Cell Technology

In 2017, Costco began piloting the use of fuel cells as an alternative source for generating on-site electricity. As of the end of FY19, we now have eight locations in California powered by fuel cells that generate an estimated total of 49 million kWh of energy annually and have four additional locations under construction. To date Costco has found the following benefits:

  • Lower demands on existing electric utility infrastructure
  • Lower overall combined power and natural gas expenses

REFRIGERANT MANAGEMENT

Costco recognizes that refrigerants have a major impact on the warmth of the atmosphere and is exploring ways to do our part to reduce the temperature of the planet and the depletion of the ozone layer. Here are some examples:

  • Continue to explore new refrigerant technologies and carefully select refrigerants that further reduce the Global Warming Potential (GWP) and GHG emissions and do not contain ozone depleting chemicals
  • Migrate to CO2 refrigerants where it is operationally viable and as of the end of FY19, CO2 is currently in use in locations in Canada, Spain, the UK and Iceland
  • Ceased using HCFC refrigerant in new and replacement refrigeration in commercial equipment and air conditioning systems
  • Continue to improve the efficiency of HVAC and refrigeration systems through new technologies such as variable speed drives and more efficient motors, while meeting more stringent requirements for heating, cooling and humidity control
  • Adhere to best management practices in the installation, maintenance and decommissioning of equipment to reduce leakages and impact on the environment
  • Installed insulated doors to the walk-in refrigeration point of sale coolers. These doors allow the POS coolers to maintain temperature more easily while putting less stress on the refrigeration system. The estimated annual savings is 95,000 kWh per location.

ENVIRONMENTAL COMPLIANCE

Costco continually works to enhance and streamline its compliance with environmental regulations, including an Environmental Compliance Executive Team, that together with regional compliance managers and field auditors, oversees compliance programs in the U.S. To remain attentive to any issues or changes in regulations, the Compliance Managers meet regularly.

The Executive Team comes together three to four times a year. These meetings include representatives from numerous departments in the company and the meetings are used to review and implement programs and policies – and to continually improve training programs, procedures and communication.

In 2019, we held the first of our planned on-going annual global environmental operations meetings, which was attended by key environmental people representing all regions where we operate worldwide. The purpose of the meeting was and will be to share best practices, review compliance, discuss upcoming projects, with the goal of creating a consistent and global approach to environmental compliance.

WASTE DIVERSION FROM LANDFILL

In fiscal year 2018, Costco reported a diversion rate of 71%, with five regions reporting. In fiscal year 2019, the global diversion rate increased to 73%, with an increase to nine regions reporting. They are working to develop reporting systems that will measure their diversion rate for all regions where we operate. Costco’s current goal is to divert 80% of waste generated within their global operations. Examples of their waste management diversion programs include donations, anaerobic digestion, recycling, composting, and animal feed and waste to energy programs. Costco is committed to expanding these programs through partnerships, efficiencies and technologies. Please view this summary of their global waste diversion.

Donate

Costco has grown its program with World Vision to donate first-quality items that used to be destroyed, recycled or returned to the supplier. In fiscal year 2019, we donated to people in need in 30 countries. More information can be found in the summary, which contains a list of the items donated and some stories that illustrate the impact of these donations.

Besides providing items to people in need valued at over $76.2 million for fiscal year 2019, efficiencies are also gained, including reduced trips to the landfill and savings on trash fees for both Costco and their suppliers.

Food Waste

Unsold rotisserie chickens are repurposed into deli entrees. Examples include:

  • Chicken Noodle Soup, Chicken Enchilada Bake and Chicken Pot Pies sold in the U.S.
  • Red Alfredo Chicken Penne and Honey Glazed Chicken Legs sold in Japan
  • BBQ Chicken Wings, Chicken Enchiladas and Chicken & Mushroom Lattice Pie sold in the U.K.

Tires

Costco recycled over 7.42 million tires in the U.S. in fiscal year 2019. While some tires are resold, over 85% are recycled into several different beneficial uses, including tire-derived fuels used primarily in cement kilns; crumb rubber used as an additive for road surfaces or pervious surfaces around roads, sidewalks and pathways; mine reclamation; daily landfill cover; and decorative mulch.

Paper

Costco has established a recycling program for paper in our offices and warehouses to capture paper printed for our everyday operations. In fiscal year 2019, they recycled over 5.5 million pounds in the U.S. They continue to move to paperless programs when applicable.

Recycle to repurpose

In fiscal year 2019, Costco also recycled 414,580 pounds of expanded polystyrene (foam) in the U.S. This material is densified and distributed to manufacturers that make picture frames, crown molding and other polystyrene products. Plus, Costco was able to recycle 1.7 million pounds of scrap metal, which made its way back into local commodities markets to be made into something new.

Feed Animals

In fiscal year 2019, 103 Costco warehouses sent 7.5 million pounds of organic materials to feed cattle and hogs. Feeding animals theirr inedible waste is important because it reduces the demand to generate new feed resources. Additionally, our warehouses divert organic materials by supporting local donation programs to:

  • Animal sanctuaries/rescue centers
  • Local farms
  • City zoos

Industrial Uses

Much of their organic waste is now recycled into usable products, such as organic fertilizer, biofuels and electricity. In fiscal year 2019 in the U.S. they diverted over 58.4 million pounds of material from landfills. Examples include:

  • 7.3 million pounds of chicken grease produced from rotisserie chickens were recycled, the majority of which was converted into biofuel;
  • 37.1 million pounds of meat and bone scraps were processed through the rendering program;
  • 302,525 pounds of organic waste was converted into certified organic liquid fertilizer
  • Anaerobic digestion programs were rolled out in 3 marketplaces

Composting

Over 60 warehouses in the U.S. send organic waste to commercial compost facilities to create a nutrient-rich soil conditioner. Warehouses have sent 17.3 million pounds to compost facilities.

Landfill or Waste to Energy (WTE)

Compactors that are hauled to waste-to-energy facilities may include organics in their mix of waste. These items are used to generate energy. Their goal is to continuously move food waste up in the hierarchy, and out of landfills and waste to energy.

Greenhouse gas emissions Costco is a global retailer that strives to be a responsible global citizen. They agree with the many scientists, economists and others who have concluded that global climate change is a serious environmental, economic and social challenge. It warrants an equally serious response by governments and the private sector, because global climate change impacts people, animals and plants. Costco wants to do their part to lessen the impact and will continue to explore ways to lower their carbon footprint, source merchandise responsibly, and preserve natural resources and support alternative opportunities such as carbon sequestration.

Risk Factors

We also recognize that the subject of climate change is significant for a number of our members and investors. It is also a risk factor for certain aspects of our business*.

Operations

Continuing to focus our expertise on reducing costs and improving efficiency is, they believe, the best way to reduce their impact on the environment. By way of example, in 2019, Costco continued to:

Energy Use

Purchased electricity for the company is the largest source of their carbon emissions and represents a significant expense. By reducing energy usage directly, their emissions and energy expenses will be reduced. Some examples:

  • In Japan, Costco upgraded their lighting systems. The Kanazawa Seaside location received an award from the Yokohama city government for reducing CO2 emissions by 300 cubic tons, which exceeds 10% savings.
  • We reduce emissions by purchasing source-based renewable energy when available and continue to add solar panels where feasible.

Greenhouse Gas (GHG) Emissions Inventory

Tracking and reporting their GHG footprint is evidence of their commitment. They have a corporate energy program to track greenhouse gas emissions. Starting with reporting year 2018, the data collection process has been upgraded to include source data collection at the facility level for all regions of our operations. They have ceased installation of HCFC refrigerants, ozone-depleting substances, in new and replacement refrigeration and air conditioning systems.

For the 2018 reporting period, Costco voluntarily participated in the Carbon Disclosure Project (CDP), established by the GHG Protocol Corporate Accounting and Reporting Standard, and this year’s inventory included all regions where we operate. Costco Wholesale reports Scope 1 and Scope 2 emissions to align with the Intergovernmental Panel on Climate Change (IPCC) and Reporting Standard.

  • Scope 1 Direct Emissions include all natural gas and propane provided to owned or controlled facilities used for heating or food processing and manufacturing. Included in direct emissions are diesel used by Costco’s truck fleets, refrigerated trailers and yard haulers; propane to power mobile floor scrubbers; jet fuel for corporate jets and fugitive emissions from leakage of HFC refrigerants from refrigeration and air conditioning equipment.
  • Scope 2 Indirect Emissions are for purchased electricity and are the largest component of GHG emissions.

Certificates

UN Sustainable Development Goals

UN SDGs Compliance

The following section aligns current company-wide sustainability initiatives with the UN Sustainable Development Goals. 

SDG 7

  • Costco is aware of its responsibility to design and construct its sites and buildings in an energy-efficient, sustainable and environmentally responsible manner. Costco’s warehouse designs are consistent with the requirements of Leadership in Energy and Environmental Design (LEED), an internationally accepted benchmark for green building design and construction
  • Participates in the U.S. Department of Energy’s Better Building Alliance, the National Renewable Energy Lab and other conferences to evaluate and share new energy efficient technologies with both government and private industry. 
  • Conducted trainings in 2018 in regions worldwide to share best practices and increase awareness about the importance of climate change, how to reduce the carbon footprint and how to save energy, which in turn saves money.
  • All lighting in new construction utilizes LED technology. Costco rapidly converts lighting systems in older buildings where it makes sense for financial, engineering and operational reasons. The LED conversion project began in fiscal year 2016, and as of the end of fiscal year 2018, 1,166 LED retrofits have been completed – with a total estimated energy savings of 206 million kWh per year.
  • By using less water, less energy also is needed to operate water systems, which in turn reduces Costco’s carbon footprint and expenses.
  • Costco encourages its employees to find alternative methods of transportation to reduce energy consumption and emissions. The Commute Trip Reduction (CTR) program began more than 20 years ago at the corporate office with 18 vanpools, and now features 68 vanpools (vans, fuel, maintenance and insurance are provided by five transit agencies). Costco also has vanpools at its San Diego, Los Angeles and Mexico City regional offices. Many employees carpool. Costco offers employees subsidies to vanpool and to purchase monthly bus passes. Costco currently has 15 locations (including the corporate office) that support 42 electric vehicle car charging stations that supplied over 86,000 kWh of charging service.
  • Waste also is used to generate energy. Costco currently has 46 locations in the U.S. that send trash to a waste-to-energy facility, essentially making these locations landfill-free. This program represents 43.7 million pounds of post-recycled waste that generated 12,011,368 kilowatt hours of renewable energy, enough to power 12,534 homes for a month. The goal is to expand this program where feasible.
  • Costco has a corporate energy program to track greenhouse gas (GHG) emissions. They have ceased using HCFC refrigerant, an ozone-depleting substance, in new and replacement refrigeration and air conditioning systems.
  • Costco supplier Nice-Pak incorporates sustainable practices into the production process that reduces water, energy, CO2 and waste to a landfill.
  • One example is Windset Farms that grows tomatoes in greenhouses through sustainable practices that include water and energy conservation, the use of renewable energy, and recyclable packaging
  • Costco uses solar photovoltaic systems in 109 warehouses 

SDG 8

  • Costco lives by its Supplier Code of Conduct in how they approach their business. This Code is global in its scope, and applies to all suppliers and their facilities, as well as their manufacturing facilities. In order to align with international standards, it is derived from the policies, standards, and conventions of the United Nations (UN) and the International Labor Organization (ILO), as well as other leading independent standards such as the Responsible Business Alliance (RBA) and Worldwide Responsible Accredited Production (WRAP).

Costco’s Supplier Code of Conduct

Ultimately, the Code was established to protect the human rights and safety of the people who produce, process and/or harvest the products they sell, while recognizing and respecting the cultural and legal differences found worldwide. To this end, Costco:

  • Prohibits slave labor, human trafficking, illegal child labor, illegal prison labor, physical and sexual abuse, bribery or attempted bribery, and health and safety conditions posing immediate risk to life and limb
  • Expects their suppliers to comply, at a minimum, with the applicable labor and environmental laws and regulations of the country where the merchandise is produced
  • Encourages their suppliers to work to achieve “Above and Beyond Goals”

Allows suppliers to use legal prison labor, to support rehabilitation and restitution, under specific conditions, which are outlined in their Global Policy on Prison Labor

SDG 12

  • Waste to Energy: Waste (organic and non-food) also is used to generate energy. Costco currently has 46 locations in the U.S. that send trash to a waste-to-energy facility, essentially making these locations landfill-free. This program represents 33.2 million pounds of post-recycled waste that generated 9,130,000 kilowatt-hours of renewable energy, enough to power 9,530 homes for a month.
  • Since 2008, Costco has partnered with APANA™ to implement an Intelligent Water Management System. Costco continues to drive operational efficiency by using this program to lower overall operating costs through the elimination of waste in water and sewer use. Ultimately, this reduces related energy and maintenance costs. Using the APANA program, Costco is able to monitor real-time water use, detect inefficient consumption, and guide operators to quickly identify and reduce waste
  • APANA Water Management Systems are currently installed in every warehouse in North America and Japan. 
  • By diverting waste from the landfill, Costco increases the efficiency of waste hauling from their locations, which reduces fuel consumption, CO2 emissions generated from transportation, and hauling costs. Costco continues to examine waste disposal programs to maximize efficiency and to reduce costs. For example, Costco uses Wastenet™ to monitor waste pickups and reduce trash hauls by 8.9% in locations using this service. This maximizes efficiency and ensures that compactors are hauled full. In addition, less waste to landfill reduces Greenhouse Gas (GHG) emissions caused by methane that is released from decomposing materials in the landfill.

SDG 13

  • Conducted trainings in 2018 in regions worldwide to share best practices and increase awareness about the importance of climate change, how to reduce the carbon footprint and how to save energy, which in turn saves money

SDG 15

  • Costco is committed to sourcing its wood, paper and fiber-based products from certified well-managed forests, which can include certifications from the Forest Stewardship Council (FSC), Sustainable Forestry Initiative (SFI) or Programme for the Endorsement of Forest Certification (PEFC). The certification is dependent upon numerous factors, some of which include the current available supply for each product, the geographic origin of the product and the country where the product is produced. These certifications help to ensure that the needs of the forest ecosystems and their communities are balanced with conservation of our forests for future generations. 
  • In 2018, Costco began in earnest to work with all of our suppliers to continue to convert Kirkland Signature paper products to certified programs. As of the end of fiscal year 2018, 95% of Kirkland Signature paper products are from certified well-managed forests, which include FSC, SFI or PEFC. 

SDG 17

  • Hearing Aid Specialists through its partnership with the International Hearing Society. Costco helps train hearing aid specialist candidates in the U.S. As a result, Costco has helped over 700 people achieve a new career as a hearing aid specialist since 2006.
  • The majority of Kirkland Signature chocolate products are made from cocoa sourced through sustainable programs, some of which are from Costco’s Sassandra Cocoa program. The Sassandra Program (“Program”) is a partnership with Costco, Blommer and Olam, which began in October 2009 and is named after the Sassandra River in the southwest region of Cote d’Ivoire. This is the original location of the cooperatives from where we source our cocoa beans. This program is exclusive to Costco and is designed to provide quality product that is traceable, improve profits and livelihoods for the farmers/cooperative members, and introduce respectful environmental practices.
  • In September 2017 Costco established a Green Chemistry management team in partnership with the Berkeley Center for Green Chemistry at the University of California at Berkeley. This partnership helps to guide Costco’s strategic plan for managing chemicals of concern within its supply chain.
  • In 2017, Costco completed a 14-month partnership project with IDH Sustainable Trade Initiative, Winrock International and Cargill to develop a draft Protocol for Oil Palm Independent Smallholders for Sustainable and Responsible Management of Peat Areas.

Secondary SDGs: 1, 3, 4, 5, 6, 8, 9, 10, 11, 12, 14, 16

Evaluation

Costco Wholesale communicates in great detail about their commitment to sustainability.  They hold key sustainability-related certificates and also have a number of rankings and awards.  They have demonstrated their commitment to sustainability in not just one but various aspects of their business, showing that they take it seriously.

Costco has been accused of different scandals over the last decade, which could bring into question their credibility. However, in several instances in which accusations were brought against Costco (e.g. supplier conditions, gender bias lawsuits), the company has acted swiftly and reasonably in effort to rectify their mistakes. Taking quick action to resolve their mistakes speaks volumes about the company’s integrity and good will. The company achieves a rating of B.

Analyst Outlook: Positive

The company is very transparent with its goals and progress. Their sustainability agendas can be easily found on their website or in their sustainability report. Costco certainly targets specific SDGs in its approach to sustainability, though they could benefit from communicating this aspect more specifically in relation to each and every SDG. By doing this, along with making their targets more specific, the true measure of their progress would be more prominent.

Key Points

  • Costco commits to human rights, responsible sourcing, and seeks out suppliers that have industry-recognized  certifications 
  • Costco’s buyers work with their suppliers to continually improve the quality of Kirkland Signature products, expand traceability, provide a fair return to people in the supply chain, and facilitate access to global or regional markets
  • Costco believes a fair return is more than the price paid for the item. It includes programs that (1) support farmers/workers and their communities through training for higher yields, quality and adaptation due to climate change; (2) pay premiums for high-quality products; and (3) improve health, education, housing, clean water and nutritious food for farmers/workers and their communities
  • Costco has worked to incorporate sustainability into the foundation of their business through investing in solar energy and harvesting biofuels
  • Costco demonstrates that they strive to pursue energy-efficient and sustainable alternatives in virtually every aspect of their business  

 

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