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Whole Foods Needs a Holistic Approach on Climate Change

Why would a new Ceres report give low scores to Whole Foods, one of the nation's largest purchasers of renewable energy, for the way it is responding to the challenge of climate change? Precisely for the word that Whole Foods uses to describe itself: "whole." Many of the company's actions on climate change are laudable, but it still lacks a holistic strategy for dealing with this colossal challenge that will ripple across all industry sectors.
by Mindy S. LubberHarvard Business Review Posted on Dec 22, 2008

Why would a new Ceres report give low scores to Whole Foods, one of the nation's largest purchasers of renewable energy, for the way it is responding to the challenge of climate change?

Precisely for the word that Whole Foods uses to describe itself: "whole."

Many of the company's actions on climate change are laudable, but it still lacks a holistic strategy for dealing with this colossal challenge that will ripple across all industry sectors. While it is encouraging that Whole Foods is buying wind-based renewable energy certificates to power all of its stores, it is discouraging that the company has not measured its overall greenhouse gas emissions or set targets to reduce those emissions. The company has also done relatively little to improve energy efficiency or promote products with lower carbon footprints.

Apple received a low score in our climate governance report for many of the same reasons. Yes, the company deserves kudos for its first-in-the-industry report in October disclosing the energy and carbon footprint for each of its main product lines. (Apple lovers take heart: the Mac mini uses less than half the energy of a typical light bulb, making it one of the world's most energy efficient desktop computers.)

But, like Whole Foods, the company lacks an integrated climate strategy and has balked at measuring its overall emissions, setting reduction targets for its operations and getting its board involved on climate matters. Both companies also have weak public disclosure of their climate change strategies -- making it impossible for investors and consumers to get a clear picture of their performance.

Climate change is a huge challenge that will require comprehensive responses from consumer and tech companies. Their massive operations and supply chains will be tested by carbon-reducing regulations that make fossil fuels more expensive -- and renewable energy and energy efficiency more attractive. They also face rising consumer demand for climate friendly products, bringing enormous opportunities in the products they make, the goods they stock on their shelves, and the labels they use to inform customer choices.

Our recent report, Corporate Governance and Climate Change: Consumer and Technology Companies, is a comprehensive assessment of how 63 of the world's largest consumer and technology companies are preparing for climate change. The report identifies a handful of companies that are integrating climate considerations across all facets of their business -- from board and CEO involvement, to operations, distribution and supply chains, to products and employee engagement.

IT companies such as IBM, Dell and Intel received the highest marks in the report, authored by RiskMetrics. Top-scorer IBM, for example, has already met a suite of emission and energy reduction goals and is now embarking on a new set of ambitious targets through 2012. IBM is also keenly focused on new product solutions, ranging from from high-performing data centers and microprocessors to traffic congestion pricing systems and solar cell technology.

"It's an area ripe for innovation, not just in corporate responsibility, but innovation in problem solving," IBM VP Wayne Balta told Business Week, which profiled the climate report last week. "We cannot continue to follow the same day-in-and-day-out practices."

Consumer giants such as Tesco, Wal-Mart and Coca-Cola are also bringing more integrated approaches to climate change.

Wal-Mart, whose direct and indirect emissions are nearly 20 million tons a year, comparable to a mid-sized U.S. power company, has been especially focused on reducing energy use, whether in its stories or its major suppliers in China who were told this fall to cut energy usage by 20 percent. Like Tesco, Wal-Mart also sees opportunity in opening up shelf space to climate-friendly products. In just the past two years, Wal-Mart has sold more than 200 million energy-saving compact florescent bulbs. Tesco has put carbon-footprint labels on nearly two dozen products it is selling.

All of these companies realize there's much more to be done. And, despite the ongoing financial crisis, they realize that now is not the time to slow down.

"The financial crisis will right itself at some point," said Coca-Cola VP Jeff Seabright, in a press conference last week. "But the climate crisis that we're facing is not going to wait. We need to continue to take action. Leading companies understand that and we'll stay the course."

Mindy S. Lubber is president of Ceres, a leading coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change.

Read the post at Harvard Business Review

Meet the Expert

Cynthia McHale

Cynthia McHale is the Director of Ceres Insurance Program. She brings over twenty years of sector expertise working with many of the leading North American and European insurers, re-insurers and industry brokers. In her current role, Cynthia is leading a campaign to promote the insurance industry’s understanding and leadership on climate risks and opportunities. As risk managers, risk carriers and major institutional investors, insurers have a vital interest, and play an important role in fostering society’s response to global warming. Stronger insurance industry leadership on climate change issues will strengthen and accelerate our nation’s transition to a clean energy future while helping to build a resilient and sustainable society.

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