E-commerce supply chain: will you be required to disclose your emissions next year?

Largest retailers require sustainability reporting

Amazon and Walmart collectively account for nearly half of the total U.S. market share for e-commerce. Without question, both companies exert significant influence in the retail industry. Both have set sustainability targets, with Amazon committing to achieving net zero emissions by 2040, including supply chain emissions, and Walmart aiming to reduce or avoid one billion metric tons of emissions in its global value chain by 2030. As a result, both retailers are seeking suppliers' sustainability information, potentially impacting middle-market companies who supply Walmart and/or Amazon.

Amazon and Walmart strategies

Amazon announced in their 2022 sustainability report that they will update their supply chain standards to require that suppliers share carbon emissions data and set carbon goals beginning in 2024. This will likely mean sharing Scope 1 and Scope 2 emissions data. Walmart launched a supplier scorecard in 2009, which already evaluates suppliers on over 100 sustainability metrics. If suppliers lag in sustainability efforts, they risk being dropped as a Walmart supplier. Beyond the mandatory scorecard, Walmart established a voluntary supplier program in 2017 - Project Gigaton - with the aim of reducing or avoiding one billion metric tons (a gigaton) of carbon emissions from the value chain by 2030. Walmart’s Project Gigaton focuses on six pillars: energy, waste, packaging, nature, product use and design, and transportation. Approximately 4,500 suppliers have already signed on, resulting in suppliers setting goals and reporting on progress. Through Walmart’s program, supplier companies receive education and potential access to financing opportunities.

Readying to meet requirements

For companies that will have to disclose carbon emissions data to Walmart, Amazon, and other retailers, there are four simple steps to get started:

  1. Establish an owner of sustainability efforts within the company, ideally a senior executive
  2. Conduct a materiality assessment to understand what sustainability topics may impact the company and help
    to narrow the focus
  3. Set a carbon strategy by establishing systems to measure greenhouse gas emissions to create a baseline,
    then set goals - science-based target or SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) goals, and begin to report.
  4. Develop specific plans to achieve the goals such as converting lighting to LEDs, upgrading to more efficient HVAC systems, or reducing overall waste through recycling.