Even Walmart struggles to monitor its supply chain emissions
Our Co-Founder, Justin Steinberg response to Andrew Edgecliffe-Johnson’s excellent profile on Walmart’s ESG efforts.
Accounting for supply chain emissions is enormously complex, and Walmart has made great strides, but we should not confuse efforts to improve supply chain emissions with verifiable reductions.
Financial Times
Letter: Even Walmart struggles to monitor its supply chain emissions
Oct 28, 2022
Andrew Edgecliffe-Johnson paints a vivid picture of Walmart’s successful navigation of the increasingly treacherous waters of environmental, social and governance investing (Spectrum, October 15).
But lost among the anecdotes about sustainable tuna are some important clarifications regarding Walmart’s most celebrated sustainability goal, Project Gigaton.
The article leaves the impression that Walmart will reduce greenhouse gas emissions in its supply chain by 1bn metric tonnes (a gigatonne) by 2030. However, that is neither what the company says nor is there evidence that this is what they are doing.
Project Gigaton is an aspirational goal to reduce or avoid a gigatonne of emissions. Avoided emissions is a complicated concept without an accepted definition. It refers to the emissions that would have been created in a business-as-usual scenario but were not, thanks to efficiency efforts (eg the use of high-efficiency lights or machinery).
Practically, this means Walmart’s suppliers could continue to increase their emissions while they count the theoretical business-as-usual emissions as a reduction.
Whether or not this is occurring is impossible to know because the underlying data are impenetrable. As Walmart warned in its response to the Securities and Exchange Commission’s proposed requirements on emissions disclosure, calculating emissions like those in its supply chain is an unreliable exercise that “involves estimations on top of assumptions that are repeatedly layered to arrive at a falsely precise number.”
What we do know is that Project Gigaton represents tangible, industry-leading efforts to improve the emissions’ trajectory of Walmart’s supply chain. However, this should not be confused with a verifiable reduction in supply chain emissions.
Justin Steinberg
Co-Founder, Finance Lead, Sargasso Environmental Insights, New York, NY, US
General Disclaimers
This article is for informational purposes only and should not be deemed as investment advice or as a recommendation to purchase and/or sell any individual securities discussed in this report. Past performance is no guarantee of future returns. All investing involves risk including the possible loss of principal.
The opinions, forecasts, assumptions, estimates, and commentary contained in this article are based on information provided to Steinberg on both a formal and informal basis which Steinberg believes to be reliable. However, Steinberg cannot represent or warrant their accuracy. The impact on Steinberg’s opinions, forecasts, assumptions, estimates, and commentary due to inaccurate information, incomplete information or information taken out of context may be substantial. Further, all opinions, forecasts, assumptions, estimates, and commentary in this report are made only as of the date indicated and are subject to change at any time without prior notice.
Discussions and calculations regarding potential future events and their potential impact are based solely on historic information and Steinberg’s estimates and/or opinions, and are provided for illustrative purposes only. No guarantee can be made of the occurrence of such events or the actual impact such events would have on the performance of the companies described in this report.
The securities discussed in this article were holdings of the Sargasso Strategy as of the date of this article. The reader should not assume that investments in the securities identified were or will be profitable and it should not be assumed that recommendations made in the future will be profitable. There can be no assurance that the Sargasso Strategy will continue to hold the same position, or any position, in the companies described in this article in the future. Positions reflected in this article do not represent all the positions held, purchased, or sold, and in the aggregate, the information may represent a small percentage of activity or holdings in the portfolio. The information presented is intended to provide insight into Steinberg’s investment process and certain noteworthy events, in the sole opinion of Steinberg, affecting the Sargasso Strategy.
Registration with the SEC should not be construed as an endorsement or an indicator of investment skill, acumen or experience
Nothing on this page limits your rights under Federal or State securities law.