The Kroger Company: Report on Renewable Energy Goals
WHEREAS: The long term interests of shareholders are best served by companies that operate their businesses in a sustainable manner, focused on long term value creation. This is particularly important in the context of climate change. In order to mitigate the worst impacts of climate change, the Intergovernmental Panel on Climate Change estimates that greenhouse gas emissions must fall by 45 percent by 2030 and reach net zero by 2050 to stabilize global temperatures.
Assessing the feasibility of adopting goals for renewable energy procurement can help Kroger align its business operations with global efforts to limit climate change, help insulate our company from regulatory uncertainty, and produce reputational benefits.
Many major companies are finding that greenhouse gas reducing measures such as adopting renewable energy are practical, and often also benefit their bottom line. Nationally, the United States Energy Information Association reports the average cost of electricity at $0.1068 /kWh for commercial customers in 2017, up from $0.1043 in 2016. By contrast, according to Bloomberg New Energy Finance, the most competitive power purchase agreements came in at just over $0.02 /kWh for solar and $0.017 /kWh for wind.
While making some inroads on energy and supply chain efficiency, Kroger has not instituted comprehensive programs to reduce the carbon impact of its power sourcing. Kroger’s failure to meaningfully invest in renewable energy is in strong contrast to its peers, which are rapidly and profitably scaling renewable energy. Competitor Walmart has over 500 renewable energy projects supplying 2,900,000 MWh to facilities (see: pg. 59); Target has solar on 436 of its buildings and 140 MW of investment in off-site renewables (see: pg. 46); and Costco has solar on 109 warehouse locations generating 89,000 MWh annually. Walmart has further committed to 100 percent renewable electricity, joining major companies such as Kellogg’s, Nestle, and Unilever. In contrast, Kroger’s 2018 CDP report indicates its use of renewable resources has not significantly increased, demonstrating a missed opportunity to decrease emissions (see: Kroger CDP Climate Response 2018).
While Kroger claims it is committed to reducing its carbon footprint, it has yet to make meaningful commitments to shift its massive energy consumption away from fossil fuel sources. Accelerating renewable energy adoption will help Kroger stay competitive and protect Kroger’s shareholder value into the future as intensifying climate change imposes growing costs on Kroger’s supply chain, physical assets, and shareholders.
BE IT RESOLVED: Shareholders request that Kroger senior management, with oversight from the Board of Directors, issue a report assessing the climate change risk reduction benefits of adopting quantitative, time-bound, enterprise-wide targets for increasing its renewable energy sourcing. The report should be produced at reasonable cost and exclude proprietary information.
SUPPORTING STATEMENT: Shareholders request the report also include discussion of the business risk Kroger faces from climate change; the potential for renewable energy procurement to reduce such risk; and options for increasing renewable energy adoption.