- Walmart is partnering with Schneider Electric to make renewable energy more accessible to suppliers. This move is part of the retailer's Project Gigaton effort to reduce it's supply chain emissions by one billion metric tons by 2030.
- The initiative with Schneider Electric's Energy & Sustainability Services, titled Gigaton PPA (power purchase agreements), seeks to educate suppliers on their renewable energy options and help them through conversion — a process Walmart's Senior Director of Sustainability Zach Freeze said can be daunting for any supplier — especially small ones. Gigaton PPA aims to bridge the knowledge gap and pool like-minded, co-located suppliers to combine purchasing power.
- "Procuring renewable energy is complicated. It requires knowledge of things like market principles, terminology, contract structures, management risks, internal stakeholders, convincing your leadership and your finance team that it's worth making it a longer-term commitment ... So, this process is really designed to help companies that are early in that journey," Freeze said. As with many of the elements of Project Gigaton, supplier participation in the Gigaton PPA is voluntary.
For Walmart to meet the goal of avoiding one billion metric tons of greenhouse gas emissions by 2030, suppliers have to get on board. The retailer was one of the first in its class to take a swing at supply chain emissions (also called scope 3 emissions), which make up the vast majority of Walmart's total output.
But to address scope 3 is to ask other companies to address their operational emissions (scope 1) and the energy they purchase (scope 2).
"We're all in this together. And that's the secret," Freeze said. "I think now that now that everyone's figuring that out, it's gonna make collaboration a little easier and a little faster."
Walmart has more than 2,300 suppliers in the fold so far, but that's a small fraction of Walmart's vast network. To attract more participants, Walmart's strategy has been to offer digital tools and opportunities to ease the way and sometimes offer a business benefit. Last year, the retailer teamed up with HSBC to offer suppliers making emissions progress more favorable loan terms.
Now Freeze and his team are trying to grease the skids on energy transition. Freeze saw the significance of tackling energy purchasing in Walmart's efforts to reduce operational emissions. The company is on track to reduce its scope 1 and 2 emissions 18% by 2025 from a 2018 baseline in accordance with the standards of the Science-based Targets initiative. And the potential for emissions reduction through renewable energy is largely untapped. The Renewable Energy Buyers Alliance Deal Tracker lists just over 100 companies have participated in renewables deals since 2008.
"Scope 2 emissions are the biggest part of ... our direct footprint with the electricity we purchase," said Freeze. "This is kind of one of the best places to start." Walmart not powers roughly 29% of its direct operations with renewables.
Gigaton PPA will be integrated into the Project Gigaton online supplier platform, where suppliers can run scenarios and test strategies for emissions reduction as well as tracking their progress. And Schneider will "facilitate a multi-phase education and project selection process to advance supplier progress towards the execution of aggregated renewable energy purchases," bringing more than 300 corporate renewable energy purchasers and providers to the project.
In Freeze's words, Gigaton PPA is "designed to make it easy and lead suppliers along the path. It's up to them to join. It's up to them to sign any sort of renewable deal, but what can we do to just make it easier."