Green Strategy for Retailing: Risks and Rewards

Is green strategy a philanthopic or bottom-line business initiative? While social responsiblity is a nice-to-have, feel-good corporate project, failure to go green in a material way carries significant business risks.

Leading U.S. investors have filed a record number of global warming shareholder resolutions with dozens of U.S. companies that face far-reaching business impacts from climate change.

Kroger, Rite Aid, Lowes, Best Buy and Big Lots face resolutions seeking greater disclosure on their responses to climate change, including greenhouse gas (GHG) reduction and renewable and energy efficiency strategies filed by some of the nation's largest public pension funds, as well as labor, foundation, religious and other institutional investors. Many of the investors are members of the Investor Network on Climate Risk (INCR), an alliance of 60 institutional investors who collectively manage more than $5 trillion in assets.

Noting that the retail sector accounts for a large percentage of GHG emissions once energy consumption for buildings and transportation are taken into account, a resolution filed by the Nathan Cummings Foundations requests that Ohio-based Kroger, one of the nation's largest grocery retailers, develop a comprehensive policy for addressing climate change and reducing GHG emissions. The resolution calls for the company to issue a report to shareholders by December 31.

Concern about the impact of climate change is no longer limited to industries with large direct emissions." said Laura Shaffer, director of shareholder activities at the Nathan Cummings Foundation. "Increasing energy costs, extreme weather events, carbon limits-these types of developments will impact virtually all sectors. Others in the retail industry recognize this and are taking steps to reduce their exposure. We want to ensure that Kroger isn't lagging behind its peers on this issue."

Another resolution, filed by the Evangelical Lutheran Church in America Board of Pensions requests that Pennsylvania-based Rite Aid, one of the nation's leading drugstore chains, assess its response to rising regulatory, competitive, and public pressure to increase energy efficiency and report back to shareholders by September 1.

"Energy efficiency is a way that a corporation can not only improve its bottom line, but also lessen its carbon footprint." said Patricia Zerega of the Evangelical Lutheran Church in America.

Some resolutions are already getting action from companies. Fourteen resolutions were recently withdrawn by investors after the companies agreed to assess and disclose impacts from emerging climate regulations and strategies for reducing greenhouse gas emissions. Resolutions filed with Lowes Companies, Inc. and Big Lots, Inc. were withdrawn after the retailers agreed to respond to the 2008 Carbon Disclosure Project survey, which examines greenhouse gas emissions management and other issues related to climate change.