Briefing: Shoprite’s & Woolworths’ climate disclosures

Just Share has reviewed the 2022 annual reports of Woolworths Holdings Limited and Shoprite Holdings Limited to analyse the retailers’ progress on a range of climate change-related issues ahead of their November 2022 AGMs. Beyond emission figures and targets, numerous other aspects of a retailer’s business approach have important implications for climate change-related issues.

In relation to greenhouse gas (GHG) emission reductions, both Shoprite and Woolworths have made net-zero commitments, with Woolworths being the more ambitious of the two companies, setting a target of net-zero by 2040 in relation to its scope 1 and 2 emissions. Shoprite sets the standard net-zero by 2050 target, without clarifying which scopes this ambition covers.

Both companies, however, have set significant 2030 reduction targets for their scope 1 and 2 emissions:

  • Woolworths’ targets are to reduce absolute scope 1 and 2 GHG emissions by 50% by 2030; and
  • Shoprite’s targets are to reduce absolute scope 1 and 2 GHG emissions by 42% by 2030 (as is set out below, it has also set a scope 3 emission reduction target).

Woolworths is the only major JSE-listed food retailer to have science-based targets approved by the Science-Based Targets initiative (SBTi). Shoprite submitted its targets for verification by the SBTi this year.

Based on recent emission reductions trends (i.e. at the current pace of emission reductions), Woolworths appears on track to meet its 2030 scope 1 and 2 emission reductions targets, whilst Shoprite does not.

However, it is not clear how either company will make or maintain meaningful progress on emission reductions in years to come. There is a concerning lack of detail for both companies on their plans to procure renewable energy, which is integral to meeting their targets. For instance:

  • Shoprite plans to power 25% of its operations with renewable energy over the next five years (therefore, presumably by 2027). However, during the 2022 financial year, only 2.8% of its electricity came from renewable sources; and
  • Woolworths plans to power 100% of its operations with renewable energy by 2030. However, in 2021, the company sourced only 0.64% of its electricity through renewable sources.

It is therefore clear that both companies are progressing very slowly when it comes to their renewable energy procurement endeavours, and both fail to set out credible plans for future renewable energy procurement.

When it comes to scope 3 emissions (associated with the use of its products), Shoprite has disclosed its emissions for all relevant scope 3 categories, as well as setting a significant 2030 emission reduction target: to reduce absolute scope 3 GHG emissions by 25% by 2030 (although these scope 3 emissions cover only category 11 of scope 3 emissions (the use of sold products), Shoprite states that these emissions account for 80% of its total scope 3 emissions).

Woolworths, by contrast, does not disclose its scope 3 emissions for all relevant categories, and has not set  direct emission reduction targets for its scope 3 emissions. Instead, it has committed to work with its top suppliers, representing 25% of total procurement spend, to set their own reduction targets.

In the briefing, Just Share also analyses the extent to which the retailers have made progress on: packaging and waste; sustainable farming; climate-related reporting; linking remuneration to climate-related outcomes; and the climate competence of their boards.

Overall, despite the two companies’ vastly different market capitalisations and sizes, neither currently provides convincing evidence that demonstrates adequate progress towards realising either the scale or pace of action (in relation to climate change outcomes) that is required by 2030, nor for the net-zero transition in general.

Where the companies differ is in their target-setting and narrative positioning, where Woolworths is in a stronger position. Its reports contain a mix of targets, statements and reported achievements that suggest a company that has a good understanding of important climate-related topics and facts. However, the importance of such apparent understanding of the key issues is questionable in the face of lack both of progress since last year, and of credible evidence of impact in the real world.

By contrast, although Shoprite lacks the same reporting volume, it does not appear any different to its competitor in terms of meaningful action, and in some places outstrips Woolworths in its reporting, particularly with regard to scope 3 emission disclosure and target-setting.

As dictated by science, immediate, rapid and large-scale reductions in GHGs are necessary to avoid the most severe impacts of climate change. This current decade, to the year 2030, is crucial in terms of climate action. There is therefore an urgent need for much greater detail in the companies’ reporting, such that shareholders and other stakeholders can judge the true significance of reported achievements, as well as progress towards limiting global average temperature increase to 1.5°C.

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