Case Studies

Woolworths

The Background

Woolworths (Pty) Ltd (hereafter referred to as Woolworths) is a leading retail brand with over 300 company-owned stores in South Africa. Woolworths’ goods are also sold in 149 corporate stores, 51 international franchise stores (in Africa and the Middle East) and 69 South African franchise stores. Woolworths has a close business relationship with retail giant Marks & Spencer (UK), allowing valuable sharing of business practices and innovation between the companies. Through its “Good business journey” plan, Woolworths is committed to addressing the impact of climate change in its operations. In addition, Woolworths is the most highly ranked company on the “Carbon Disclosure Leadership Index” of the CDP.

The Objectives

Woolworths commissioned Global Carbon Exchange (GCX) to conduct a carbon footprint analysis of its South African operations. The objectives for conducting this assessment were:

  • To meet its 2009 CDP reporting requirements (CDP7);
  • To increase operational efficiencies in view of pending energy regulation and incentives;
  • To meet customer expectations as an environmentally-aware company;
  • To increase both employee pride and customer loyalty;
  • To verify its current position with regard to the company’s 2006 benchmark and to its “Good business journey” carbon-reduction target of 30% by 2012.

The Process

The carbon emissions were measured in accordance with the Greenhouse Gas (GHG) Protocol (WRI and WBCSD, 2002), using customised tools and emission factors mainly from the IPCC (2007) and DEFRA2 (2008).

  • The control approach was used to consolidate all emissions;
  • The organisational boundaries were drawn around the operational activities of Woolworths South Africa;
  • All scope 1 and 2 emissions as well as significant scope 3 emissions were included. The operational boundaries included the following sites:
    • “The Campus” (5 buildings including Head Office in Cape Town CBD);
    • Call Centre (Cape Town CBD);
    • The 3 distribution centres;
    • All company-owned stores in South Africa (+/- 300)
  • Emissions associated with outsourced logistics and distribution were included in the assessment, but only for transportation from the distribution centres (DCs) to stores (data for transportation of goods from suppliers’ premises to the DCs was not available);
  • Due to data limitations, the findings were reported as an aggregated value for all operations and were not disaggregated into the four areas;
  • The data was submitted to GCX by Woolworths for the period January – December 2008;
  • Where data was incomplete, extrapolation was used.
  • GCX made use of a Woolworths’ in-house travel survey to estimate emissions resulting from employee commuting to/from the workplace.

The Result

Woolworths’ total carbon footprint for the period January-December 2008 was 408,627.36 tonnes of CO2 equivalent (CO2e). Of this, 14% were scope 1 emissions, 71% were scope 2 and 15% were scope 3 emissions. The chart below shows the total inventory of emissions by source.

These findings indicate that for the year assessed, the biggest sources of carbon emissions for Woolworths were:

  • Electricity (70.5% or 288.2 mega-tonnes CO2e);
  • Employee Commute (8% or 32.9 mega-tonnes CO2e), mainly from private cars;
  • Company-owned vehicles (7.9% or 32.4 mega-tonnes CO2e).

The table below shows total emissions by source and scope and also indicates carbon emissions intensity.

* Total number of employees used for 2008: 21,374 ** Total area for all operations used for 2008: 543,708m2 *** Total turnover used for 2008: R21,8m.

Woolworths’ annual carbon emissions intensity is therefore equivalent to:

  • 16.24 tonnes CO2e per employee; or
  • 638.42 kg CO2e per m2; or
  • 15.92 tonnes CO2e per R’m turnover

In order to gauge real reductions that account for growth, it is necessary to compare intensity of emissions. The table below compares emissions by intensity over the two most recent reporting periods3.

The table shows that:

  • Although scope 1 emissions per m2 increased by 14.63% between the two periods, the combined totals of scope 1 and scope 2 emissions per m2 decreased by 2.73%.
  • Similarly, whilst the scope 1 emissions per employee increased by 11%, the combined scope 1 and scope 2 emissions decreased by 5.2%.

These findings indicate that year-on-year, Woolworths is showing reductions in its relative scope 1 and scope 2 emissions.

The Recommendations

If Woolworths was to:

  • Reduce its carbon emissions by 10%, this would have the same effect as removing 9,772 medium-sized petrol cars from the road for a year.
  • Reduce its annual electricity consumption by 25%, this would save enough electricity to power 7,522 middle-income homes for 1 year.

GCX recommends that Woolworths sets realistic annual targets to reduce its carbon emissions in alignment with its Good business journey goal to reduce relative carbon emissions by 30% by 2012. Examples of such targets could be to:

  • Reduce carbon emissions per employee by 10% annually;
  • Reduce electricity consumption per m2 by 15% over 2 years;
  • Reduce distribution emissions by 20% in 2 years.

Next are some recommendations made to assist in reducing emissions in order to meet the reduction targets.

  • Due to the high proportion of emissions arising from electricity consumption, as well as the significant operational cost of electricity, GCX recommends that Woolworths conduct a full energy efficiency audit as part of its emissions-reduction strategy starting with a pilot audit of the head office and a distribution centre. The next step would be to address Woolworths’ stores.
  • Implement systems that will allow for benchmarking and comparing stores/divisions within the Woolworths group so that next year’s report becomes a useful management reporting tool for the company.
  • Switch to ozone-friendly coolant gas for refrigeration and air-conditioning;
  • Introduce an incentivised employee travel plan with benchmarks and targets;
  • Make use of teleconferencing instead of business travel wherever possible;
  • Roll out the use of bio-diesel made from recycled cooking oil across the fleet nationwide.
  • Consider the implementation of a dynamic management system dedicated to the monitoring of CO2 emissions within the organisation.

The Future

Woolworths is currently a market leader in its efforts to combat climate change and is to be commended for constantly investigating innovative ways to make its offering more environmentally-friendly and reduce its emissions.

GCX believes that this assessment complements the image of Woolworths, and in particular supports the objectives of the Woolworths’ “Good business journey”.