Costco is committed to providing our members with high-quality goods at the lowest possible price in a way that is respectful to the environment and to the people and animals that produce these goods. There are many factors that go into how we source our goods. Here are some guiding principles, with a few supporting examples.
While a majority of our merchandise is branded, Costco has a line of exclusive private-label products that we have created called Kirkland Signature™. In developing Kirkland Signature products, we have the unique opportunity to have better control over the entire supply chain, including where the product comes from and under what conditions it is produced. Our goals for Kirkland Signature items are that they (1) meet or exceed the quality standards of leading national brands, while being offered to members at the lowest possible price; (2) are respectful of the people or animals who produce them; and/or (3) are respectful of the environment in the way they are produced, grown, harvested, processed, transported and packaged. We’re working toward these goals one product at a time as we build this brand. We acknowledge that we still have a long way to go in certain areas to meet our goals, but we are also encouraged by stories of success in many Kirkland Signature products so far.
To meet these goals, our buyers work with our suppliers to continually improve the quality of Kirkland Signature products, expand traceability, provide a fair return to people in the supply chain and facilitate access to global or regional markets.
Traceability is important for several key reasons. It enables us to know the quality and safety of the product; allows us to examine issues of sustainability; enables us to list product origin information on the label; and helps us help people in the supply chain receive a fair return, so that the product can succeed in the long term.
A fair return in the supply chain is important, because for us to be successful, our network of suppliers must thrive. This commitment helps to ensure long-term supply and quality while also using market-based approaches to address poverty and malnutrition. We believe a fair return is more than the price paid for the item. It includes programs that (1) support farmers/workers and their communities through training for higher yields, quality and adaptation due to climate change; (2) pay premiums for high-quality products; and (3) improve health, education, housing, clean water and nutritious food for farmers/workers and their communities.
Below are some representative examples of Kirkland Signature products with corresponding programs that illustrate our long-term Kirkland Signature goals.
Kirkland Signature EXTRA VIRGIN OLIVE OIL
Since 1996, Costco has directly supported thousands of smallholder farms in Tuscany to make high-quality Kirkland Signature Toscano PGI Extra Virgin Olive Oil. With these growers we created a network of cooperatives to produce this fine olive oil. PGI stands for “Protected Geographical Indication,” which signifies that every grower is registered and the number of trees and yields on each property are verified. All olive oil is milled and then bottled and numbered in Tuscany under the strict guidelines of PGI to ensure traceability, authenticity and quality. The 2016 harvest celebrates the 20th campaign designed to ensure superior-quality olive oil at a fair price to our members, while supporting the economic and social foundation of smallholder farms in this treasured area for the foreseeable future. View Tuscan video
In 2005, we also began to sell 100 percent Italian Extra Virgin Olive Oil sourced from outside Tuscany, with numerous steps in place to trace the olives back to the trees. Our traceability program is now certified by an independent third-party organization, with each bottle carrying an ISO-certified sticker. View Italian Olive Oil video
Kirkland Signature ORGANIC EGGS
Costco has worked closely with a number of egg producers to provide organic eggs across the U.S. We support several producers in converting conventional operations to organic: Read the article | View video
In 2010, Costco and its organic egg farmers partnered with the Sustainable Food Lab to estimate the greenhouse gas (GHG) emissions in our organic egg supply chain over a three-year period through the use of the Cool Farm Tool. We learned that the highest GHG emissions were produced through feed, followed by transport and manure management. Once aware, these farmers started to take action to lower emissions, which were reduced over the three-year period by 14 percent for the entire supply chain. For more information, please see the case study.
Kirkland Signature COCOA
Our Kirkland Signature chocolate products are made from cocoa sourced through the Sassandra Cocoa program. Since 2009, we have sourced over 41,000 metric tons of high-quality, fully traceable cocoa beans from over 30 cooperatives in the southwest region of Côte d’Ivoire in West Africa. To learn more click here.
Wild Alaskan SALMON PRODUCTS
In Alaska, the sustainable management of salmon is protected by the Alaska State Constitution and has always served as a model for sustainability. Our supplier, Trident Seafoods, maintains full ownership and control of the Alaskan salmon it provides to us.
Together we have developed numerous products to maximize the utilization of as much of every fish harvested as possible. For example, we offer products such as: fresh salmon fillets flown directly to warehouses, Kirkland Signature skinless boneless canned pink and sockeye salmon, Wild Alaskan Salmon Burgers, Kirkland Signature Wild Alaskan smoked sockeye salmon, and Pure Alaska Omega™ Wild Alaskan Salmon Oil.
Kirkland Signature COFFEE
We have numerous Kirkland Signature coffee items sourced from around the world. Each item has a unique story that includes Fair Trade certification, while others focus on farmer training, education, housing and/or health care. To learn more about one of our programs, click here. View Rwandan video | View Guatemalan video
Kirkland Signature GASOLINE
In locations where Costco Kirkland Signature Gasoline is sold and where allowed by local law, Costco offers its Kirkland Signature gasoline, which has the five times the EPA(United States Environmental Protection Agency) minimum requirements for detergent additives to help keep the engine intake valves and fuel injectors clear of harmful carbon deposits. (*Kirkland Signature Gasoline is not available at Costco Wholesale Japan.) Costco additives also clean up existing deposits. Clean engines run better, and thus deliver the fuel economy, performance and lower emissions benefits that modern engineering provides. Since Costco sells a lot of gasoline, this translates into millions millions of vehicle miles driven with lower emissions. For more information that illustrates how additives work to keep engines clean, click here.
Our station maintenance, equipment and design are all chosen to limit emissions arising from station operations, and to contain vapor. In addition, all of our stations have corrosion-proof, double-wall underground storage tanks and piping that are monitored for leakage. Finally, our station attendants are trained and certified on safety and environmental issues.
Kirkland signature ORGANIC MILK
Our Kirkland Signature Organic Milk program is offered to our members throughout the U.S. We have partnered with suppliers that provide high-quality milk at competitive prices. Learn more about one of our suppliers who also has an excellent animal welfare program and with whom we are working to ensure a long-term supply of organic milk and feed. View video
Kirkland signature BED SHEETS
Our Kirkland Signature Bed Sheets are made from Pima cotton grown in the Central Valley of California. Through a patented technology, we have set up a pilot program to test the traceability of cotton fiber through the entire supply chain. This allows us to track the purity of the cotton and verify the manufacturing process from the fields to our shelves, ensuring higher quality. For more information on this process, please view video.
Costco is committed to protecting the human rights, safety and dignity of the people who contribute to the success of our business. We also seek to support the welfare of the people who produce, process and/or harvest the products we sell.
Supplier Code of CONDUCT
Our suppliers and their facilities are subject to our Supplier Code of Conduct. This code protects the human rights and safety of the people who produce, process and/or harvest the products we sell, while recognizing and respecting the cultural and legal differences found throughout the world. To this end, Costco:
- Prohibits slave labor, human trafficking, illegal child labor, illegal prison labor, physical and sexual abuse, bribery or attempted bribery, and health and safety conditions posing immediate risk to life and limb.
- Expects our suppliers to comply, at a minimum, with the applicable labor and environmental laws and regulations of the country where the merchandise is produced.
- Encourages our suppliers to work to achieve “Above and Beyond Goals.”
Confidential Ethics Hotline
We have a global confidential ethics hotline as part of our continuing efforts to assure compliance with our Code of Ethics, our Supplier Code of Conduct and other legal and ethical policies: www.costco.ethicspoint.com
We recognize that human trafficking is a serious global problem and are taking steps to bring awareness and improvement to the issue. For more details, please see our statements:
We understand that sex trafficking (including the commercial exploitation of children) occurs in the hospitality industry and as such are working with our Costco Travel suppliers to bring awareness to this issue. We are also working with Truckers Against Trafficking to educate our fleet drivers, as well as other trucking suppliers.
Costco seeks to collaborate with multistakeholder coalitions to address many of the issues facing our business. We have joined multiple efforts to help improve the working conditions of people within our supply chains. Some examples include:
Costco buys shrimp from Thailand, India, Vietnam, Indonesia, Mexico and the U.S. We helped organize and are an active member of the Seafood Sustainable Supply Chain Task Force, which addresses labor practices aboard Thai fishing boats. The Task Force includes representatives from Thai shrimp feed manufacturers, shrimp processors, certain major retailers in the U.S. and Europe, and nongovernmental organizations (NGOs). The Task Force has engaged with the Thai government and has set three primary objectives:
- Implementing verification systems to trace fish supplied to the feed mills.
- Creating and enforcing a code of conduct for vessels sourcing fish for fish meal plants.
- Improving the sustainability of two of Thailand’s major fisheries that supply fish meal.
More details are available at Seafood Task Force November 2016 Summary.
Equitable Food Initiative (EFI)
Costco is part of a fresh produce multistakeholder effort that includes farmers, suppliers and NGOs to pilot a program to improve labor practices, environmental stewardship and food safety for the benefit of workers, agricultural communities, businesses and consumers.
Costco and some of its produce suppliers are also piloting a program with Fair Trade USA that directly engages with farmworkers to provide:
- Training on food safety and quality, labor rights, health and safety, and family financial planning.
- Improved communication and measurable impacts.
- Fair Trade premiums to help cover the cost of living.
Costco is a signatory to the multistakeholder pledge promoted by the Responsible Sourcing Network concerning forced child and adult labor in Uzbekistan. We are working to keep cotton produced by child and adult forced labor in Uzbekistan and Turkmenistan out of our Kirkland Signature™ items. We are collaborating with a multistakeholder coalition to raise awareness of this very serious concern and press for its elimination. Our full pledge can be found here: Pledge Concerning Cotton.
Apparel from Bangladesh
Costco is a member of The Alliance for Bangladesh Worker Safety, which was founded by a group of North American apparel brands, companies and retailers. The organization currently has members in the U.S., Canada and Australia that collectively source from more than 650 factories. The Alliance has one goal: To substantially improve worker safety in the ready-made garment industry by upgrading factories, educating workers and management, empowering workers and building institutions that can enforce and maintain safe working conditions throughout Bangladesh. More information can be found at bangladeshworkersafety.org.
Costco is committed to the welfare and proper handling of all animals that are used in the production of food products we sell. We subscribe to and support the Five Freedoms of Animal Well-Being:
- Freedom from fear and distress
- Freedom from discomfort
- Freedom from thirst and hunger
- Freedom to exhibit normal behavior
- Freedom from pain, injury and disease
Costco is committed to going cage‐free for its egg procurement. We are increasing the percentage of cage-free eggs globally; in the U.S., we have substantially increased our percentage of cage‐free eggs sold from 2 percent in 2006 to over 26 percent in 2016, totaling over 1 billion cage-free eggs. We are working with our suppliers toward a complete and sustainable transition to a cage‐free supply chain. This transition, however, will take time, because currently over 90 percent of the supply of eggs in the U.S. is from caged hens. Together with other retailers and restaurants, we are working with the industry to shift to cage-free requirements.
Costco understands that the honey bee population is declining and that these bees are necessary for approximately one-third of the pollination of the food we consume, including many fruits, nuts and vegetables. We have invested in a multiyear research project, called Project Apis m., to improve honey bee health and sustainability. Funds for the research come from sales of Kirkland Signature™ honey.
The project focuses on three areas:
- Maintaining a functioning and sustainable genetic repository for honey bee germplasm with cryopreservation protocols and repository techniques recognized as a national treasure by the USDA.
- Supporting community beekeepers throughout the U.S. with Technology Transfer Teams that share research, experiments and best practices.
- Funding doctoral-level candidates to continue research and experimentation to support bee health.
Costco also has adopted a bee policy for suppliers of live goods (garden plants) that encourages them to limit the use of all nonessential chemicals and to utilize eco-friendly methods of pest and disease control. The use of neonicotinoids on plants is discouraged where bees are reasonably considered to be primary pollinators or on plants known to attract bees, unless mandated by law.
View our bee policy.
Finally, Costco is working with its fresh produce suppliers to encourage the planting of buffer zones to benefit pollinators. We are also significantly expanding our selection of organic products in the warehouses, which supports pollinator health.
The two primary objectives of our seafood sourcing policy are:
- To continually source sustainable seafood products from either wild fisheries or farmed aquaculture in ways that meet current demands without compromising the availability of scarce resources for future generations.
- To consider these factors when sourcing seafood: the condition of fish stocks (biomass); the protection of and respect for the marine ecosystem; governmental and regulatory agency guidelines; and practices that will mitigate or limit environmental impacts associated with aquaculture and fishing practices. As science and industry evolve, we will continue to refine these global policies.
As science and industry evolve, we will continue to refine these global policies.
We do not sell certain wild species that have been identified at great risk, unless our sources are certified by the Marine Stewardship Council (MSC). Currently, those species are:
- Atlantic cod
- Atlantic halibut
- Chilean sea bass
- Greenland halibut
- Grouper (Epinephelus morio)
- Orange roughy
- Skates and rays
- Bluefin tuna
If we decide in the future to rely on other certifying organizations relative to the sale of these or any other species, we will disclose their identity and disclose that certification on the packaging. Moving forward, we will examine whether there are other species that we should cease to sell because of documented concerns of risk for the species or habitat.
FISHERY Improvement Projects
Fishery Improvement Projects (FIPs) are alliances of stakeholders—retailers, processors, producers and/or catchers—that work to resolve aspects of the fishery that do not meet MSC standards. The FIP process works through key organizations, governments and individuals to:
- Talk through the management of the fishery and the challenges that it may face.
- Identify data that need to be collected.
- Agree on a set of priority actions that should be undertaken to improve the fishery.
- Oversee an action plan.
We encourage industry participants where management can be improved to participate in FIPs. Costco supports FIPs through participation in FIP meetings, letters to governments and/or fisheries participants and financial contributions. Fisheries and industry participants that demonstrate good management through the supply chain and paths to improved management receive strong consideration in our purchasing decisions. Costco is working directly on the following World Wildlife Fund (WWF) sponsored FIPs:
- Honduras lobster
- Nicaragua lobster
- Bahamas lobster
- Peru mahi
- Ecuador mahi
- Vietnam blue swimming crab
- Thailand blue swimming crab
- Vietnam tuna
Costco or Costco suppliers also purchase product from these fisheries. Over time our sourcing from individual FIPs will vary, depending on market conditions and other factors.
Our major canned tuna suppliers are participants in the International Seafood Sustainability Foundation, which is undertaking science-based initiatives for the long-term conservation and sustainable use of tuna stocks, reducing bycatch and promoting ecosystem health.
We believe that farmed seafood should be an integral part of our business, that aquaculture is a critical source of affordable protein now and in the future, and that farming can proceed in a sustainable fashion.
The Shrimp Aquaculture Dialogue (ShAD) established standards for shrimp farming and passed them to the Aquaculture Steward Council (ASC). These global, performance-based standards will help minimize negative environmental and social impacts of shrimp farming. Through this project, Costco evaluated the feasibility of implementing those standards. Our goal ultimately is to source farmed shrimp only from suppliers that have been certified under ASC standards. This goal has been partially achieved. In response to issues that have arisen concerning labor standards, we have prohibited our suppliers of farmed shrimp from outsourcing process tasks, including peeling sheds.
We are working with our suppliers to implement ASC standards developed from the Salmon Aquaculture Dialogue (SAD), representing years of collaboration among industry, customers and nongovernmental organizations. Our goal is to source farmed salmon only from suppliers that have been certified under the SAD standards. This goal has been partially achieved.
Costco does not intend to sell genetically modified salmon.
We are also working with our suppliers concerning implementation of the ASC Pangasius Standard. Our goal is to source pangasius only from suppliers that have been certified under the ASC standards. This goal has been largely achieved.
A five-year effort led to global standards through the Tilapia Aquaculture Dialogue (TAD), completed in 2009. Currently, all tilapia sold in Costco is from suppliers that have been certified with standards developed by the TAD and now managed by the ASC. One of our suppliers is Regal Springs. Click here for information related to Regal Springs and their sustainability efforts. Read the article.
Costco pays attention to the environment through how we source and package our products as well as how the products themselves impact the environment. Here are some key examples.
Costco is committed to ensuring that the palm oil contained in our Kirkland Signature™ products is responsibly and sustainably sourced. We are a member of the Roundtable on Sustainable Palm Oil (RSPO) and are working with our suppliers to move toward RSPO-certified palm oil. For more details and further information, please review our Palm Oil Policy.
Also, Costco is partnering with IDH Sustainable Trade Initiative, Winrock International and Cargill on a 14-month project to support palm oil smallholders. This project entails developing a step-by-step program to manage peatlands in a sustainable manner, increase market access and reduce greenhouse gas emissions.
Fresh Cut ROSES
In 2015, Costco sold over 400,000 cut rose heads, sourced mainly from Guatemala and Colombia. Our roses are certified by the Rainforest Alliance, which means that our rose suppliers meet standards to protect ecosystems and wildlife habitats, conserve water and soil, promote decent and safe working conditions and ensure that the farms are good neighbors to rural communities and wildlands. Our suppliers also support the local communities through scholarship programs and child care centers.
Harmful Chemicals Reduction CONSUMER GOODS
Costco historically has tested many different consumer product categories for chemicals regulated in the countries where we do business. Examples of these products include items found in and around the home, such as toys, products intended for children and food use, furniture, electrical, apparel, and home textiles. Examples of the regulated chemicals include soluble heavy metals, heavy metals found in surface coating, SVHCs (Substance of Very High Concern), formaldehyde, flame retardants, dyes, phthalates, BPA and many others. Additionally Costco tests non-foods packaging for heavy metal exposure, per U.S. and UK regulations.
To keep up with the ever-growing global regulatory changes and challenges for chemical restrictions in consumer products, Costco has been updating over the last three years the Costco Restricted Chemical List (RSL). We continue to work with the chemical and consumer product industries to find appropriate replacements for many chemicals of concern and to develop a green approach to chemical use. Costco is working with major third-party laboratories to test certain items for chemicals of regulatory and social concern. We call it the Costco Smart Screening Program, and have begun its implementation.
TEAK & Forest Stewardship Council Certification
After a 10-plus-year moratorium, in 2015 Costco began selling a limited amount of teak outdoor furniture that was 100 percent Forest Stewardship Council (FSC) certified. Going forward, Costco is committed to selling only 100 percent FSC-certified teak. We are beginning to expand FSC certification for other wood products. For more information, click here.
Costco’s selection of organic products continues to grow to meet our members’ demand for more organic products. We are working with suppliers and growers to support the conversion of conventional supplies to organic where it makes sense. A key component of the sustainable growth of protein organics, such as eggs, chicken, beef, pork, etc., is organic feed. Costco is working with our suppliers and their feed suppliers to learn the impacts that this growing demand for feed has on farmers’ future security, yields and income.
Costco’s sustainable packaging goals are to ensure our packaging is designed to protect the product, comply with laws and regulations, reduce materials and communicate effectively with our members. We also seek opportunities to reuse packaging, identifying the materials used so the package can be recycled or composted, as well as to source already recycled content. We realize this is an area of continuous improvement.
We are pursuing opportunities to eliminate polyvinyl chloride (PVC) plastic and replace it with recycled or recyclable materials. We also have taken steps to eliminate the use of polystyrene (commonly known as Styrofoam) from our inner packing materials, requesting this material be replaced with recyclable or compostable options.
Packaging for many items in our produce and other fresh food departments is made from recycled water bottles—and these materials continue to be recyclable in communities where polyethylene terephthalate (PET) recycling is available. Other areas where we have improved our packaging footprint include the redesign of our PET jars from round containers to square tubs. This engineering change allows more containers to fit on a pallet, reducing the number of trucks needed to complete delivery. Our Kirkland Signature Milk program is part of this engineering change; utilizing a square bottle allows for better shipping configurations, which allows more goods to be shipped in a single delivery. We also switched our fresh chicken packaging from polystyrene trays to saddle-pack bags.
We have increased the product count of many of our multi-packs, such as water and other beverages. This provides more servings per sell unit, reduces the number of shopping trips and provides a better value. We also have eliminated the cardboard tray inside many beverage packs.
We sell our goods directly out of the boxes they are shipped in, then reuse those same recyclable boxes at the cash register by offering them to our members in lieu of shopping bags. We continue to explore options in every category, with a solid focus on reduction of materials, compostable solutions and recyclability.