Costco’s sustainability commitment also focuses on managing our operation of 700-plus warehouses worldwide in an energy-efficient and environmentally responsible manner. These efforts, together with our attention to detail to find efficiencies that lower costs, use fewer resources and generate less waste, help us remain a low-cost operator, become more efficient and reduce our carbon footprint. These measures also save money on energy costs.
Sustainable CONSTRUCTION & Landscaping
Costco is aware of its responsibility to design and construct its sites and buildings in an energy efficient, sustainable and environmentally responsible manner. The organization Leadership in Energy and Environmental Design (LEED) is internationally accepted as a benchmark for green building design and construction. Costco’s warehouse design is consistent with the requirements of “certified” LEED standards.
Our buildings are insulated to meet or exceed current energy code requirements, and our main structures use 80 percent recycled steel materials. The roof materials on our metal pre-engineered warehouses are standing-seam metal panels utilizing a percentage of recycled materials designed to maximize efficiency for spanning the structure; the exterior skin of the building also contains recycled metal.
We use recycled asphalt in our new parking lots. For over 20 years we also have strived to exceed the minimum landscape requirements, such as planting larger and more mature trees. We have installed bioswales to preserve groundwater and prevent runoff in some locations.
Renewable ENERGY & Energy Efficiency
We currently use large rooftop solar photovoltaic systems in 91 warehouses in Arizona, California, Colorado, Hawaii, Japan, New Jersey, New Mexico, New York, Ohio, Puerto Rico, Spain and Utah with more systems being installed in the coming years. These systems are projected to generate 77 million kilowatt-hours (kWh) of electricity per year. In addition, some of our locations are using solar power in our parking lots.
All lighting in new construction utilizes LED lamps, and we are converting older buildings to LED. In 2015, we saved 45 million kWh through the use of LED lighting, in addition to significantly reducing our lamp recycling requirements and associated costs.
The efficiency of our HVAC and refrigeration systems continues to improve through new technologies such as variable speed drives and more efficient motors, while meeting stricter requirements for heating, cooling and humidity control. We continue to evaluate additional opportunities to improve energy efficiency. Finally, we continue to incorporate daylighting through the use of skylights, a practice we began over 30 years ago.
WATER Efficiency & Usage
We began managing water use in our facilities in Mexico in 2008, and as a result of meaningful efficiency gains have since rolled out an automated system to the U.S., including Arizona, California, Hawaii and Nevada. Nearly 120 warehouses participate in the water efficiency program, with savings ranging from 20 percent to 25 percent. In Mexico alone, we saved more than 30 million gallons in 2014. Using software analytics, we can detect in real time not only mechanical failures, but also operational water waste, which has traditionally been difficult to track. The whole-system approach to facility water management not only saves water, but also reduces costs associated with wastewater treatment and energy use.
We continue to expand the use of non-chemical water treatment systems in our cooling towers, to reduce the amount of chemicals going into sewer systems and, where possible, reuse “gray” water for drip site irrigation. All of our Mexico warehouses have their own wastewater treatment systems. By coordinating with local and national incentive programs, these and other energy-saving systems help us lower the cost of operating our facilities.
GREENHOUSE Gas Emissions
We have a corporate energy program to track greenhouse gas (GHG) emissions. We have ceased using HCFC refrigerant, an ozone-depleting substance, in new and replacement refrigeration and air conditioning systems. We have completed a greenhouse gas emissions inventory for our operations in the U.S., Puerto Rico, Canada, the United Kingdom and Australia that meets standards established by the GHG Protocol Corporate Accounting and Reporting Standard. The inventory accounts for greenhouse gases emitted from company activities (including direct emissions from our own energy-use activities and indirect emissions from our purchased electricity). We use this inventory to track emission trends and to monitor the amount of greenhouse gases produced directly and indirectly in our business (Please see the section on our Organic Egg Program that describes the measurement and reduction of greenhouse gases in our U.S. organic egg supply chain by 14 percent).
Waste Stream Management & RECYCLING
Our warehouses donate edible nonperishable food products to local food banks and to other nonprofit programs in their local communities. The donation programs vary by location and by country. In the U.S., Costco has begun to explore donating perishable products to communities through a small pilot program with Feeding America.
Tons of organic waste that our warehouses generate each week, much of which was once discarded in landfills, are now recycled into usable products, such as organic fertilizer, compost, biofuels, animal feed for local farms or zoos, and fuel for anaerobic digesters creating electrical power or used as feedstock. In 2015, Costco locations in the U.S. recycled 6,797 tons of organic waste, and we are rolling out a program in California to divert organic waste from landfills. Also in 2015, we began a pilot program using a third-party zero-waste nutrient-recovery system called The Harvester, which converts food scraps into nutrient-rich liquid organic fertilizer, some of which is resold in our lawn and garden departments. In the warehouses, meat scraps and rotisserie chicken grease are recycled by third parties to make animal feed, biodiesel fuel, soaps and other products. Our grease recovery systems, now in most of our warehouses, annually divert millions of pounds of grease from the waste stream.
All locations worldwide have recycling programs to divert tons of materials from landfills. We are committed to expanding these programs over time. Review this summary of our recycling efforts to date.
LOGISTICS & Reverse Logistics
Our depots (distribution centers) enable us to reduce delivery costs by providing single-step handling of full pallets of merchandise from our suppliers to our warehouses. We continually evaluate our processes and implement new ways to improve shipping efficiencies through measures such as packaging design changes and pallet configuration—resulting in more products on a pallet and fewer delivery trucks on the road. Another way we do this is by analyzing state weight and length oversize permits and using specialized equipment where geographically possible to handle heavier loads, along with using longer combination vehicles to maximize trailer utilization.
Our transportation team always works on ways to reduce empty miles involving trucks returning to our depots from the warehouses. One such practice is to pick up truckloads of merchandise that are destined for a Costco depot for distribution to a regional group of warehouses. Another practice is to load trailers with returned goods that are headed to salvagers or need to be returned to the supplier, and consolidate all of those shipments into truckloads. These streamlined “reverse logistics processes” enable us to reduce our merchandise handling costs and free up sales floor space in the warehouses—which helps reduce our operating costs and lower our carbon footprint.
We also utilize rail service wherever possible, commonly for shipments traveling over 500 miles. This takes trucks off the nation’s highways, reducing greenhouse gas emissions and diesel fuel consumption. We insist on using transportation providers that comply with the highest standards of excellence, so all of our carriers are required to adhere to our Transportation Service Provider agreement to ensure we’re partnering with safe carriers to move our goods.
We encourage our employees to find alternative methods of transportation to reduce energy consumption and emissions. Our Commute Trip Reduction (CTR) program, begun 20 years ago at our corporate office with 18 vanpools, has evolved into 76 vans (vans, fuel, maintenance and insurance provided by five transit agencies); and we have six vanpools in our San Diego and Los Angeles regional offices and vanpools in Mexico City. We offer employees subsidies to vanpool and to employees who purchase monthly bus passes. All of these programs and activities contribute to reducing our carbon footprint.
Costco continually looks to enhance and streamline its compliance with environmental regulations. We have a Director of Environmental Compliance, who, together with field auditors, oversees our compliance programs in the U.S. Monthly environmental compliance meetings with representatives from numerous departments in the company review and implement programs and policies to continually improve training programs, policies, procedures and communication.