Coles sets net zero target with absolute emissions reductions

Supermarket giant Coles has committed to reducing its carbon emissions by more than 75% by 2030 and is aiming to do so without carbon offsets.

Coles recently launched its refreshed sustainability strategy, which includes its climate change pillar, named Together to Zero. As part of the climate pillar, Coles commits to deliver net zero greenhouse gas emissions by 2050 and cut combined Scope 1 and 2 greenhouse gas emissions by more than 75% by the end of the 2030 financial year, based on a 2020 baseline.

To accomplish that, Coles Group will be powered by 100% renewable electricity by the end of the 2025 financial year, building on the progress already made towards this target through renewable power purchase agreements, onsite solar and agreements with renewable electricity generators.

Coles integrates the impacts of climate change on its business strategy in its annual reports, including disclosing to the Task Force on Climate-related Financial Disclosures (TCFD) voluntary standards.

"In our annual reports and TCFD report and in our sustainability strategy, we're acknowledging the impact of climate change and the fact that we are conscious of the risks and opportunities to our business, and we will manage that going forward," said Kirsty Davis, general manager of sustainability and property services.

Part of that strategy is the most recently announced with deal with the operators of the Lal Lal Wind Farms near Ballarat, Victoria, for the purchase of large-scale generation certificates for renewable electricity until the end of 2030.

Under the agreement, Coles Group will purchase enough large-scale generation certificates from Lal Lal Wind Farms to further increase Coles' renewable electricity to 45% of total consumption by FY23. Lal Lal Wind Farms has been exporting renewable electricity at full capacity to the Victorian grid since December 2020.

"Our energy usage and scope 2 emission are significant contributors to our emissions and what we have to work on in order to achieve the emissions reductions targets," Davis said. "We haven't adopted a strategy of carbon offsets. We're aiming for absolute emissions reductions."

Security of energy supply has been a key risk to manage for Coles, and moving to renewables extends the energy procurement practice in "a slightly different way," Davis said.

The 10-year agreement between Coles and CleanCo commences July 2022 and will see Coles purchase 400 GWh of electricity annually through the agreement. The Western Downs Green Power Hub, set to be Australia's largest solar farm once built, and the MacIntyre Wind Farm, one of the largest wind farms to be built in the southern hemisphere, will supply three quarters of the Coles' electricity requirements, with the remainder supported by CleanCo's low emissions portfolio.

The purchasing agreement will result in Coles reducing its electricity carbon dioxide emissions nationally by an estimated 20% or 240,000 tonnes annually.  Coles and CleanCo also note that it will secure the development of both projects, which together with CleanCo's Karara wind farm, will create 800 local jobs in Queensland's Western and Southern Downs.

In 2019, Coles became the first major Australian retailer to commit to buying renewable energy through a 10-year Power Purchase Agreement with global renewable power generation company Metka EGN, purchasing more than 70% of the electricity generated by three solar power plants in regional NSW.

The waste commitments will also start to bring Coles towards the goal of circular economy.

"We're working through that quite a lot," Davis noted. "We divert a lot of our waste away from landfill, but we will be moving that into a truly circular loop, which impacts on the recycling space."

Soft plastics will be a key challenge in this regard.

Coles oversees its management of climate change through the Sustainability Steering Committee, a management committee, which is responsible for monitoring Group-wide identification and response to sustainability risks, including climate change.

The climate change agenda and program are coordinated by a Climate Change Subcommittee which oversees Coles' climate change approach and reports to the Sustainability Steering Committee and its chair.

The Sustainability Steering Committee's commitments as part of the refreshed policy were thought out in advance, and there will be regular reporting on progress towards the goals, Davis said.

"What we've done is before we make these announcements, we do quite a bit to make sure we have comfort around the achievability, because if we're going to make these commitments, we have to make sure we have a way to do it," she said. "From a governance perspective, we will have almost quarterly reporting to the steering committee to see how it's going and if there are any alternate solutions we should be considering."

Coles joins competitor Woolworths Group, which pledged last year to power its entire operations with renewable electricity by 2025. Woolworths joined the RE100 initiative and announced it would build on its network of rooftop solar panels installed in more than 150 national locations by signing power purchase agreement with wind and solar energy providers.

The transition to 100% renewable energy is a "practical step" to meeting its goal of being net positive carbon emissions by at least 2050, Woolworths said.

Read more: Lal Lal Wind FarmsColes GroupTCFDKirsty DavisWoolworths GroupTask Force on Climate-related Financial Disclosures