Driving energy efficiency and transitioning to renewable electricity

Our Challenge

The effects that climate change on our planet, customers, the economy, and the community can’t be ignored. Target as part of Kmart Group supports reducing greenhouse gas emissions (emissions) in line with the 2015 Intergovernmental Panel on Climate Change Paris Climate Agreement (Paris Agreement) to limit temperature change to 1.5OC degree pathway.

Scope 1 and 2 emissions in our owned and controlled operations (store network and distribution centres) contribute around 2 per cent of our total emissions, whilst Scope 3 emissions (occurring in our supply chains and product use/disposal) account for around 98 per cent.

Within the Scope 3 component, FY22 inventory data indicates that emissions associated with customer use of sold electrical appliances represent 68 per cent of total emissions; materials in clothing and soft-home represent 10 per cent; and manufacturing processes amount to 22 per cent.

Delivering greater energy and material efficiency in our supply chain and products will be a priority for our business over the long term.

Our Approach

Scope 1 and 2 emissions (owned and controlled operations)

To reduce our emissions, we are focused on:

  • Constant monitoring of our entire store networks energy usage through Building Monitoring Systems and our Energy Centre
  • Improving the energy efficiency and performance of our air-conditioning and lighting systems
  • Directly investing in rooftop solar or working with landlords to access their roof space at suitable stores and distribution centres.
  • Seeking Power Purchase Agreements (PPAs) in market to directly supply renewable energy to owned and controlled operations.

Scope 3 emissions (full value chain)

Approximately ninety per cent of our overall greenhouse emissions are in our value chain and beyond our direct control (owned and controlled operations). Thus, investing in our supply chain partners and partnerships is central to our plan.

As a member of the Fashion Industry Charter for Climate Action, we are developing a roadmap to reduce Scope 3 emissions across our apparel and general merchandise businesses.

Kmart Group has adopted the recommendations of the international Taskforce on Climate-related Financial Disclosures (TCFD). These recommendations aim to help investors understand a company’s financial exposure to climate risk and help companies disclose this information in a clear and consistent way. Through the TCFD process we undertake a rigorous risk assessment to understand the potential risks resulting from climate change, and the opportunities available to us to address them.

Our Progress

Scope 1 and 2 emissions (owned and controlled operations)

Kmart Group’s total emissions (FY22) from our owned and controlled operations were 253.8 ktCO2-e, down from 262.5 8 ktCO2-e in FY21.

In FY22, our electricity use increased by 0.4 per cent per-square-metre of its stores’ gross footprint. This increase is attributed to warmer weather conditions and a 9.5 per cent increase in store operating hours following reduced COVID-19 restrictions in the prior. In the context of energy efficiency, stores’ energy use per square metre improved 1.7 per cent from FY21. Energy efficiency gains were realised through lighting and heating upgrades, and rooftop solar installation at suitable sites.

In 2021, Kmart Group secured a renewable energy supply contract through to 2030 for 58 stores in Queensland. This represents 18 per cent of the group’s total energy requirements.

In FY24 we will be finalising our roadmap to achieve our 100% renewable energy target and continue our energy efficiency roll out.

Scope 3 emissions (full value chain)

Kmart Group delivers Scope 3 inventory reporting on an annual basis. This is the first step toward developing a long-term Scope 3 strategy and roadmap. In FY22, Scope 3 emissions for Kmart Group were calculated as 13,801ktCO2-e, a reduction from 15,088ktCO2-e in FY21. We will continue to be refine this calculation as access to supplier specific data improves.

Of our total scope 3 emissions, we have estimated that approximately 5,031ktCO2-e (36%) is embodied within the materials and manufacturing of our products. The use of our products (e.g. electricity consumed by appliances, washing of clothing) constitutes 8,495ktCO2-e (62%) of Kmart Group’s Scope 3 emissions.

Studies have shown that approximately 48% of emissions generated in the apparel supply chain are from fabric production, dying and finishing facilities*. Kmart Group has captured and verified energy consumption data for the 2021 calendar year from 172 wet processing facilities in our supply chain, an increase from 72 facilities in the previous year. This data shows that 46 of these facilities source some energy from renewable sources (solar photovoltaic and wind) - primarily facilities in China, Bangladesh and India - with 20 sourcing energy from coal-powered generators – primarily facilities in India, Pakistan and China. Of these 172 facilities, an average of 0.27% of energy is currently sourced from renewable sources and 9.72% from coal-powered generators.

As part of our roadmap to reduce Scope 3 emission, we intend to work with our supply partners to encourage further adoption of renewable energy, seek less energy intensive materials and design better products that consume less energy over their lifetime.

**See Quantis 2018, https://quantis-intl.com/wp-content/uploads/2018/03/measuringfashion_globalimpactstudy_full-report_quantis_cwf_2018a.pdf

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