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Target Corporation - Climate Change 2019
C0. Introduction
C0.
(C0.1) Give a general description and introduction to your organization.
Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,844 stores and via Target.com. Since 1946, Target has given 5 percent of its profit to communities. For more information about Target’s commitment to corporate responsibility, visit https://corporate.target.com/corporate-responsibility/.
CDP system functionality only allows for 365 days to be reflected in the start and end date fields below. The results contained in this CDP survey are for Target's fiscal year 2018 (Feb. 4, 2018 through Feb. 2, 2019), which consisted of only 364 days.
Target considers multiple factors in evaluating risk. Target considers risks substantive when they are assessed to be high or critical using proprietary criteria. Importantly, something that has a "substantive financial or strategic impact on our business" is not necessarily "material" to investors as defined by the SEC.
Target’s answers to this questionnaire contain forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "expect," "may," "could," "believe," "would," "might," "anticipates," or similar words. All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward- looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Item 1A of our Form 10-K for the fiscal year ended February 2, 2019, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.
C0.
(C0.2) State the start and end date of the year for which you are reporting data.
Start date End date Indicate if you are providing emissions data for past reporting years
Select the number of past reporting years you will be providing emissions data for Row 1
February 4 2018
February 3 2019
No
C0.
(C0.3) Select the countries/regions for which you will be supplying data. United States of America
C0.
(C0.4) Select the currency used for all financial information disclosed throughout your response. USD
C0.
(C0.5) Select the option that describes the reporting boundary for which climate-related impacts on your business are being reported. Note that this option should align with your consolidation approach to your Scope 1 and Scope 2 greenhouse gas inventory. Operational control
C1. Governance
C1.
(C1.1) Is there board-level oversight of climate-related issues within your organization? Yes
C1.1a
(C1.1a) Identify the position(s) (do not include any names) of the individual(s) on the board with responsibility for climate- related issues.
Position of individual(s)
Please explain
Board-level committee
Target's Board of Directors retains oversight responsibility over the Corporation's key strategic risks including those relating to corporate responsibility matters. The Nominating and Governance Committee of the Board of Directors has overall oversight responsibility over corporate responsibility matters. Target recognizes that environmental, social and governance issues are of increasing importance to many investors. The Vice President of Corporate Responsibility (CR) and the CR team work with functional leaders across the company to determine strategies, policies and goals related to sustainability and regularly report to and seek input from the Nominating and Governance Committee on those matters, including climate-related issues.
C1.1b
(C1.2a) Describe where in the organizational structure this/these position(s) and/or committees lie, what their associated responsibilities are, and how climate-related issues are monitored (do not include the names of individuals).
The Vice President of Corporate Responsibility oversees CR across Target. They report to the Executive Vice President and Chief Marketing Officer at Target. The CR team moved within the marketing pyramid back in 2017. This move has allowed the CR team to engage directly with marketing and communications partners to help amplify the goals and key milestones when it comes to CR and climate work. Within CR, the Business Integration team engages directly with partners from across the enterprise to help drive and incorporate our key enterprise initiatives like climate into the core business. Specifically, our climate account manager within the business integration team works with a number of partners from Responsible Sourcing to the energy team within Property Management to help coordinate and strategize on work. This climate account manager also leads the coordination and strategy behind our Scope 3 goals in tandem with Responsible Sourcing. All our work on climate ladders up to our CR Future at Heart Strategy and lives within the Design Tomorrow Pillar of the strategy.
The Vice President of Property Management oversees the Property and Energy Management across Target. They report to the Senior Vice President of Properties at Target. The Property and Energy Management teams conduct critical work around our waste minimization efforts, store HVAC efficiencies, EV charging stations, and lead the work around procuring renewable energy sources. These initiatives also ladder up to our goals within the CR Future at Heart Strategy. The Property and Energy Management teams also drive a majority of the strategy behind our Scope 1 and 2 goals in conjunction with the Business Integration team within CR. On a bi-annual basis the Vice President of Property Management brings together their team along with other critical partners like Responsible Sourcing and CR to review progress on set goals and understand key milestones.
C1.
(C1.3) Do you provide incentives for the management of climate-related issues, including the attainment of targets? Yes
C1.3a
(C1.3a) Provide further details on the incentives provided for the management of climate-related issues (do not include the names of individuals).
Who is entitled to benefit from these incentives? Energy manager
Types of incentives Monetary reward
Activity incentivized Efficiency target
Comment Progress toward Target's carbon reduction goal is included in applicable individuals' Goals and Objectives. Performance against these Goals and Objectives is a key factor in annual performance reviews and compensation adjustments.
Who is entitled to benefit from these incentives? Environment/Sustainability manager
Types of incentives Monetary reward
Activity incentivized Efficiency target
Comment Progress toward the carbon reduction goal is included in individual Goals and Objectives; performance against Goals and Objectives is a key factor in annual performance reviews and compensation adjustments.
C2. Risks and opportunities
C2.
(C2.1) Describe what your organization considers to be short-, medium- and long-term horizons.
From (years) To (years) Comment Short-term 0 2 Medium-term 2 3 Long-term 3 100
C2.
(C2.2) Select the option that best describes how your organization's processes for identifying, assessing, and managing climate-related issues are integrated into your overall risk management. A specific climate change risk identification, assessment, and management process
C2.2a
(C2.2b) Provide further details on your organization’s process(es) for identifying and assessing climate-related risks.
In developing Target's Scope 1, 2, and 3 reduction goal, Target reviewed the SBTi's guidance on the developing goals that align with at least a two-degree Celsius warming limit scenario. The guidance identifies the pace of greenhouse gas (GHG) reductions by sector required to meet the warming limit identified by scientists and the Paris Agreement. By committing to reduce emissions in line with science, Target will continue work to minimize aspects of transition risk, such as policy/regulatory and reputational risk. Target also recognizes that climate change impacts will and are affecting Target's supply chains and the communities we serve. We are committed to mitigating our contribution to climate change and working with impacted communities. Target is evaluating roles we can play in community disaster resilience in communities experiencing extreme weather events.
Target also uses scenario analysis to for identifying and assessing climate-related risks. In deciding how to approach our scenario analysis, we reviewed the guidelines from the Task Force on Climate-related Financial Disclosures (TCFD). The TCFD recommends performing scenario analysis to identify both physical and transition risks, as well as using at least two scenarios (one to be a 2°C or lower scenario). The TCFD also recommends establishing one or more timeframes, e.g. short-, medium, or long-term. In keeping with this best practice, we chose well-established third-party scenarios to look at both physical and transition risks and opportunities over three timeframes (2025, 2030, and to 2040). For physical risks and opportunities, we drew on IPCC RCP 4.5 and RCP 8.5. For transition risks and opportunities, we used IEA’s WEO Sustainable Development Scenario and Current Policies Scenario. We also used the WRI Aqueduct tool to investigate water-related risks under different decarbonization pathways. In addition to the IPCC scenarios already mentioned, the tool uses socioeconomic assumptions from the Shared Socioeconomic Pathways (e.g. SSP2 and SSP3).
Inputs: We also reviewed the U.S. Government’s Fourth National Climate Assessment to incorporate relevant U.S. region-specific findings. For internal data sources we analyzed: historical financial results e.g. sales, Target Scope 1 & 2 emissions, energy use across our physical locations (stores, distribution centers, headquarters, etc.), relevant supply chain information (e.g. raw ingredients in products), etc.
Coverage: The scenario analysis covered Target’s owned facilities, logistics, and three product lines: apparel & accessories, beauty & household essentials, and food & beverage. For these lines, we considered supply chain, operations, and sales.
Time-horizons: We considered scenarios on our business in 2025 and in 2030 as this is in line with our current GHG emission targets, and to 2040 to capture physical impacts. While Target business strategy does not extend to 2040, we felt that this was an appropriate timeframe for trying to capture physical risks, as differences in climate impacts in the scenarios may not become apparent before this time.
Assumptions: In the 2°C (RCP 4.5, IEA SDS, SSP2) scenario, we assume in the period to 2025 and to 2030, society acts rapidly to limit emissions and puts in place measures to restrain deforestation and discourage emissions (e.g. implementing a carbon price). In the 4°C scenario to 2025 and to 2030, we assume climate policy is less ambitious with emissions remaining high. For this time period, there is not a significant difference in physical impacts between the two scenarios. For the period to 2040, the transition assumptions remain the same for both scenarios, however the physical manifestations become more apparent in the 4°C scenario.
Results: We identified material impacts on our business arising from each scenario based on existing internal and external data (see inputs above). Examples of impacts of the 2°C scenario: Federal, state or local efforts to regulate fuel-efficiency would impact Target’s business most significantly through changing prices for transportation costs; zero net deforestation requirements introduced and shifts to sustainable agriculture pressures agricultural production, raising the price of key raw materials; a higher carbon price applied in more geographies could increase Target’s operational costs, as well as supply chain costs through pass-through. Examples of impacts of the 4°C scenario: chronic & acute water stress, reducing agricultural productivity in some regions, raising prices of raw materials such as cotton, which is crucial to Target’s apparel products; increased frequency of extreme weather causing increased incidences of disruption to manufacturing & distribution networks; temperature increase & extreme weather events reducing economic activity.
C2.2c
(C2.2c) Which of the following risk types are considered in your organization's climate-related risk assessments?
Relevance & inclusion
Please explain
Current regulation
Relevant, always included
Target operates in 50 states and the District of Columbia. As an end user of energy, we pay for existing renewable energy standard and carbon regulation policies that are implemented through regulated utility programs. Current regulations are the foundation of IEA’s WEO Current Policies Scenario, which was included in our scenario analysis. Emerging regulation
Relevant, always included
Target is tracking carbon regulation and related energy policy proposals at the U.S. federal and state levels. As a large consumer of energy, we evaluate how these proposals may impact energy pricing, both negatively and positively. Emerging regulations are a key component of IEA’s WEO Sustainable Development Scenario, which was included in our scenario analysis. We looked at emerging regulation both in the near term and long term to help identify climate-related risks. Technology Relevant, always included
As a retailer, Target plays a key role in the roll out of potential carbon reducing consumer projects such as smart thermostats, efficient lighting, and other types of products. Target is also installing direct current (DC) fast electric vehicle charging stations at over 100 stores in the coming years. Target believes the retail sector can play a key role in developing the electric vehicle infrastructure needed to transition the transportation sector to run on clean energy. Included in the pathways we used in our scenario analysis is an analysis of the various kinds of technology that will be needed to achieve the end results. E.g. for IEA’s WEO Sustainable Development Scenario, various technologies are analyzed and assumed to be implemented in order to achieve 2 degrees or lower of average temperature increase. The implications of these technologies on society, i.e. the cost to implement and changes in energy prices, is considered. Target also examined technologies that may become more prevalent as climate change progresses, e.g. window air conditioners and fans in areas that are expected to see a high rise in average temperatures. These are areas that present an opportunity to Target to meet the increase in demand. Legal Not relevant, explanation provided
Included in the scenario analysis was an examination of legal-related risks. However, it was found at this time that although Target is subject to regulatory and policy-related risks, Target does not have strictly legal-related climate risks.
Market Relevant, always included
We aim to leverage our size, scale and reach to positively impact the communities in which we serve and operate. Going beyond what we can achieve in our own operations and with our vendors, we collaborate with NGOs, governments, industry organizations and other businesses to innovate solutions to the most pressing issues we face today. Examining market risks was a large part of the scenario analysis. We analyzed how the market would play out in different climate scenarios, e.g. the cost of energy (oil, natural gas, electricity) as well as how the overall economy would react to climate change in the long-term. Through this process we were able to identify market-related climate risks. Reputation Relevant, always included
Since the company's formation in 1962 Target has invested in the communities we operated in and serve. Target's corporate responsibility team evaluates how our climate mitigation goals, policy, and resiliency efforts impact our standing with local communities where we operate, with our NGO stakeholders and partners, and with third party industry analysts. Target's existing climate policy and goals are designed to set a leadership example within the retail industry and are accompanied by internal execution strategies and management plans to hold our team accountable to meeting the goals and maintaining our credible reputation in this space. Target commits to publicly reporting annually on our goal progress. Target understands that falling short of what climate science says is needed to mitigate the worst of the warming scenarios will damage our reputation. Reputational risks were considered in the scenario analysis from both a consumer standpoint and investor standpoint. Target identified both reputational risks and opportunities associated with climate change. Acute physical
Relevant, always included
Target operates in many communities impacted by extreme weather events. In the past few years Target has experienced facility damages from extreme weather events such as Hurricanes Harvey, Irma, and Maria, and wildfires across California. Repairing damaged stores and other facilities has direct costs to Target. Acute physical risks played a large role in the scenario analysis, as Target is already prone to climate-related acute weather events. As described above, Target has already experienced financial damage from weather-related events. Chronic physical
Relevant, always included
Rising temperatures require longer run times on HVAC equipment in impacted stores. Longer HVAC run times incur additional energy costs to Target. Chronic physical risks played a large role in the scenario analysis, as it is very likely that chronic risks associated with climate change will impact Target. Upstream Relevant, always included
Target anticipates supply chain disturbances from extreme weather events, agricultural changes, and other climate change impacts. These disturbances cause Target to incur significant costs and/or product disruptions for our guests. The transition and physical climate- related risks that Target experiences will most likely also impact Target’s suppliers. Disruptions in the supply chain can have financial impacts on Target. Thus, upstream climate-related risks were also included in the scenario analysis. Downstream Relevant, always included
As online shopping continues to grow, climate change may disrupt the delivery of orders to guests. Extreme weather events may change the types of products purchased by guests.
C2.2d
Explanation of financial impact figure By 2040, the cost of diesel used in heavy-duty trucks is expected to increase by roughly 75% compared to 2018. If this increase in fuel cost is passed down to Target from its logistics suppliers, the potential financial impact could be $200,000,000 to $300,000, USD/year by 2040.
Management method We work closely with vendors to determine the best ship points and delivery routes to reduce the number of transportation miles and to mitigate risk associated with transportation of merchandise. We apply careful research and sophisticated optimization technology to choose the most efficient combination of transportation methods to carry each shipment throughout our supply chain and continue to improve loading practices and efficiencies at our regional distribution centers. We also are managing these risks through our work with Clean by Design and the Sustainable Apparel Coalition.
Cost of management 0
Comment
Identifier Risk 2
Where in the value chain does the risk driver occur? Supply chain
Risk type Transition risk
Primary climate-related risk driver Policy and legal: Mandates on and regulation of existing products and services
Type of financial impact
Company- specific description Federal, state or local efforts to regulate fuel-efficiency would impact Target’s business most significantly through changing prices for transportation costs. Although Target moves most of its merchandise via third-party transportation providers, domestic low- carbon fuel standards, fuel-economy requirements, equipment retrofit and other requirements impact our business partners. For example, increased logistics costs can arise from more stringent fuel-economy requirements. With almost 2,000 stores in the US and nearly 40 distribution centers, Target relies heavily on a complex supply chain and logistics network. An increase in cost to operate logistics due to more expensive, high efficiency trucks will lead to a higher logistics cost for Target. According to the EIA Outlook 2019, the steepest decline in the US in energy intensity occurs in the transportation sector, with the level of energy used per highway vehicle-mile traveled declining by 32% from 2018 to 2050 as a result of increasingly stringent fuel economy and energy efficiency standards for light- and heavy-duty vehicles. Policy developments in this space will increase transportation costs to Target: California’s Zero-Emission Vehicle regulation, which nine additional states have adopted, requires a minimum percentage of vehicle sales of BEV and PHEV. In 2025, the year the regulation and new federal fuel economy standards go into full effect, projected sales of BEV and PHEV reach 1.3 million, or about 8% of projected total vehicle sales in the BAU case.
Time horizon Long-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
Management method We work closely with vendors to determine the best ship points and delivery routes to reduce the number of transportation miles and to mitigate risk associated with transportation of merchandise. We apply careful research and sophisticated optimization technology to choose the most efficient combination of transportation methods to carry each shipment throughout our supply chain and continue to improve loading practices and efficiencies at our regional distribution centers. We also are managing these risks through our work with Clean by Design and the Sustainable Apparel Coalition.
Cost of management
Comment The financial impact of policy standards is difficult to quantify without specific policy proposals to evaluate. We work with our third- party transportation and supply chain partners to understand changing operating costs in different manufacturing regions.
Identifier Risk 3
Where in the value chain does the risk driver occur? Direct operations
Risk type Transition risk
Primary climate-related risk driver Policy and legal: Mandates on and regulation of existing products and services
Type of financial impact
Company- specific description We aim to build and remodel intentional spaces that are designed with our long-term impact on the environment in mind. Target has built an energy efficient portfolio of stores by continuously adopting new technologies and operating procedures. Building and equipment codes will continue to evolve toward higher efficiency and more sustainable operational models, which will lead to increased capital costs for new and existing stores. For example, increased CAPEX tied to renewable energy portfolio standards and increased energy efficiency requirements will factor into future building decision-making.
Time horizon Short-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure By 2020 Target will remodel more than 1,000 stores across the country. Target continues to open new stores, many of which will be part of existing building stock and in urban locations. Both projects require investments to comply with current and evolving energy efficiency codes. Code compliance is a requirement and Target's investments in energy efficiency projects produce financial value to the company. Target also partners with utility energy efficiency programs, where available, to maximize the impact and value of the company's energy efficiency projects.
Management method We believe that one way to address energy price risk is by making investments that will reduce our demand for high-carbon energy sources over time. Over the past decade, we made significant investments which reduced our energy-related expenditures on a pro-rata basis. We are working to reduce the carbon footprint of our organization through two primary means - energy efficiency
extreme weather events.
Cost of management 0
Comment Uncharacteristic or significant weather conditions can affect consumer shopping patterns, particularly in apparel and seasonal items, which could lead to lost sales or greater than expected markdowns and adversely affect our short-term results of operations. In addition, our three largest states by total sales are California, Texas and Florida, areas where natural disasters are more prevalent. Natural disasters in those states or in other areas where our sales are concentrated could result in significant physical damage to or closure of one or more of our stores, distribution centers or key vendors, and cause delays in the distribution of merchandise from our vendors to our distribution centers, stores, and guests, which could adversely affect our results of operations by increasing our costs and lowering our sales.
Identifier Risk 5
Where in the value chain does the risk driver occur? Supply chain
Risk type Physical risk
Primary climate-related risk driver Chronic: Changes in precipitation patterns and extreme variability in weather patterns
Type of financial impact Reduced revenue from decreased production capacity (e.g., transport difficulties, supply chain interruptions)
Company- specific description Changes in chronic climate events will impact our vendors and the products they supply. Increased frequency and length of droughts can cause infrastructure damage, disrupt the supply chain and cause delays in distribution. Water stress can lead to decreased agriculture production, leading to an increase in material cost such as cotton, and an increase in food and produce costs. Global sea-level rise can cause infrastructure damage, disrupt the supply chain and cause delays in distribution.
Time horizon Long-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure Uncharacteristic or significant weather conditions can affect customer shopping patterns, particularly in apparel and seasonal items, which could lead to lost sales or greater than expected markdowns. Natural disasters in states where our sales are concentrated could result in significant physical damage to our stores or distribution centers, and cause delays in the distribution of merchandise, which could adversely affect our sales.
Management method For chronic local climate changes Target monitors guest shopping patterns at the macro level and assesses if changes in product assortments in apparel, home furnishing, grocery, and other product categories is needed as a result of chronic changing weather patterns.
Cost of management 0
Comment Uncharacteristic or significant weather conditions can affect consumer shopping patterns, particularly in apparel and seasonal items, which could lead to lost sales or greater than expected markdowns and adversely affect our short-term results of operations. In addition, our three largest states by total sales are California, Texas and Florida, areas where natural disasters are more prevalent. Natural disasters in those states or in other areas where our sales are concentrated could result in significant physical damage to or closure of one or more of our stores, distribution centers or key vendors, and cause delays in the distribution of merchandise from our vendors to our distribution centers, stores, and guests, which could adversely affect our results of operations by increasing our costs and lowering our sales.
Identifier Risk 6
Where in the value chain does the risk driver occur? Customer
Risk type Transition risk
Primary climate-related risk driver Reputation: Shifts in consumer preferences
Type of financial impact
Company- specific description Guests' expectations could shift as a result of climate change – driving a need for new reputational leadership in the retail industry. Use of unsustainable materials (e.g. materials produced as a result of deforestation, materials that use a lot of water, etc.) in products could lead to losses in sales from reputational damage. Additional costs could relate to a decrease in share price or increased cost in restoring public relations.
Time horizon Long-term
Likelihood More likely than not
Magnitude of impact Low
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure Guests' preferences and expectations could shift as a result of climate change- driving a need for new merchandise offerings and base expectations of reputational leadership in the retail industry. These types of incidents could have an adverse impact on perceptions and lead to tangible adverse effects on our business, including consumer boycotts and lost sales.
Management method Target is actively working on a number of projects to manage this risk and understand evolving guest attitudes and how our merchandise assortment meets those needs. For example, we have teams across the enterprise focused on understanding and improving attributes (including environmental) of our owned- and national-brand product assortment. This team is comprised of representatives from key departments within our merchandising, sourcing, and marketing divisions. The work of this team is helping to inform and guide our merchandise strategy. In addition, the CR team works with hundreds of partners across the company to set goals, develop initiatives and monitor and report progress. LINK: https://corporate.target.com/article/2018/07/future-at-heart • Some of these goals include: By 2022, source 100 percent sustainable cotton for owned-brand and exclusive national brand products; source all owned brand paper-based packaging from sustainably managed forests by 2022; and in 2018, 38 percent of palm oil in products covered by our commitment was certified sustainable via physical certification (Mass Balance or Segregated) and the remainder covered by RSPO PalmTrace credits.
Cost of management
Comment
Identifier Risk 8
Where in the value chain does the risk driver occur? Direct operations
Risk type Physical risk
Primary climate-related risk driver Chronic: Changes in precipitation patterns and extreme variability in weather patterns
Type of financial impact Increased insurance premiums and potential for reduced availability of insurance on assets in "high-risk" locations
Company- specific description Increased severity of chronic changes in climate may increase damage to Target stores and distribution centers, increasing Target's capital costs. Global sea-level rise can cause infrastructure damage of owned facilities and permanent closure of Target distribution centers and stores. Prolonged heat waves and overall higher average temperatures can cause higher cooling costs at owned facilities. Florida is a key market for Target. Warm nights associated with heat waves currently occur only a few times per year across most of the region but are expected to become common events across much of the Southeast under a higher scenario.
Time horizon Long-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure Across a chain of over 1,800 stores the overall magnitude of extreme events may be small but at a local market level the impacts may be larger.
Management method Target monitors weather forecasts and works with store teams and Target's emergency management team to prepare the stores and prioritize team member and guest safety.
Cost of management
Comment
Identifier Risk 9
Where in the value chain does the risk driver occur? Supply chain
Risk type Transition risk
Primary climate-related risk driver Market: Increased cost of raw materials
Type of financial impact
Company- specific description Higher material costs from global suppliers due to slowing of global economy is a risk to Target's supply chain. Climate change is expected to cause substantial losses to infrastructure and property and impede the rate of economic growth over this century. The continued warming that is projected to occur without significant reductions in global greenhouse gas emissions is expected to cause substantial net damage to the U.S. economy, especially in the absence of increased adaptation efforts. The potential for losses in some sectors could reach hundreds of billions of dollars per year by the end of this century. Additionally, the impacts of climate change beyond our borders are expected to increasingly affect our trade and economy, including import and export prices and U.S. businesses with overseas operation and supply chains.
Time horizon Long-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
Management method Target’s major suppliers are spread out geographically across the globe. Having a diverse supply chain geographically reduces Target’s risk of a localized climate-change related event greatly impacting our business.
Cost of management
Comment
Identifier Risk 10
Where in the value chain does the risk driver occur? Investment chain
Risk type Transition risk
Primary climate-related risk driver Reputation: Increased stakeholder concern or negative stakeholder feedback
Type of financial impact
Company- specific description 827 investors are now requesting data from companies through CDP's climate change program. These investors represent over US $100tn. The expectation for corporate responsibility reporting has grown significantly in the past 30 years. Over 93% of the G (world’s 250 largest companies by revenue based on the Fortune 500 ranking of 2016) reported on corporate responsibility in 2016. If Target does not maintain its sustainable operations to limit climate change, there is a risk that it could lose investors that value ESG and sustainability within their portfolio companies.
Time horizon Long-term
Likelihood Likely
one region of the US.
Cost of management
Comment
Identifier Risk 12
Where in the value chain does the risk driver occur? Supply chain
Risk type Transition risk
Primary climate-related risk driver Market: Increased cost of raw materials
Type of financial impact
Company- specific description Changes in global electricity and oil prices would impact Target’s business. For example, increased electricity costs globally will lead to increased prices from suppliers. 81% of Target's imports are from China, 5% from Vietnam, 5% from India, and the remaining 9% from other countries in Asia, Europe, Africa, and Central America. Suppliers are likely to pass their increased costs to customers. Global electricity prices are expected to rise by 15% in the EU and 13% in China by 2040 according to the IEA WEO
- Global oil prices impact the prices of materials that use petrochemicals as feedstocks, such as plastics, detergents, solvents, nylon, and polyester. Plastic packaging affects the majority of Target's products, while textiles accounted for 20% of sales in 2018.
Time horizon Long-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
Management method Target is working with our suppliers to transition to renewable energy sources and implement our own emissions reductions projects. We are using post-consumer recycled plastic, such as in our Everspring brand product packaging. We are using recycled plastic for polyester in Target owned-brand apparel. Target is working to eliminate expanded polystyrene from our owned-brand packaging by 2022, and we plan to pursue the goals of the New Plastics Economy commitment by 2025.
Cost of management
Comment
Identifier Risk 13
Where in the value chain does the risk driver occur? Supply chain
Risk type Transition risk
Primary climate-related risk driver Market: Increased cost of raw materials
Type of financial impact
Company- specific description A potential decrease in supply of raw materials due to climate change could lead to an increase in competition and prices. Globally, changes in the suitability of agriculture, increases in fire frequency and extent, the loss or migration of coastal wetlands, and the spatial relocation of natural vegetation will disrupt material supplies and their costs. Competition for resources will cause an increase in raw material prices and pose a risk to Target's supply chain.
Time horizon Long-term
Likelihood Very likely
Magnitude of impact High
Are you able to provide a potential financial impact figure? No, we do not have this figure
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
Management method Target is focused on taking the circular economy mainstream. Target established a goal that by 2020 we aimed to invest $1 million USD in textile recycling technologies. By the end of 2018, 27.8% of the goal had been invested.
Cost of management
Comment
C2.
(C2.4) Have you identified any climate-related opportunities with the potential to have a substantive financial or strategic impact on your business? Yes
C2.4a
(C2.4a) Provide details of opportunities identified with the potential to have a substantive financial or strategic impact on your business.
Identifier Opp
Where in the value chain does the opportunity occur? Direct operations
Opportunity type Energy source
Primary climate-related opportunity driver
