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Walgreens Boots Alliance - Climate Change 2021
C0. Introduction
C0.
(C0.1) Give a general description and introduction to your organization. Walgreens Boots Alliance, Inc. (WBA) is a global leader in retail and wholesale pharmacy, touching millions of lives every day through dispensing and distributing medicines, and through its convenient retail locations, digital platforms and health and beauty products with sales of $139.5 billion in the fiscal year ended August 31, 2020. The company has more than 100 years of trusted healthcare heritage and innovation in community pharmacy and pharmaceutical wholesaling. WBA's purpose is to help people across the world lead healthier and happier lives. WBA is proud of its contributions to healthy communities, a healthy planet, an inclusive workplace and a sustainable marketplace. WBA is the largest retail pharmacy, health and daily living destination across the United States and Europe. WBA and the companies in which it has equity method investments together have a presence in more than 25(1) countries and employ more than 450,000(1) people. The company is a global leader in retail and wholesale pharmacy and, together with the companies in which it has equity method investments, has over 21,000(1) stores in 11(1) countries as well as one of the largest global pharmaceutical wholesale and distribution networks, with over 425(1) distribution centers delivering to more than 250,000(2) pharmacies, doctors, health centers and hospitals each year in more than 20(1) countries. In addition, WBA is one of the world’s largest purchasers of prescription drugs and many other health and well-being products. The company’s size, scale and expertise will help us to expand the supply of, and address the rising cost of, prescription drugs in the United States and worldwide. We provide customers with convenient, omni-channel access through our portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7, NICE!, Soap & Glory, Liz Earle, Finest Nutrition, Botanics, Well Beginnings, Sleek MakeUP and YourGoodSkin. Our global brands portfolio is enhanced by our in-house product research and development capabilities. We seek to further drive innovative ways to address global health and wellness challenges. Our strategic partnerships with some of the world’s leading companies enable us to extend our healthcare solutions and convenience offering to the communities we serve, which we refer to as our “strategic partner strategy.” We believe we are well positioned to expand customer offerings in existing markets and become a health and well-being partner of choice in emerging markets. Additionally, through our strategic partnerships, we will be able to dramatically enhance WBA's marketing effectiveness and power the company's strategic initiative around mass personalization - delivering the right offers and content to our customers. (1) As of August 31, 2020. (2) Over 12 - month period ending August 31, 2020.
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 Reporting year September 1 2019 August 31 2020 No
C0.
(C0.3) Select the countries/areas for which you will be supplying data. Chile Czechia Egypt France Germany Ireland Lithuania Mexico Netherlands Norway Romania Spain Switzerland Thailand Turkey United Kingdom of Great Britain and Northern Ireland 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 chosen approach for consolidating your GHG 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 The WBA Board is actively engaged in discussing and advancing the strategy of the company, ensuring that the company’s talent and resources are aligned with the strategy, and overseeing the company’s approach to Corporate Social Responsibility (CSR) and sustainability. Within the Board of Directors, the Nominating and Governance Committee has the responsibility to review, at least annually, WBA’s policies and activities regarding CSR and sustainability. During fiscal 2020, the decision was made to review the CSR Report and the activities described therein, such as the company’s commitment to reduce our energy consumption and emissions on a comparable basis (excludes the impact of acquisitions, disposals and any significant changes in existing operations) as defined by the Greenhouse Gas Protocol. In addition, the Nominating and Governance Committee’s charter is to assess the management of risks related to sustainability and the environment. The members of the Nominating and Governance Committee are all independent directors and the Chair of the Committee is responsible for reporting to the Board regarding the activities of the Committee at appropriate times and as otherwise requested by the Chairman of the Board. The Nominating and Governance Committee charter is publicly available on WBA’s website. Board-level committee In addition to the Nominating and Governance Committee’s direct oversight of the company’s strategy, the Audit Committee has explicit oversight responsibility for enterprise risk assessment and risk management pursuant to its charter. While management is responsible for establishing an effective compliance program and maintaining systems to manage major risks faced by the company, the Audit Committee oversees management’s analysis and mitigation of these major risks by regularly reviewing and discussing with management the key risks identified in the Enterprise Risk Management (ERM) process, their potential impact on the company and its operations and the company’s risk mitigation strategies. Key risks are presented to and reviewed by the WBA Governance, Risk and Compliance Committee on a bi-annual basis, and summaries are presented to the Board’s Audit Committee at least twice annually. During fiscal 2020, the Audit Committee reviewed emerging issues, those that have not fully developed or for which the potential impact cannot be accurately assessed, including climate change impacts on the business. The Audit Committee also reviewed the company’s strategy for business continuity and disaster management including the establishment of emergency response teams across the business. The Audit Committee charter is publicly available on WBA’s website.
C1.1b
(C1.1b) Provide further details on the board’s oversight of climate-related issues. Frequency with which climate- related issues are a scheduled agenda item Governance mechanisms into which climate- related issues are integrated Scope of board- level oversight Please explain Scheduled – some meetings Reviewing and guiding strategy The Nominating and Governance Committee, which consists solely of independent directors, regularly reviews risks related to WBA’s governance structures and processes and CSR function, which includes the company’s strategy on sustainability and the environment. Pursuant to its charter, the Nominating and Governance Committee of the Board has oversight responsibility for CSR matters, and receives and reviews reports on these matters at least annually. The company’s CSR strategy includes a commitment to reduce its energy consumption and emissions on a comparable basis - a goal that is related to combatting the urgent threat of climate change - and to doing its part to help mitigate global warming. The Nominating and Governance Committee met five times in fiscal 2020 and reviewed at least once in the year policies and activities related to CSR. Scheduled – some meetings Reviewing and guiding risk management policies The Audit Committee of the Board is charged with regularly reviewing and discussing, no less than annually, the company’s enterprise risk assessment and key enterprise risks, including major financial risks as well as information security and technology risks (including cyber-security). The Audit Committee periodically reviews the steps management has taken to monitor and control such risk exposures, including the risk assessment and risk management policies.
C1.
(C2.1) Does your organization have a process for identifying, assessing, and responding to climate-related risks and opportunities? Yes
C2.1a
(C2.1a) How does your organization define short-, medium- and long-term time horizons? From (years) To (years) Comment Short-term 0 1 Medium-term 1 3 Long-term 3 Long-term is more than 3 years
C2.1b
(C2.1b) How does your organization define substantive financial or strategic impact on your business? Climate-related risks are included in the company’s multi-disciplinary company-wide risk identification, assessment, and management process. The Senior Vice President, Global Chief Compliance and Ethics Officer oversees the Enterprise Risk Management program, which is designed to identify, monitor and assess significant short-, medium- and long-term risks to the enterprise and help ensure the company is taking the appropriate steps to mitigate them. The Enterprise Risk Management and Compliance functions (among other functions) play a leading role in monitoring the overall risk profile. WBA defines a risk as a threat, event or action that could affect the ability to achieve business objectives. Risks are identified and assessed for all divisions, businesses, cross-divisional functions and the corporate function across WBA. At the company level risk assessments encompass all strategic, operational, commercial, regulatory, reputational, legal and financial risks that could have an adverse impact on WBA. Each business is responsible for preparing and reviewing potential risks at least twice annually. WBA has a process in place for assessing the potential size, scope and relative significance of climate-related risks. Emerging issues that have the potential to become key risks are categorized and prioritized. An example of emerging issues that are being monitored in this way by the company are climate change related risks. The long-term effects of climate change on general economic conditions and the pharmacy industry in particular are unclear, and changes in supply, demand or available sources of energy and the regulatory and other costs associated with energy production and delivery may affect the availability or cost of goods and services, including natural resources, necessary to run business. Emerging risks are reviewed by the WBA Enterprise Risk Management team at least every six months. WBA considers potential risks to the company and evaluates them based on the following criteria: (i) the importance of the issue to and potential impact on the company; (ii) the importance of the issue to and potential impact on our stakeholders; and (iii) the time frame in which we envision the issue becoming relevant for WBA. WBA does not have a specific threshold used to determine substantive financial or strategic impact on the company. The summary of key risks includes executive management’s view of the most important risks that could significantly and adversely affect the company’s operations, financial condition and results of operations. The Enterprise Risk Management program tracks additional current and emerging risks and will recommend changes to the company’s key risk summary, as deemed appropriate. Summaries of key and emerging risks are presented and reviewed by the WBA Governance, Risk and Compliance committee twice annually, with summaries presented to the Board’s Audit Committee at least twice annually. The Board exercises oversight over WBA’s strategic, operational, and financial matters, including the elements and dimensions of major risks facing the company. The Board administers its risk oversight function as a whole and through its committees, and uses various processes to help assess and monitor risks that WBA faces. The key risks are disclosed in WBA’s 2020 Annual Report on Form 10-K, along with certain subsequent periodic reports filed with the SEC.
C2.
(C2.2) Describe your process(es) for identifying, assessing and responding to climate-related risks and opportunities. Value chain stage(s) covered Direct operations Upstream Downstream Risk management process Integrated into multi-disciplinary company-wide risk management process Frequency of assessment More than once a year Time horizon(s) covered Short-term Medium-term Long-term Description of process Climate-related risks are included in the company’s multi-disciplinary company-wide risk identification, assessment, and management process. The Senior Vice President, Global Chief Compliance and Ethics Officer oversees the Enterprise Risk Management program, which is designed to identify, monitor and assess significant short-, medium- and long-term risks to the enterprise and help ensure the company is taking the appropriate steps to mitigate them. The Enterprise Risk Management and Compliance functions (among other functions) play a leading role in monitoring the overall risk profile. WBA defines a risk as a threat, event or action that could affect the ability to achieve business objectives. Risks are identified and assessed for all divisions, businesses, cross-divisional functions and the corporate function across WBA. At the company level, risk assessments encompass all strategic, operational, commercial, regulatory, reputational, legal and financial risks that could have an adverse impact on WBA. Each business is responsible for preparing and reviewing potential risks at least twice annually. The summary of key risks includes executive management’s view of the most important risks that could significantly and adversely affect the company’s operations, financial condition and results of operations. The Enterprise Risk Management program tracks additional current and emerging risks and will recommend changes to the company’s key risk summary, as deemed appropriate. Summaries of key and emerging risks are presented and reviewed by the WBA Governance, Risk and Compliance committee twice annually, with summaries presented to the Board’s Audit Committee at least twice annually. The Board exercises oversight over WBA’s strategic, operational, and financial matters, including the elements and dimensions of major risks facing the company. The Board administers its risk oversight function as a whole and through its committees, and uses various processes to help assess and monitor risks that WBA faces. Examples of how transition and physical risks are included in the company’s risk assessment process: Transition risk: Transitional market- related risks are regularly assessed and prioritized as part of the company's risk assessment process. While the ways in which markets could be affected by climate change are varied and complex, one of the major ways is through shifts in supply and demand for certain commodities, products and services as climate-related risks and opportunities are increasingly taken into account. Specific climate-related market risks and opportunities include potential increases in electricity and fuel prices. With more than 13,000 stores in nine countries and more than 300 distribution centers in 11 countries, as of August 31, 2020, we require significant amounts of electricity to maintain operations across our retail locations, offices, data centers and distribution centers, as well as fuel for our vehicle fleet. An increase in prices could impact our profitability negatively. We are mitigating these risks by assessing our energy procurement options and leveraging opportunities to reduce our energy demand through capital investments in energy efficiency programs. Physical risk: Chronic physical risks such as temperature changes due to climate change are included in the company’s assessments regarding measuring and managing energy use and associated Greenhouse Gas (GHG) emissions. For example, the gradual increase or decrease in temperature could impact energy costs by requiring additional air conditioning and refrigeration systems. The company maintains environment-related objectives that are tracked and monitored, and cascaded to each business to align with local objectives and initiatives. In carrying out its business activities, WBA endeavors to: ensure appropriate use of resources and materials; minimize waste and encourage re-use and recycling; ensure the safe handling and disposal of products; maintain environmental management systems; and communicate its commitment to the environment across the entire company. In order to hold itself accountable, WBA collects data from across its operations and publishes total emissions and energy use data as well as waste data on an annual basis. These data are externally assured and are broken down by source, by division, by scopes, by types of energy, emissions from business travel and emissions from product delivery.
C2.2a
(C2.3b) Why do you not consider your organization to be exposed to climate-related risks with the potential to have a substantive financial or strategic impact on your business? Primary reason Please explain Row 1 Risks exist, but none with potential to have a substantive financial or strategic impact on business WBA does not believe that climate-related risks have the potential to have a substantive financial or strategic impact on its business. A summary of emerging risks is maintained by WBA’s Enterprise Risk Management team identifying risks that have not fully developed or for which the potential impact cannot be accurately assessed. The company’s risk assessment considers multiple physical and transition risks such as increased days requiring heating or cooling of facilities, commodity shortages due to drought, facilities damage due to more intense weather events and rising carbon prices. These emerging risks are not unique to WBA. While these emerging risks are relevant to the company’s businesses, at this time none of these risks have been identified to have the potential for a significant or adverse impact on business operations, financial condition and results of operations. Summaries of key and emerging risks are presented to and reviewed by the WBA Governance, Risk and Compliance Committee, and summaries are presented to the Board’s Audit Committee at least twice annually. To better understand WBA’s ESG impacts throughout its operations, the company conducted thorough CSR materiality assessments during fiscal 2018 and fiscal 2021. The aim of the assessments was to encourage stakeholder dialogue, to inform WBA’s evolving sustainability strategy and to form the basis for its public CSR reporting. The assessments also included horizon scanning: identifying emerging topics that could become a focus for the company’s sustainability efforts in the future. WBA engaged global nonprofit Forum for the Future to guide the assessments, which were conducted following GRI reporting requirements. Internal and external stakeholders, including suppliers, employees, customers, the media, nonprofit groups, investors and regulatory bodies, were engaged through interviews and surveys to identify and prioritize material CSR issues, such as energy use and climate impacts. The results of these assessments identified energy use and climate impacts as a second tier material topic (i.e., medium priority). In the fiscal 2021 assessment, environmental topics rose in importance, particularly those relating to the negative impacts of plastics, but also climate change. Our policy is to complete a detailed and thorough CSR materiality assessment every three years to adhere to best practices in reporting and to stay abreast of emerging trends and issues related to ESG impacts.
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 Resource efficiency Primary climate-related opportunity driver Move to more efficient buildings Primary potential financial impact Reduced indirect (operating) costs Company-specific description WBA has adopted a goal to reduce emissions to help mitigate global warming and combat the urgent threat of climate change. This goal is embedded in the company’s business strategy and allows it to manage fluctuating energy costs as well as reduce environmental impact. The company’s emissions reduction strategy includes the implementation of large-scale initiatives, such as a global process to measure and monitor Scope 1, Scope 2 and some Scope 3 emissions. The strategy involves investment in energy and fuel efficiency programs in office buildings, distribution centers, stores and transportation fleets. In fiscal 2020, electricity represented 91.6 percent of the WBA carbon footprint from energy, reflecting use of electricity to power its retail stores and warehouses. Natural gas accounted for 7.7 percent, primarily for heating buildings. In fiscal 2020 WBA's total carbon footprint was 2.0 million metric tonnes of CO2e (carbon dioxide equivalent), down 7.9 percent from fiscal 2019, due to investment in energy-efficient equipment and systems to reduce our overall carbon footprint. As energy accounts for most of our emissions, we recognize the importance of investing in energy efficient equipment to reduce our overall carbon footprint. Time horizon Long-term Likelihood Likely Magnitude of impact Medium Are you able to provide a potential financial impact figure? Yes, a single figure estimate Potential financial impact figure (currency) 15700000 Potential financial impact figure – minimum (currency) Potential financial impact figure – maximum (currency) Explanation of financial impact figure The potential financial impact figure is an approximate annual monetary savings including energy savings only. This was estimated by determining an average monetary savings per Walgreens store per month based on average kWh savings per store per month (i.e., the number of stores that implemented at least one of the described energy efficiency programs multiplied by an average monetary energy savings per store per month multiplied by 12 months to account for the full year). Cost to realize opportunity 153214231 Strategy to realize opportunity and explanation of cost calculation
During fiscal 2020 Walgreens invested more than $146 million in energy efficiency programs, including projects in nearly 2,000 stores. These upgrades included replacing HVAC units and converting to LED interior lighting. In Boots UK, £5.6 million ($7,130,661 million) was invested during fiscal 2020. As of August 31, 2020 Boots UK had installed doors on refrigerated cabinets containing self-service food products in more than 340 stores, resulting in approximately 40 percent lower energy use, decrease in chiller breakdowns and reduction in food waste. Additionally, in Mexico, Farmacias Benavides invested more than $83,000 during fiscal 2020, including converting 805 locations to LED exterior lighting and installing Chilled Unit Energy Savers in 148 locations. The cost to realize this opportunity is more than $153 million. This is estimated by adding up the investments made in energy efficiency programs during fiscal 2020 by Walgreens, Boots UK and Farmacias Benavides businesses (i.e., $146 million plus $23 million plus $83,000). Comment Identifier Opp Where in the value chain does the opportunity occur? Direct operations Opportunity type Resource efficiency Primary climate-related opportunity driver Use of recycling Primary potential financial impact Other, please specify (Increased revenue from sale of commodities for recycling) Company-specific description Waste management is an important issue for WBA and our stakeholders, who expect that we do what is reasonably within our control to avoid waste associated with our operations and to minimize any adverse impacts of waste through responsible management and increasing circular economies. Approaches by WBA to improve sustainability of waste management include rethinking design, reducing consumption and recycling and composting materials. In managing waste, our business strives to engage employees to create innovative solutions and take ownership, collaborate with vendor partners, unlock the value of recyclable commodities and get them to market and create more efficient operations and practices. Time horizon Long-term Likelihood More likely than not Magnitude of impact Medium 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 The impact has not been quantified financially. However, WBA recognizes that market opportunities exist from the sale of recyclable materials, such as cardboard. This has the added benefit of helping to ensure recyclable materials are diverted from landfills. The potential financial impact could be significant but due fluctuations in the commodities market the company is unable to estimate these impacts at this time. Cost to realize opportunity 0 Strategy to realize opportunity and explanation of cost calculation Examples of our collaboration on waste reduction efforts include the following: Boots UK signed up for the Food Waste Reduction Roadmap and Step Up to the Plate Pledge, which includes a collective, ambitious target to reduce food waste by 50 percent by 2030. Thousands of Boots UK employees have completed Boots Environmental Experts (BEE) online training to further environmental targets. Walgreens distribution centers joined the U.S. Environmental Protection Agency (EPA) WasteWise program, the first U.S. voluntary solid waste reduction program. Walgreens diverted more than 2 million pounds of products from landfills in fiscal 2020 by donating unsold or discontinued products to a variety of nonprofit organizations and eliminated 595,000 pounds of waste through its reusable end-stand structure initiative. Walgreens distribution centers diverted more than 93 percent of waste from landfill in fiscal 2020, through an ongoing zero waste to landfill program. During fiscal 2020 less than 1 percent of Boots UK waste went to landfill. WBA continues to sponsor the U.S. Chamber of Commerce Foundation's Beyond 34 program, which aims to improve low U.S. municipal recycling rates. Beyond 34 will continue growing in scope and geography with the roll out of five new cities between 2021-22. The Walgreens distribution center in Orlando, Florida diverted more than 114,000 pounds of material from landfill in fiscal 2020. This was possible through a partnership with NuCycle Energy that enabled the business to find alternative uses for mixed plastics and paper that are generally rejected by recyclers. WBA entered 0 in the “Cost to realize opportunity” column to satisfy CDP’s disclosure requirement, as the company has not quantified the total cost for WBA of implementing these programs at this time. Comment Identifier Opp Where in the value chain does the opportunity occur? Direct operations Opportunity type Resource efficiency Primary climate-related opportunity driver Use of more efficient modes of transport
(C3.2) Does your organization use climate-related scenario analysis to inform its strategy? No, but we anticipate using qualitative and/or quantitative analysis in the next two years
C3.2b
(C3.2b) Why does your organization not use climate-related scenario analysis to inform its strategy? At WBA, climate-related risks and opportunities that include exposure to increased operating costs, business continuity, and the emissions associated with our operations have influenced and been incorporated into company-wide objectives, strategies and goals. As such, at the enterprise level, we focus on mitigating the impacts of climate change, reducing operating costs and risk, and ensuring business continuity due to weather and/or climate change impacts. WBA is committed to reducing its energy consumption and emissions. Central to this commitment is WBA’s climate change goal, which is as follows: To reduce the company’s energy consumption and Scope 1 and 2 emissions on a comparable basis (excluding the impact of acquisitions, disposals and any significant changes in existing operations) as defined by the Greenhouse Gas Protocol. Information has been widely disseminated throughout the organization via WBA’s intranet, employee town halls and specialized trainings (e.g., Boots UK EnergyCare e-learning packaging). We also regularly inform other stakeholders of our progress via our annual CSR report. The primary drivers in establishing this goal are the recognition of the risks posed to the organization by increasing energy costs and a belief that exploring and developing business opportunities in a low carbon economy will generate value for the organization. Additionally, our consumers are increasingly seeking environmentally preferred products. Even though WBA has not undertaken climate-related scenario analysis at this time, the company does consider climate-related issues as part of its risk assessment process. WBA identifies climate-related issues among its emerging risks. Emerging risks are those that have not fully developed or for which the potential impact cannot be accurately assessed. Once an issue is determined to have the potential to significantly and adversely affect the company’s operations, financial conditions and results of operations it is considered a key risk. Key risks are presented to and reviewed by the WBA Governance, Risk and Compliance committee on a twice yearly basis, and summaries are presented to the Board’s Audit Committee at least twice annually. Due to the uncertainty associated with climate-related issues they are considered emerging risks and climate-related scenario analysis has not been included at this time. While we haven’t yet leveraged climate-related scenario analysis to inform our business strategy, we have partially applied it to ongoing work to develop a Science-Based Target (SBT) for carbon reduction. During fiscal 2020, WBA conducted a Scope 3 evaluation based on its fiscal 2019 emissions, and the company has evaluated ways of integrating climate-related scenario analysis methods into our Enterprise Risk Management processes over the next two years to better understand how our business might perform and what alternatives are available to prevent or mitigate climate-related risks given different climate-related scenarios such as rising energy costs, increased storm damage, more frequent flooding, sustained supply chain disruptions and paradigm shifts.
C3.
(C3.3) Describe where and how climate-related risks and opportunities have influenced your strategy. Have climate- related risks and opportunities influenced your strategy in this area? Description of influence Products and services Yes WBA recognizes that risks and opportunities from the physical effects of climate change could have an impact directly or indirectly to its supply chain. The products WBA sells are sourced from a wide variety of domestic and international vendors, and any future disruption in the our supply chain or inability to find qualified vendors and access products that meet requisite quality and safety standards could adversely impact our businesses. The loss or disruption of supply arrangements for any reason, including loss or impairment of key manufacturing sites, inability to procure sufficient raw materials, natural disasters, or other external factors over which the Company has no control, could interrupt product supply and, if not effectively managed and remedied, have a significant adverse impact on business operations, financial condition and results of operations. Although the Company believes our suppliers and vendors may have felt the effects of climate-related issues in some form, we have yet to see major impacts of that in our enterprise and we do not expect to in the short- term. Walgreens is a founding retail partner of Loop, a state-of-the-art circular shopping system that aims to contribute to a shift toward durable, re-usable packaging and a shopping system that would reduce carbon emissions. This project is available to all online shoppers in the U.S. and Walgreens is evaluating opportunities to offer Loop products in stores in select markets. Walgreens also offers electric vehicle charging stations in the parking lots of 450 stores in the U.S. This is an increase of 13 percent from fiscal 2019. In fiscal 2020, Boots UK holiday gift lines removed plastic lamination and glitter from disposable packaging, replaced tissue paper in gift boxes with paper bags, used ribbons made from PCR or cotton to allow reuse, and included clear On-Pack Recycling Labels. We also call out on packaging where items can have additional uses. For example, a Liz Earle wash bag that can be used as a planter. All of our paper is ethically sourced and where we are able to, we use FSC certified pulp. Through our use of materials and packaging formats, we enable customers to feel like more responsible consumers. Through this program we eliminated 270 of metric tonnes of plastic packaging, which is more than half of the plastic packaging that was used in the previous year. Supply chain and/or value chain No WBA recognizes that risks and opportunities from the physical effects of climate change could have an impact directly or indirectly to its supply chain. The products WBA sells are sourced from a wide variety of domestic and international vendors, and any future disruption in the our supply chain or inability to find qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner could adversely impact our businesses. The loss or disruption of such supply arrangements for any reason, including for issues such as loss or impairment of key manufacturing sites, inability to procure sufficient raw materials, natural disasters, or other external factors over which the company has no control, could interrupt product supply and, if not effectively managed and remedied, have a significant adverse impact on its business operations, financial condition and results of operations. Although the company believes our suppliers and vendors may have felt the effects of climate-related issues in some form to date, we have yet to see major impacts of that in our enterprise and we do not expect to in the short-term. Investment in R&D Yes Climate-related risks and opportunities have not yet influenced our R&D investment strategy, as we are currently focused on evaluating the risks and opportunities relating to our operations and existing products and services. WBA also recognizes that increased investment in R&D in response to climate-related issues is likely already occurring in WBA’s suppliers’ operations and in terms of magnitude these investments have the potential to be significant. Operations Yes WBA is committed to protecting the planet and giving due consideration to the impact our company’s operations have on the environment. This includes working to reduce emissions across all of our businesses to help mitigate global warming and addressing the urgent threat of climate change in the short-, medium- and long-term horizons. As energy accounts for most of our emissions, we recognize the importance of investing in energy efficient equipment to reduce our overall carbon footprint. In fiscal 2020 Boots UK and Walgreens invested more than $153 million in energy efficient lighting, heating, ventilation and air condition (HVAC) units and refrigerators (as disclosed in 2.4a opportunity 1).
C3.
(C3.4) Describe where and how climate-related risks and opportunities have influenced your financial planning. Financial planning elements that have been influenced Description of influence Row 1 Revenues Direct costs Capital expenditures Assets At WBA, climate-related risks and opportunities that include exposure to increased operating costs, business continuity, the emissions associated with our operations and generating value for customers have influenced and been incorporated into company-wide objectives, strategies and goals. As such, at the enterprise level, we focus on mitigating the impacts of climate change, reducing operating costs and risk, generating value for customers and ensuring business continuity due to weather and/or climate change impacts. Financial planning elements that have been influenced: Revenue Description of influence: Since joining the Global Shea Alliance (GSA) in 2019, WBA has supported the formation of a cooperative of women shea harvesters in Ghana, including legal registration of the cooperative, election of leaders, creation of sub-committees and training more than 700 women in cooperative development and business development. The shea butter used as a moisturizer in beauty products and as a cooking oil comes from the kernel in the fruits on shea trees, which are native to Africa. Liz Earle, a WBA-owned beauty brand that is passionate about naturally active ingredients and has pioneered cruelty-free skincare, will be supporting and working with the GSA in its endeavors to support women in shea. Liz Earle uses shea butter widely in its products and working with the GSA allows us to give back to communities that harvest shea fruits. Increasingly, consumers are seeking more sustainable product offerings and brands they can trust. Through partnerships such as with GSA we are ensuring WBA is in a position to meet increased demand and generate revenue. Financial planning elements that have been influenced: Direct costs Description of influence: WBA includes climate-related risks among the sustainability concerns on the company’s summary of emerging risks. Climate-related opportunities associated with the company’s direct operating costs are focused on effective management of energy expenses and consideration of opportunities to reduce associated emissions. The company’s financial planning process evaluates historical and future energy costs. To reduce energy consumption, Walgreens and Boots UK forecast and manage energy across their real estate and fleets with monthly and yearly reports. With many of our initiatives, we recognize that what is good for the planet is also good for business. Energy savings, for example, reduce our emissions output while cutting costs. Financial planning elements that have been influenced: Capital expenditures Description of influence: Climate-related opportunities associated with capital for the company prioritizes funding capital equipment upgrades that reduce energy and associated emissions. Included in the company’s financial planning process is consideration of capital investments which reduce operating costs and risk. In fiscal 2020, Boots UK and Walgreens invested more than $153 million in these energy efficiency programs. Financial planning elements that have been influenced: Assets Description of influence: The company’s assets are comprised of current assets (cash, short-term investments, receivables merchandise inventories and other assets), property and equipment, goodwill and other assets. The value and lifetime of the company’s assets can be impacted due to climate-related risks such as changes to temperature, humidity and dew points. These chronic changes may reduce the expected lifespan of store equipment which was installed under different condition expectations, requiring more frequent replacement. Asset aging and turnover is monitored and included in financial planning.
C3.4a
(C3.4a) Provide any additional information on how climate-related risks and opportunities have influenced your strategy and financial planning (optional).
C4. Targets and performance
C4.
(C4.1) Did you have an emissions target that was active in the reporting year? Intensity target
C4.1b
(C4.3a) Identify the total number of initiatives at each stage of development, and for those in the implementation stages, the estimated CO2e savings. Number of initiatives Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked ) Under investigation 0 0 To be implemented 0 0 Implementation commenced* 0 0 Implemented* 4 62000 Not to be implemented 0 0
C4.3b
(C4.3b) Provide details on the initiatives implemented in the reporting year in the table below. Initiative category & Initiative type Energy efficiency in buildings Heating, Ventilation and Air Conditioning (HVAC) Estimated annual CO2e savings (metric tonnes CO2e) 4200 Scope(s) Scope 2 (location-based) Voluntary/Mandatory Voluntary Annual monetary savings (unit currency – as specified in C0.4) 1100000 Investment required (unit currency – as specified in C0.4) 32900000 Payback period
25 years Estimated lifetime of the initiative 11-15 years Comment This commentary refers to WBA’s energy efficiency heating, ventilation, and cooling program at Walgreens retail operations resulting in reduced carbon emissions. In fiscal 2020, targeted energy efficiency-based and reactive-based HVAC rooftop unit replacements were conducted to improve unit efficiency, right-size units and replace aging or failing assets at approximately 498 Walgreens stores. 444 of the locations had all units replaced through our Energy Efficiency program while 54 locations had all units replaced in a reactive replacement program. Walgreens replaced aged heating, ventilation, and air conditioning (HVAC) equipment while taking advantage of new technology and energy saving opportunities. It is estimated that this program will achieve 4,200 metric tonnes of CO2e savings annually over the life of the initiative. WBA entered $1,100,000 in the “annual monetary savings” column based on approximate annual energy savings only. Initiative category & Initiative type Energy efficiency in buildings Lighting Estimated annual CO2e savings (metric tonnes CO2e) 33000 Scope(s) Scope 2 (location-based) Voluntary/Mandatory Voluntary Annual monetary savings (unit currency – as specified in C0.4) 8600000 Investment required (unit currency – as specified in C0.4) 52900000 Payback period 4-10 years Estimated lifetime of the initiative 6-10 years Comment This commentary refers to the first of two energy efficiency lighting programs implemented during fiscal 2020 at Walgreens retail operations, resulting in reduced carbon emissions. Under this initiative, ballasts and lighting were upgraded and fully replaced with a lighting system with dimming capabilities and daylight-harvesting functionality. During fiscal 2020, 847 Walgreens stores were retrofitted with this technology. It is estimated that this initiative will achieve 33,000 metric tonnes of CO2e savings annually over the life of the initiative. WBA entered $8,600,000 in the “annual monetary savings” column based on approximate annual energy savings only. Initiative category & Initiative type Energy efficiency in buildings Lighting
Estimated annual CO2e savings (metric tonnes CO2e) 8300 Scope(s) Scope 2 (location-based) Voluntary/Mandatory Voluntary Annual monetary savings (unit currency – as specified in C0.4) 2100000 Investment required (unit currency – as specified in C0.4) 10200000 Payback period 4-10 years Estimated lifetime of the initiative 6-10 years Comment This commentary refers to the second of two energy efficiency lighting programs implemented at Walgreens retail operations during fiscal 2020, resulting in reduced carbon emissions. This interior lighting initiative involved a reduction from two bulbs to one per fixture through a centering kit along with an upgrade from fluorescent bulbs to LED bulbs. This was the first year of this specific initiative and it was implemented as a lower cost solution compared to the full ballast retrofit. During fiscal 2020, 368 Walgreens stores were retrofitted with this technology. It is estimated that this initiative will achieve 8,300 metric tonnes of CO2e savings annually over the life of the initiative. WBA entered $2,100,000 in the “annual monetary savings” column based on approximate annual energy savings only. Initiative category & Initiative type Energy efficiency in buildings Building Energy Management Systems (BEMS) Estimated annual CO2e savings (metric tonnes CO2e) 16500 Scope(s) Scope 2 (location-based) Voluntary/Mandatory Voluntary Annual monetary savings (unit currency – as specified in C0.4) 3900000 Investment required (unit currency – as specified in C0.4) 21300000 Payback period 4-10 years Estimated lifetime of the initiative 6-10 years Comment This commentary refers to the energy efficiency building energy management system program at Walgreens retail operations, which resulted in reduced carbon emissions. During fiscal 2020, Walgreens launched an Energy Management System (EMS) program, upgrading or installing new EMS at 1,292 retail locations. The EMS allows for near real-time data gathering from our locations and enables better adherence to lighting and HVAC schedules and the execution of other energy savings strategies such as demand response. This was the first year of this iteration of the program and part of an overall effort to standardize our EMS across the portfolio of stores. This being the first year of the program, measurement and verification processes are being fine-tuned while the data being gathered from our systems is being learned. It is estimated that this initiative will achieve 16,500 metric tonnes of CO2e savings annually over the life of the initiative. WBA entered $3,900,000 in the “annual monetary savings” column based on approximate annual energy savings only. Initiative category & Initiative type Transportation Company fleet vehicle efficiency Estimated annual CO2e savings (metric tonnes CO2e) 638 Scope(s) Scope 1 Voluntary/Mandatory Voluntary Annual monetary savings (unit currency – as specified in C0.4) 0 Investment required (unit currency – as specified in C0.4) 400000 Payback period No payback Estimated lifetime of the initiative Ongoing
(C4.3c) What methods do you use to drive investment in emissions reduction activities? Method Comment Compliance with regulatory requirements/standards New Walgreens stores are constructed and designed to meet or exceed local and state building and energy efficiency codes. Similarly, specifications for new Boots stores, maintenance programs and store refits include energy considerations as part of the investment case, and include many energy reduction technologies as standard, such as LED lighting, low GWP refrigerants and building control systems. Employee engagement In addition to new investments in technology, WBA fosters a hearts and minds approach to initiating active sustainability among our employees. Through regular internal communications and social media posts, WBA employees are invited to learn about and celebrate our progress and commitments on environmental initiatives. Dozens of employees participate in our volunteer Business Resource Groups (BRGs) focused on environmental and sustainability issues. Through our EnergyCare program our employees are given opportunities to learn about energy waste, be inspired toward an energy conscious culture and understand their role in the greater goals of the company. In fiscal 2020, as part of the EnergyCare program, Boots UK developed an additional e-learning module about water. Through interactive training, participants learn the importance of water management. In fiscal 2020, Boots UK employees were introduced to the Boots Environmental Experts online training, designed to engage employees and further Boots UK environmental targets. More than 14,000 employees completed the training in fiscal 2020. During Fiscal 2020 Boots UK continued to offer electric vehicle charge points for employees parking at its support office in Nottingham and took the decision to increase the number of points available and also include charge points for visitors. These will be installed in fiscal 2021. Walgreens continued to support a large number of free charging stations for employee parking at its support office in Deerfield. Dedicated budget for energy efficiency To reduce energy consumption, Walgreens and Boots UK forecast and manage energy across their real estate and fleets with monthly and yearly reports. The company's businesses invest in energy efficient lighting, heating, ventilation and air conditioning (HVAC) units and refrigerators, engage and educate employees around energy consumption, invest in photovoltaic systems, use alternative energy management programs and participate in demand-response curtailment programs during peak periods. In fiscal 2020, Boots UK and Walgreens invested more than $153 million in these energy efficiency programs. With many of our initiatives, we recognize that what is good for the planet is also good for business. Energy savings, for example, reduce our emissions output while cutting costs. Each business within WBA tracks and monitors energy use, in line with our company-wide commitment to reduce emissions. Walgreens, WBA's largest business, has an annual target to reduce energy use across its operations. Dedicated budget for other emissions reduction activities As part of the capital planning process, energy efficiency programs are part of the long-range plan to reduce overall operating expenses. Compliance with regulatory requirements/standards Boots UK complies with the Energy Savings Opportunity Scheme (ESOS), a mandatory energy assessment and energy saving identification scheme for large organizations in the UK. The scheme introduces a regular program of energy audits (or approved equivalent) for the mandated eligible organizations. Walgreens complies with mandatory energy consumption reporting in municipalities where this is required. Partnering with governments on technology development Boots UK is a steering committee member of the Circular Economy Task Force. The Circular Economy Task Force is a government-endorsed, business-led group convened by Green Alliance. The Task Force is continuing to research policy solutions that would enable businesses to make the necessary changes for a more circular economy, optimizing the UK’s resource use. Some of the recommendations of the Task Force were picked up by the UK’s Environmental Audit Committee’s “Growing a Circular Economy” report and by the Scottish Government’s “Resource Use and the Circular Economy” inquiry, and the Task Force’s reports are being considered as part of the evidence base for the government’s forthcoming resources and waste strategy. Other (Boots UK support office in Beeston in Nottingham, UK operates a Combined Heat Power (CHP) plant) At the Boots UK support office in Beeston in Nottingham, UK, there is a Combined Heat Power (CHP) plant that supplies heat and energy to distribution centers, data centers, and corporate offices. Energy management is organized at the operations level. This asset enhances Boots UK’s ability to better control the energy inputs associated with corporate support operations. In addition, the carbon reduction goals of the plant are set by those who operate it on a daily basis. Other (Contracts to purchase electricity generated from renewable origins) A number of WBA’s businesses in the UK and Republic of Ireland – including Boots UK, Boots Opticians, Alloga UK, Alliance Healthcare in the UK and Boots Ireland – have contracts to purchase electricity generated from renewable origins. With a few exceptions, the electricity that these businesses purchase directly through the utility grid is certified as renewable. The company’s businesses in Norway and Spain are certified for purchasing 100 percent renewable energy. Across WBA, in fiscal 2020, 7 percent of energy consumed was from renewable sources. Other (British Retail Consortium's Climate Change Statement) In July 2020, Boots UK pledged to collaborate with 19 other UK retailers on a roadmap for the industry to achieve complete net zero emissions by 2040, including net zero Scope 2 emissions by 2030 and Scope 1 by 2035. The 20 retailers who are signatories to the British Retail Consortium's Climate Change Statement committed to driving decarbonization in shops, distribution centers and logistics operations; cutting emissions in supply chains; and guiding customers toward dramatically lowering their own carbon footprints, Other (U.S. Department of Energy Better Buildings Challenge) Fiscal 2020 was the final year of Walgreens commitment through the U.S. Department of Energy Better Buildings Challenge, to reduce energy intensity by 20 percent across 100 million square feet of retail space, compared with fiscal 2011. The business achieved the goal through energy efficiency investments and other programs and was publicly recognized by the DOE as a Goal Achiever.
C4.
(C4.5) Do you classify any of your existing goods and/or services as low-carbon products or do they enable a third party to avoid GHG emissions? Yes
C4.5a
(C4.5a) Provide details of your products and/or services that you classify as low-carbon products or that enable a third party to avoid GHG emissions. Level of aggregation Product Description of product/Group of products Walgreens retail pharmacies host electrical vehicle charging stations in selected urban regions. Are these low-carbon product(s) or do they enable avoided emissions? Avoided emissions Taxonomy, project or methodology used to classify product(s) as low-carbon or to calculate avoided emissions Other, please specify (No methodology established at this time.) % revenue from low carbon product(s) in the reporting year 0 % of total portfolio value Asset classes/ product types Comment Walgreens is a leading retail host of electric vehicle charging stations in the U.S., promoting choices by customers and neighbors to drive electric vehicles. As of August 31, 2020 approximately 450 electric vehicle charging stations were in operation at Walgreens locations. They are upgraded and maintained by a third party. Level of aggregation Group of products Description of product/Group of products Walgreens stores offer a selection of energy efficient products Are these low-carbon product(s) or do they enable avoided emissions? Avoided emissions Taxonomy, project or methodology used to classify product(s) as low-carbon or to calculate avoided emissions Other, please specify (Products with the U.S. Environmental Protection Agency's Energy Star rating) % revenue from low carbon product(s) in the reporting year 0 % of total portfolio value Asset classes/ product types Comment Walgreens offers selected products, including devices that have achieved the U.S. Environmental Protection Agency’s Energy Star rating, that allow customers to reduce their emissions.
C5. Emissions methodology
C5.
(C6.2) Describe your organization’s approach to reporting Scope 2 emissions. Row 1 Scope 2, location-based We are reporting a Scope 2, location-based figure Scope 2, market-based We are reporting a Scope 2, market-based figure Comment
C6.
(C6.3) What were your organization’s gross global Scope 2 emissions in metric tons CO2e? Reporting year Scope 2, location-based 1507000 Scope 2, market-based (if applicable) 1445000 Start date End date Comment
C6.
(C6.4) Are there any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure? Yes
C6.4a
(C6.4a) Provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure. Source Fugitive emissions are excluded Relevance of Scope 1 emissions from this source Emissions are not relevant Relevance of location-based Scope 2 emissions from this source No emissions from this source Relevance of market-based Scope 2 emissions from this source (if applicable) No emissions from this source Explain why this source is excluded While fugitive emissions resulting from the use of refrigeration and air conditioning equipment are not included as the company evaluates their materiality for its operations, the company committed in fiscal 2017 to the Consumer Goods Forum’s second Refrigeration Resolution to continue the phase down of Global Warming Potential (GWP) gases. Source Chilled water Scope 2 emissions are excluded Relevance of Scope 1 emissions from this source No emissions from this source Relevance of location-based Scope 2 emissions from this source Emissions are not relevant Relevance of market-based Scope 2 emissions from this source (if applicable) Emissions are not relevant Explain why this source is excluded Estimated emissions resulting from chilled water account for on the order of 3 hundredths of 1 percent of total Scope 2 emissions and thus are deemed not relevant.
C6.
(C6.5) Account for your organization’s gross global Scope 3 emissions, disclosing and explaining any exclusions.
Purchased goods and services Evaluation status Relevant, calculated Metric tonnes CO2e 25508000 Emissions calculation methodology WBA engaged a third party consultant to complete a Scope 3 evaluation using an Environmentally Extended Input-Output (EEI-O) model and primary fiscal 2019 data when available. The Scope 3 evaluation was conducted in line with the WRI/WBCSD Corporate Value Chain (Scope 3) Guidelines (GHG Protocol). The results of this evaluation will be leveraged to understand relevance of each category of Scope 3 emissions. 25,508,0000 tonnes of CO2e emissions associated with purchased goods and services were estimated using supplier expenditure data provided by WBA for select business units, which was extrapolated by the third party consultant to account for unavailable data, and sector emission factors including emissions of all supply chain tiers up to and including raw material extraction. Percentage of emissions calculated using data obtained from suppliers or value chain partners 0 Please explain WBA completed a Scope 3 assessment using fiscal 2019 data. This assessment is not completed on a annual basis, therefore we have entered data from fiscal 2019 as these are our most recent estimates. WBA entered "0" into column "percentage of emissions calculated using data obtained from suppliers or value chain partners" as we are unable to determine percentage of emissions calculated using data obtained from suppliers or value chain partners due to the engagement of a third party consultant to use an Environmentally Extended Input-Output (EEI-O) model. Capital goods Evaluation status Relevant, calculated Metric tonnes CO2e 776000 Emissions calculation methodology WBA engaged a third party consultant to complete a Scope 3 evaluation using an Environmentally Extended Input-Output (EEI-O) model and primary fiscal 2019 data when available. The Scope 3 evaluation was conducted in line with the WRI/WBCSD Corporate Value Chain (Scope 3) Guidelines (GHG Protocol). The results of this evaluation will be leveraged to understand relevance of each category of Scope 3 emissions. 776,0000 tonnes of CO2e emissions associated with capital goods were estimated using supplier expenditure data provided by WBA for select business units, which was extrapolated by the third party consultant to account for unavailable data, and sector emission factors. Percentage of emissions calculated using data obtained from suppliers or value chain partners 0 Please explain WBA completed a Scope 3 assessment using fiscal 2019 data. This assessment is not completed on a annual basis, therefore we have entered data from fiscal 2019 as these are our most recent estimates. WBA entered "0" into column "percentage of emissions calculated using data obtained from suppliers or value chain partners" as we are unable to determine percentage of emissions calculated using data obtained from suppliers or value chain partners due to the engagement of a third party consultant to use an Environmentally Extended Input-Output (EEI-O) model. Fuel-and-energy-related activities (not included in Scope 1 or 2) Evaluation status Not relevant, calculated Metric tonnes CO2e 298000 Emissions calculation methodology WBA engaged a third party consultant to complete a Scope 3 evaluation using an Environmentally Extended Input-Output (EEI-O) model and primary fiscal 2019 data when available. The Scope 3 evaluation was conducted in line with the WRI/WBCSD Corporate Value Chain (Scope 3) Guidelines (GHG Protocol). The results of this evaluation will be leveraged to understand relevance of each category of Scope 3 emissions. 298,000 tonnes of CO2e emissions associated with fuel- and energy-related activities was estimated using electricity and energy consumption data provided by WBA for all operations and country specific energy distribution and transmission emission factors from DEFRA (2019) UK Government GHG Conversion Factors for Company Reporting. Percentage of emissions calculated using data obtained from suppliers or value chain partners 0 Please explain WBA completed a Scope 3 assessment using fiscal 2019 data. This assessment is not completed on a annual basis, therefore we have entered data from fiscal 2019 as these are our most recent estimates. WBA entered "0" into column "percentage of emissions calculated using data obtained from suppliers or value chain partners" as we are unable to determine percentage of emissions calculated using data obtained from suppliers or value chain partners due to the engagement of a third party consultant to use an Environmentally Extended Input-Output (EEI-O) model.
