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Tuesday, September 21, 2021
Welcome to your CDP Climate Change
Questionnaire 2021
C0. Introduction
C0.
(C0.1) Give a general description and introduction to your organization.
Minneapolis based Target Corporation (NYSE: TGT) serves guests at 1909 stores and via Target.com.
As one of the largest U.S. retailers, at Target, we use our scale and scope to design, source and sell quality products that delight our guests. We are committed to providing inclusive and sustainable choices that support the needs of our guests, align with their values and uplift and protect the people, communities and ecosystems all along our value chain. As we work to meet these commitments, we are guided by a strategy that is an expression of our purpose and values of inclusivity, optimism, connection, inspiration and drive, as well as ethics and delivering a great experience for our guests.
To help all families discover the joy of everyday life—that’s Target’s purpose and there are countless ways we live it.
No matter how our guests choose to shop with us—whether in-store, through our digital channels or both—we aim to make their experience easy and inspiring, at an only-at-Target value. We have stores in all 50 U.S. states and the District of Columbia, with team members who reflect our communities and are passionate about bringing joy to our guests, day in and day out. We work together as a team and stand together with our communities, in good times and hard times, striving to always be a source of convenience, continuity and joy. 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/.
Target considers multiple factors in evaluating risk. Target considers risks substantive when they are assessed to be high or critical using proprietary criteria. Importantly, issues deemed material for the purposes of this report may not be considered material for SEC reporting purposes.
Tuesday, September 21, 2021
Target’s responses to this questionnaire contains 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. The principal forward-looking statements in this report include our sustainability goals, commitments and programs; our business plans, initiatives and objectives; our assumptions and expectations; the scope and impact of corporate responsibility risks and opportunities; and standards and expectations of third parties. 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 that could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 30, 2021, 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 Reporting year
February 2, 2020
January 31, 2021
No
C0.
(C0.3) Select the countries/areas 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 chosen approach for consolidating your GHG inventory.
Operational control
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Reviewing and guiding major plans of action Reviewing and guiding risk management policies Monitoring implementation and performance of objectives
from the Nominating and Governance Committee. The Nominating and Governance Committee reviews environmental and social topics semi-annually. This happens independently of our financial reporting process, which includes economic topics, and is overseen throughout the year by the Audit and Finance Committee, which provides regular reports to the Board of Directors. Target’s Senior Vice President of Corporate Responsibility presents to the Nominating and Governance Committee semi-annually on corporate responsibility related topics.
C1.
(C1.2) Provide the highest management-level position(s) or committee(s) with
responsibility for climate-related issues.
Name of the position(s) and/or committee(s)
Responsibility Frequency of reporting to the board on climate-related issues Other, please specify Senior Vice President of Corporate Responsibility
Both assessing and managing climate-related risks and opportunities
Half-yearly
Other, please specify Vice President of Property Management
Both assessing and managing climate-related risks and opportunities
Half-yearly
Other, please specify Vice President of Responsible Sourcing & Sustainability
Both assessing and managing climate-related risks and opportunities
Half-yearly
C1.2a
(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).
At Target, the Senior Vice President of Corporate Responsibility oversees Corporate Responsibility initiatives across the enterprise. The Senior Vice President of Corporate Responsibility amplifies the goals and key milestones of CR and Target's climate strategies. The SVP of Corporate Responsibility has been assigned the full responsibility of Target’s Climate-related issues and takes on the leadership role with optimal assistance from the Corporate Responsibility Business Integrated team. 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 & Sustainability team and the Energy team within Property Management
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to help coordinate and strategize on work. The Process of monitoring climate-related issues further includes a quarterly meeting with the SVP of CR, the Vice President of Property Management and the Vice President of Responsible Sourcing & Sustainability.to discuss progress toward goals (for example, Scope 1 & 2, and Scope 3 goals) and any changes in our business context that may have implications for climate-related issues relevant to Target.
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. 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 quarterly basis the Vice President of Property Management brings together their team along with other critical partners like Responsible Sourcing & Sustainability and CR to review progress on goals and understand key milestones. The process of monitoring climate- related issues is brought up during this meeting to review progress of Scope 1 and 2 goals.
The Vice President of Responsible Sourcing & Sustainability oversees Target's global commitment to manufacture our goods and services in a responsible and sustainable manner. The Vice President of Responsible Sourcing & Sustainability reports to the SVP & President of Owned Brand Sourcing. The process of monitoring climate-related issues involves the Responsible Sourcing & Sustainability team leading our Scope 3 climate commitment specifically, around the purchased goods and services category and inclusive of the strategy and implementation of our supplier focused climate goal. Our supplier engagement initiatives that are tied to our climate goal are focused on engaging and supporting our top 80% of suppliers by spend set their own Scope 1 and 2 science-based emission reduction targets. The Responsible Sourcing & Sustainability team also leads our supplier and factory engagements to drive sustainable operations via transparency and improved supply chain operational efficiencies. Key efforts of Responsible Sourcing & Sustainability include: manufacturing performance improvement programs, training of suppliers on our energy and climate goals, as well as factory compliance audits across our global supply chain. These initiatives ladder up to Target's energy and climate goals within the Owned Brand Sourcing and Development team objectives and our overarching science-based emission reduction targets. The Vice President of Responsible Sourcing & Sustainability meets quarterly with the SVP of CR, VP of Property Management and VP of Responsible Design to discuss progress towards climate goals and review forward moving plans to support climate-related strategies.
C1.
(C1.3) Do you provide incentives for the management of climate-related issues,
including the attainment of targets?
Provide incentives for the management of climate-related issues Comment Row 1 Yes
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From (years) To (years) Comment Short-term 0 5 Medium-term 5 10 Long-term 10 20
C2.1b
(C2.1b) How does your organization define substantive financial or strategic impact
on your business?
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. In the context of climate-related issues and this response, Target leverages both the TCFD framework and our internal Enterprise Risk Management Framework. We considered level of financial impact, likelihood of potential events occurrence over time and our ability to mitigate potential risks.
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 1, 2020, 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.
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
A specific climate-related risk management process
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Frequency of assessment
Every two years
Time horizon(s) covered
Short-term Medium-term Long-term
Description of process
In 2020 we developed an Enterprise Sustainability Strategy with an ambition to be an equitable and regenerative company. All of our actions to address climate change support our top-level commitment to being a net zero enterprise by 2040. The scope of this goal includes our scope 1, 2 & 3 emissions. This strategy will be started Summer
- The science behind climate change necessitates aggressive emissions reductions and removals over the next two decades, and we will do our part.
We will continue to evaluate both our climate – related risks as we build out our net zero goal roadmap. We have identified climate risks based on our initial 2019 TCFD climate risk findings and are in the process of completing a new TCFD analysis to continue to integrate climate risks into our business planning and processes.
C2.2a
(C2.2a) Which 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 initial scenario analysis. An example of a current regulation Target is tracking is California’s Zero-Emission Vehicle regulation, which nine additional states have adopted, requiring a minimum percentage of vehicle sales of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). The majority of Target’s logistics are carried out by third-party operators, and increased costs faced by these operators would likely be passed on to Target. Emerging regulation
Relevant, always included
Target is tracking carbon regulation and related energy policy proposals at the U.S. federal and state levels. An example of a current regulation Target is tracking is the U.S. Federal Regulatory Commission’s Minimum Offer Price Rule regulation for the PJM Regional Transmission Operator, which requires a minimum price for certain renewable energy resources to participate in the capacity marketplace. As a large consumer of energy, we evaluate how these
Tuesday, September 21, 2021
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. 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, and consumer shifting preference to sustainable brands. As part of the new Target Forward sustainability strategy, Target has committed to being a net zero enterprise by 2040. Acute physical
Relevant, always included
Target operates in many communities impacted by extreme weather events. In 2020 Target experienced impact from extreme weather events such as Tornadoes, Floods, a Derecho, Hurricanes like Delta, Laura and Sally and wildfires across west coast. Outfitting our facilities with shutters and air scrubbers along with 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. These physical risks could imply decreased revenue due to disruption in supply chain and operations, increased operating costs and infrastructure damage at Target’s facilities, increases in raw material, food, and produce costs, and delays in distribution.
C2.
(C2.3) Have you identified any inherent climate-related risks with the potential to have
a substantive financial or strategic impact on your business?
Yes
C2.3a
(C2.3a) Provide details of risks identified with the potential to have a substantive
financial or strategic impact on your business.
Identifier
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Risk 1
Where in the value chain does the risk driver occur?
Upstream
Risk type & Primary climate-related risk driver
Market Uncertainty in market signals
Primary potential financial impact
Increased indirect (operating) costs
Company-specific description
Changing prices for electricity and other fuels could significantly impact Target’s business. For example, higher fuel costs will lead to higher logistics costs. 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 higher fuel costs will lead to a higher logistics cost for Target. Both the IEA WEO 2018 and the EIA Outlook 2019 project increases in fossil fuels costs under the BAU scenario through 2040. The 2025 global oil price is projected at $101/ barrel and the 2025 US oil price is projected at $80/ barrel. The 2040 global oil price is projected at $137/ barrel and the 2040 US oil price is projected at $105/ barrel.
Time horizon
Long-term
Likelihood
Very likely
Magnitude of impact
High
Are you able to provide a potential financial impact figure?
Yes, an estimated range
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
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.
Tuesday, September 21, 2021
requirements 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?
Yes, an estimated range
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
By the end of this year 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. Our investments in both energy efficiency and renewable energy have positive paybacks and are a direct financial benefit. Over the last seven years, we have invested over $ million dollars in energy efficiency projects, many of which have a payback of fewer than three years.
Cost of response to risk
Description of response and explanation of cost calculation
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 and renewable energy; and will continue to do so to manage these risks. As a means to drive renewable energy, we have
Tuesday, September 21, 2021
installed solar energy systems at 542 locations across the U.S. At present, we are also exploring a number of ways to expand our renewable energy programs as a key component of our carbon reduction strategy. These energy efficiency and renewable energy investments help us to mitigate the risk associated with the potential for rising energy costs associated with increased legislation including a carbon tax, a cap and trade system, fuel taxes, and higher building efficiency standards. Target's Property Management teams partner on remodel and store design projects to meet energy codes and make smart efficiency investment decisions that go beyond code where feasible. Target's Energy team works with internal asset teams and Target's electric utilities to maximize utility energy efficiency rebates where available. The cost of the response to the risk is estimated at $0. There is no incremental cost to respond to this climate- related risk mitigation response because maintaining adequate insurance coverage for all Company sites is part of the normal cost of doing business.
Comment
Our investments in both energy efficiency and renewable energy have positive paybacks and are a direct financial benefit. Over the last seven years, we have invested over $300 million dollars in energy efficiency projects, many of which have a payback of fewer than three years. The cost of the response to the risk is estimated at $0. There is no incremental cost to respond to this climate-related risk mitigation response because maintaining adequate insurance coverage for all Company sites is part of the normal cost of doing business.
Identifier
Risk 3
Where in the value chain does the risk driver occur?
Direct operations
Risk type & Primary climate-related risk driver
Acute physical Increased severity and frequency of extreme weather events such as cyclones and floods
Primary potential financial impact
Increased capital expenditures
Company-specific description
Increased severity of extreme weather events may increase weather-related damage to Target stores and distribution centers, increasing Target's capital and insurance costs. Increased flood occurrence can cause infrastructure damage of owned facilities, potential incurred costs for transporting workers post impacts, and temporary closures resulting in lost sales. Florida is a key market for Target. In this region, the combined effects of changing extreme rainfall events and sea level rise are already increasing flood frequencies, which impacts property values and infrastructure viability, particularly in coastal cities. Aqueduct shows that key locations for Target are at risk for flood
Target Corporation CDP Climate Change Questionnaire 2021 Tuesday, September 21, 2021
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. When a Target store or distribution center is closed or, and property damages occur from extreme weather-related events, our teams monitor the duration of closure to assess and assign sales loss and team member compensation, costs to repair damages, and costs of products donated to communities to provided necessities such as pallets of water and other necessities. Target provided more than $2 million to support communities impacted by a natural disaster in 2020. In October of 2020,Target donated $250,000 to support communities activating in response to Hurricane Delta’s impact in the Gulf Coast, including the Team Member Giving Fund, Red Cross, Team Rubicon, Community Foundation of Southwest Louisiana and local food banks, such as Second Harvest Greater New Orleans and Acadiana, the Food Bank of Central Louisiana and the Food Bank of Northeast Louisiana. Our store teams also used Target GiftCards to support local first responders and nonprofit organizations on purchasing much needed supplies. The cost of the response to the risk is estimated at $0. There is no incremental cost to respond to this climate-related risk mitigation response because maintaining adequate insurance coverage for all Company sites is part of the normal cost of doing business.
Comment
The cost of the response to the risk is estimated at $0. There is no incremental cost to respond to this climate-related risk mitigation response because maintaining adequate insurance coverage for all Company sites is part of the normal cost of doing business.
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
Use of lower-emission sources of energy
Tuesday, September 21, 2021
Primary potential financial impact
Reduced indirect (operating) costs
Company-specific description
Multiple federal and regional efforts have emerged that seek to put a price on carbon. Included in these proposals are federal and regional cap-and-trade programs, carbon taxes, and other proposals. The end objective of policymakers is to reduce the price disparity between carbon-based and alternative energy sources, establish increased certainty for future energy prices and regulations, reduce U.S. dependence on foreign energy sources, and incentivize organizations and individuals who act to reduce their energy use. In addition to the certainty that would come from the establishment of significant carbon regulations, we believe Target could benefit in two other ways. First, more than 10 years of substantial investments in energy efficiency will position Target to compete in an economy where energy costs increase. Strategies that de-couple our business operations from carbon-based energy sources will reduce our exposure to price fluctuations and help the organization manage expense. Second, as we continue to invest in energy efficiency and renewable energy – there may be opportunities for Target to further monetize the value we create by reducing GHG emissions through the sale of renewable energy certificates. Target has invested heavily in carbon reduction efforts over the past several years. Target is currently realizing financial value through the sale of Renewable Energy Credits (RECs) in states with renewable energy standards and strong REC markets. When Target sells the RECs from a behind-the- meter solar energy installation, Target does not make public claims to be solar powered nor does Target include the associated solar production in annual renewable energy or GHG reporting. Our investments in both energy efficiency and renewable energy have positive paybacks and are a direct financial benefit.
Time horizon
Long-term
Likelihood
Very likely
Magnitude of impact
Medium-low
Are you able to provide a potential financial impact figure?
Yes, an estimated range
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
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fixtures in our stores. In addition, we have team members dedicated to identifying incentive and rebate opportunities for energy efficiency projects. This has allowed for increased investment in energy efficiency projects. We anticipate continued opportunities to leverage various incentive sources and rebate opportunities for implementing energy efficiency projects in the coming years.
Time horizon
Medium-term
Likelihood
Virtually certain
Magnitude of impact
Low
Are you able to provide a potential financial impact figure?
Yes, a single figure estimate
Potential financial impact figure (currency)
Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)
Explanation of financial impact figure
In 2019, Target received approximately $6 million in direct energy efficiency incentives from utilities for Target’s installation of energy efficiency projects. The energy cost savings from these energy efficiency projects is not reflected in this figure.
By continually updating our energy-consuming assets, we have been able to take advantage of continually improving energy efficiency standards and regulations. This has led to energy- related savings and we have team members dedicated to identifying incentive and rebate opportunities for energy efficiency projects. This has allowed for increased investment in energy efficiency projects.
Cost to realize opportunity
Strategy to realize opportunity and explanation of cost calculation
We have team members dedicated to identifying incentive and rebate opportunities for energy efficiency projects. They work closely with internal partners as well as utilities to ensure we are taking advantage of as many opportunities as possible. The cost associated with currently managing these risks is minimal. We utilize internal resources to manage programs and have some expenses related to these programs. However, these costs as a percentage of total costs are minimal. The main effort involved in
Tuesday, September 21, 2021
identifying opportunities is handled via online calls with our suppliers and we don't incur any additional cost to realize this opportunity.
Comment
The cost associated with currently managing these risks is minimal. We utilize internal resources to manage programs and have some expenses related to these programs. However, these costs as a percentage of total costs are minimal.
Identifier
Opp
Where in the value chain does the opportunity occur?
Downstream
Opportunity type
Products and services
Primary climate-related opportunity driver
Development and/or expansion of low emission goods and services
Primary potential financial impact
Increased revenues resulting from increased demand for products and services
Company-specific description
From how we build our stores to the products on our shelves, environmental sustainability at Target is integrated throughout our business. Our guests have come to expect attractive, functional, high-quality, and affordable merchandise as a part of our everyday assortment. With the growing awareness of environmental issues including climate change and health and well-being, we see an opportunity to offer our guests additional choices within our product assortment that will drive top-line sales. We constantly revamp our assortment to make sure we're giving guests what they want. We are rethinking the design of products and packaging we sell to incorporate sustainable attributes - because it's the right thing to do and because it creates additional value for our guests. We measure our guests' preferences through surveys, trend research, sales patterns and product tests. In many departments within our stores, guests will find product choices that incorporate recycled materials, nontoxic chemicals or organic ingredients, and packaging designs that minimize waste and incorporate recyclable or other preferable materials. In addition to top-line sales growth opportunities – there are opportunities to drive improved margin through a greater focus on product and packaging design. The elimination of excess material and energy costs from product manufacturing and transportation can translate into lower cost of goods sold.
Time horizon
Short-term
Likelihood
Likely
