In this episode of Climate Rising, Kathleen McLaughlin, Chief Sustainability Office at Walmart, Inc. and President of the Walmart Foundation, discusses how Walmart plans to achieve its goal to avoid a gigaton–a billion metric tons–of greenhouse gas emissions in its global supply chain by 2030.

The world’s largest company by revenue, Walmart operates more than 11,000 stores in 28 countries. Because of Walmart’s size, the decisions it makes about the products and services it sells have a ripple effect throughout the global economy. Walmart launched its first major campaign to sell products in biodegradable packaging in 1989, and released its first sustainability report in 2007. They also have partnered with environmental nonprofits to figure out the most effective ways of addressing their environmental impacts–both in operations and throughout their supply chain.

Today, you’ll hear Kathleen talk about how Walmart aims to help suppliers meet emissions reduction goals through Project Gigaton’s six pillars that focus on energy, nature, waste, packaging, transportation, and product use and design. And she shares some of the challenges and opportunities of operating on such a large scale.

Kathleen also reflects on her own career journey, and offers advice for those interested in working in the business and climate change space.

Resources

• Walmart Climate Change Goals
• Walmart’s Project Gigaton and guidance for suppliers to set GHG emission reduction targets
• Walmart Sustainable Packaging Playbook
• The LEAF Coalition
• Net-Zero Challenge: The Supply Chain Opportunity report by the World Economic Forum and Boston Consulting Group (BCG)
• Making Supply-chain Decarbonization Happen by McKinsey & Company

Guests

Climate Rising Host: Professor Mike Toffel, Faculty Chair, Business & Environment Initiative

Guest: Kathleen McLaughlin, Executive Vice President and Chief Sustainability Officer, Walmart, Inc.; President, Walmart Foundation

Transcript

Editor’s Note: The following was prepared by a machine algorithm, and may not perfectly reflect the audio file of the interview.

Mike Toffel:
Kathleen, thank you for joining me on the Climate Rising podcast.

Kathleen McLaughlin:
Oh, it's my pleasure to be with you. Thanks for having me.

Mike Toffel:
I'd like to start by asking you to share your job title and the scope of responsibilities you have at Walmart.

Kathleen McLaughlin:
Sure. I'm chief sustainability officer and also president of the Walmart Foundation. My role is to work with colleagues from across the company on finding ways to use our business assets to address the social issues, the environmental issues that are greatest on the minds of our stakeholders in ways that can accelerate progress on those issues for society and also strengthen our business.

Mike Toffel:
I wonder if you can tell us a bit about what Walmart is doing on climate change.

Kathleen McLaughlin:
For climate change, we have set a science-based target. Back in 2016, we were the first retailer to do that, which means setting out an ambition to reduce emissions in line at the time that we initially set it with the Paris Agreement, but since then we've elevated the target to be in line with the one and a half degree warming scenario. So basically what that means is working in our own operations as well as with suppliers to reduce emissions from our day-to-day activities. So in the stores, it would be things like electricity, or it would be emissions from the heavy tractor trailers that we use to transport products and so on.

Kathleen McLaughlin:
In supply chain, it could be everything from emissions that are required to grow wheat, to emissions from a factory that might produce shoes, even right through to the way customers use products that can also be a source of emissions. Ultimately, what we're trying to do is engage others to change the way that products get produced and consumed so that we're altering the way that production and consumption actually happens, so it's a sustained significant reduction in emissions.

Mike Toffel:
And that brings us to Project Gigaton, which is your program with many prongs that addresses supply chain emissions, or what others will call Scope 3 emissions, because most of its impact really is on the production of the goods that it sells, is that right?

Kathleen McLaughlin:
Yes. Certainly the footprint of any retailer in terms of emissions would be a lot bigger in what people call Scope 3, meaning all of those products that we sell to our customers. So we purchase them from suppliers and then sell them onto customers, and that is typically an order of magnitude greater than emissions in our own operations. .

Kathleen McLaughlin:
When you consider the supply chain of a company like Walmart, it's incredibly complex in terms of just sheer number of categories that we sell. As I mentioned, everything from produce, to apparel, to electronics, and the sources of emissions to produce those kinds of products, as well as the emissions that come from consumption, it's significant. So when you're talking about getting in line with the Paris Agreement or the one and a half degree scenario for all of that, you're really talking about transforming society. You're talking about transforming food systems, buildings, and infrastructure, transportation. It's really pretty much every aspect of our society tends to be involved when you're talking about products that people use on a day-to-day basis.

Mike Toffel:
I wonder if you could talk about the pros and cons of Walmart being so large. I think a lot of folks will think, well, Walmart being so large they can just mandate this of suppliers and then the suppliers will have to change because Walmart's a super valuable customer. But I've also heard from large organizations that because they're so large, it's actually hard to move the supply chain rapidly because of the scale that's required, so do you see that sort of yin and yang?

Kathleen McLaughlin:
Absolutely. So we are an important customer to many suppliers, but we're by no means the only customer. We just happen to operate in a lot of different markets and work with a lot of different suppliers, but to any one supplier we're certainly not the only customer. And so no, there's very little that we can just outright mandate. So the way we have approached something like emissions reduction in the supply chain is similar to how we've approached our goals across the supply chain in general.

Kathleen McLaughlin:
For context, what we've done is look across all of the categories of products that we sell and consider what's the broader set of social and environmental issues that matter for each of those chains. Generally speaking for any category, whether it's tuna or tomatoes or clothing, it's a combination of environmental issues like climate, but also nature, natural ecosystems and the degradation that the world is facing in forests and oceans and so on as well as waste. Waste is a big concern. And then in some chains and in some parts of the world, there are a number of risks to even basic human rights, whether you want to consider things like forced labor or human trafficking, building safety in some parts of the world where maybe the communities aren't quite as evolved in terms of infrastructure and codes and things like that.

Kathleen McLaughlin:
So the way that we approach that as a company is to set goals for each category that we sell in any of those six arenas that I just talked about. Climate is just one, and we conceived of Project Gigaton as the way to get at the climate goals.

Kathleen McLaughlin:
When we set our science-based target back in 2016, we said, "Well, we need a way to get at Scope 3. How are we going to get going on this?" Because to your point, it is incredibly complex. There are so many chains and so many issues and so many ways that we could come at it. So we said, "Well, let's try to break this down and be a link for suppliers from these broad societal goals. How can we help connect suppliers to that goal, but help them figure out the practical way to get started." Let's do the math on our Scope 3. What would that look like for science-based targets? What's an interim goal?" And the way the numbers worked out is about a billion metric tons by 2030 to avoid or reduce in supply chains across our volume that we sell.

Kathleen McLaughlin:
And then we said, "Well, let's break it down into different arenas for action." So there's energy, there's waste, there's packaging, there's agriculture, forests, there's the design of the products themselves. So for example, if a laundry detergent can get clothes clean in cold water, as well as it can in hot water, that's a huge source of emissions reduction at the customer end of things. So we identified those different arenas and we worked with World Wildlife Fund and many other NGOs, so folks like Environmental Defense Fund, Conservation International, World Resources Institute, Nature Conservancy to look at the science and figure out how to translate actions that companies can take in any of those six arenas into an impact on emissions. So for example, if you have a shoe factory and it uses so much energy, and you can save 10% through energy efficiency, or you convert from a coal-fired plant electricity source to renewable energy, what's that worth in terms of emissions for the products that you make?

Kathleen McLaughlin:
So for every single one of those arenas, we identified opportunities for action and then calculators that translate the action into emissions reduction, so that's kind of step one.

Mike Toffel:
These are both in the production process and in the use phase?

Kathleen McLaughlin:
Correct.

Kathleen McLaughlin:
And they vary by product category based on where do the emissions come from. So something like laundry detergent, it would be in the factory to produce the laundry detergent, it might be in the packaging and transportation getting the laundry detergent to market, and then it would absolutely be in the way the customers use that product. Something like a tomato, it's going to be more the emissions from the agricultural stage, from the fields, was fertilizer used or not? That's a source of emissions. It would probably be in the food waste, so we know 30% of food is wasted globally. So we identify what are those opportunities by category and then invite the suppliers to work on this and help them coach them. We've held workshops that help people make the business case to their leadership about why they should get engaged in this. In the early days we really had to do that, now we don't have to explain that to anybody. it's become much more a cultural norm and folks are quite engaged.

Kathleen McLaughlin:
And then other times it's us coaching them. So bringing some of the NGOs into the room to help coach the suppliers on how do I go about energy efficiency in my factory, or what could I do to purchase renewable energy, or what practices could I change in the fields growing my food. And then third, it's been providing additional supports within these pillars where people need capabilities, they need tools, we could help them go faster. So for example, in the energy arena, we work with Schneider Electric to put together something we call The Gigaton Power Purchase Agreement, The Gigaton PPA.

Kathleen McLaughlin:
It gives suppliers an opportunity to join in with others into an aggregate purchase order for renewable energy. Because a lot of companies don't have renewable energy procurement teams, and so if you don't have one and you'd like to tap into renewable energy and you need a way to do it, this will be a product that might be interesting because it’s favorable terms, you join in with others and then you can actually start sourcing renewable energy for your electricity needs. Or in packaging, to reduce emissions but there are a lot of other benefits as well to eliminate packaging waste and so on. But we created a sustainable packaging playbook, and we hold packaging summits with our suppliers. The last one had 2000 people join where they learned about different materials they could be using or different choices for packaging.

Kathleen McLaughlin:
And then finally, we've worked through the platform to be a one-stop shop where a supplier can come in and report what they've done, and that goes right through to CDP. And CDP, formerly known as the Carbon Disclosure Project is really the primary platform that many industries use to disclose progress on emissions. It's a good standard. They have a whole ranking system where they rate companies based on their climate action, not just their efforts to reduce emissions, but their advocacy and innovation and all kinds of things. And so we worked hard with CDP to make it really easy for our suppliers to report to them through our tool and vice versa so that we're taking extra work out of climate disclosures for people and helping them with that step.

Mike Toffel:
Walmart is a retailer, and yet many of the projects you just described require capabilities in packaging or in logistics or in production, all of which one might have thought, well, the point of being a retailer is you get to outsource all that to your supply base, and yet now you're having to acquire and disseminate expertise associated with production. Can you explain that transition?

Kathleen McLaughlin:
It goes really to our core philosophy as a company that we call shared value, which is not a phrase we came up with. It was one of the colleagues at HBS, Michael Porter, who really brought that more into common parlance. Shared value is a management strategy that recognizes the way you maximize the value that you create as a company can only be by addressing the issues that are most important to your customers and to your associates and the people who you engage with as suppliers and the communities you operate in and so on. So in other words, environmental issues, social issues, these aren't separate matters of social responsibility, although they may be. More importantly, they're actually the source of your value creation. So the only reason a company exists is to provide something of value to some customers.

Kathleen McLaughlin:
And then if you're a publicly-traded company, you've got shareholders that have lent you money that you need to pay back, and you probably employ a bunch of people who are your associates or your employees, all of those stakeholders matter for the success of your business. If that's your approach to your mission, and if that's your core belief for value creation, then yeah, you step back and you say, "Well, what are those relevant issues that we're addressing through our business? And which ones do our stakeholders expect us to take action on? Which ones matter for the future value creation of the company and where do we have capabilities where we could make a difference?" So when we apply those screens at Walmart, what we've ended up with as our priority set of issues includes climate. I'll come back to that in a minute, but just to provide a bit broader context, for us it's first and foremost, what we do every day for a living as a company, which is provide people access to affordable quality food, apparel, household items, and so on.

Kathleen McLaughlin:
That's the core mission and the core societal need there, of course, is equitable access to safe food, and all the things that we sell. Then we say, "Okay, well, let's do that in a way that does things that our stakeholders have said matter most to them." Number one, create economic opportunity through our jobs, through our purchase orders, and so on. Number two, we have to figure out a way to make this whole enterprise sustainable from a social and environmental point of view. And why? Well, future surety of supply, future supply of commodities like coffee or palm oil or beef, or you name it, apparel. Cost structure, managing cost over time, managing risk, license to operate. If you look at something like climate change or loss of nature, things that we're really addressing through Project Gigaton; packaging, all of these things.

Kathleen McLaughlin:
That’s why we've really prioritized working with suppliers on this. And the reason that we do engage suppliers and NGOs and many others is the kind of change that we're trying to make on any of these, whether it's packaging or the way manufacturing facilities work, or agriculture or nature, it's systemic. We're talking about rewiring the way that systems work. So it's broad change, it engages practices, people's mindsets, resource flows, networks. It's really infrastructure, it's shifting entire systems for long-term sustainability, and the only way you do that is through partnership and it's certainly with suppliers, but many others as well.

Mike Toffel:
NEW QUESTION: Decarbonizing supply chains often requires investing in developing innovative products, materials, and packaging. How is Walmart and its suppliers thinking about funding these investments and knowledge sharing?

Kathleen McLaughlin:
Take for example the work we're doing in our own emissions reduction, Scope 1 and 2. So there are some elements like renewable energy or energy efficiency that we can drop to the bottom line. We've saved a lot of money on energy efficiency. Converting LEDs in our parking lots, for example, saved us a lot of money in terms of total cost of operating those lights.

Kathleen McLaughlin:
Then you look at something like refrigeration, converting to low global warming potential refrigerants, and we have hundreds of stores right now where we've already done that and we're doing more every year. That's just a cost, we don't see a big benefit to that. We're not going to sell more products or save costs somewhere else because we did that, so that's a cost. So taken on its own, you'd say, "Well, I don't want to do that." Well, we need to do it to achieve our emissions goal, and so we look for ways to offset that through these other arenas, like the energy of efficiency or the shift to renewables.

Kathleen McLaughlin:
So in aggregate, you're looking for ways to optimize, and so if you have a higher cost in one aspect of what you're doing, you're trying to innovate and find a lower cost somewhere else.

Mike Toffel:
I wonder if we could talk more broadly about how you engage with suppliers to try and encourage them to pursue these efforts. You mentioned earlier about sending in a design team, for example, to think about reformulation, there's efforts on packaging. I know that you also engage in standard setting or encouraging them to adopt particular industry-wide standards with environmental practices in mind or other types of industry consortia. Can you talk about those broader programs?

Kathleen McLaughlin:
Yeah, sure. You know, in the early days when we conceived of Project Gigaton, there was debate. Should we make it ever requirement? Say you can't supply to Walmart, unless you do this? It's pretty rare that we would put that kind of onus on suppliers, and we find it's better to understand what would motivate them. How do we make this something that they actually want to do for their own purposes, their own stakeholders, and see how far does that get us in terms of really rewarding and supporting?

Kathleen McLaughlin:
And I'm happy to say that we're really excited by the progress, and at this point we've been getting the results that we want through that approach. So as of a year ago, when we last reported, we had 60% of our sales base covered by suppliers who are engaged in Gigaton. I'm happy to say the number we're about to come up with is even higher so we'll be disclosing that in the next couple of months. Ideally we'd have 70 to 80% of our volume base covered and that's the direction we're heading in, which is pretty exciting. So without making it a quote requirement, we have 3,100 suppliers as of, again, our previous reporting period that are very engaged in this effort.

Kathleen McLaughlin):
Of the 3,100 suppliers who are engaged, 1500 have goals and are reporting and 800 and some are what we call Giga-Gurus, which means they've set SMART goals, so specific, measurable goals, they're reporting on them, they've publicly disclosed their commitments. It's a very high standard of engagement and results, and that's what we want to see. We've tried to create what we think of as an escalator of ambition, where it's a really broad tent, it's super easy for anybody to at least get started and do something, and we will help you. We'll help you make the case, we'll help you pursue it, and then we're going to ratchet up the ambition. We are going to keep raising the bar and move you along up that escalator toward Giga-Guru status, and then we're going to raise the bar on what it means to be a Giga-Guru, which we've just done.

Kathleen McLaughlin:
And that's really our goal here is to make this a broad industry transformation. Then to the second part of your question, which is, What are we asking them to do? As I mentioned through, through Gigaton, it really is to identify which of the six arenas are relevant if you're a supplier for your categories, and it might be 2, 3, 4, it might be all of them, depending on the nature of the product you sell, to set a goal, to make it public, and then to start on it and disclosing your progress. And then there are different ways to do that depending on the pillar you're talking about.

Kathleen McLaughlin:
So you mentioned certifications. That's a very relevant starting point for the nature aspect of Project Gigaton. For commodities that have an impact back in a critical ecosystem, whether it's a tropical forest or any kind of forest, agricultural lands and so on. Say we're talking about palm oil, tuna, coffee, tea, soy, these kinds of commodities. There are certifications that have set a standard for environmental and often social practices in production, and as a bare minimum, we ask our suppliers to do that. And for those, we are trying to get to a hundred percent and we've disclosed that we're at or close to a hundred percent in the key commodities we've identified. Then what we say again, along with this idea of ratcheting up ambition, we want people to go beyond that because the issue is certifications.

Kathleen McLaughlin:
I might say, "Well, my coffee is certified. From the farm I got my coffee from everything's fine. But then right next door, somebody might be down some trees, deforesting or what have you. So we also want suppliers to engage more broadly in practices that will conserve and restore nature as well as better manage the lands that they're sourcing from. And then yes, for that, there are a whole series of initiatives or collaboratives that we have either created or encouraged people to join. So for example, in the Midwest, there's something called the Midwest Row Crop Collaborative that we started to engage suppliers with local NGOs, folks like Nature Conservancy on the ground there, Soil Health Partnership, land-grant universities to work with farmers in the Midwestern United States to accelerate adoption of regenerative practices on their land, which includes better management of those crops for things like fertilizer, optimization or other inputs, cover crops, crop rotations, and so on.

Kathleen McLaughlin:
There are major climate benefits, but there are also broader ecosystem benefits. So reducing nutrient runoff into waterways, for example, pollinator health is another. So that's an example where it's actions back at the source of where commodities are coming from that actually not only get you the Gigaton climate benefits, but ancillary benefits related to natural ecosystem health through a collaborative and a collective effort on the ground working in partnership with others.

Mike Toffel:
What is it that is incentivizing those growers to adopt those new practices?

Kathleen McLaughlin:
Well, there can be many things. So one can just be the evidence of other farmers who've adopted regenerative practices, showing them that their yields are as good or better, the soil health is better, the quality of the crops is better, and that's ultimately the case that we're trying to make. There is a challenge for some farmers in making that leap. Often there's also a transition period where maybe the yields aren't quite as good as they wanted them to be. So what can they layer in? Is there additional revenue stream from cover crops? So when they add that in it's an offset or managing woodlots in a different way to create a different revenue stream. Or are there programs they can take advantage of that keep them whole economically during the transition? What kind of policy setting do we have for farmers that makes that less risky for them?

Kathleen McLaughlin:
One thing that we've found just immediately that's been a creative, I guess, for farmers is fertilizer optimization. That's not a new thing now. It was maybe newer 10 years ago, but it's something we've really leaned into so farmers can save money on fertilizer application and still get great yields by being more specific about where it's getting applied using technology to give them better insights, sometimes down to like the square yard level of like, "Where do I put the fertilizer on my field for optimal results?" That's an example of what we're talking about before, which is okay, well, if you can save money on that, maybe you take a risk on transitioning to other approaches for inputs or crop rotations, or what have you.

Mike Toffel:
Let’s shift gears to the newest pillar of Project Gigaton: transportation. What’s interesting about this space for Walmart’s work on climate?

Kathleen McLaughlin:
Transportation, it's a great example of how when you talk about Scope 3 for a retailer, you're kind of talking about everything in society; you know transportation, building design, infrastructure, agriculture, consumer behavior, everything else. So for us, the most important contributor to emissions in our own business is our heavy fleet. It's the big tractor trailers. What's interesting is it's been relatively easy I'd say for us to convert to electrical solutions for things like forklifts in the DCs and fulfillment centers. When you're talking about those heavy rigs, that's a different story because not only do the vehicles themselves present a challenge in terms of an electric technology or hydrogen technology, but the charging infrastructure we need is significant, especially in the United States, because often our trucks will pull out of one facility in the morning and four or five days later, they end up somewhere completely across the country.

Kathleen McLaughlin:
We need charging infrastructure all along the way, it's not as if they pull out of a depot downtown in the morning and go right back there at lunchtime to recharge. The implications for the infrastructure are pretty significant. Now we've been working a fleet for a long time. We worked over a 10 year period between 2005 and 2015 to double the efficiency of the fleet, and through that work, we established relationships with equipment manufacturers, policy makers, utilities, working groups in academia around innovation and transportation, and many of the same relationships we're relying on now as we go into this next stage of innovation, and that program was really successful. We doubled our fleet efficiency in a 10 year period, and it was everything from changing driving behavior, and actually rewarding drivers for driving differently in a more fuel efficient way, to the cab design, the engine design, how the trailers get loaded and so on.

Kathleen McLaughlin:
It's the same kind of thing here, as we think about electric battery or hydrogen fuels, renewable diesel, all of those we're trying to explore. In Canada, We have a deal with Tesla and we actually have some electric powered vehicles that we're testing in Canada and it gets a little bit different route situation where people are going out and coming back to the same home base a bit more than we do in the US. It's going to take a lot of innovation, and as we work with suppliers who may have some of the same challenges, I think there's opportunity to share what are we learning and that innovation that we need for our own business may be the same kind of innovation that's needed in our supply chain.

Mike Toffel:
Are the trucking companies that are making those innovations in response to your requests, are they disseminating these same innovations in their fleet that they sell to other companies as well? So are you able to have that sort of magnifying impact of your engagement with them?

Kathleen McLaughlin:
I think it's early to say, because what I'm talking about for the heavy tractor trailers doesn't really exist yet at scale. It's things that people know they need to work on. It's probably over like the next 10 years that that starts to get developed, and there are many innovators out there trying to come up with solutions. Many PE firms or venture capital firms are looking at this arena, so Gates Venture Capital for example, is trying to encourage innovation that could then be adopted and scaled in industry that doesn't even exist yet. So that's all in progress. What I would say from past experiences, typically if something does come available in one part of one sector, people very quickly figure out, okay, well, how do we adopt that? There's a lot of interest from investors to really encourage that kind of growth and expansion and port things from one sector to another.

Mike Toffel:
Now we've been talking about ways to reduce emissions, the decarbonization journey, but net zero, and not absolute zero, means we anticipate that we won't be able to do it all at least by whatever deadlines you're setting and that there'll be some carbon offsets or other sequestration programs that will be required to bring you to zero. So I wonder if you can talk about what's Walmart's strategy thinking about carbon offsets? I know there's lots of press about some being of higher quality than others, some worrying about the permanence of them. I wonder if you can share your strategy for offsets?

Kathleen McLaughlin:
Our first principle is that wherever possible to reduce emissions, avoid emissions, get emissions to zero that's what should be done. And people shouldn't say, "Well, my strategy out of the gate is I'm just going to offset my emissions." Because as a world, as a planet, we can't do that. If you look at the math and the scientists have modeled this all out, we have to get to zero in every aspect where we can. And so that's why for our Scope 1 and 2, our goal is zero.

Kathleen McLaughlin:
Second thing though, to your point is there are some sources of emissions that you can't actually get rid of, they're just going to keep happening on the planet and that's where you need offsets. So what would be some examples of that? Well, agriculture. So when we till a field, there's emissions that come out of the soil. Animal agriculture. Some people might say, well, you shouldn't eat beef or what have you but to the extent we have dairy cows, or cattle for beef. The methane that comes out of those animals, that is a source of emissions. And so what people mean when they say, we can't get that to zero unless we didn't do agriculture and nobody in the world ate beef or drank milk, which is probably not realistic.

Kathleen McLaughlin:
You're always going to have some emissions coming out in a given year. So we need an offset, to neutralize that and get to net zero. Now, what gets debatable is people then want to throw some other things in there, "Well, I'm going to have emissions from driving my car around. Well, really do you need to, or couldn't you shift to a zero emissions vehicle?" And so that again comes back to this principle that everything we can get to zero, we should get to zero, but we will have some residual. So how do we deal with that? Well, nature can provide a big part of that solution. So maintaining forests, preventing them from getting cut down is a critical first thing, but reforesting, afforesting, planting new trees, there are certain ways that has to be done. So to your point about the debate about what's a good offset or not, you can't just go plant trees.

Kathleen McLaughlin:
To have forests that actually are productive in terms of being an offset for emissions, there has to be certain kinds of trees planted in a certain way. And by the way, once you plant them, you can't cut them down. So if there's this notion of permanence. So people get nervous about offset programs where you've done something, all of those things have to come into consideration when you talk about offset programs. And so what we've started to do is experiment with different collectives that have emerged that are trying to create carbon sequestration, carbon drawdown opportunities through nature so, for example, the LEAF Coalition, we just joined that last month. We've made a little over $10 million investment in that group, who are going to go find these kinds of projects to basically protect and restore nature, but also can provide some carbon solutions and there'll be standards around permanence and the quality of those projects and so on.

Kathleen McLaughlin:
And the people who are investing in LEAF will have choices about where to invest the money so that we'll feel good that it meets our standard. We're not going to take the offsets from that, even though we could, and apply them to our own emissions or anything like that. Our interest is to invest in that to get that kind of effort going, to seed it, to encourage it, to expand it because the world needs it. And we have some other goals that we've set related to nature, restoring nature, conserving nature connected to our supply chains. It's going to help us with that, but we're not using it as an offset for our Scope 1 and 2 program per se.

Mike Toffel:
So what are your favored offsets that you will imagine purchasing, or maybe you currently are?

Kathleen McLaughlin:
We're not going to be purchasing offsets for our own science-based targets, our emissions reduction, we're planning to get to zero emissions in our own Scope 1 and 2. But for Scope 3, in the nature part of Project Gigaton, we are absolutely encouraging projects in forests, in grasslands, in oceans that have benefits for restoring and conserving nature as well as helping to draw down emissions.

Kathleen McLaughlin:
One of the things we did last year is we took our assortment and we worked with Conservation International to map it back to the ecosystems that it comes from. Palm oil, beef, paper, tomatoes, tuna, where does it come from? Is it forest? Is it grassland? Is it ocean? And how much land are we talking about? And it worked out to 50 million acres of land and a million square miles of ocean for the assortment that Walmart provides to customers. And then what we said was, "Hey, as part of Project Gigaton, let's enhance it by asking our suppliers as they're participating in Gigaton to set a goal in the nature pillar for the commodities that they sell." So it might be beef, or it might be apples, or it might be tuna. To set a goal that would be about the better management of the ecosystem at source for that commodity to be in line with what's now being developed called science-based targets for nature, and would also include conservation and restoration of the contiguous area in the ecosystem.

Kathleen McLaughlin:
And our commitment is to work with people to improve 50 million acres of land and a million square miles of ocean through that kind of work.

Tyson has made a commitment to work in 5 million acres of land at the grazing stage and the feed stage, so all grains that get produced to feed the cattle, by having ranchers and farmers adopt better practices on those lands that have benefits for emissions reduction as well as for nature. So nutrient runoff into waterways, pollinator health, restoration of grasslands at the grazing stage and so on, so that's one example. A similar example, that's through philanthropy and not with our suppliers, we got together with Cargill and McDonald's and gave $6 million to World Wildlife Fund as a grant to work in the Northern Great Plains, to work with ranchers, to courage, ranchers not to convert the grasslands into agriculture, rather keep them as grasslands, either for grazing or just for grasslands and to restore native grasses, to encourage pollinators, to change the way that they're rotating the cattle and so on to preserve the soil health and to manage the nutrient runoff into waterways and so on.

Kathleen McLaughlin:
So that's a really interesting one because you have economic benefits for the ranchers. You still have some beef production coming out of that ecosystem, and yet the goals are to significantly restore original Prairie grasslands as an ecosystem for local biodiversity, and the other benefits I mentioned.

Mike Toffel:
You've been at Walmart since 2013. You've seen a lot of changes over the past decade of how employees, how suppliers, how investors, how neighbors are thinking about environment and climate in particular. I wonder if you can reflect on some of the biggest changes that you've seen and, and where you think things are heading?

Kathleen McLaughlin:
The biggest change is the awareness of the situation that we face as a planet. And that's partly because more findings have come out of the scientific community in the last eight years. Every year we get new information and unfortunately it's not good news. I think it's partly also because of people like us. I actually think we have made a difference. You know when you have a company like Walmart four or five years ago saying to thousands of other companies in our supply chain, "Hey guys, this is actually an issue. It could be an opportunity for your business. It's definitely a concern. We think you should work on this. Here's why,” and we make the case, it's compelling, we get them engaged and you get that level of participation. That makes the difference too.

Kathleen McLaughlin:
We were at Glasgow recently and the biggest change that we noticed there relative to Paris was the engagement of the business community, and the fact that businesses have recognized just what is the science saying, and what does that mean for the future of our customer communities, our businesses, our surety of supply, life on the planet, let alone be in business. People realize that now, and people have recognized this as a tri-sector response, it's not just government and civil society, but also business. That’s the biggest change is the awareness and therefore the level of engagement in all parts of society, certainly climate, as well as a lot of other issues; equity, nature, others too.

Mike Toffel:
That's a pretty optimistic trend, I would say.

Kathleen McLaughlin:
It is. It is. The question is, are we going to go fast enough? And are the steps big enough? So I am encouraged by the engagement, I'm encouraged by technology. I don't think it's a silver bullet, but I am encouraged by it. But boy, we need to go fast.

Mike Toffel:
Let me close by asking you more about your journey and the advice you might have for those interested in embedding climate in their future career in business, before Walmart, you were at McKinsey for many years. So you did a consulting route, and then now into a senior sustainability role at Walmart, what do you recommend for MBAs or folks in their twenties or thirties who are thinking they really want to dedicate their career to a business opportunity in some manner engaging the business and climate change challenge?

Kathleen McLaughlin:
Well, the good news is it will be very hard for you to escape it, even if you didn't want to do that, and that's the big difference from when I started out in the business world. What we face as a society with respect to climate change is pervasive, and it's going to require changes to virtually every facet of how we live. To me, it just underscores that shared value philosophy, which is whether it's that issue or the issue of equity or even nature. It's so embedded in just about any kind of role, so what I would say to someone coming out of school is they're always say some sectors where that's going to figure more prominently than others and some types of jobs more prominently than others, but you don't need to go work on the sustainability team of a company or a NGO to be in the middle of it.

Kathleen McLaughlin:
If you're working for a bank and you're putting the portfolio together, that's going to be a huge consideration. If you're working for a transportation company, you'll probably spend a good part of your time thinking about how you're going to deal with that. If you're working in real estate, it's going to be a big factor for you, both the climate piece and lower emissions buildings to nature issues around footprint, and so on. It's really hard to come up with a sector. Anything in food systems, it's front and center. So what I would say is hone your core intrinsic skills like your problem solving skills, your communication skills, get comfortable with ambiguity, learn about system change and how to bring different tools to bear to accelerate changes in systems. We talked about some of them today: policies, certifications, capability building tools, mindsets, those are different things that we bring to bear if we're trying to accelerate the changes in our systems. Learn about the science of system change. Those are the kind of capabilities that are going to serve you well, and then the content, like learning about the science behind climate, and so you can pick that up along the way. I would say focus more on the core problem solving and communication skills.

Mike Toffel:
Kathleen, it's been a real pleasure speaking with you today. Thank you so much for joining us here on Climate Rising.

Kathleen McLaughlin:
Well, thanks for having me. It's been a real pleasure.