Hydrofluorocarbons (HFCs) are potent greenhouse gases, with a high global warming potential (GWP) making them hundreds to thousands of times more potent than carbon dioxide (CO2) in contributing to climate change per unit of mass. Refrigeration systems utilized by Kroger contain HFCs. The Company’s reporting indicates refrigerant emissions may account for 63% of its Scope 1 emissions.
Kroger has taken steps to reduce refrigerant leakage in its stores. However, refrigerant emissions cannot be eliminated by reducing leaks alone. As long as companies continue to utilize HFCs, there is reason to believe that their production, usage and ultimate disposal will continue to release HFCs to the environment. That is why Kroger’s peers are moving to refrigerants with much lower GWP.
The potential impact on reducing climate change is profound. A recent U.N. report estimates that phasing down HFCs globally will reduce their future warming impact from 0.5° C to less than 0.1° C.1 In fact, scientists have found we must accelerate the global phasedown of HFCs in order to achieve the goal of limiting global warming to 1.5° C.2
The Board of the Consumer Goods Forum (CGF), a group of major consumer goods retailers and manufacturers of which Kroger is a member, approved a 2016 resolution to mobilize resources towards transitioning away from HFCs. The resolution stated that member companies committed to “install new equipment that utilize only natural refrigerants or alternative ultra-low GWP refrigerants effective immediately.”3 The CGF defined “ultra-low GWP” as less than 150. The resolution promised individual targets and action plans toward implementation.
Kroger’s 2021 ESG report does not reference any strategy for adopting ultra-low GWP technologies. Instead, Kroger’s report specifies GWPs of “1,500 or less.”4
Kroger lags peers such as ALDI US, which has installed ultra-low GWP refrigeration systems in over 420 stores, and in all new self-contained equipment.5 Target and Whole Foods have also adopted ultra-low GWP technologies more widely than Kroger.6 Negative media attention on HFCs is increasing,7 while peer companies receive a reputational boost.8
Proactive adoption of ultra-low GWP technologies would not only reduce Scope 1 emissions but may ultimately be more cost-effective, since trends in Europe indicate HFC prices may rise by up to 1300%.
Shareholders request that Kroger issue a report, at reasonable cost and omitting proprietary information, describing how it can adopt strategies above and beyond legal compliance to curtail the predominant source of its operational (Scope 1) GHG emissions, by deploying the best available technological options for eliminating the use of hydrofluorocarbons (HFCs) in refrigeration. The report should describe the extent to which the Company will act consistent with the Consumer Goods Forum commitments on ultra-low GWP refrigerants, including any related capital spending commitments, or explain why the Company is not acting consistent with those commitments.
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