Our vision is to make sustainable living easy and affordable for everyone. Increasing product and packaging sustainability for our customers and reducing our waste and emissions is no longer a nice to have – it is a must-do for our people, our customers, and the planet.
This year, we launched the Tomorrow Test – a platform that empowers our team to deliver sustainability outcomes, big or small. Team members ask, “Does it pass the tomorrow test?” in everything they do to challenge, ideate and make change happen.
The Tomorrow Test has driven the integration of sustainability into some team members’ remuneration models and position descriptions. These team members’ annual performance is now directly assessed against their contribution to our sustainability metrics.
To help our team members activate the Tomorrow Test, we have equipped them with sustainability training, launching the The Warehouse Group Sustainability Academy. This training builds our team members’ knowledge, craft and mindset to achieve our ambitious sustainability goals.
We continue to focus on the 2040 Sustainable Living Plan targets we set last year. Our plan is grounded in four building blocks, which are now our default way of working as we roll out the initiatives required to meet the targets we have set:
Improving the sustainability of our products and packaging is one of our biggest contributions to making sustainable living easy and affordable for everyone.
- To increase the share of private label sales1 from products and packaging which are more sustainable or have a circularity solution to 50% by 2025 and 100% by 2035; and
- To reduce the Group’s Scope 3 emissions2 generated by our suppliers by 50% by 2035 and by 80% by 2040
We have made significant improvements in product and packaging sustainability in FY23. We are proud of our team members and suppliers lifting the bar in this space through sourcing practices, improved production methods, material choices, and reducing plastic waste in packaging.
Our focus is on our private label products, where we directly control product specifications, processes and packaging.
In FY23, 33% of private label sales in The Warehouse and Warehouse Stationery were from products with one or more sustainable features, up from 22% in FY22. This represents 46,637 individual product lines and $343 million in sales.
We are a member of the Better Cotton Initiative (BCI) – the world’s largest sustainable cotton initiative, operating in 26 countries globally and accounting for almost 20% of global cotton production. In FY23, 81% of our private label cotton garment and home textile sales in The Warehouse were linked to our investments in BCI production technique, representing 30,000 individual product items.
Wood and paper products certified to Forest Stewardship Council (FSC), FSC Mix or Programme for the Endorsement of Forest Certification (PEFC) criteria accounted for $66 million in sales representing 5,500 products in FY23. These certifications ensure the forests at the origin of products within our stationery, art and craft, furniture and homeware ranges are managed sustainably and provide a verified supply chain.
Our memberships of initiatives like BCI and The Packaging Forum, along with certifications such as FSC, OEKO-TEX® 100, Rainforest Alliance, and the Global Recycling Standard, help extend our influence on the origin of raw materials and give our customers confidence that their purchases are making a positive difference.
With our apparel partners, we are looking at more sustainably-made fabrics. Key suppliers are already investing in reducing water and energy use and waste and investing in rooftop solar to reduce their carbon footprint. Polyester is a widely used material in garments and home décor but has a significant environmental impact. We are working with suppliers to increase the use of recycled polyester recovered from waste fabrics and plastic bottles, like our puffer jackets with outer fabric and inner filling made from recycled polyester, each equivalent to about 20 plastic bottles. In FY23, 6,800 products within our garment ranges were made with recycled polyester, accounting for $34 million in sales.
Our customers want products with less plastic packaging and expect packaging to be easily recyclable through kerbside collection.
Our suppliers continue to innovate to reduce plastic packaging and improve transport efficiency by optimising the spatial characteristics of packaging.
We are exploring an innovative solution to replace expanded polystyrene that provides shock protection for consumer electronics. To remove expanded polystyrene used for this purpose completely, we are piloting a solution using moulded cardboard and a form of mushroom-based packaging for one of our TVs.
We have replaced almost all the vinyl (PVC) satchels used across our bedding, sheeting and duvet ranges with reusable cloth bags or recyclable cardboard bands.
In FY23, 43% of our private label sales were derived from products with packaging that is compostable or which can be recycled via New Zealand’s kerbside recycling infrastructure or instore, up from 22% in FY22.
Roadmap to measuring Scope 3 emissions
For retailers globally, it is estimated that Scope 3 emissions constitute up to 96% of their overall emissions.3 These emissions are difficult to measure and influence as they are outside our direct control and span complex interconnected supplier networks and geographies.
In our Sustainable Living Plan, we have set an ambitious target to reduce Scope 3 emissions from private label products at The Warehouse and Warehouse Stationery by 50% by 2035 and 80% by 2040, against a baseline yet to be established. Most of our Scope 3 emissions are linked to the production of goods in our supply chains, the use of products by our customers, and their disposal at the end of the product’s life.
As of today, we only report on our measured Scope 3 emissions generated from the moment we take ownership of the products we source. This includes our freight emissions, transportation and shipping from the port of ownership to our distribution centres, stores and customers, and the emissions generated from our operational waste. In FY23, our measured Scope 3 emissions reduced by 13.4% compared to FY22 and 13.5% compared to our 2020 base year.
We have continued to engage our suppliers to deepen our understanding of Scope 3 emissions and opportunities to improve our data. We have begun to expand our private-label supplier ethical assessment process to capture their Scope 1 and 2 emissions data (our Scope 3) and their reduction targets and initiatives. Refer to Our Relationships section on page 40 of this report for further details.
In the coming year, we plan to revisit the baseline calculation of our overall Scope 3 footprint across our entire value chain. The methodologies and emission factors used to generate these estimates are continuously evolving. We will reexamine our earlier work to ensure we have the most accurate understanding and deploy our emissions reduction efforts where they are most impactful. Our existing Scope 3 targets may also be updated as a result of this work.
We are working with our shipping partners to reduce the emissions generated by the shipping of our products. For example, we worked with our sea freight partners to purchase a fossil-based LNG and biomethane mix, with a guarantee of origin shipping fuel. This fuel can reduce the emissions generated by the transport of sea shipping containers by 25% of well-towake emissions4 .
The fuel purchase is attributed to our shipments CO2e reduction through declarations that are in accordance with methodologies from the Clean Cargo Working Group and ISO standards 14020/14021/14067.
This fuel purchase resulted in 134.1 tonnes tCO2e reduction in emissions. We plan to expand the use of low-emission fuels as their cost curve improves.
We are establishing a new customer value proposition around sustainable living solutions. This area is in its infancy, with initiatives currently being developed, and we hope to provide solutions to reduce our customers’ energy and water usage and increase customer benefits to help them live more sustainably.
- To install electric vehicle (EV) charging stations at all possible stores by 2030
Today, 28 The Warehouse stores offer free EV charging, with 13 offering 25kW DC rapid chargers.
Our sourcing and buying teams already focus on sourcing and selling sustainable living products for our customers, including considering water and energy efficiency. An example is working with our suppliers to supply more water – or energy-efficient, fourand five-star-rated appliances in Noel Leeming and The Warehouse.
While customer solutions are unfolding organically, we need to build a structure around this building block and build the data capability and reporting of the targets associated with these initiatives
In addition to reducing and improving our packaging, we continue to offer and expand circular solutions for our customers to help them minimise waste to landfill.
- To provide waste recycling and circular solutions in all our stores, where possible, enabling up to 2.5 million customers to reduce their own waste by 2030, particularly from the products we sell
In FY23, we trialled My Recycling Hub at The Warehouse in Royal Oak. This pilot programme helped us understand how we can deliver integrated postconsumer solutions that encourage recycling hard-to-recycle items like apparel, toys, oral care products and coffee capsules. We collected significant consumer insights and data to inform our future circularity programmes. This initiative highlighted the need for increased collaboration with government agencies, local councils, and industry partners to fulfil high customer demand and make wider post-consumer recycling capabilities successful.
We have continued to expand costeffective recycling and circular solutions offered in our stores, including soft plastics, e-waste, and ink and toner recycling.
In FY23, we expanded our e-waste recycling service to a further 12 Noel Leeming stores. Our Soft Plastic Recycling Scheme is now available in 44 The Warehouse stores, with six stores launching this year, and we are now offering an ink and toner recycling service at all Noel Leeming and Warehouse Stationery stores.
Through these post-consumer recycling initiatives, we diverted 198.9 tonnes of post-consumer waste from landfill disposal in FY23.
More customers are using our recycling services, with the average collection volume per store increasing by 15% from 1.7 tonnes to 2.0 tonnes. We are pleased to continue the TerraCycle NZ recycling programme with three The Warehouse stores collecting hard-torecycle products and packaging like toothpaste tubes and coffee capsules.
In July 2020, the Government announced six ‘priority products’ to establish regulated product stewardship schemes under the Waste Minimisation Act 2008 (WMA). To ensure these schemes are convenient, practical and feasible for New Zealand, we are participating in the Plastic Packaging and Expanded Polystyrene Product Stewardship Schemes design process. Our engagement involves participating in steering committees, technical working groups and government consultations, and we are co-designing product packaging regulation, improving process capability, and incentivising waste minimisation practice.
Reducing our direct carbon emissions (Scope 1 and 2) is one of the most important parts of our sustainability plan. Our ambition is to reach zero emissions in our operations by 2040 – without using carbon offsets.
- Reduce Scope 1 and 2 emissions aligned to a 1.5-degree trajectory, reducing 42% by 2030 compared to our 2020 base year and with a pathway to zero emissions by 2040;
- Reduce domestic and international freight emissions by 40% by 2030 and only use sustainable transportation fuel by 2040; and
- Become a zero-waste status organisation by 2025.
On the path to sourcing our electricity from 100% renewable sources
In September 2023, we have a new Solar Power Purchase Agreement with Lodestone Energy, a new developer and operator of solar electricity farms. Over 260 The Warehouse Group sites, including The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 stores, will be 100% powered by solar energy as early as 2026. We’ll gradually transition our Aotearoa New Zealand sites to Lodestone Energy solar farms, and by the end of December 2026, we anticipate we’ll have eliminated close to 100 per cent of all our New Zealand electricity emissions.
Our partnership with Lodestone will support the development of additional renewable generation, supporting New Zealand’s goal to achieve 100% renewable electricity generation by 2030. Lodestone’s electricity provided to The Warehouse Group will be certified 100% renewable through the New Zealand Energy Certificate System maintained by Certified Energy. The use of renewable certificates will ensure that the Group’s use of renewable electricity is reflected in the New Zealand Electricity Grid Carbon Intensity.
Overview of our carbon emissions
Total measured emissions (Scope 1, 2 and measured Scope 3) for FY23 was 28,690 tCO2e, compared to 37,799 tCO2e in FY22, a reduction of 24.1% from FY22, and a reduction of 22.8% compared to our 2020 base year.
We have reduced our electricity consumption by 2.5% compared to FY22 and 6.0% compared to FY20. Scope 1 and 2 emissions decreased 43.3% compared to FY22 and deceased 40.4% compared to our FY20 base year.
Our significant reduction in emissions is primarily due to two reasons. In August 2022, the Ministry for the Environment (MfE) revised its methodology for calculating Scope 2 emissions, which required the Group to backdate and restate our FY20 base year and subsequent years. Secondly, the 2023 MfE emission factors were significantly lower than historical years due to lower use of fossil fuels and an increase in renewable energy generation on the national grid.
Our measured Scope 3 emissions5 decreased 13.4% compared to FY22 and decreased 13.5% compared to our 2020 base year. This was primarily due to the Group shipping significantly less product in FY23, especially in the final quarter as we normalised our inventory.
Initiatives that have had a specific impact on the reduction of our emissions include:
- The Group’s light passenger fleet is now 100% EV, resulting in the Group’s total fleet emissions, including our light commercial utes, vans and trucks, decreasing by 27.3 tCO2e compared to FY22 and 36.8 tCO2e compared to FY20 (Scope 1 & 3);
- 41% of our store sites now have 100% LED lighting (up from 32% in FY22) (Scope 2);
- Sea freight emissions reduced by 1,224.7 tCO2e (9.8%) compared to FY22 and 3,784.8 tCO2e (25.2%) compared to FY20 (Scope 3); and
- International airfreight emissions reduced by 333 tCO2e (62.5%) compared to FY22 and 288 tCO2e (59.1%) compared to FY20 (Scope 3).
Total emissions (Scope 1, 2, and measured Scope 3) intensity ratio decreased from 11.5 total gross GHG emissions per revenue (tCO2e/$million) in FY22 to 8.4 in FY23, down 26.7%.
Our base year is FY20 in accordance with our SLL agreement, which aligns our Scope 1 and 2 emissions reduction targets to 1.5°C SBTi criteria.
For our FY23 emissions, we have updated our Toitū Envirocare (Toitū) certification with the Toitū CarbonReduce certification. This move follows our announcement of a new solar electricity procurement agreement with Lodestone Energy, allowing the Group to reduce our Scope 2 emissions to zero by FY27. From FY24, we will shift our focus and investments towards accelerating our Scope 3 emission reductions. Working with our suppliers, we believe we will make a significant difference in lowering our products’ impact, emissions and waste.
We are proud of what we have achieved since February 2019, when we became the first retailer in New Zealand to achieve Toitū Net CarboNZero certification. Since then, The Warehouse Group has:
- Invested $1.65 million offsetting 189,812 tonnes of carbon emissions through our carbon offset partners; and
- Built the capacity needed to address our Scope 3 emissions, the most material and challenging area of emissions impact for mass retailers.
Toitū Envirocare Kaiwhakahaere matua CEO Teressa Betty says The Warehouse Group is helping to set an example for other New Zealand companies by shifting from a Toitū net carbonzero certified organisation, to a Toitū CarbonReduce certified organisation for FY23.
“The Warehouse Group has been striving to be a sustainable business over the years and has now reached the point in its carbon reduction journey where it is shifting all its offset spending to pure reduction initiatives as these will have the most impact. It’s great to see the company is also planning to accelerate its Scope 3 emission reductions, which is a big challenge.”
Our annual carbon emissions reporting continues to follow the strictest audit standards (Toitū CarbonReduce certification) of our reporting partner, Toitū. Our reduction targets align with the New Zealand Climate Leaders Coalition commitments, which reflect the Paris Agreement guidelines. The Warehouse Group is certified in accordance with ISO 14064-1:2018 and ISO 14064-3:2019.
The Group reports to the Carbon Disclosure Project (CDP). This not-forprofit runs the global disclosure system for investors, companies, cities, states and regions to help them manage their environmental impacts. CDP rates companies on themes such as transparency, risk management, and initiatives they have in place to reduce carbon emissions. These scores give organisations an overall rating from A (best) to D (worst). The rating highlights how well the organisation performs to best practices concerning climate change.
For our 2022 assessment, our Group scored a B, putting us in the ‘Management’ category for performance on climate change. ‘Management’ means the Group is taking co-ordinated action on climate issues. The Group’s score is higher than the Oceania regional average of C, as well as the Global Retail Average and overall Global Average of C.
We have taken steps this year to improve our score, and we hope to improve our score to our 2020 score of A- in the coming years.
For an in-depth review of performance against energy and greenhouse gas emissions, please refer to The Warehouse Group Emissions Inventory Report.
Become a zero-waste organisation by 2025
To become a zero-waste organisation by 2025 will require us to reduce unnecessary, non-recyclable shipping and freight packaging, and, where residual waste does occur, ensure it is diverted from landfill.
The majority of our internal waste is generated from shipping and freight packaging which is removed and disposed of at our distribution centres, and general use waste in our stores and Store Support Office (SSO). All operational waste is generated onsite. Our waste data is consolidated from individual reports, provided by our waste and recycling service providers.
Waste diversion from disposal was slightly lower in FY23 than the prior year (72.9%, compared to 73.4%) due to store refurbishment and SSO construction, where a large proportion of the construction waste could not be recycled.
When waste is sent to landfill, we use landfills with Landfill Gas Recovery Facilities (LGRF) that capture greenhouse gas generated from the breakdown of organic matter to reduce the negative climate impacts of landfill gas. In FY23, 93.6% (FY22: 89.5%) of landfill waste was sent to landfills with LGRF.
Our national waste and recycling service providers supply comprehensive waste-minimising solutions in our stores, including commingled paper and cardboard recycling. At our SSO, we provide various recycling services to our team members, including food waste services, which diverted 15 tonnes of compostable organic waste in FY23 (FY22: 13 tonnes).
The Warehouse Group disposed of 1.86 tonnes of hazardous waste in FY23 (FY22: 0.09 tonnes). All hazardous waste is professionally collected, transported, treated and disposed of by our licensed waste service provider.
Future focus areas
In FY24 and beyond, we will continue our progress to make sustainable living easy and affordable for everyone. This includes:
- Maintaining our progress to embed sustainability in our business operations, finance, process, learning and development, data systems and governance.We will continue to review opportunities and mechanisms to make our carbon emissions and waste impact tangible for our teams, customers and broader stakeholders.
- Extending the Retail Sector Climate Risk disclosure we led in FY23 and deliver the next chapter of The Warehouse Group’s specific Climate related risk disclosure and transition plan following the new XRB Aotearoa New Zealand Climate Standards.
- Accelerate our work to address our Scope 3 suppliers’ emissions, which will deliver more sustainably sourced and packaged products for our customers.
- Continue to make recycling easy for our customers by making our stores the go-to destination for free and convenient post-consumer waste solutions, and expand our current e-waste solution availability in FY24.
- Participate in consultations and provide advice on policies and actions that help our sector and country move towards a more sustainable future.
- Target boundary includes private label products at The Warehouse and Warehouse Stationery.
- Target boundary includes private label products at The Warehouse and Warehouse Stationery, with planned expansion to other brands, against a baseline yet to be established.
- FY20 was set as our base year in accordance with our SLL agreement which aligns our Scope 1 and 2 emissions reduction targets to 1.50C degree SBTi criteria.