Environment:

Energy/Carbon

Kroger is committed to protecting health and the environment. This extends beyond our responsibilities to comply with all applicable environmental laws and regulations to include our commitment to environmental sustainability. We strive to reduce our impact on the environment by using natural resources responsibly and minimizing waste in our operations.

Our aggressive work in energy management has enabled us to reduce overall electricity consumption in our stores by 34.85% since 2000. In our stores, we have saved more than 1.6 billion kWh since 2000—enough electricity to power more than 119,000 homes for a whole year, and the carbon equivalent of taking 238,878 cars off the road for a whole year!

COMMITMENT TO ENERGY REDUCTION

Kroger's long-term goal is to reduce cumulative energy consumption (in the form of electricity) in our stores by 40% by 2020, using a 2000 baseline. We continue to show a positive long-term trend—a 34.85% electricity reduction in our stores since 2000—and remain committed to achieving our long-term goal. Company-wide, our electricity consumption increased by 10.5% since last year and our total energy consumption, including natural gas, propane and other fuels, increased by 12.5% (largely due to the growth of our business including our merger with Roundy's and the rapid expansion of our popular ClickList online order and pick-up service).

To reduce energy use, our new stores are designed with many energy-efficient features, including LED lighting, motion sensors, variable speed drives, anti-sweat heat controls, distributed refrigeration systems, heat reclaim systems, night-time lighting controls, building and refrigeration control systems, and high efficiency lamps and ballasts. Newer features also include refrigeration case controls, digital scroll compressors, demand defrost and demand-control ventilation.

We use the U.S. EPA’s ENERGY STAR program to track and assess energy consumption across our retail locations. We benchmark building energy performance, assess energy management goals over time, and identify strategic opportunities for savings. Kroger continues to seek the ENERGY STAR certification for our stores, and new stores are “Designed to Earn” the certification. Currently, 1,119 Kroger-operated retail stores qualify for the ENERGY STAR certification, and we are actively applying for certification even as we configure our new energy management system to align with the ENERGY STAR Portfolio Management platform.


LOGISTICS

Our Logistics team moves several million items across the country each and every day. We operate and maintain 42 distribution centers across the U.S. Our store delivery fleet of 3,200 tractors and 12,000 trailers makes more than 8,600 deliveries every day. In 2016, that translated to traveling almost 369 million miles to our stores and facilities. In our Logistics operations, we continue to reduce energy by improving fleet efficiency. We participate in the EPA's SmartWay program, and we are converting to alternative fuel sources like renewable liquefied natural gas and deploying photovoltaic solar systems at two of our distribution centers. From 2015 to 2016, we decreased diesel consumption by 5%, and our ton-miles-per-gallon have improved by 7.5% since 2010. See our Logistics section for more details about our 2020 goals and progress to date.


RETAIL

Our 443,000 associates are engaged in reducing energy consumption in the workplace in numerous ways. Their actions are as important as ever in making a real difference to help maintain and reinforce the basics like FAST (Food at Safe Temperatures), an automated system of over 200 sensors per store to ensure our food safety program. Associates also focus on proper case stocking, closing doors, monitoring case temperatures, turning out lights, and turning off equipment at night. Even small actions in our stores add up to big energy savings across our company.


HOW WE IMPROVE IN OUR MANUFACTURING PLANTS

The manufacturing group is leveraging the ENERGY STAR program as part of their ongoing commitment to reduce energy. More than 30 plants have formed energy teams who are charged with increasing awareness, monitoring progress and incorporating feedback into the process.


CARBON FOOTPRINT

Kroger has measured and managed our total carbon footprint since 2006. In 2016, our total corporate carbon emissions were 7,251,426 metric tons of carbon dioxide equivalents (tCO2e). This includes 2,754,335 tCO2e of scope 1 (direct) emissions from mobile and stationary fuel sources (e.g., natural gas, diesel fuel, refrigerants) and 4,497,091 tCO2e of scope 2 (indirect) emissions from purchased electricity consumption. While this represents a ~3% increase in our gross carbon emissions from 2015—primarily related to the grown of our company, including the merger with Roundy's—our normalized carbon emissions (tCO2e per 1,000 sf) decreased by ~3% in the same time period. In addition, normalized emissions have decreased by about 4% since 2006 when we first started tracking our carbon footprint.

Reducing our carbon footprint is an important pillar in Kroger’s sustainability commitment, and we continue to invest in energy efficiency and low-carbon technologies.

One example is our work to better manage and reduce refrigerant impact. We are testing technologies that reduce initial system charges and investigating the cost and efficacy of refrigerants with lower global warming potential (GWP). Kroger joined the U.S. EPA’s GreenChill program in 2014. GreenChill is an EPA partnership program with food retailers to reduce refrigerant emissions and decrease their impact on the ozone layer and climate change. As a member, we report on our refrigerant management progress and goals. In 2016, we met our our goal to reduce refrigerant emissions by 9% in stores. We also set a new goal to further reduce these store emissions by 10% in 2017, demonstrating our ongoing commitment to continuous improvement.

Kroger expanded our footprint in 2014 to include a partial scope 3 (other indirect) footprint, which includes impacts such as company-generated waste, employee commuting and business travel. In 2016, these scope 3 sources totaled 1,751,411 tCO2e, an increase of about 10% from 2015. These increases are at least in part due to improved tracking capabilities for these activities.


* We publicly report our carbon footprint to the Carbon Disclosure Project (CDP). This international organization records scope 1, scope 2 and scope 3 greenhouse gas emissions measurements.


* For consistent tracking of emissions over time, 2006–2015 emissions have been recalculated to include the acquisition of Harris Teeter and Roundy's divisions added in recent years. Based on Harris Teeter's 2015 emissions and historical sales by year, and on Roundy's 2016 emissions and historical sales by year, 2006–2015 emissions were adjusted for growth and added to Kroger's footprint. This methodology is recommended by the Greenhouse Gas Protocol (http://www.ghgprotocol.org/files/ghgp/public/ghg-protocol-revised.pdf), the standard used to calculate Kroger's greenhouse gas inventory, in order to maintain consistency over time.


RENEWABLE ENERGY

WIND

Kroger has two wind energy turbines located at the Turkey Hill Dairy in Lancaster, Penn. Kroger's Turkey Hill Dairy purchases all of the wind energy produced from The Frey Farm Wind Turbine Project. For the fifth full year of operation, these turbines supply up to 25% of the dairy's annual electricity needs which will be enough power to produce six million gallons of ice cream and 15 million gallons of iced tea for one year. Annual wind energy production in 2016 was 6.57 million kWh.

SOLAR

Several Kroger-operated stores have installed rooftop solar systems, generating approximately 815 kW of solar energy capacity that produces nearly 958,000 kWh per year. Fry’s stores in Arizona installed the first commercial application of the PowerParasol—a patent-pending solar energy and shade technology—in 2013. This 580-kW parking lot system covered 1.7 acres and generated nearly 850,000 kWh of clean renewable energy. Since then, Fry’s has added two 840-kW PowerParasol systems and a new 1,159-kW Affordable Solar Energy parking lot system.

Kroger’s Logistics team has deployed two photovoltaic solar systems at our distribution centers. The Fred Meyer Clackamas Distribution Center in Oregon was the first to install a photovoltaic system in December 2011. It has a 500 kW capacity, which continues to provide about 10% of the DC’s power requirements. Smith’s Food & Drug Stores also operates a rooftop mounted system in Utah at its main distribution center in Layton, Utah. The 1-MW AC solar photovoltaic rooftop system has produced more than 3 million kWh of clean electricity since 2014, reducing the Layton Distribution Center’s energy needs by 20%. The project, a partnership between Smith’s and Rocky Mountain Power, establishes a guaranteed cost for approximately 20% to 25% of the total electricity for the grocery and freezer storage operations over the next 20 years.

Total solar production in 2016 was approximately 4.046 million kWh.



FOOD POWER

The Kroger Recovery System, located in Compton, Calif., at the Ralphs/Food 4 Less Distribution Center, started operations in 2013. It works like this: Ralphs store associates fill bins with unsold organics and place them on a return trailer to the distribution center. When the truck arrives at the distribution center, the bins are off-loaded and brought to the anaerobic digester. The Compton facility has an annual capacity to process nearly 55,000 tons of food waste. In this situation, food waste is food that cannot be sold or donated, as well as on-site dairy processing effluent. The system generated more than 1.8 million kWh of renewable power in 2016. Any power not consumed by the digester’s processes is diverted to the 650,000-square-foot Ralphs/Food 4 Less Distribution Center.

The naturally occurring process of anaerobic digestion transforms the food waste into renewable biogas. This biogas is then turned into power for onsite operations. The process is carried out in an enclosed, oxygen-free environment, which means the process takes up less space and generates no odors. Using the anaerobic digester reduces area truck trips by 400,000 to 500,000 miles each year, and reduces waste costs by $4.5 million. It also reduces carbon emissions by an estimated 90,000 tons a year.

Based on the success in Compton, Kroger broke ground on a second anaerobic digester in 2016. This project will create an anaerobic wastewater treatment system at our KB Specialty Foods manufacturing facility in Greensburg, Ind. The system will turn food production byproducts into energy and improve air quality in the area. The existing wastewater treatment system in the facility is open to the air. The new system will feature a dome that will capture biogas from food byproducts at the plant. The collected biogas will then be harnessed to generate electricity that will be sent to the plant’s electrical grid.

Read more about this kind of Organic Electricity here.


Smith’s: Partner of the Year

In 2016, Smith’s Food and Drug Stores was named a wattsmart® Business Partner of the Year for reducing energy use through efficient lighting, refrigeration and HVAC at its 47 Utah stores. Smith’s completed multiple projects—from lighting and HVAC upgrades to recommissioning existing facilities—to save 4.1 million kWh a year in energy, enough to power 455 Utah homes. The division also received more than $406,000 in Rocky Mountain Power incentives to offset the cost of the upgrades.

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