Sprouts Farmers Market, one of the largest and fastest-growing specialty retailers of fresh, natural, and organic food in the US, released its 2022 ESG report, highlighting plans to open smaller stores and findings from its first-ever Scope 3 emissions inventory.
Scope 1 and 2 emissions (more directly influenceable) increased 7.4%, from 216 metric tons CO2e in 2021 to 232 MT CO2e in 2023
This was the first year Sprouts assessed its Scope 3 emissions, partnering with HowGood for a comprehensive Scope 3 inventory
78.9% of the company’s emissions are Scope 3 from purchased goods and services
Sprouts plans to open smaller format stores with less carbon-intensive operations, taking advantage of infill expansion efficiencies
Sprouts’ new 23k square foot store format is 23% smaller than the previous 30k sq ft prototype
The company plans to refine its brand and marketing approach with a “digital-forward strategy customized to its customers’ dietary and lifestyle preferences, reducing its carbon footprint”
Sprouts averted 51k metric tons of CO2e through food recovery programs in 2022
Sprouts is committed to removing single-use plastic and paper bags at checkout by the end of 2023 and transitioning to reusable bags only
The report also highlights the strategic value of Sprouts operating its own produce distribution and fresh supply chain. 88% of Sprouts’ stores are located within 250 miles of a produce distribution center. This proximity to distribution centers allows Sprouts to increase the freshness of its produce, reduce food waste, and lower transportation miles, all of which contribute to reducing Sprouts’ carbon footprint.
The full Sprouts Farmers Market 2022 ESG Report is available here.
Given its customer profile and assortment, Sprouts is understandably ahead of the curve in some areas of sustainability.
But its most recent report may be an indication of change on the horizon to many retailers and brands, for a few reasons:
Smaller footprint – Decarbonization probably isn’t the sole (or even primary) motivation for Sprouts to open and operate smaller buildings, but there’s little argument that a smaller physical footprint means a smaller climate footprint (along with lower capital requirements and operating costs). Less space also means pressure to rationalize SKUs and a smaller canvas to market and merchandise in-store, so space productivity will be a focus for Sprouts, and its suppliers.
Product-level scrutiny – At nearly 80% of its emissions, Sprouts’ Scope 3 emissions are the overwhelming majority of its footprint — which is fairly typical among retailers. Scrutinizing its assortment’s C02e at the product-level is likely to give Sprouts and its merchants new insight, and a new factor to consider when deciding what to stock and promote.
Absolute vs. relative emissions reductions – As Sprouts itself notes, its high growth rate (planned new store growth of 10% per year starting in 2024) puts added pressure on its efforts to decarbonize, since to reduce absolute emissions it must draw them down at a rate that exceeds the company’s growth rate.
