Costco earned a letter grade of C-, which is lower than its grade last year of C and reflects a lack of significant forward momentum in 2019. The company scored 46.5 out of 146.5 possible points, ranking 19th out of the 43 retailers evaluated this year.
In 2019, Costco disclosed that it is phasing out the use of receipt paper coated with BPA or BPS by the end of 2019 in its Canadian stores, but did not disclose whether it was doing the same in the U.S.
In 2018, the company made demonstrable progress in improving its work to address harmful chemicals, most notably by adopting new restrictions on toxic chemicals in textiles and in its manufacturing. Besides the action on thermal receipts, the company has not reported on progress in implementing or expanding the commitments announced last year. The chemical restrictions for textiles announced in 2018 apply to apparel and footwear, textile sporting goods, luggage, handbags, and home textiles, such as blankets, sheets, rugs, and towels. In 2018, the company also notably disclosed chemicals it is restricting in non-foods packaging, expanded the Smart Screening Program, and began encouraging suppliers to attain qualified third-party certifications.
In 2017, Costco announced its Chemical Management Policy, which “goes beyond the boundaries of regulatory compliance in an effort to reduce potential chemical harm to humans and to the environment from the product manufacturing process and from consumer use and disposal.” The company encourages suppliers to: “1) Identify chemicals of concern (utilizing comprehensive testing programs); 2) Remove or apply the process of informed substitution for any identified chemicals of concern; 3) Identify ways to change their manufacturing processes to reduce hazardous chemical use; and 4) Encourage Suppliers to review and attain qualified third-party green certifications.” This builds on Costco’s Smart Screening Program, which “identifies and removes chemicals of concern in multiple product categories, including chemicals not yet restricted by laws.”
Opportunities for improvement: Costco can continue to make progress by fully disclosing its beyond restricted substance lists (BRSLs) by product category, expanding its restrictions on textiles chemicals to eliminate any per- and polyfluoroalkyl substances (PFAS), and setting public quantifiable goals with clear timelines for reducing and eliminating chemicals of high concern (CHCs) that may be present in the products it sells, such as flame retardants, phthalates, and PFAS. As a major food retailer, Costco should eliminate and safely replace any toxic indirect food additives in food contact materials, with special attention paid to bisphenols and PFAS in that may be in food packaging and other food contact materials as well as any phthalates that may be in food and food contact materials in its supply chain. Costco should become a signatory to the Chemical Footprint Project and pilot it with key private label suppliers.
Summary of Costco’s Grade
12 out of 17.5 points
Policy: Adopted a retailer safer chemicals policy
Costco has developed “chemicals of concern” and “restricted substance list[s]” for multiple product categories including “children’s and adult apparel, bedding, home textiles, pet beds, furniture, luggage, handbags, sporting goods, personal care products, cleaning products, Kirkland SignatureTM food packaging, non-foods packaging, Kirkland Signature Baby Wipes, and Kirkland Signature Diapers.”
In 2018, Costco disclosed that it adopted BRSLs for textiles and packaging. The company states: “The Costco Smart Screening Program also includes textiles. This portion of the testing program is based on the Apparel and Footwear International RSL Management (AFIRM) Working Group. The AFIRM Restricted Substance List (RSL) has been adopted with third-party testing labs performing testing for Costco’s textile and footwear products. Examples of products tested include apparel and footwear, sporting goods, luggage, handbags, and home textiles like blankets, sheets, rugs, and towels…Costco encourages its textile suppliers to implement in their supply chains the Zero Discharge of Hazardous Waste (ZDHC) Manufacturing Restricted Substance List (MRSL).” This was a significant development for the company. However, the company has not shared any progress on its implementation since then.
In 2018, on packaging, the company expanded its work and now says: “The labeling and packaging of Costco items are tested for chemicals of concern as follows: Products that are part of the Costco Smart Screening use the AFIRM Group packaging RSL. Examples of packaging components include paper, wood, cartons, stickers, plastic wrap, finishing dyes, inks, coatings, metal, tape, textiles and desiccants…Labeling and packaging for Kirkland Signature foods items also are required to participate in the Costco Smart Screening testing program.” However, the company has not shared any progress on its implementation since then.
In 2019, Costco Canada disclosed it was phasing out BPS and BPA in thermal receipt paper in its Canadian stores by the end of 2019. The company has not clarified whether or not this also applies to its stores in the U.S. Since Costco gave itself a timeline for this phaseout, we are awarding the company one point each for the operations component and for setting these limited public quantifiable goals, as the company has not set these goals for eliminating other CHCs from other products and has not indicated whether this effort also applies to the U.S.
Costco has not set other public quantifiable goals for reducing and eliminating CHCs, the policy does not appear to apply to operations (beyond the initiative noted above), and it is not clear if the policy applies to all locations where Costco products are sold.
2.5 out of 5 points
Oversight: Established management responsibilities and incentives
Costco does not appear to offer financial incentives for senior management to implement its safer chemicals policy.
7.5 out of 12.5 points
Accountability: Ensures supply chain accountability
In 2017, Costco stated that its children’s and adult apparel, bedding, home goods, pet beds, furniture, personal care products, cleaning products, Kirkland Signature food packaging, Kirkland Signature Baby Wipes, and Kirkland Signature Diapers are physically tested against a list of more than 300 COCs. In 2018, the company clarified that the following product categories are now also part of the program: home textile goods, luggage, handbags, sporting goods, and non-foods packaging. The company intends to add more product categories over time but has not disclosed any new product categories for 2019.
The company notes, “In fiscal year 2018 we performed over 5,000 individual product tests and when chemicals of concern were identified, we worked with our suppliers to either remove or reduce these chemicals.” The company has not yet publicly reported on how many tests it has conducted in fiscal year 2019.
The company provides training for suppliers, stating: “For each new product category introduced to the program, Costco trains its International buyers and suppliers around the world on the processes and expectations for the packaging and the product.” In 2018, the company further clarified that training for the Smart Screening program is “completed biannually at a minimum.”
Costco has not specifically disclosed that it incorporates its safer chemicals policy or reporting requirements in supplier contracts.
0 out of 13 points
Disclosure: Requires suppliers to report use of chemicals in products to retailer
3 out of 16 points
Action: Reduced or eliminated chemicals of high concern (CHCs) within the last three years
In 2019, Costco Canada disclosed it was phasing out BPS and BPA in thermal receipt paper in its Canadian stores by the end of 2019. The company has not clarified whether or not this also applies to its stores in the U.S. and has yet to report on progress on reductions in line with this goal.
6.5 out of 13.5 points
Safer Alternatives: Evaluates safer alternatives, avoids regrettable substitutes
The company recently committed to moving away from BPS and BPA thermal receipt paper in Canada but has not disclosed what alternatives it is switching to.
7 out of 18 points
Transparency: Demonstrates a commitment to transparency and public disclosure
On packaging, the company stated: “Products that are part of the Costco Smart Screening use the AFIRM Group packaging RSL. Examples of packaging components include paper, wood, cartons, stickers, plastic wrap, finishing dyes, inks, coatings, metal, tape, textiles and desiccants…Labeling and packaging for Kirkland Signature foods items also are required to participate in the Costco Smart Screening testing program.”
In 2017, the company described some of the authoritative lists of chemicals it restricts and tests against, disclosing that it includes “300 COCs, including those from the State of California Proposition 65, the EU REACH program, and the U.S. Toxic Substances Control Act (TSCA).” The company has also listed examples of chemicals of concern it screens for, such as flame retardants, phthalates, organotins, and per- and polyfluoroalkyl substances (PFAS), but it still has not disclosed its full BRSL.
In 2018, the company shared: “Non foods Kirkland Signature formulated product suppliers are required, and non foods brand formulated product suppliers are encouraged, to provide product ingredients on packaging, on their website, or with a third party chemical management tool.” This statement, however, does not clarify the scope of ingredient disclosure, and the disclosure can be either on-pack or online, so partial credit is awarded.
0 out of 7.5 points
Chemical Footprint: Evaluates its chemical footprint
3 out of 8.5 points
Third-party Standards: Promotes credible third party standards for safer products
The company also sells some private-label cleaning products that are Safer Choice-certified.
0 out of 5 points
Joint Announcement: Public commitment demonstrated through joint announcement
5 out of 15 points
Continuous Improvement: Shows continuous improvement by steadily expanding safer chemicals policy
Outside the scope of this category, the company made significant progress on its policy in 2017 and 2018 by adopting the AFIRM RSL and ZDHC MRSL for apparel and the AFIRM RSL for non-food consumer packaging by expanding or clarifying the categories of products the Smart Screening program applies to and by adding new language around public ingredient disclosure.
0 out of 5 points
Safer Products: Program to promote safer products in stores and/or on website
0 out of 5 points
Collaboration: Actively participates in collaborative process to promote safer chemicals
In the spring of 2018, the Berkeley Center reported that: “The team has recently submitted its report on the current state of non-food chemical management at the company and will be submitting a general comparison of restricted substances lists (RSLs) currently being used in some targeted industry sectors.” Also in 2018, the BCGC reported that “the Costco Wholesale consulting project on Costco’s global non-food chemical management system is wrapping up. The team has recently submitted its final recommendations and will be visiting the Costco Headquarters in Issaquah, WA for a final presentation on September 5th.”
This partnership appears to have ended. There are no updates to the Costco or Berkeley Center for Green Chemistry website on this program for 2019, so no credit is awarded.
0 out of 5 points
Impact Investment: Investing financial resources into independent research into safer alternatives and/or green chemistry solutions