Costco earned a letter grade of C, scoring 52.75 out of 135 possible points, which reflects a notable improvement from its C- grade in 2017, resulting in an overall ranking of 12th among 40 retailers. The company made demonstrable progress in 2018 in improving its work to address harmful chemicals, most notably by adopting new restrictions on toxic chemicals in textiles and in their manufacturing. The new chemical restrictions for textiles apply to apparel and footwear, textile sporting goods, luggage, handbags, and home textiles, such as blankets, sheets, rugs, and towels. The company also notably disclosed chemicals it is restricting in non-foods packaging, expanded the Smart Screening Program, and is now encouraging suppliers to attain qualified third-party certifications. In 2017, Costco announced its new 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, announced earlier in the year, which “identifies and removes chemicals of concern in multiple product categories, including chemicals not yet restricted by laws.” Also in 2017, Costco announced a new partnership with the University of California’s Berkeley Center for Green Chemistry to identify ways to improve its chemical management program, beginning with a focus on three product areas: furniture, textiles, and personal care and household products.
Opportunities for improvement: Costco can continue to make progress by fully disclosing its restricted substance lists by product category, expanding its restrictions on textiles chemicals to eliminate per- and polyfluoroalkyl substance (PFAS) chemicals, setting public quantifiable goals with clear timelines for reducing and eliminating chemicals of high concern, and completely eliminating and safely replacing BPA and per- and polyfluoroalkyl substances (PFAS) in food packaging and food contact materials as well as phthalates 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
10 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 goods, pet beds, furniture, personal care products, cleaning products, Kirkland Signature food packaging, Kirkland Signature Baby Wipes, and Kirkland Signature Diapers.”
In 2018, Costco disclosed it has adopted Restricted Substance lists for textiles and packaging. The company stated: “The Costco Smart Screening textiles testing program is based on the Apparel and Footwear International RSL Management (AFIRM) Working Group. This restricted substance list (RSL) has been adopted with the third party testing labs performing testing for Costco’s textile and footwear products. Not only is this tested for all apparel and footwear, but also includes textile sporting goods, luggage, handbags, and home textiles like blankets, sheets, rugs, and towels. Costco is working with our textiles suppliers to communicate upstream, and implement the Zero Discharge of Hazardous Waste (ZDHC) Manufacturing Restricted Substance List (MRSL).” This is a significant development for the company.
On packaging, the company shared: “The labeling and packaging for Costco’s non foods consumer goods are tested for chemicals of concern based on their environmental impact. Costco Smart Screening for labels and packaging references the AFIRM Group packaging RSL. The current scope of packaging components include paper, wood, cartons, stickers, plastic wrap, finishing dyes, inks, coatings, metal, tape, textiles and desiccants. (* This packaging component list is not all inclusive and under constant review). Additional labeling and packaging for Costco’s Kirkland Signatures Foods items are also required to participate in the Costco Smart Screening testing program.”
Costco has not set public quantifiable goals for reducing and eliminating CHCs, the policy does not appear to apply to operations, and it is not clear if the Chemical Management Policy applies to products sold in stores outside the U.S.
2.5 out of 7.5 points
Oversight: Established management responsibilities and incentives
It is not clear if the board is engaged in the chemical policy or if there are financial incentives for senior management to implement its safer chemicals policy.
7.5 out of 10 points
Accountability: Ensures supply chain accountability
In fiscal year 2018, the company “performed over 5000 individual product tests looking for chemicals of concern to identify and either remove or reduce these chemicals in all product categories tested.”
Last year, 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. Recently 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.
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.” More recently the company further clarified that training for the Smart Screening program is “completed biannually at a minimum.”
Costco has otherwise not reported on programs to audit suppliers.
0 out of 10 points
Disclosure: Requires suppliers to report use of chemicals in products to retailer
3 out of 15 points
Action: Reduced or eliminated chemicals of high concern within the last three years
4 out of 10 points
Safer Alternatives: Evaluates safer alternatives, avoids regrettable substitutes
7.75 out of 15 points
Transparency: Demonstrates a commitment to transparency and public disclosure
Last year, 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, triclosan, organotins, and per- and polyfluoroalkyl substances (PFAS), but it has not disclosed its full Beyond Restricted Substances List (BRSL).
The company recently 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 disclosure, however, does not clarify the scope of ingredient disclosure so partial credit is awarded.
0 out of 7.5 points
Chemical Footprint: Evaluates its chemical footprint
3 out of 7.5 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
10 out of 15 points
Continuous Improvement: Shows continuous improvement by steadily expanding safer chemicals policy
0 out of 5 points
Safer Products: Program to promote safer products in stores and/or on website
5 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.” More recently, 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.”
0 out of 5 points
Impact Investment: Investing financial resources into independent research into safer alternatives and/or green chemistry solutions