Sustainable Solutions for Trader Joe's: A Blueprint for Change

Trader Joe’s is a chain grocery store located in the United States. It was founded in the 1960s by Joe Coulombe who had the goal of bringing “exotic and specialty food to the masses.” Trader Joe’s success can be attributed to many different aspects, including innovative products, competitive pricing, hand-drawn signs, quirky Hawaiian uniforms, and talkative workers. 

Trader Joe’s has made some good efforts in terms of sustainability. They have been proactive on food waste by donating large amounts of food to non-profits. Through their Neighborhood Shares Program, they donate almost 100% of their unsold food. In 2022, they donated 85 million pounds of food to non-profit organizations. They have also made some advances in plastic reduction, arguably not enough, but notable. They have removed 12 million pounds of packaging from their products. They specifically accomplished this by removing plastic mesh packaging from produce, clamshells in produce, plastic rings from six-packs of beer, and plastic sleeves from many potted plants. They were able to eliminate packaging in 40+ items in their produce department. They also have changed a lot of frozen meals’ packaging from plastic trays to compostable options, and have changed packaging in around 20 products from virgin plastic to 100% recycled PET1 plastic. Trader Joe’s has also focused on using minimal building materials and fixtures in the construction of its stores. They use sustainably sourced Cedar, no Volatile Organic Compound paint, and energy-efficient LED lighting. Trader Joe’s abstains from selling online or delivering, which greatly avoids unnecessary emissions. Their product offering is 23% organic, has no GMOs as ingredients in their products, and uses no synthetic colors or artificial flavors. They have also purchased 100 electric delivery trucks to cut emissions on their transportation. Trader Joe’s has also implemented a policy where new stores are constructed with CO2-based refrigerators because traditional HFC refrigeration systems are a huge contributor to grocery store emissions. 

These all may seem like great advances, but it is abysmal in comparison to other grocery store chains (see Step 5 in Appendix).

Trader Joe’s products are all privately labeled, so every product is labeled as the Trader Joe’s brand. You won’t find any directly labeled Nestle or Pepsico products in Trader Joe's. One would think that this would mean that they actively choose better ingredients, and carefully work with local farmers and consumers to create a personal relationship with their products, but Trader Joe’s is just as bad and even worse than mainstream grocery stores. Trader Joe's was ranked the least sustainable grocery store in the 2021 Brightly Analysis and the Environmental Investigation Agency Climate-Friendly Supermarkets 2022 Scorecard. 

There are many reasons why Trader Joe’s is ranked so low, mainly that they don’t report on any metrics so their consumer base can’t see how they are currently doing and how much change they are implementing. Not reporting any numbers is a cowardly move to propel their greenwashing. Trader Joe’s is marketed as a locally run, down-to-earth, tree-hugging, and people-loving business, but it is all a facade. This is apparent in labeling products as “green” and “fresh”. There is no proof that Trader Joe’s truly wants to enact change on earth for their consumers.

Trader Joe’s lacks a focus on produce and instead focuses on processed foods. Mainly, frozen processed foods. Trader Joe’s has a small selection of produce, with the quality of these products being abysmal. This forces its customers to the processed foods section. Not only does processed food have a high carbon footprint, but it also promotes unhealthiness among a consumer base. It is important to not forget that population health is also a key part of sustainability. 

Trader Joe’s also does a terrible job in terms of sourcing. Their sourcing information, much like a lot of their information, is hidden. However, “The Eater” was able to uncover the sourcing of three products in Trader Joe’s line. Their bottled smoothies were made by Naked, a brand owned by PepsiCo. Their hummus was made by Tribe Mediterranean Foods, a brand owned by Nestle. ConAgra supplied their canned corn. All three of these supplying brands are known for having detrimental effects on the environment and people, whether it be through mass emissions or minimal labor rights. A report released by a non-profit organization named Ceres measured the top 100 companies and how they were reacting to global warming, with 100 meaning that they had effective and good responses. Nestlé scored 29 points, PepsiCo scored nine points, and ConAgra scored four points. All of these scores are terrifyingly low, showing how detrimental Trader Joe’s supply chain is to the planet.

Trader Joe’s specifically shows a disregard for labor rights in its supply chain. Cocoa farming is known for often violating human rights through exploiting extreme poverty, hazardous child labor, and forced labor. Trader Joe’s got one of the worst scores on Green America’s Retailer Chocolate Scorecard, meaning that they had a weak child labor policy, didn't specifically mention child labor for their cocoa, and offered 5 or fewer fair trade chocolate brand options.

Recognizing that all of these issues are important, a large part of emissions in grocery store chains comes from their refrigeration systems. Refrigerants are substances that can transform from liquid to gas and back while continually cycling through coils in appliances. They absorb heat and promote cooling. Hydrofluorocarbons (HFCs) are the most common refrigerant and is a greenhouse gas that is 53 times worse than carbon dioxide. Grocery stores use a lot of energy with 60 percent of it being for cooling and heating systems. Refrigerants leak from appliances from wear, faulty maintenance, or leakage at the end of an appliance’s lifecycle. Once these refrigerants leak, they escape into the atmosphere and deplete the ozone layer. According to Green America, “Refrigerant leaks from US supermarkets emit 45 million metric tons of greenhouse gases every year (the equivalent of 9.5 million cars on the road).” The damage to refrigeration systems is rampant, and there are ways to be proactive in a change for good. 

Material Issues and Stakeholder Analysis

Careful consultation and research have highlighted 9 key ESG issues for the grocery industry and Trader Joe’s. These key issues are GHG Emissions, Energy Management, Waste Management, Data Security, Product Quality and safety, Customer Welfare, Product Labeling, Labor Practices, and Supply Chain Management. I have highlighted GHG emissions, energy management, and Supply Chain Management as material issues that are of the highest intensity for Trader Joe’s, with medium to high importance to key stakeholders and financial performance (see Steps 1, 2, and 3 in Appendix). The GHG emissions material issue entails transportation vehicle fleet fuel and refrigeration emissions. The energy management issue entails electricity usage for refrigeration, air conditioning, and lighting. The supply chain management issue entails conservation, water scarcity, animal welfare, fair labor, and climate change. I have also highlighted Trader Joe’s key stakeholders, whose influence were considered heavily for my recommendations. Their stakeholders are customers, retail employees, suppliers, investors, corporate employees, local communities, government regulators, and NGOs/Food Banks (See Step 4 in Appendix). 

Recommendations (See Step 8 in Appendix)

My recommendations will tackle the material issues of GHG emissions, energy management, labor practices, and supply chain management. These recommendations will work towards the SDG issues of “Decent Work and Economic Growth”, “Industry, Innovation, and Infrastructure”, and “Sustainable Cities and Communities”.

The first recommendation is to tackle the refrigeration issue. Trader Joe’s has publicly committed to using only CO2-based refrigeration in its new stores and upgrading existing stores to “better, lower impact refrigeration systems”. Solely implementing these CO2 refrigeration systems in new stores and setting no explicit goal to transition all systems in all locations to lower impact ones is not enough for actionable change. I suggest that Trader Joe’s commits to having all of its stores using CO2-based refrigeration by the end of 2026. Trader Joe’s has 564 stores across the US, so they will have to upgrade 188 stores every year. This recommendation includes the removal of old HFC refrigerators, which will require great care. The EPA published a guide on the proper disposal of refrigeration equipment, explaining that technicians need to follow protocols and laws for the proper recovery of refrigerants. Once these refrigerants are recovered, we have the option to resell, destroy, or safely store them. We should safely store these refrigerants as it is the safest against releasing emissions and does not promote further use of refrigerants by other firms.

The second recommendation is to tackle supply chain management. This will be accomplished through a partnership with Source Map. Source Map is a software company that has successfully traced the entire supply chains of companies like Hershey’s, Mars, Ferrero, Williams Sonoma, and Hoka. I recommend that Trader Joe’s works with SourceMap to trace the entire supply chain of every product that they sell. This will be extensive and costly but will be crucial in investigating their true impact. Trader Joe’s should have all of their products traced by the end of 2024. Once this is accomplished, Trader Joe’s should hire a team of employees to replace any parts of their supply chains that violate human rights and promote deforestation, accomplished by the end of Q1 of 2024. These are two issues that are prevalent in many supply chains that will be a good first step to revolutionizing their supply chains. To provide efficiency and success, I recommend that Trader Joe’s hires Daniel Stanton as an expert and adviser. Stanton is a supply chain expert with over 25 years of experience in many industries. He should be hired by August 2024, allowing time for the SourceMaps to be constructed and allowing him to be a part of the strategy from early on. Trader Joe’s should have all human rights violating and deforesting suppliers replaced or changed by the end of 2027. This gives them around four years to accomplish these drastic but timely changes. 

Market Demand

The market demand for these recommendations is apparent. 

The recommendation to increase supply chain transparency guarantees positive attention from consumers. Research conducted by Label Insight stated, “94% of consumers are more likely to be loyal to a brand that offers complete supply-chain transparency, while 39% say they’re willing to switch to a more transparent brand.” A 2019 research study conducted by MIT found that supply chain transparency allows companies to gain consumer trust and then raise direct revenues from this. The senior quality commitments advisor for Whole Foods, a grocery store chain that has spearheaded their sustainability efforts, said, “I think consumers are interested more than ever about where their food comes from, where it was grown, and how it was produced.” These MIT and Label Inisghts research studies along with this advice from Trader Joe’s competitor show that supply chain transparency heavily affects customer loyalty and trust. 

The recommendation to replace HFC refrigeration systems with CO2 refrigeration heavily affects emissions. The market demand for emission reductions is significant. Carbon Trust’s research showed that “45% of shoppers would be prepared to stop buying their favorite brands if they refused to commit to measuring their product carbon footprint”. Brand loyalty comes into play with emissions as well, with Carbon Trust reporting that “56% of people would be more loyal to a brand if they could see at a glance that it was taking steps to reduce its carbon footprint.” 

Both of these methods will increase customer loyalty and brand image. Max Freedman wrote an article about what effect customer loyalty has on a business. It can cultivate regular patronage, correlate with higher spending, reduce customer acquisition costs, and increase ad effectiveness. The perception of customers in this market will be heavily affected by these recommendations with a positive change. 

ROSI Analysis (See Step 9 in Appendix)

The first strategy of replacing HFC refrigerants with CO2 refrigerants will provide a huge change in operational efficiency and innovation. This method will decrease carbon footprint by 30% for Trader Joe's and will provide a more efficient system. CO2 as a refrigerant ensures the lowest cost possible because of its high efficiency, low power usage, and refrigerant charge reduction. Trader Joe’s will be able to save up to 20% of costs on energy if implemented in warmer climates. Specifically, CO2 refrigerants are cheaper per pound, reduce electricity consumption in installation, reduce electricity bill costs, reduce maintenance and performance-related costs, and avoid retrofit costs. All of these benefits will amount to huge savings for Trader Joe's. Additionally, making this change avoids future regulations that most likely will be enacted on the use of HFCs. Carbon taxes, emission limits, and more are set in stone to be created and enforced more heavily in the future. Trader Joe’s has already experienced this in the past. In 2016, Trader Joe’s had a settlement with the U.S. Department of Justice and Environmental Protection Agency for failing to perform proper refrigerant leak repair and recordkeeping. This settlement cost Trader Joe’s a penalty of $500,000 and they had to spend around two million dollars in costs to fix the issue. Making this change will prevent a penalty like this from happening again. 

The second strategy of Supply Chain Transparency will be more of a brand image strategy than cost-saving. There will be a lot of capital invested in the SourceMap partnership through hiring a whole new team of supply chain professionals and hiring Daniel Stanton as an expert. I predict that the specific aspect of the strategy of replacing human rights violators and deforestation propellers from their supply chain will create a more consistent and stable supply chain. Trader Joe’s can benefit from a better supply chain because they can avoid shortages, strikes, and regulations. Additionally, having an ethical supply chain allows for a better relationship with suppliers that can be more beneficial in the long term. 

Limitations

It is important to understand that no plan is perfect. This plan is the first step to tackling Trader Joe’s sustainability and is nowhere near the end. The material issues of waste management, customer welfare, and labor practices need to be addressed in the future and the issues these recommendations are tackling are nowhere near being solved. The replacement of HFCs with CO2 is beneficial but is still not perfect. CO2 will still leak from the machines and go into our atmosphere. Large amounts of nonrenewable energy will still be used to run these machines. Human rights violations and deforestation are not the only issues within supply systems. There is still action needed for conservation, water scarcity, animal welfare, and so much more. A fair wage and proper benefits should be provided for everyone in their supply system. There are a lot more things that Trader Joe’s needs to do to have a positive impact on this planet and its people, so this is only the start. 

Conclusion

In conclusion, the sustainability recommendations presented in this blueprint for change aim to address the pressing environmental and social challenges faced by Trader Joe's. Despite commendable efforts in certain areas, such as food waste reduction and limited plastic usage, Trader Joe’s falls short of its green image, ranking at the bottom in many sustainability assessments. The recommendations outlined focus on two critical issues: the transition of all stores to CO2-based refrigeration by the end of 2026 and the change in supply chain transparency and elimination of human rights and deforestation violations by the end of 2027. These strategies not only work towards the UN’s sustainable development goals but also respond to the growing market demand for transparency and emissions reduction. The proposed changes are anticipated to foster operational efficiency, reduce costs, and enhance Trader Joe's brand image, ultimately aligning the company with a more sustainable and responsible future. As consumers increasingly prioritize eco-conscious choices, these recommendations have the potential to not only meet regulatory expectations but also secure customer loyalty and elevate Trader Joe's as a leader in responsible business practices within the grocery industry. It is time for Trader Joe's to embrace a proactive and transparent approach to sustainability, ensuring a positive impact on the environment, society, and its long-term success.

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