Costco 2013 Annual Report Download - page 15

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of chemicals going into sewer systems and, where possible, reuse that water for site irrigation. By coordinating
with state and federal incentive programs, these and other energy-saving systems help us reduce our carbon
footprint and lower the cost of operating our facilities.
Over the past decade we have made notable progress in lowering the power consumption of the lighting
systems in our buildings by as much as 40% while actually improving the quality of the lighting. Our HVAC
systems are as much as 15% more efficient over the last several years, while at the same time meeting
stricter requirements for heating, cooling, and humidity control. Our refrigeration systems have also become
more efficient even as we have increased the size of our coolers and freezers due to higher sales volumes.
We continue to evaluate additional opportunities to improve energy efficiency.
Recycling and Waste Stream Management Tons of trash that our warehouses generate each week, much
of which was once discarded into landfills, are now being recycled into usable products, recycled into biofuels
or compost, or used as feed stock. For example, the 170,000 tons of corrugated containers we recycled
during Fiscal 2010 increased to 210,000 tons during Fiscal 2013. Additionally, our organic recycling programs
diverted more than 2,505 tons of food waste from landfills this year; and our new electronic waste (E-waste)
diversion program recycled 2,074 tons during 2013. We also have a warehouse program where meat scraps
and rotisserie chicken grease are recycled by third parties to make animal feed, biodiesel fuel, soaps, and
other products. Our grease recovery systems, now in most of our warehouses, annually divert millions of
pounds of grease from the waste stream. Our merchandise packaging is also becoming more sustainable
as we pursue opportunities to eliminate polyvinyl chloride (PVC) plastic in our packaging and replace it with
recycled or recyclable materials.
Logistics and Reverse Logistics Our strategically placed depots (cross-dock distribution centers), now
in each of our U.S. and Canadian regions as well as all of our other international operations, allow us to
reduce delivery costs by providing single-step handling of full pallets of merchandise from our suppliers to
our warehouse receiving docks. With rising fuel and operating costs we are continually evaluating ways to
improve our “cube efficiency” (our truck’s capacity) through such means as pallet configuration and packaging
design changes, resulting in more product on a pallet and fewer delivery trucks on the road. Additonally, we
are reducing our “empty miles” (how often we drive empty trucks) by loading trailers that are traveling back
to our depots (back hauling) with salvaged warehouse returns and return-to-vendor merchandise. This
streamlined “reverse logistics” allows us to reduce in-warehouse merchandise handling costs, free-up floor
space in the warehouse, and increase the quantity and quality of vendor returns - all contributing to the
reduction of our operating costs and our carbon footprint.
Commuting We continue to encourage our employees to find alternative methods of transportation to
reduce energy consumption and emissions. The Commute Trip Reduction (CTR) program we began nineteen
years ago at our corporate office with eighteen van pools has evolved into seventy-seven vans (vans, fuel,
maintenance and insurance provided by five transit agencies); and we have six van pools in the San Diego
and Los Angeles regional offices. We offer employees subsidies to van pool, and we subsidize employees
who purchase monthly bus passes. In addition, we encourage employees to ride bicycles to work when
practical. All of these programs and activities contribute to reducing our carbon footprint.
RISK FACTORS
The risks described below could materially and adversely affect our business, financial condition and results
of operations. These risks are not the only risks that we face. We could also be affected by additional factors
that apply to all companies operating in the U.S. and globally, as well as other risks that are not presently
known to us or that we currently consider to be immaterial. You should review these Risk Factors carefully
in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations
and our consolidated financial statements and related notes in this Report.