Major U.S. supermarket chain Kroger has been challenged by Friends Fiduciary, one of the company’s shareholders, to deploy “the best available technological options for eliminating the use of hydrofluorocarbons in refrigeration,” according to a recent letter to shareholders.

The resolution will be voted on at Cincinnati, Ohio-based Kroger’s annual general meeting on June 23.

Friends Fiduciary says the supermarket chain is lagging behind industry peers, with ALDI U.S., Costco, Target, Costco, Walmart and, Whole Foods having all set targets and taken concrete action to transition from HFCs to ultra-low GWP and HFC-free refrigerants.

The Consumer Goods Forum (CGF), of which Kroger is a member, stated in 2016 that “a rapid phasedown of high-GWP HFCs and more sustainable management of refrigeration and systems is necessary to meet the ambitious goal of holding the increase in the global average temperature to well below 2°C [3.6°F].”

In its 2021 sustainability report, Kroger noted an intention to transition to lower-GWP refrigerants but also established goal of “achieving a portfolio GWP of under 1,400.” This goal drastically diverges from the CGF’s definition of low-GWP, which is less than 150 GWP.

Kroger has also stated its commitment to reducing refrigerant-related GHG emissions in its Refrigerant Management Policy, which includes leak reduction.  However, while Friends Fiduciary applaudeds the retailer’s efforts to reduce emissions through leak prevention, the shareholder also criticized this as a short-term approach and called for the development of a “proactive strategy and plan to phase out the continued use of those higher GWP refrigerants.”

If Kroger is to achieve its goal of reducing its scope 1 emissions by 30% by 2030, it must address the 63% of its operational emissions that come from HFCs, said Friends Fiduciary.

Financial risk

In addition to threatening its climate commitments and reputation, Kroger’s continued use of HFC-based systems could pose a significant financial risk as refrigerant prices rise in response to regulatory advances, Friends Fiduciary said.  For example, the American Innovation and Manufacturing (AIM) Act  is set to reduce HFC consumption in the U.S. by at least 85% by 2036.

“Shareholders cannot afford to stand by and watch Kroger fall behind competitors in an area that impacts one of a supermarket’s major assets and its largest source of direct GHG emissions,” said Jeff Perkins, Executive Director of Friends Fiduciary. “Given the capital costs to purchase refrigeration equipment compatible with ultra-low GWP refrigerants, Kroger’s lack of a clear plan and targets leaves investors in the dark as to potential financial, regulatory and reputational risks presented by Kroger’s inaction on HFCs.”

Supermarkets around the world are facing growing pressure to act faster on HFCs. Last year, Walmart shareholders voted in favor of a proposal calling on the company to accelerate its plans to reduce refrigerants released from its operations, and the Environmental Investigation Agency (EIA) has recently challenged U.K. supermarket chain ASDA on its installation of a high-GWP HFC-based air-conditioning system.

According to Sophie Geoghegan, Climate Campaigner at the EIA, “future-proof, HFC-free cooling systems are available, and supermarkets have a responsibility to make better environmental choices and do their bit to help us all avoid climate catastrophe.”

“Shareholders cannot afford to stand by and watch Kroger fall behind competitors in an area that impacts one of a supermarket’s major assets and its largest source of direct GHG emissions,”

Jeff Perkins, Friends Fiduciary.