Sustainable Operations

  • Focus: Operational Eco-Efficiency and Compliance

    We have assessed our operational footprint and determined that energy use and GHG emissions are the most significant impacts for two reasons: our real estate footprint is continually growing and covered more than 99 million square feet of building space in 2015, with retail pharmacies accounting for much of this. In addition, we have a vast distribution and transportation network that services our stores on a continual basis. Water use and landfill waste are other impacts, although to a much lesser degree. Our strategy for sustainable operations focuses on these impacts, with a priority on reducing GHG emissions because of the link to climate change. To do that, we focus on energy efficiency.

  • Climate Change and GHG Emissions

    The World Health Organization predicts that the overall health effects of a changing climate are likely to be overwhelmingly negative. As a company with health care at its core, and with the November 2015 Climate Summit in Paris highlighting the imperative to reduce emissions, we have been intent on strengthening the culture of environmental responsibility within our company to reduce the GHG emissions generated through our operations.

    As described in our Climate Change Policy, our approach to reducing emissions includes monitoring for risks and opportunities, establishing energy and GHG efficiency programs, and engaging on an ongoing basis with our stakeholders to determine and prioritize our climate-related commitments. Because the roll-out of new technology across thousands of store locations takes time, we have adopted a methodical approach to investment in this area. We want to ensure the technologies we implement are proven and that they deliver on both environmental and cost efficiencies.

    Measuring and Reducing Our GHG Emissions

    We have been measuring and reporting our GHG emissions since 2008. We monitor our emissions in accordance with the Greenhouse Gas Protocol published by the World Resources Institute and the World Business Council for Sustainable Development, as well as the Climate Registry’s General Reporting Protocol. These standards also inform the boundaries of our carbon footprint, which encompasses all U.S. retail pharmacy locations, retail clinics, corporate and regional offices, distribution centers, as well as emissions from business travel, product delivery and refrigerants. Our small pharmacy chain in Brazil is also included in these boundaries. The boundaries do not include Omnicare facilities or former Target pharmacies, as these entities were acquired during 2015.

    We measure and report our absolute emissions as well as carbon intensity by square foot of retail space, which allows us to determine the success of our efficiency measures, especially given the growth of our business. In 2015, we achieved a 16% reduction in carbon intensity, exceeding our target to reduce carbon intensity by 15% per square foot of retail space by 2018, compared to a 2010 baseline. We attribute this result to lighting efficiency upgrades, reduced demand for heating, and changes in the Environmental Protection Agency’s (EPA) electricity emissions factors (eGRID factors). The use of the eGRID2012 factors, published in 2015 in place of the eGRID2010 factors, resulted in a 7% reduction in metric tons of CO2e for electricity emissions.

    We will continue working toward further reductions and establish a new GHG emissions reduction target within the next two years.

    Climate Change Risks and Opportunities

    We believe our proactive approach to climate change risk management and our proven ability to respond during severe weather events has strengthened the trust our customers have in CVS Health, and will enable our business to grow.

    Climate change is causing unusual and sometimes extreme weather patterns around the world, and climate experts are foreseeing a new era of “super storms” emerging. As a provider of prescription medications and retail health services, we understand that a major disruption in our business can have serious implications for patients who rely on us for prescriptions and other health care needs. To prepare for potential impacts, we evaluate our risks and opportunities on a continual basis.

    In evaluating and preparing for these risks, we believe that the unexpected closure of our data centers and corporate offices would pose the greatest threat to our business because it would impede our ability to operate the systems that support our stores. Our Business Continuity Plan addresses the loss of facilities, information technology (IT) infrastructure and human resources as well as losses in our supply chain in the case of floods, hurricanes and similar events. Financially, we are at risk of physical damage to our facilities, lost inventory from power outages and lost business from being closed in the wake of a natural disaster.

    We have responded to disasters in the past and learned valuable lessons that help our business continuity team enhance our emergency response action plans on a regional level. Their focus is on ensuring we are operational during times of severe weather events or directing customers to other nearby CVS Pharmacy locations in the event that a particular store must close.

  • Energy and Fuel

    Three main sources of energy use contribute to our GHG emissions: electricity, natural gas and fuel. In 2015, the 2.9 million megawatt hours of electricity used to operate our retail locations and other facilities continued to represent our most significant environmental impact and the largest contributor to our carbon footprint. Our fleet used 10.6 million gallons of fuel to distribute product to our stores, another contributor to our footprint.

    Electricity use in 2015 stayed flat compared to 2014 amidst an increase in overall square footage of 1.8% and the introduction of open-air refrigeration units in 450 stores. Our performance is at least partly attributable to store energy efficiency initiatives, including lighting retrofits and enhancement of our Energy Management Systems (EMS) controls.

    We plan to drive energy efficiency in 2016 through a number of initiatives. These include fast-tracking the completion of our lighting retrofit program, integrating our EMS into our newer acquisitions, and exploring opportunities to balance shifting energy needs in our retail locations.

    Use of natural gas decreased in 2015, likely due to warmer weather, which resulted in a 10% decrease in heating degree days between 2014 and 2015. Heating degree days is a measure that indicates the overall heating demand required to heat a building.

    Given continued growth in our retail locations, we remain focused on achieving energy efficiency in operational areas where we can have the biggest impact, including lighting and the centralized management of energy use, as well as through transportation and distribution efficiencies.

    Greenhouse Gas Emissions, Energy, and Water Data Analysis

    Total Energy Usage, by Type, for 2010–2015*


    * 2010–2013 data represents all CVS distribution centers, stores and administrative locations, LL Paid facilities and Caremark locations. 2014 data included the addition of operations in Brazil. 2015 data includes the addition of Coram and Navarro locations. This data includes Scopes 1, 2, and 3 as detailed below.

    Greenhouse Gas Emissions by Scope*

    * In 2012, emissions from Private and Dedicated Delivery Fleets were both reported under Scope one as part of Private Delivery Fleet. In 2013, emissions from Dedicated Delivery Fleet were moved to Scope 3.

    Total Carbon Footprint and Carbon Intensity Measurement

    * Carbon Intensity Goal: Reduce carbon intensity by 15% by 2018, based on 2010 figures.
    ** Adjusted from figure reported in the company’s 2013 CSR report due to minor (~5%) updates as a result of CVS Health’s third-party verification process.
    *** 10-K shows 79.4M SF, but includes 1.3M SF for Target pharmacies acquired on 31 December 2015, which are excluded for the purposes of the intensity target calculation.

    Water Use Intensity Measurement for 2010–2015


    * Company’s 10-K reports 79.4 million sq ft, but this figure includes 1.3 million sq ft for Target pharmacies acquired on December 31, 2015, which are excluded for the purposes of the intensity target calculation.​

    Energy Management System

    In 2015, we enhanced the controls of our EMS, which operates in more than 95% of our retail locations. We will look to integrate our EMS platform into our Coram and Omnicare facilities in the near future.

    The EMS monitoring platform allows us to manage, monitor and adjust lighting, HVAC and other systems from a central location, thus helping us drive energy efficiency consistently across our stores, distribution centers and other facilities.

    Lighting Retrofits

    A significant amount of energy is used to light our facilities. Our strategy, given the scale of our footprint, is to build long-term success through sustained year-over-year investments in proven lighting technologies.

    In 2015, we implemented a new LED lighting strategy that will provide long-term value in terms of energy efficiency and operational cost. The decision followed the success of a 2014 LED interior lighting retrofit pilot, which yielded a 10% increase in efficiency using LED technology compared to high-efficiency florescent solutions. We completed lighting retrofits in 854 stores in 2015, of which 349 used LED lighting. In 2016, we plan a significant increase in the number of LED retrofits with an accelerated timeline.

    In 2015, we also completed an interior and exterior LED lighting retrofit at our corporate headquarters in Woonsocket, and in 2016 we will evaluate opportunities and establish a standard for lighting retrofits at our other main corporate locations.

    Our lighting retrofit program saved us $1.7 million in energy costs in 2015, and nearly $15.9 million since 2011.

    Transportation

    CVS Health depends on a fleet of more than 760 company-owned and third-party tractors and 1,800 company-owned and third-party trailers to deliver products from our 22 distribution centers to store locations in 46 states. This includes deliveries to Navarro locations in Florida and our newly acquired Omnicare business, but excludes Target pharmacies. They will be included in our transportation footprint in our next report.

    In 2015, transportation services related to our distribution network consumed more than 10.6 million gallons of fuel and covered 50.8 million miles. We are continuously looking for innovations and technologies to help us reduce the contribution from or mitigate the impact of these activities on our total GHG emissions. For example, in 2015 we began implementing improved routing software in our fleet, which allows us to track and optimize miles driven, fuel efficiency, average cost per load and on-time service delivery. With 50% program completion at the end of 2015, we saved approximately 34,450 gallons of fuel, which resulted in an estimated cost savings of $173,000. We expect to complete implementation in 2016.

    This new software is also helping us establish Routing Centers of Excellence through the realignment of distribution centers and delivery routing. This strategy helps us manage the environmental impacts of our growing business, while also supporting our growing number of delivery locations, the increasing diversity of merchandise we ship, and our investments in cold chain technology in logistics centers to better serve our medication distribution channels.

    We have long known that excessive idling is an inefficient and expensive use of diesel fuel and a preventable source of GHG emissions. On average, an idling diesel engine consumes 0.8 gallons of fuel per hour and emits more than 18 pounds of CO2. In 2015, we upgraded our in-cab computers to support energy efficiency by monitoring truck idle time and route compliance.

    Our company-owned fleet is an Environmental Protection Agency SmartWay Carrier Partner for the sixth year in a row, receiving the highest carrier rating of Level 1 for emissions control. CVS Health has been a SmartWay Shipping Partner since 2012.

    Alternative Energies

    We also continue to monitor the environmental and economic payback of new technologies and alternative energy sources, adapting our outlook in 2015 to declining energy prices. We are constantly evaluating opportunities through renewable technologies, renewable energy credits, power purchase agreements, and tax credits.

    Our renewable energy program, which includes five stores powered by rooftop solar panels (four in Hawaii and our Leadership in Energy and Environmental Design (LEED) Platinum-certified store in West Haven, CT) and a sixth store under construction in California, also informs our strategic thinking in this space.

  • Water

    At CVS Health, we believe that water quality and scarcity issues pose a threat to the long-term health and sustainability of many communities the world. The World Economic Forum refers to water security as “one of the most tangible and fastest-growing social, political and economic challenges the world faces today.”

    We have implemented steps to monitor and reduce our consumption, particularly in water-stressed areas where we operate. We have also established a water reduction target:

    • Reduce water use in retail operations by 20% by 2020

    Our Environmental Management Program provides the basic framework for responsibly managing our environmental obligations. CVS Health’s water management strategy provides guidance for how we drive efficiencies and reduce usage. We regularly measure our water use and savings; establish guidelines around the development of new properties with appropriate landscaping, and implement water-reduction initiatives into LEED and non-LEED buildings.

    In 2015, CVS Health used the World Resources Institute Aqueduct tool to assess the number of facilities located in water-stressed regions. Using this tool, we were able to assess approximately 99% of total operations. We found that 27% of operations assessed were located in areas of extremely high water stress. For the remaining 1% of sites that were not assessed, we either did not have available water use data or accurate location information. We are working to improve data collection efforts for future assessments.

    While CVS Health has some operations in water scarce regions, our business is not water intensive. The prime areas of water usage relate to irrigation of land around certain stores and usage in washrooms.

    Landscape irrigation at our retail locations currently accounts for 45% of our total U.S. water footprint. In 2015, we began assessing the opportunities for implementing this strategy – going to zero-irrigation in many locations and, wherever possible, eliminating the need for irrigation at our new stores. There are some store locations – both existing and new sites – where landscaping irrigation is mandated by local ordinances. For these locations, our approach will focus on conservation irrigation solutions that reduce water use while meeting irrigation requirements. We will develop next steps in 2016 and begin implementing our strategy.

    Our water use increased by 1% over 2014. We believe the increase can be attributed to warmer temperatures in the summer of 2015, which triggered the need for more water for irrigation. The vast majority of the water we use comes from U.S. municipal water systems. We report our water usage annually through the Carbon Disclosure Project (CDP), which is publicly available at CDP.net.

  • Waste Diversion and Recycling

    According to the U.S. Environmental Protection Agency, more than 250 million tons of solid waste is generated annually in the United States, which makes this country the highest per capita generator of waste. Waste disposal requires resources, costs money and generates methane – a potent GHG emission that contributes to climate change. CVS Health’s retail pharmacies and clinics, distribution centers and corporate offices produce waste across multiple streams, each with specific disposal requirements. We are focused on reducing our solid waste impact by reducing material use and through diversion and recycling programs across our expanding operations.

    Managing Waste at Retail

    As a nationwide retailer, we must occasionally remove products from store shelves and dispose of them. Our priority is to divert any unsalable – but still usable – product from the landfill waste stream to its highest-value purpose through liquidation, donation and other reverse distribution mechanisms.

    In addition to our goal to minimize consumer product waste through donation and liquidation, we want to ensure compliance with hazardous waste regulations. In 2015, we used in-store radio-frequency (RF) scanners to help manage product inventory – from shipping and warehousing to product disposal. The scanners read barcode information located on product labels and colleagues provide information about the condition of the product. This information, in conjunction with ingredient-level data and vendor instructions, is entered and the RF unit displays proper disposition instructions for unsalable goods. This allows us to ensure compliance on hazardous waste requirements, select the most appropriate disposition for products that cannot be sold, and enhance our day-to-day inventory management.

    In many cases, we are able to donate unsalable items to local charities. These items are still usable and provide value to the charities and their clients, and this helps minimize waste. We view this as a win-win for our communities and the environment. In 2015, the value of these product donations was nearly $56 million, based on the cost of goods.

    Reducing Material Use

    It makes both environmental and economic sense to reduce the amount of materials we use so that we have less to handle through our diversion and disposal programs. We believe we are having an impact on material reduction and associated cost savings though our work with suppliers to reduce the inner packs on product packaging when feasible, by opting for lighter weight paper stock to reduce material input at source, and by introducing innovative packaging at Omnicare operations to cut medical waste.

    Increasing Recycling Opportunities

    CVS Health is continuously looking for opportunities to divert recyclable materials from landfill waste. We focus on high-volume materials, including plastic film, plastic bags and cardboard, customer- and employee-facing recycling programs for paper and plastic bottles and cans, as well as the proper recycling of electronic waste. We continue to make progress at our pharmacies, distribution centers and corporate offices, and at our pharmacy mail-order facilities.

    Recycling at CVS Pharmacy

    In an effort to increase opportunities that will reduce the impacts of our waste stream, we provide paper bags to customers who request them in all retail locations. We also adhere to all municipal ordinances that ban the free distribution of single-use plastic bags in favor of reusable and/or fee-based options – currently about 5% of our stores are in jurisdictions that ban the free distribution of plastic bags. We expect that a growing number of municipalities will adopt similar bans and we have developed monitoring and implementation programs to help us respond. Through these programs, we are committed to ensuring that our customers receive the service they expect while also balancing environmental and cost considerations.

    Plastic bag recycling programs are available at a number of our retail locations for customers to bring in and recycle their used plastic bags. In 2015, we continued to add stores to this program, which helped divert more than 42,000 pounds of plastic bags from landfills, a 20% increase over 2014.

    We also saw improvement in our existing single-stream recycling programs in stores in Connecticut and New Jersey, and in 2015 we implemented single-stream recycling in 351 stores in Massachusetts. This program allows different recyclable materials to be commingled for collection, with the aim of keeping more recyclables out of the disposal stream. In 2015, we recovered more than 1.6 million pounds of recyclable material through this program, compared to 1.1 million pounds collected in 2014.

    Our stores also continue to maximize material recovery. For example, cardboard constitutes our largest recycling stream at nearly 120,000 tons recovered across stores, corporate offices and distribution centers in 2015, compared to 100,000 tons in 2014.

    In addition to these programs, we diverted approximately 8,000 pounds of plastic bottles and aluminum cans through store collection programs, compared to 9,900 pounds diverted in 2014, as well as 185,000 toner cartridges from landfill through our mandatory cartridge refill program in place at all 7,900 locations.

    Recycling at Distribution Centers

    In our distribution centers, we recycle 89% of our waste, including 215 tons of plastic film, compared to 235 tons in 2014, and 48,388 tons of cardboard, compared to 49,218 tons in 2014. We also recycled 580 tons of plastic totes that we use to carry and ship many of our products, 324 tons of metal and 289 tons of other miscellaneous waste, which includes office paper and commingled recyclables.

    Reducing Waste at Mail-Order Facilities

    Since 2012, we have been recycling plastic film, cardboard and amber prescription vials at our Chicago mail-order facility in Mount Prospect, IL. In 2015, we recycled more than 914 tons at this facility. At our Wilkes-Barre, PA mail-order facility, we recycled nearly 350 tons of cardboard and commingled recyclables in 2015.

    E-Waste Recycling

    In 2015, we continued to partner with e-Cycle to recycle cell phones within our organization. By recycling wireless devices, we are helping to save energy and GHG emissions, essentially by avoiding the energy used to mine and process new materials. Recycling also helps avoid the use and disposal of toxins such as lead, mercury and arsenic. Through our work with e-Cycle, we collected 1,437 devices for reuse and recycling. This reduced the need to mine more than 200 pounds of copper, gold and aluminum; prevented nearly 30 million gallons of water from being contaminated; and saved enough energy to power more than 350 households with electricity for a day.

    Medical & Pharmaceutical Waste Disposal

    Pharmaceutical and other medical waste are broadly characterized as regulated waste. If improperly disposed of, these waste streams can be released into the environment where long-term exposure may cause harm to animals, plants and people. Not disposing of unused or expired pharmaceuticals, especially controlled substances, also increases the risk of drug abuse or accidental poisoning. Proper disposal of hazardous waste is governed by strict procedures and guidelines. At CVS Health, we work with experts in hazardous waste disposal to ensure compliance while choosing the best environmental options to keep waste out of landfill.

  • Incorporating Green Building Practices

    The manufacturing, design, construction and operation of the buildings in which we live and work consume a sizable portion of natural resources. In the United States, buildings account for 39% of total energy use and 38% of CO2 emissions, 68% of total electricity consumption, and 12% of total water use. At CVS Health, we recognize the long-term environmental and economic value of incorporating sustainable building design in our new building construction. We monitor best practices in green design through our participation in LEED training programs developed by the U.S. Green Building Council (USGBC), as well as by our home state of Rhode Island’s USGBC chapter. Our portfolio of 11 LEED-certified stores and facilities, particularly our Platinum-certified West Haven, CT store, has served as prototypes for our new construction projects. We continually incorporate design and construction characteristics of our certified green buildings that have a demonstrated ROI, such as energy and water efficiency features or sustainable materials. It was this process that, in 2015, prompted us to adopt LED lighting in all new construction and retrofits.

    Based on a successful pilot in 2014, we began the roll-out of smaller-sized stores in 2015. At 6,000 and 9,000 square feet, these compact stores require less land, use fewer materials and are built with an emphasis on sustainability. We plan to continue this strategy of smaller footprint, lower-impact stores, based on the needs of each store location.

  • Platinum Store Shines

    Two years ago in West Haven, CT, we built a new CVS Pharmacy store that stands out among most other stores. In fact, this location became our first store to be certified LEED Platinum, the highest distinction awarded by the USGBC. With its innovative design and state-of-the-art environmental features, we are using this site to help identify best practices that can be incorporated into other stores and facilities.

    In 2015, we got our first hard look at how our LEED platinum store performed and the results were even better than projected, with overall energy usage averaging 8.9% below forecast. In fact, energy savings exceeded expectations in virtually every area of the store, from pharmacy and exterior lighting to HVAC systems, water heaters and coolers. These results are informing our energy-efficiency strategies in LED interior and exterior lighting, day lighting, high-efficiency plumbing features and increased recycled content in materials used in other select locations. In 2016, we will explore additional green building options, leveraging the insights and data we captured from our West Haven, CT store.

    Restoring Brownfields

    Our first priority in new store development is locating the ideal site. Some of the sites we select for freestanding stores are classified as brownfields, land that may be contaminated by concentrations of hazardous waste or pollution as a result of its former industrial or commercial use. When we acquire a brownfield site for a CVS Pharmacy location we are required to remediate it before construction, making it a safe and viable property for our retail store and for the community. In 2015, we reviewed and improved our processes for this work, ensuring we have best practices in place to expedite remediation closure. In 2015, we remediated 68 sites that were classified as brownfields or required remediation, representing about one-third of new store constructions.

Learn about our other strategic priorities within our Planet in Balance pillar:

Sustainable Products and Packaging

Internal and External Engagement Around Our Sustainability Vision

Read the full report:

2015 CSR Report