Using Resources Wisely

Continuous improvement in the area of resource efficiency is a priority for CVS Caremark. Store operations, transportation and distribution centers are the largest contributors to our energy use, and as a result, many of our environmental efforts focus on reducing the impacts related to retail and distribution operations. We also know that water is a precious and finite resource and take steps to monitor and reduce our overall consumption.

Advancing Energy Efficiency

In 2011, 87 percent of our carbon emissions came from electricity use, our primary energy source. In order to reduce our carbon footprint, we have been primarily focused on incorporating the energy-saving technologies we’ve adopted for new store construction into our existing stores and distribution centers and enhancing our transportation and distribution processes. Our newly established Energy Technology Assessment Committee works to identify and assess areas across our operations to gain further efficiencies. We also continue to explore the use of alternative energy solutions in certain regions, such as in Hawaii, although the feasibility of larger scale implementation throughout our enterprise remains uncertain. Specific initiatives we focused on in 2011 include:

• Advancing our energy management systems
• Expanding our lighting retrofit program across stores and distribution centers
• Upgrading to energy-efficient HVAC systems in new and relocated stores
• Investing in more efficient refrigeration units in new and relocated stores
• Optimizing our transportation routes and systems to reduce fuel use
• Working with vendors to share best practices, leading to more efficient use of resources

Expanding our Energy Management System

In 2011, we expanded our energy management system to more than 5,000 stores with systems that are now controlled via phone modem. The energy management system is run from a centralized location that allows us to monitor energy use and automatically adjust lighting, temperature, HVAC and other systems so energy is only used when needed. We are migrating store connectivity to a network interface and have a goal of connecting more than 3,500 locations by the end of 2012.

Energy Technology Assessment Committee: Evaluating Sustainable Solutions

In 2011, we established an Energy Technology Assessment Committee (ETAC), an internal, cross-functional team charged with monitoring emerging technologies and trends in the area of energy efficiency. ETAC evaluates opportunities for CVS Caremark to pilot these technologies in our facilities, and some of the recommendations are already being implemented. For example, in 2011 we replaced our irrigation system specifications at select stores, helping to reduce irrigation water use by 20 percent annually, and ETAC helped advance LED lighting projects in stores and distribution centers.

Engaging with Vendors

In 2011, CVS Caremark hosted a three-day event at our Lumberton, New Jersey distribution center to raise awareness about energy efficiency. Our logistics engineers and other employees in our distribution center worked with vendors during the event, which was facilitated by General Electric (GE), to identify energy saving opportunities during specific phases of operation: while the facility was open and functioning, when it was closed and during start-up. Several opportunities were identified and immediately implemented across our network of distribution centers and others will result in pilot projects in 2012.

Exploring Renewable and Alternative Energy Sources

We have incorporated the use of some renewable and alternative energies within our operations. The use of solar power at several stores in Hawaii has been successful, and we are evaluating opportunities for future use of solar power at distribution centers in this region and in other parts of the country.

In 2011, we completed the installation of hydrogen refueling infrastructure at our Chemung, NY distribution center, which is expected to reduce electric consumption at that facility by five percent. One byproduct of hydrogen fuel cells is pure water. Our Chemung distribution center discovered a way to repurpose the water for use in cleaning processes, rather than discharging it.

Incorporating LEED Standards into our Facilities

Our design and construction teams incorporate LEED standards when building new stores and facilities. To monitor emerging trends in this area, our team participates in the U.S. Green Building Council (USGBC) LEED training programs and is represented on the Rhode Island Green Building Committee. Additionally, our internal Energy Technology Assessment Committee evaluates energy-efficient technologies to incorporate into new building construction and seeks ways to retrofit existing facilities.

In 2011, we achieved LEED Gold certification for our distribution center in Chemung, NY, and a new Finance Support Center in Rhode Island.

Chemung Distribution Center

Our distribution center in Chemung, NY, is the largest LEED Gold-certified industrial building in the state and among the 10 largest industrial buildings in the country to receive the LEED Gold standard. Built using local, recycled and repurposed materials, the facility’s sustainable design elements include: an energy-efficient, white PVS insulated roof; interior lighting with daylight sensors and timers; a rainwater harvest system for irrigation; and high-efficiency, low-flow plumbing fixtures. The distribution center opened in June 2011 and supports 350 CVS/pharmacy stores in the northeast and employs more than 500 people.

Transporting Products Responsibly

The transportation of our products from our distribution centers to our stores accounts for the second largest contributor to our carbon footprint. To reduce transportation-related emissions and save on fuel, we have continued to advance earlier initiatives and implement new measures, such as:

• Maintaining a fleet of modern, fuel-efficient vehicles
• Maintaining fuel-efficient speeds on our truck fleet by setting governors at 63 mph – a speed optimized for fuel efficiency – and reducing governors to 55 mph in California
• Installing aerodynamic skirts to truck trailers in California to evaluate the efficiencies of expanding the skirts to our entire fleet
• Utilizing new trailers with electric backup motors to reduce reliance on diesel-powered cooling units
• Enforcing a no-idling policy by reviewing OnBoard Computer performance reports
• Optimizing delivery routes and schedules with fuel efficiency in mind
• Optimizing cube space of our trucks to limit unnecessary deliveries
• Promoting fleet safety through driver awareness initiatives

Our trucks drive thousands of miles every week between distribution centers and stores, so continually optimizing our cube and routing efficiencies plays a significant role in reducing our carbon footprint. In 2011, the average miles per gallon of our fleet improved to 6.53, up from 6.46 in 2010 and 6.37 in 2009, while also saving 25,148 gallons of gas. These optimization efforts helped reduce our CO2 emissions by 260 tons.

Our fleet has been an Environmental Protection Agency’s Smartway Carrier Partner since 2010, and in 2012, we plan to complete the process of becoming a Smartway Shipping Partner. 

Improving Lighting 

In 2011, we continued to install efficient lighting projects, retrofitting facilities across the enterprise and incorporating energy-saving technologies used in new store construction. More than 680 retail stores, as well as our headquarters campus, were retrofitted during the year, resulting in a $5 millon savings in energy costs. We upgraded coolers, exterior signage, drive-through windows and entryway canopies with LED lighting, and our Energy Technology Assessment Committee is evaluating opportunities to install additional exterior LED retrofits, such as those in our store parking lots. In 2012, we plan to upgrade lighting in 1,500 additional stores, and we are developing a comprehensive long-term plan for improved lighting efficiency in more than 7,300 stores. 

Several of our distribution centers also received lighting upgrades in 2011. We successfully piloted exterior LED lighting in our facility in North Smithfield, Rhode Island and implemented a full installation in Kapolei, Hawaii, which uses one-third of the electricity required by lights typically used, and also reduces light pollution for neighbors who live near our distribution centers. We also began a pilot of interior LED lighting at our two Rhode Island distribution centers in Woonsocket and North Smithfield. 

Moving forward, we are evaluating the integration of LED lighting into the design and construction of our La Habra, CA, bulk facility. We have begun the process of upgrading the lighting at our Indianapolis distribution center with fluorescent lights. 

KWH Reductions Per Year 

We are realizing energy savings as a result of the lighting upgrades that were implemented in some of our distribution centers in 2010. For instance, electrical consumption was reduced across four of our distribution centers in 2011, compared to 2010 usage. Although our overall usage of electricity among all of our distribution centers went up, due to the addition of new distribution centers in New York and Hawaii, electricity density in our distribution centers decreased by 3.9 percent.

KWH REDUCTIONS PER YEAR
Reductions in Electricity Use Realized from Lighting Upgrades at Four Major Distribution Centers (2010 vs. 2011): Knocksville/Loudon, TN; North Augusta, SC; Fredericksburg, VA and Pheonix, AZ 

Award for Sustainable Transportation Practices

CVS Caremark was recognized by the 2011 Supply Chain Logistics Summit for best practices in route optimization. Our best practices included implementing a process improvement and technology integration program across our entire distribution network, which reduced inbound transit times and associated costs, while improving delivery performance, productivity and customer service.

Ensuring Fleet Safety

We take fleet safety seriously at CVS Caremark, given the many miles our drivers travel every day. Our distribution centers host regular road safety trainings and simulations and offer driver incentives including annual safety bonuses and our Driver of the Year award. We have also received numerous industry awards for our legacy of advancements in fleet safety. In 2011, we were awarded first place by the National Private Truck Council for Local Truck Safety.

Reducing our Water Use

Although CVS Caremark is a relatively small user of water, we believe conserving water – our most precious resource – is an issue everyone has a responsibility to address.

In 2011, we established a baseline for our water use and reported our water footprint through the Carbon Disclosure Project water questionnaire for the first time. Water usage, the vast majority of which was supplied by U.S. municipal water systems, totaled 7,200 megaliters in 2011, down from 7,350 megaliters in 2010. This reduction is primarily due to landscaping efficiencies at our corporate facilities and retail locations, with resulting cost savings.

Our biggest source of water usage continues to be our irrigation systems, which accounted for 23 percent of our total water cost. Although many communities where we have operations require us to irrigate, we strive to reduce the associated impacts and implement landscaping efficiencies, where possible. In 2011, our water usage from these systems was 157,284 kilogallons, a 14 percent decrease from 182,001 kilogallons in 2010, which was a reduction of almost 26 percent from our 2009 usage of 244,518 kilogallons. In 2012, we will continue to monitor and conserve our water use and plan to continue reporting water footprint data through the CDP water questionnaire.