While the company operates nearly 2900 stores on a worldwide basis, TJX differs from traditional apparel retailers, as the company earns less than 10% of its revenues from the sale of private label goods. Instead, TJX purchases inventory opportunistically and at discounts from initial wholesale prices. TJX’s unique business model reduces the company’s direct environmental risk profile as it does not face the same supply chain concerns as traditional apparel retailers, which include sourcing of raw materials, replacement of toxic chemicals in products, and labor issues. Despite the company’s limited scope over its supply chain, TJX has established several purchasing guidelines, including an agreement to limit lead in handbags and to not knowingly source cotton from Uzbekistan until the issue of forced child labor is adequately addressed by the government. TJX leases the majority of its stores, which limits the company’s direct control over the design/build of its stores. Despite this, TJX recognizes energy use by stores is its largest source of emissions. In an effort to minimize the company’s carbon footprint, TJX established an Energy Management Group. It appears to be committed to improving the efficiency of its stores through lighting and ventilation retrofits, as well as through insulation and the procurement of some renewable energy, specifically in the European Union. Moreover, in 2011 the company set its first carbon emissions reduction target.
Portfolio 21 regards TJX’s business model as a competitive advantage in terms of its environmental risk profile; however, we have asked the company to continue to strengthen its environmental initiatives aimed at its direct impacts, mainly energy and carbon management.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 10/31/12 and may not reflect current opinions or subsequent events.