Costco Wholesale Corporation (NASDAQ:COST) closed its fiscal fourth quarter with results that highlight both its financial strength and long-term sustainability commitments. The retailer reported revenue and earnings that beat expectations, showing it remains strong in a tough retail market.
At the same time, Costco reinforced its ambition to reach net-zero emissions by 2050, with interim 2030 targets already in motion. For investors, earnings results and ESG updates provide two key insights. They show strong business performance now and outline a path for future environmental responsibility.
Strong Financials, But Mixed Investor Reaction
Costco reported its fiscal fourth quarter results after markets closed. Adjusted earnings per share came in at $5.87, beating the $5.80 forecast.
Revenue reached $86.2 billion, narrowly ahead of expectations. However, same-store (comparable) sales rose 5.7%, slightly below the anticipated 5.9%.
The company also revealed full-year sales of $269.9 billion, up 8.1% from $249.6 billion a year ago. Extended store hours implemented in summer added roughly 1% to weekly U.S. sales, according to the CEO — a modest but positive boost.
Investors were cautious, though, even with good results. They noted a small shortfall in comps and worried about margin pressure. Costco’s stock still dips despite better-than-expected results.
Membership Muscle: Costco’s Secret Weapon
Costco’s strength lies in its membership model. The company ended the period with 81 million paid memberships, of which 38.7 million were executive tier. Renewals remain high, particularly in the U.S. and Canada.
Its limited product assortment and bulk sales model help streamline logistics and negotiating leverage with suppliers. Bulk buyers and value-seeking shoppers have kept foot traffic robust, even in tougher economic times.
Costco continues to expand overseas, focusing on markets like China and Spain. Its broad geographic reach—covering North America, Asia, and Europe—gives it scale and flexibility.
Greener Aisles: From Solar Roofs to Net-Zero Goals
Beyond financials and stock performance, Costco is advancing sustainability goals. The giant retailer has committed to net-zero greenhouse gas emissions by 2050.
To support that, it plans to reduce Scope 1 and Scope 2 emissions by 39% by 2030, using a 2020 baseline of approximately 2.6 million metric tons CO₂e. It also targets 100% renewable energy for operations by 2035.
Operational actions to reduce emissions include:
- Upgrading refrigeration systems and phasing down hydrofluorocarbons (HFCs)
- Switching to LED lighting and efficient HVAC systems
- Installing solar panels at warehouses and depots
Scope 3 emissions remain the greatest hurdle. Costco has proposed a 20% reduction in certain Scope 3 categories (excluding fuel) by 2030 vs. 2020. This relies heavily on supplier cooperation.
Third-party analysts estimate that Costco’s total operational footprint, including indirect sources, is 4–4.7 million metric tons of CO₂e. Meanwhile, Costco’s latest climate action plan report shows mixed but notable progress in its emissions profile.
- Scope 1 emissions rose 1.3% between FY22 and FY23, though this increase was lower than the company’s overall growth in sales and store space.
- Scope 2 market-based emissions dropped 3%. This decrease was due to more electricity being bought from clean energy sources.
- Scope 3 emissions rose by 1%. This is much lower than the 7% rise in merchandising sales. It shows early signs of better efficiency in the supply chain.
On ESG scores, S&P Global assigns Costco an ESG score of 36 (out of industry peers), reflecting its public disclosures.
Sustainability initiatives also include sourcing certified seafood, fair-trade coffee, and timber. Costco is expanding waste diversion efforts, recycling, and sustainable procurement.
ESG Actions and Progress
Costco’s Climate Action Plan includes:
- Rooftop solar
- Off-grid solar for depots
- EV charging stations
- Efficiency upgrades
The company also runs sustainable sourcing programs for seafood, coffee, and timber. These measures aim to lower emissions, reduce waste, and meet consumer demand for responsibly produced goods.
Why ESG Progress Matters for Investors
Investors see sustainability as part of long-term risk management. Energy efficiency cuts costs, renewable energy reduces exposure to fuel volatility, and Scope 3 engagement limits supply-chain risks. While these initiatives require upfront spending, they can strengthen Costco’s margins over time.
Large investors increasingly prefer stock companies with measurable climate targets like Costco’s. Its emission goals, clean energy commitments, and supplier engagement help it align with these expectations and support brand trust with customers.
Retail Rivalries: ESG as the New Competition Ground
Costco’s earnings come at a time of shifting dynamics in global retail. Inflationary pressures have eased somewhat compared to the highs of 2022–2023, but cost-sensitive consumers continue to seek value.
Bulk retailers like Costco are benefiting from these trends. Households are focused on saving money on food, household goods, and fuel. At the same time, ESG expectations are rising. Retailers face scrutiny over product sourcing, supply chain transparency, and emissions targets.
Costco competes with Walmart, Target, and Sam’s Club. These rivals are also pushing climate strategies and setting interim net-zero goals.
Industry analysts expect the global retail sector to grow by 4–5% each year until 2030. This growth will come from population increases, urbanization, and the rise of digital channels. Sustainability is now a key factor in competition. More consumers prefer companies that show strong climate commitments.
Outlook for Investors
Investors will now watch for guidance in Costco’s next earnings cycle:
- How much margin pressure is expected (especially with extended store hours and energy costs)
- Capex plans (how much will go toward growth vs. ESG projects)
- Progress on emissions targets (updates on reductions or new milestones)
- Membership growth and renewal stability
Costco’s ability to deliver both strong financials and steady ESG progress will determine its appeal to both traditional stock and sustainability-focused investors.
Bottom Line: Growth Meets Green Ambitions
Costco’s fourth quarter results underline its ability to deliver steady growth in a shifting retail landscape. Membership strength and operational efficiency remain clear advantages. Meanwhile, the company is advancing on its climate roadmap, though Scope 3 reductions will be difficult to achieve.
With this achievement, Costco offers a strong option for investors. It’s a solid retailer with dependable earnings while also aiming to improve its ESG profile. This effort helps it compete in a market where financial success and sustainability are both important.
