Climate-Positive Future
Mohawk is committed to helping build a climate-positive future. We are doing our part to contribute to climate solutions by implementing a decarbonization strategy. Our strategy to achieve that future includes robust sustainability governance and, within our operations, working to conserve energy, harness alternative energy and reduce transportation fleet emissions.
Guiding this work is our Planet Council, the mandate of which is to ensure that our business decisions align with our sustainability goals. A central priority for the Planet Council is the establishment of refreshed climate targets by the end of 2024, for reducing GHG emissions. We are pleased that since 2022 our tracking and reporting efforts extend to Scope 3 emissions, further enhancing the transparency of our environmental performance.
As we pursue refreshed climate targets at the enterprise level, some of our business units have additional climate targets in place. Flooring Rest of the World segment received validation from the Science Based Target initiative in 2023 for science-based targets. Mohawk Group—our North American commercial flooring division—is one of approximately 480 companies to sign The Climate Pledge, committing to achieve net zero carbon emissions by 2040, a decade ahead of the goals established by the Paris Agreement.
In 2020, our Oceania-based flooring business, Godfrey Hirst, became the first Australian carpet manufacturer to achieve carbon neutral status as defined by Climate Active, an Australian government-accredited carbon neutral certification program. Recently, Godfrey Hirst New Zealand also became a carbon neutral organization as defined by Climate Active/ISO.1
We continue to engage third-party experts to collect and report Scope 3 emissions data from all global business units. Based on our analysis of all 15 Scope 3 categories, we determined that 10 were relevant to Mohawk. We are transitioning from spend-based to activity-based data for purchased goods and services, when available, to more accurately represent emissions. With two years of reporting Scope 3 emissions, comparing year-over-year data has provided more insight into opportunities for supply chain engagement to decarbonize.
We recognize the importance of identifying, assessing and mitigating climate-related impacts, risks and opportunities to help ensure business continuity and resilience. Each year, we publish our Task Force on Climate-related Financial Disclosures to provide important information to investors, regulators and other stakeholders to analyze climate-related risks and opportunities.
Climate Risk Assessment
Mohawk has partnered with third-party climate risk experts to complete a climate risk assessment as part of a commitment to evaluate a variety of risks and opportunities to more fully consider how each may impact our business, our communities and the overall environment. The scope of the climate risk assessment included all of Mohawk’s manufacturing and non-manufacturing sites, as well as the Company’s most critical suppliers, and spans the entire value chain, including both upstream and downstream activities that directly influence Mohawk operations.
Beginning with the identification of 40 climate risks and opportunities based on Mohawk’s relevant mandatory and voluntary disclosures, benchmarking with industry peers and feedback from subject matter experts, Mohawk prioritized climate-related risks and opportunities to those highly relevant for the Company. The assessment of each risk was conducted by a multi-disciplinary team, consisting of leaders of Mohawk Sustainability, Procurement, Human Resources, Operations, Investor Relations, Risk Management, Controlling, Audit, Legal and Finance. Cross-functional engagement with key stakeholders helped Mohawk understand how our Company impacts climate change, as well as how climate-related risks and opportunities could impact Mohawk’s future financial position. To allow a comprehensive evaluation of Mohawk’s climate-related risks and opportunities under different possible future climate conditions, Mohawk analyzed each of those highly relevant risks and opportunities in the context of various climate scenario analyses—specifically Representative Concentration Pathways, Shared Socioeconomic Pathways and specific topic scenarios, such as the IEA Net Zero Emissions by 2050 Scenario and Network for Greening the Financial System Hot House scenario.
Of the top identified climate-related risks, Mohawk ranked the increased cost and lack of availability of energy as a key market risk for our business. In our continued efforts to mitigate this risk, we have implemented natural gas price management strategies to mitigate cost increases and price volatility. As we move forward, we will continue to identify methods of diversifying the potential fuels used by key production and logistics assets in case of financial or supply disruption of fossil fuels markets. Finally, we continue to develop and implement strategies, including on-site renewable generation, to shift fossil-powered fleets, processes, assets and operations to renewable electricity or sustainable fuels.
Of the top climate-related opportunities where Mohawk is positioned to maximize value for our business and our stakeholders, Mohawk has identified waste and product circularity as a key market opportunity, which we address through our postconsumer takeback programs. The programs continue to develop and expand to meet our waste reduction goals and increase circular economy opportunities. Additionally, our waste management strategy helps us to identify more opportunities and potential investments to reduce waste generated, including the amount of waste that goes to landfills.
1. Godfrey Hirst Australia Pty Ltd and Godfrey Hirst NZ Ltd are “carbon neutral” organizations, as defined under Climate Active standards, meaning that those entities purchase and voluntarily retire carbon offsets equivalent to their annual carbon dioxide GHG emissions from sources within their organizational boundary. For New Zealand, organizational GHG emissions are accounted for in accordance with ISO 14064-3:2018. For Australia, organizational GHG emissions are accounted for, and carbon neutral status is certified in accordance with, the requirements of Climate Active.