In these extracts from Copart Inc’s recent Q4 2022 earnings call, Co-CEO Jeff Liaw reaffirms the company’s position (and continued global commitment) to the circular economy and sustainability.
We are celebrating the 40th anniversary of our company’s founding by Willis Johnson, starting with just a single yard in Vallejo, California. Since our inception, we believe it is our people and our values that have enabled us to build a profitable, sustainable enterprise. We’re confident our formula will work for the next 40 years as well.
We’re well into our third year now of exceptional social and macroeconomic conditions of coronavirus and its attendant mutations, a war, and the disruptions on industrial production and supply chains, fuel prices and the like. All businesses, including ours, are affected by these forces.
We’re focused on more durable operating beliefs and principles that guide our decision-making, namely that we will invest in our physical infrastructure, technology platform, and customer service offerings to improve auction, liquidity, and returns for our sellers.
We collaboratively engage with our sellers, both day-to-day and through catastrophic events, to protect them and their policyholder relationships.
We will actively expand our addressable market by growing our volume of lesser damaged and whole cars from both insurance and non-insurance sellers. And we will continue our expansion into international markets around the world.
Commitment to sustainability and the circular economy
We are increasingly asked by our customers, our teammates, our shareholders, and other stakeholders about how Copart’s business addresses the world’s growing focus on sustainability.
I want to offer our perspective on what sustainability means to us, how our business contributes to environmental sustainability, how we support and empower local communities, how we enable global economic mobility and development, and how we build an enduring enterprise to serve our customers for decades to come.
First, on the question of environmental sustainability, we have the great privilege of operating a business that has this at its core.
Copart is a keystone enabler of the circular economy in the automotive sector. Our retrieval and storage of vehicles, and online marketplace, are essential to the reuse, harvesting, and recycling of literally millions of cars per year.
We estimate that approximately 2 out of every 5 vehicles we sell are driven again somewhere in the world. The remainder are harvested and recycled for parts or metals, reducing the need for de novo mineral extraction and manufacturing emissions.
The benefit of the reuse and recycling of cars and their components and the attendant avoidance of carbon emissions dwarfs our actual Scope 1 and Scope 2 emissions. We estimate this benefit to be more than 100x the quantity of our direct emissions.
Secondly, we operate our business to enhance the sustainability and wellbeing of the communities in which we operate.
Our business is essential in helping communities recover from acute weather events, which are increasing in frequency. We currently operate purpose-built dedicated yards with hundreds of acres of vacant storage capacity for responding to catastrophic events in storm-prone areas.
When major weather events occur, our people and our advanced preparations enable us to act swiftly and help recovery.
Third, we enable global economic mobility and development.
Through our unparalleled global member network, we facilitate access to vehicular transportation across the globe. We estimate that approximately 2/3 of the vehicles sold by our U.S. auctions to international members are to developing economies as defined by the UN Department of Economic and Social Affairs.
Physical mobility, which most of us take for granted is essential for people around the world to access health care, education, leisure and economic advancement.
Finally, we operate our business in a manner that ensures enterprise sustainability.
We believe that a truly sustainable business makes decisions so that it can serve its customers, not just in the weeks, months, and years ahead, but for decades to come.
To that end, we have always taken the strategic approach of owning the vast majority of our real estate and storage capacity. We’ve heard the sometimes persuasive arguments in favour of more “capital-light” approaches, but we’re steadfast in our belief that owning our facilities enables us to control our own destiny, ensuring the sustainability of our business for our customers.
We are not just participants in our industry, we are stewards of it. Today, we operate on nearly 16,000 acres of land worldwide and own approximately 90% of it, controlling it in perpetuity.
Over the last 5 years alone, we’ve invested nearly $2 billion in land acquisition and development. Similarly, we have maintained a conservative balance sheet since our founding.
We recognize the arguments in favor of more financial leverage, but we know that our approach assures our customers that whatever comes our way – financial crisis, massive storms, COVID-19, and all that lies ahead – Copart will stand uncompromised and ready to serve our customers.
We intend to publish our inaugural ESG report in the next few weeks in which we will, of course, more fully articulate these themes.