'Important step': Why Coles shares are making headlines on Thursday

Coles shares are back in the news today with an agreement that should please ESG investors.

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Coles Group Ltd (ASX: COL) shares are shaking off the wider market selling pressure today to be up 0.5% in late morning trade.

Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $18.15. At the time of writing, shares are changing hands for $18.24 apiece.

For some context, the ASX 200 is down 0.48% at this same time.

That's Thursday's price action for you.

Now, here's why Coles shares are in the headlines today.

What's putting the ASX 200 retail share in the news today?

If you own Coles shares you likely know of the company's aim to operate wholly off sustainable energy by June 2025, less than two years from now.

In what Coles head of energy Jane Mansfield called "an important first step" to achieving that target, the company has signed an agreement with Origin Energy Ltd (ASX: ORG). This will see Coles and Origin co-invest in renewable energy and battery assets at up to 100 stores across Australia.

The company said it plans to install 20 megawatts of solar panels at the selected stores. Batteries will be installed at a third of those stores to store excess renewable electricity generated from the solar panels.

Coles energy assets will be connected to Origin's virtual power plant to help ease pressure on the energy grid during peak periods of demand.    

The partners expect to achieve a 20% reduction in electricity use from the participating stores. And the project is already underway at six Victorian stores.

Coles expects solar panel installation will be completed at all 100 Coles supermarkets, Vintage Cellars, Liquorland and First Choice Liquor Market stores by 2026. The company said 20 sites would be completed by next year. 

Atop reducing emissions, Coles shares could get a longer-term boost from the agreement as it's forecast to lower operating costs.

"This alliance with Origin is an important step towards achieving our 100% renewable electricity target by June 2025," Mansfield said.

According to Mansfield:

Not only will this investment in renewables help us reduce our emissions, it will also lower our operational costs and allow us to meet more of our energy needs from our own on-site solar generation.

Origin Zero executive general manager James Magill added:

This is a landmark alliance between two of Australia's leading retailers across supermarkets and energy which will see the companies co-invest in renewable energy and battery assets to help deliver greater emissions reductions for Coles.

How have Coles shares been performing?

Coles shares have been strong performers in 2023, up 11% since the opening bell on 3 January.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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