Wal-Mart is Serious About Going Green
Ushering in the New Era of "Supply Chain Environmentalism"
More than three years ago, Wal-Mart CEO Lee Scott first announced his plans for a bold sustainability initiative — one so lofty it had the potential to make the company synonymous not only with low, low prices but with green corporate practice. And next week is the dawn of a new day, as consumer product suppliers and consumers alike will have a look at Wal-Mart's green rebirth.
The official start of Wal-Mart's Sustainability Index begins on October 1. This marks the due date for the company's consumer product companies to hand in a 15-question assessment form that inquires about their use of resources, environmental impact, and ethical business practices. This Sustainability Index is certainly a signal to Wal-Mart suppliers and its competitors that the company means business. It also serves as a red flag to suppliers who aren't up to snuff with their company's own sustainability and green business policies, and an excellent opportunity for self-evaluation.
"The Wal-Mart Sustainability Index constitutes the firing of the starting pistol of latching the market to the quest for the climate solution. . . If we engage large retailers in competition to green the supply chain, I believe we can achieve a massive amount of planet-protecting behavior through market-driven conduct," says Larry Goldenhersh, president of Enviance, a maker of carbon and environmental accounting software.
This green domino effect could be the greatest influence Wal-Mart has had on any community and its global suppliers since its inception. The Sustainability Index provides businesses the opportunity to assess their own sustainability and improve efficiency, while simultaneously creating opportunity for consulting firms to aid in this assessment and execution.
The Sustainability Index is perhaps the most notable piece of Wal-Mart's green puzzle, but it is not the sole result of the company's diligent homework that began after their announcement in July 2006. Wal-Mart dedicated nearly a year to consulting with outside companies that would measure the company's environmental impact — both in its U.S. locations and international stores — as well as how to save money in a tough economy by ramping up efficiency.
The result of their research was ground-shaking for the company. Just one enlightening discovery: by eliminating excessive packaging on one line of toys sold exclusively at their stores, Wal-Mart could save more than just $2.4 million a year in shipping costs; it could also spare 3,800 trees and one million barrels of oil.
Wal-Mart's initial look inward has created 14 "sustainable value networks," consisting of Wal-Mart executives, environmental groups and regulators, and suppliers. Each group has a focus area in which it will work tirelessly to come up with reform for sustainability and efficiency: facilities, internal operations, logistics, alternative fuels, packaging, chemicals, food and agriculture, electronics, textiles, forest products, jewelry, seafood, climate change and China.
Wal-Mart has long been a target for environmentalists, whose focus on the company's expansion paints Wal-Mart as an overly-excessive and wasteful corporate giant. Wal-Mart not only holds the title of being the top electricity consumer in the United States, but it also boasts the second-largest fleet of private trucks in the country — 300 trucks coming and going to each of the 188 country's distribution centers daily. Not a very favorable statistic in a time of rising gas prices and waning fossil fuel supply.
But even environmentalists and skeptics must admit, Wal-Mart is putting their money where their mouth is — and they realize they have a long road ahead of them. But what seem like small changes have a huge impact when you're a $312-billion-a-year retailer with 2,074 Supercenters with 1.8 million employees. "Small steps" on a scale that large add up to millions of gallons of water saved, paper reduced, and electricity spared.
Take light bulbs, for instance. Wal-Mart has taken measures to install energy-efficient lighting in its stores, including skylights to offset the need for electric lighting, and has committed to carrying several brands of energy-efficient bulbs for consumer sale. The marketing plug? The bulbs will be in displays that allow the consumers to calculate the money they save, simply by switching the bulbs they use to light their homes to energy-efficient bulbs.
Other green initiatives:
- In stores: Cash register receipts are now double-sided, reducing paper waste; green toilets are being installed; freezer cases are being upgraded with motion detectors so that lights go on only when customers approach, saving stores an estimated 4% in annual energy consumption.
- In package plants: Wal-Mart is collaborating with suppliers to change the way they package products and the way they are shipped to stores; some suppliers are reducing the amount of package and plastic they use by up to 50 percent.
- On the road: Wal-Mart calculated savings to the tune of $26 million a year in fuel costs for its fleet of 7,200 trucks with installations of auxiliary power units that enable the drivers to keep the truck cab's temperature regulated during mandatory ten-hour breaks from the road. This eliminates the waste from letting the truck engine idle for ten hours.
- On the farm and in the field: Wal-Mart comes in first place as the biggest seller of organic milk and the biggest buyer of organic cotton in the world. The company's purchases of organic cotton have eliminated millions of tons of chemicals.
- Reusing and recycling: By installing sandwich balers, machines that recycle and sell plastic that it used to throw away, these machines have reduced waste and added $28 million to the company's tally.
- Sustainable agribusiness: Over the next 3-5 years, Wal-Mart plans to purchase all its wild-caught seafood from fisheries that have been certified as sustainable by the independent nonprofit Marine Stewardship Council (MSC). They intend to do the same for farmed fish.
"The fact that a huge company with huge supply chain connections like Wal-Mart is getting into this could really have the impact of democratizing the environmental movement from a consumer standpoint," says Andrew Shapiro, founder and CEO of Green Order.
"It's the kind of thing that can make the green movement accessible to every person in the nation."
Wal-Mart serves 208 million Americans every year. If we're to look at the forest for the trees, we must put a previously spotty environmental track record in the past, and give credit where credit is due. Not everyone has the privilege to shop at a local farmer's market weekly, nor can they afford a cloth diaper service or natural shampoo for a family of eight.
So long as Wal-Mart is the world's largest retailer for all the things we need, consume, and use, every day. . . even if we don't shop at the nearest Supercenter, we must commend the company for a giant step in the responsible direction. Seems Wal-Mart is making strides in the interest of its business, as well as the consumer — who, regardless of demographic or income, can now buy fair-trade coffee for $4.71 a pound. . . 24-hours-a-day, in some places.