The goal was announced with great fanfare.
We will reduce greenhouse gas emissions by the equivalent of 3.8 million cars within five years—that’s 20 million tons across our supply chain by 2015. We expect all of our suppliers and vendors to participate in achieving this goal and we will measure their performance.
Only this was not some politician or government bureaucrat handing down this pronouncement, this time, it was serious because the man doing the talking was the CEO of Wal-Mart!
“Energy efficiency and carbon reduction are central issues in the world today. Wal-Mart has been working to make a difference in these areas, both in our own footprint and our supply chain. We know that we have an opportunity to do more and the capacity to do more. Reducing carbon in the life cycle of our products will often mean reducing energy use. That will mean greater efficiency and, with the rising cost of energy, lower costs, making our business stronger and more competitive. And, as we help our suppliers reduce their energy use, costs and carbon footprint, we’ll be helping our customers do the same thing.”
—Mike Duke, Wal-Mart CEO and President
Cynics may say this is a crass attempt by the world’s largest retailer to get politically correct with the world by throwing its weight behind the carbon reduction movement. Wal-Mart officials described it as a search for treasure in the form of cost savings from direct energy use at Wal-Mart stores and distribution centers. They also see that treasure multiplying exponentially by expanding their efforts across their vendors and suppliers making both the company and its suppliers leaner, meaner, more competitive and—oh yes, we almost forgot greener too.
Now this is sustainability we can believe in, but let’s face it, Wal-Mart may actually have more influence, faster in achieving the goal of reducing greenhouse gas emissions than the Federal or State governments. And—more importantly, Wal-Mart is not in line with its hand out for Federal stimulus payments.
But the giant retailer’s goals are even broader than this announcement and laid out clearly on its sustainability home page:
“At Wal-mart, we know that being an efficient and profitable business and being a good steward of the environment are goals that can work together. Our broad environmental goals at Wal-mart are simple and straightforward:
- To be supplied 100 percent by renewable energy;
- To create zero waste;
- To sell products that sustain people and the environment.”
Just as important to recognize here as Wal-Mart’s strategy is the shift in approach by one of the country’s most important environmental protagonists—the Environmental Defense Fund whose managing director for corporate partnership, Elizabeth Sturcken said Wal-Mart was defining a goal that was aggressive yet achievable and she applauded them for rolling up their sleeves and taking action where they could effect change directly without waiting for the next Copenhagen conference or the Federal government to do something.
Wal-Mart has also hired efficiency consultants and a carbon measurement firm to help their vendors and suppliers search for the treasure and add up the savings while they measure progress toward the goal.
Strategic Competitiveness at Work
The other thing I liked about this Wal-Mart approach was the transparent concept of a Sustainability Index. By measuring the energy use, potential savings from efficiency, and carbon footprint of each product Wal-Mart sells it creates a powerful, effective and targeted process for achieving its broader strategic environmental goals.
Mike Duke, Wal-Mart’s CEO described this process as creating an open, shared database to communicate substantive information to consumers about the sustainability and lifecycles of the products they purchase from Wal-Mart stores. The three-step, five-year process to produce the sustainability index includes:
- Create a Sustainability Database across the Supply Chain. Survey Wal-Mart suppliers’ about energy use, climate actions, materials efficiency, natural resources, and people and their community impacts.
- Make it Transparent, Encourage Actionable Best Practice Solutions. Create a consortium of universities, NGOs, retailers, suppliers, and government to turn the data collected into actionable research, measurements, and peer reviewed analysis of results to improve transparency.
- Give Our Customers Honest information About Product Impacts. Turn the information and insight learned by the consortium into “a simple tool that informs consumers about the sustainability of products” so they can make more informed purchase decisions.
These actions are obviously good public relations by Wal-Mart, but it is more than that—much more. Wal-Mart decided to spend the money used previously to fight off its critics to take actions that improve its shareholder value, the value it brings to customers through lower prices, and its own bottom line.
The Environmental Defense Fund also deserves a lot of credit for its own strategy to encourage partnerships with the business community instead of endless litigation to help achieve its environment policy objectives. Institutionalizing a sustainability strategy at Wal-Mart that is good for the environment and good for the bottom line is a much more sustainable environmental achievement than all the lawsuits put together because partners like Wal-mart do well by doing good for the environment.
So here’s a message to Washington:
Forget Waxman-Markey! While you boys were busy scoring political points for the TV cameras—Wal-Mart, EDF and a bunch of others likely to join them are getting the job done.
How can you help? Get out of the way!