Walmart: A Green Leader
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E-mailIn a video posted on Walmart’s Website (see below), CEO Mike Duke discusses the company’s progress with measuring sustainability and how Walmart will work with others to create the index.
To get a glimpse into the commitment and leverage that Wal-Mart Stores Inc. (WMT) brings to bear on the issue of sustainability and the green movement, it helps to start with something as mundane as laundry detergent. In 2007 the company mandated that every brand of liquid detergent carried in its Walmart and Sam’s Club stores across the U.S. be in concentrated form.
For the laundry-challenged among us, the concentrated formula simply means it takes less detergent to wash the same amount of clothes. So what used to come in a 100-ounce bottle now requires only a 32-ounce bottle. But for Walmart, says Matt Kistler, senior vice president of sustainability, concentrated liquid laundry detergent was a litmus test. “It allowed us to challenge our suppliers,” which include consumer goods giants such as The Procter & Gamble Co. (PG) and Unilever PLC (UL), he explains. “We started to ask them, What can you do differently with your packaging to make it smaller? How can you change the way you make your products so that it’s good for the bottom line and good for the environment?”
The smaller bottles are produced using less plastic resin, Kistler says, and the amount of cardboard needed to make the boxes those bottles are shipped in is also reduced. Kistler, who worked at Kraft Foods Inc. (KFT) before joining Walmart in 2003, says other big suppliers are making changes too. The retailer’s top-tier consumer packaged goods vendors in the U.S. and abroad, about 100 suppliers in all, are now working on reducing or even eliminating packaging across a variety of products, including groceries, personal-care products and household items. “I don’t want to say we’re the sole reason,” Kistler adds modestly, “but I would say we’ve been a bit of a force behind the packaging innovation movement.”
The world’s largest retailer plans to help customers understand the meaning of sustainability by developing eco-labels for every product it carries.
To say that Walmart is “a bit of a force” in any aspect of retailing is a little like saying a tsunami is a bit of a wave. The company says it is the world’s largest retailer, with 2008 revenues of about $400 billion; the reported combined revenues for the same period from Dillard’s Inc. (DDS), J.C. Penney Co. Inc. (JCP), Kohl’s Corp. (KSS), Macy’s Inc. (M), Nordstrom Inc. (JWN), Sears Holdings Corp. and Target Corp. (TGT) are less than half that. Walmart operates 8,159 stores under 55 different names in 15 countries and employs more than 2 million people — or “associates,” in Walmart parlance — worldwide, according to the company. As it puts sustainability programs in place, observers say, its sheer size and leverage will compel suppliers — and competitors — to step up their own green efforts or risk being left behind.
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“When Walmart mandated that its suppliers switch to concentrated laundry detergent, it forced everyone in the industry to embrace it,” says Neil Stern, senior partner at McMillanDoolittle LLP, a Chicago-based retail consulting firm, and co-author of Greentailing and Other Revolutions in Retail. “Because of their size and clout, they’re able to focus on sustainability issues with their suppliers, and it winds up actually meaning something.” Indeed, Walmart estimates that since the move to selling only concentrated detergents in its stores two years ago, it has saved more than 80 million pounds of plastic resin, preserved more than 430 million gallons of water and reduced the need for cardboard by about 125 million pounds.
When it was unveiled by former CEO Lee Scott in 2005, Walmart’s sustainability initiative aimed to accomplish three things, Kistler says: ensure that the company is supplied with 100 percent renewable energy, that it creates zero waste and that its stores around the globe sell sustainable products. To accomplish this last goal, current CEO Mike Duke in July announced an ambitious plan to help develop a worldwide sustainability index. For consumers, the index would provide some sort of label or tag with simple, easy-to-understand information about just how eco-friendly a product really is. So far the creation of the index has been seen by sustainability experts and suppliers as admirable — and quite complex. “A fantastic idea but incredibly difficult to execute,” is how Stern characterizes it. Yet the consensus seems to be that “if anyone can pull this index off successfully, it’s Walmart,” adds Stern. “They have the leverage and the credibility.” Such talk is music to the ears of Walmart CFO Thomas Schoewe. “Our culture is the most important differentiator we have,” he says. “When we embrace a goal, we will make it happen.”
