It’s no secret that the very existence of “big box” stores that plant themselves in giant parking lots to bring cheaply manufactured goods from third-world countries to America (and around the world) is unsustainable. However, with its almost 8,000 stores, 2 million associates, over 100,000 suppliers and 200 million customers, any step in the right direction from the world’s biggest corporation has a huge influence. And Walmart has been making some definite steps in the right direction.
Walmart’s environmental goals are clear: “To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and the environment.”
So how close is Walmart to achieving these goals? I’m glad you asked. I have just the place for you to find out: Walmart’s 2009 Sustainability Report, released this week. Walmart has made some impressive leading environmental moves in some areas while also falling short in others.
But you don’t have to take my word for it. Gwen Ruta, the vice president of corporate partnerships at the Environmental Defense Fund (EDF), commented on the latest from Walmart on EDF’s Innovation Exchange blog.
When it’s Walmart, how much is good enough?
June 9, 2009 | Posted by Gwen Ruta in Walmart (EDF’s Innovation Exchange blog)
That’s a hard question to answer of the world’s biggest retailer. Frankly there’s a lot of good and some not good enough. This week, Walmart released its 2009 sustainability report. Since we are working with Walmart on its sustainability initiative, now is a good time for us to share our perspective on Walmart’s progress and the new report. We’d like to acknowledge some positive things and highlight areas where we feel the company could do better.
First, let’s talk about the basics for a sustainability program and report: meaningful and ambitious goals along with interim milestones and clear timelines are essential. How can we tell whether a company is on track? Pretty simple – the goals are associated with clear metrics and the data supporting them is transparent. Walmart’s new report represents a big improvement over its predecessor in straightforwardly matching goals with progress. Metrics are explicitly described and Walmart is candid about where goals have changed, progress has been slow or measurement unclear. We applaud this.
The Achilles heel of this report, however, is data. In a company as big and complex as Walmart, transparency is key to ensuring the credibility of its claims and the impact of its leadership. The data behind claims of progress should be made available. For example, the report states that water use declined by 35% at Walmart China. Is that aggregate water use for all stores in China? Average per store? Over what time period? What was the baseline and what is current usage? This information would allow the reader to understand the context for the claim and to more readily benchmark Walmart’s performance.
Now let’s talk about the substance of Walmart’s sustainability initiative. Walmart has some truly ambitious aspirational goals: to be supplied by 100% renewable energy, to create zero waste and to sell sustainable products. The company has also jumped headlong into sustainability across the company, perhaps more deeply than any other company we’ve worked with – working on fuel-efficient trucks, sustainable seafood, organic clothes and food, building efficiency and renewable energy, among others. Walmart has also been masterful at harvesting business benefits as they go, reinforcing the importance of the sustainability program among its managers and Board.
But what do we know about how Walmart’s actions are measuring up against its aspirations? Well, not surprisingly, it’s a mixed bag. Some really impressive efforts and leadership…
Take renewable energy. According to the figures presented in this report, Walmart anticipates that during 2009 it will source about 1% of its energy in the U.S. from renewables, so there’s a long way to go to reach the 100% renewable goal. Yet the company is a major solar installer in the United States, recently announced plans to nearly double solar capacity in California and is working with EDF to bring next generation thin film solar technologies into the marketplace. These facts tell you the magnitude of the challenge facing both Walmart and the country on renewable energy.
On waste, the company reports diverting 57% of the waste generated at US stores and Sam’s Club facilities from landfills. Laudable. At the same time, it reports that stores in Japan have reached 75% waste recycling and a model store in the UK reports that 95% of its waste is diverted from landfills. What will it take to get to these levels across the globe?
And some missed opportunities …
Walmart is lacking an ambitious goal on climate change – the most pressing environmental issue of our generation and one which must be a component of any comprehensive sustainability program. Yes, the company has set goals for reducing greenhouse gas emissions at existing stores and increasing energy efficiency in its truck fleet. The problem is that, as Walmart grows, so does overall greenhouse gas emissions. In fact, the report includes graphs showing that, while CO2 per unit of sales has declined over three years, total corporate CO2 emissions have increased.
In other words, the company’s contribution to the problem of climate change continues to increase. Yet we know that, with gutsy leadership, companies of Walmart’s size and scope can find ways to grow their business while shrinking their footprint. GE, which has grown 13% annually on average since 2003, recently reported that it had exceeded its goal by reducing greenhouse gas emissions 13% below 2005 levels.
We’d like to see Walmart make a corporate commitment to reduce total greenhouse gas emissions, perhaps by using its strongest leverage – its supply chain. With a unique opportunity to help its suppliers decrease their carbon output, Walmart can reduce total emissions associated with its business even while it expands.
There’s much to be positive about in Walmart’s sustainability program, but there’s also a long, long way to go. In future entries on the EDF Innovation Exchange blog, we’ll drill down into specific issue areas to provide commentary on progress made and to help impart a sense of urgency, imperative and inspiration for that yet to come.