Last week Joel Makower of Greenbiz.com hosted a webinar with Rand Waddoups, Senior Director of Strategy/Sustainability from Walmart, to help put some structure to the Sustainability Index Walmart announced about ten weeks ago.
Realizing that the demands of the customer are changing, Walmart is focusing on “innovation and supply chain transparency.” Citing programs like Patagonia’s Footprint Chronicles and SC Johnson’s What’s Inside, Mr. Waddoups referred to sustainability and transparency in business and product sourcing as the “new normal” in customer expectations.
The Index Is For Everyone
This is one point that Mr. Waddoups repeated – Walmart wants “to be a voice in the conversation, not the decision makers.” They realize it can’t be just about Walmart if it is to have any legitimacy. From the beginning they say the index will be transparent and clear, and the goal is that once this system is developed it will be operated by an independent body, and utilized by everyone.
The research is being centralized within the Sustainability Consortium – a “partnership of researchers from leading global universities, non-government organizations (NGOs), governmental agencies, and business partners.” The consortium will work with all these participants to create an index of products based on best practices and research that can then be used by all retailers.
The universities are acting as an independent third party of these analysis – and the consortium will also spend a lot of time in Europe and China, and include both companies and universities from all over the world, so the index will include geographic needs and demands and isn’t perceived as “Ameri-centric.”
Above Level, At Level, Below Level
As Walmart Sustainability gurus already know, the first phase of this process is the 15-question assessment that Walmart sent out to all of their suppliers. Once a company has submitted their answers to this questionnaire, they will be given a ranking of above level, at level, or below level. This is where things get interesting.
Obviously, suppliers have some major concerns here. Are we being judged solely on our environmental impacts/policies? Will this effect the decisions made by Walmart buyers? The answer is yes and no. Waddoups was clear that Walmart buyers have a set of criteria that they base their purchasing on, and the index will be part of that criterion. However, suppliers won’t be “dropped” if they don’t participate in this process – but the index will serve as an indicator of who’s leading in sustainability, and they want to reward leadership.
A Work In Progress
Walmart will be the first to tell you – this is nowhere near finished. The timeline for the questionnaire to suppliers – and the results given to Walmart buyers – is coming fairly quickly, but the Index for products is further down the line (the number currently stands at around 5 years to product labels). In the meantime, there will be many lessons learned and stories relayed to those participating in the process.
Walmart wants to show that cost and environmental performance aren’t mutually exclusive – and they plan to lead by example with their own products. To be proactive, Walmart urges suppliers take a hard look at their own key products, and try and fill in any gaps in their life-cycle. Then take a look at the 15 questions to help find some opportunities for “quick wins” within your company, so you don’t feel discouraged by making huge changes that may require large capital expenditures.
There are going to be critics of this process. How can Walmart successfully detach itself from this Index, when it is the one who conceived it and selected the university partners for the consortium? Why does it cost so much to participate in the consortium – what small business has $75K to commit over three years? Aren’t there people in the field already doing this work?
These are good questions, and there will no doubt be hundreds more to be answered. Yet, credible certification and independently verified systems are critical for good business, and the goal of developing a universally accepted standard for sustainability is a valid one.
The consortium is tasked with this goal, and aiming to pull together a unified front to accomplish it. Obviously, this isn’t going to be easy, but if the end result is better companies that make better products for their consumers, than it is a net gain for all involved.
You can find more information and track progress of the Sustainbility index here.