There’s a provocative blog post up on the Harvard Business Review’s website attacking Walmart’s sustainability plans. The post accuses the mega-retailer of “regulatory vigilantism” that shifts the cost of reducing Walmart’s carbon footprint onto its suppliers and customers who have not been allowed to weigh-in on the changes.
My guess is the post’s author, Bob Lurie, a sustainability consultant, is primarily playing the devil’s advocate. But some of his points echo concerns that were made earlier this year when Walmart announced it would “ask” its suppliers to reduce carbon emissions by 20 million metric tons by 2015.
Lurie outlines three criticisms of that move: one, that Walmart, by demanding that suppliers reduce emissions, is essentially enforcing environmental regulations that go beyond what our elected representatives have passed into law; two, that by “outsourcing” the work of reducing emissions to its suppliers, Walmart gets the win-win of reduced emissions (and energy costs, presumably) while not having to pay for them itself; and three, higher prices as a result of these actions may not be what consumers want from the cut-rate retailer.
Lurie’s points seem cogent only on the most cursory examination, and are in fact mostly flimsy and a little absurd — an observation made by more than one of the people who left comments on the post.
The idea that Walmart telling its suppliers it may drop them if they don’t reduce emissions somehow subverts the democratic process — which is the implication of his first point — leaps far ahead of logic. The company, it should be pointed out, is not requiring suppliers comply, merely stating that if they don’t, Walmart is likely to take business elsewhere. In a free market you are free to make whatever choices you want, even ones that may increase costs.
The argument that customers don’t want the higher prices that theoretically will ensue from carbon reduction strategies is also weak. It ignores the fact that Walmart has made the decision to go ahead with carbon reduction efforts because they believe a) customers are willing and interested, and b) they will reduce costs in the short, medium and long run. As as Walmart president and chief executive Michael T. Duke said in a webcast in February, “we know we need to get ready for a world in which energy will only be more expensive.”
The second point however — that those costs are being externalized — is trickier. If Walmart wants to buy from only the most energy-efficient suppliers, that’s their prerogative. But a funny thing happens when well-intentioned rules are handed down from on high: unintended consequences.
To take an example from another environmentally-friendly mandate: it is a fact that rising fuel efficiency requirements for American cars have led to more fatalities in auto accidents (per capita deaths have fallen, however). Why? To raise MPG, manufacturers make cars lighter, and thus less protective of occupants.
Walmart’s insistence on less packaging or less raw materials in manufacturing could lead to shoddier, less durable products, according to Stacy Mitchell of the Institute for Local Self-Reliance. Other consequences of Walmart’s green fiat will only become clear as it ripples down the supply chain.
And suppliers desperate to keep Walmart’s business could make other choices intended to reduce their carbon footprint that, for example, increase the exploitation of their workers, create unforeseen environmental impacts, or reduce their long-term viability in other ways. Hopefully not, but it is possible.
But is this reason to seriously criticize these efforts? No. Walmart’s experiment with sustainability is good for the planet, good for the company and good for the bottom line — and if it’s not, I have no doubt Walmart will quickly change direction.