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What Goes Into a Sustainability Report Card? Walmart is Finding Answers

RP Siegel | Wednesday August 4th, 2010 | 4 Comments

It’s a widely accepted adage in business that “what gets measured gets managed.” So any company wishing to make its products more sustainable really needs a system of metrics that can be used to compare their products against other products in terms of their impact on the world. Therefore, it should be no surprise that the largest company in the world, in its effort to be become more sustainable, has set out to develop just such a set of metrics that they are calling the Sustainability Index. But exactly how do you come up with such metrics and what criteria should be included as most important and which ones can safely be left out in order to ensure simplicity and comprehensibility?

According to Rand Waddoups, Walmart’s senior director of sustainability, they started by taking steps to understand their supply chain, including the distribution of a 15-question survey to top-tier suppliers. The questions covered areas including energy and greenhouse gas emissions, material waste reduction, responsible sourcing of materials, and responsible and ethical production. This has already led to a number of supply chain innovations such as those described in the attached video. Eventually the survey will go out to all of the company’s 100,000 suppliers.

The answers helped to understand a lot about their responding suppliers, but what about their suppliers? Waddoups gives the example of a turkey supplier. From the survey, they learn a lot about how they run their operation, but what about the farmers that they get their feed from? The web of suppliers quickly becomes so vast that it vanishes at the horizon.

This complexity led to Walmart’s participation in the Sustainability Consortium, which currently includes some fifty-five companies and is jointly administered by Arizona State University and the University of Arkansas.

The consortium is working to develop a global database that will include the responses of all the Walmart suppliers as well as others.

This will eventually lead to a simple set of metrics that can be included on labels for all kinds of consumer products, giving consumers the information they need in order to make the most sustainable choices.

The work is far from done. Walmart has begun asking a few of their suppliers to complete a life-cycle analysis. To date this has been piloted on seven products ranging from sour cream to dish soap. This kind of detail will undoubtedly lead to more innovation and savings while at the same time it will provide more insight into each product’s true impact which will make the sustainability index that much more valuable.

I asked Frank Dixon, who had worked as a sustainability consultant for Walmart a few years back, what he thought of this work. His response was that “Walmart’s work on the sustainable product index is outstanding.  Once again, the company is acting as a trend setter and causing sustainability to become a mainstream business practice.”

But going back to my original point about what gets measured getting managed, he cautioned that the way our socio-political-economic system is set up, it is sometimes difficult to measure things that are really important, or we tend to measure things that are not necessarily relevant to the questions at hand. Take the stock market, for example, or international trade regulations.  “Overarching economic and political systems are too large for even Walmart to change on their own.  Walmart, like every other company, is constrained from acting sustainably in many ways.  If the company tries to fully mitigate negative impacts, it will put itself out of business.  This applies to all companies.  It has nothing to do with ethics, values or not trying hard enough.”

To truly address these issues at their root cause, Dixon argues, requires system level change.

The Sustainability Consortium, which includes not only businesses and universities but government representatives and NGO’s as well, may not address every facet of the issue, but it strikes me as a good start.

RP Siegel is Executive Director of Cool Rochester and co-author of Vapor Trails, an eco-thriller of corporate intrigue and ecological disaster written with former Ford VP, Roger Saillant.


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  • whludlow

    Generally speaking, how do you see this Sustainability Index developing in the next five years? Right now, Walmart's database of information is largely made up of suppliers' unverified self-assessments. I agree that we have to start somewhere, but should Walmart even accept information that hasn't been verified by a 3rd party to meet GHG Protocol standards? Along those same lines, is the Consortium going to be responsible for overseeing and auditing every single product's LCA to ensure consistency across the board?

    Also, who's to say that Walmart's suppliers have the resources available to collect and accurately measure their total carbon footprint, let alone scale those measurements down to the product level? Creating an efficient labeling system that the average consumer can understand is another conversation in itself..

  • Dave Shires

    I find it kind of puzzling that WalMart wants to do this on their own. For it to hold any real merit (assuming we get some kind of global standards for this kind of thing) won't it have to comply? Then again, by doing this themselves they make a lot of headway on other organizations who may later have to follow in their footsteps – and take a lot of time and expense to do what WalMart did early!

  • RP Siegel

    Both good questions. I don't have the answers. If I had to guess, I would think it would be a joint industry-government panel that would ultimately set the standards (not unlike the Sustainability Consortium). As for the oversight, it could certainly fall under some government agency. How to keep the chumminess factor down is a question we shouldn't have to ask, but unfortunately we now do. As for resources, generally that would be a cost of doing business. Wal-Mart generally gets what they want from their suppliers for obvious reasons. It would make sense for those expenses for be tax-deductible or possibly even eligible for some kind of credit, since the work does benefit the common good. Then again, the price of not having this assessment done, could ultimately end up being much higher through lost business.

  • Bill Roth

    Great article RP! The video on sour cream is very cool!

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