In October 2005, Walmart announced plans to transform itself into one of the greenest corporations in the world. Then-CEO Lee Scott called sustainability "essential to our future success as a retailer." I visited with Lee Scott numerous times between 2005 and 2008 to discuss, evaluate and advise on Walmart’s sustainability strategy. Several years after Scott’s departure as CEO, something has gone seriously wrong.
On July 26, 2006, Fortune Magazine released a cover story on Walmart under the banner “Walmart Saves the Planet, well not quite…” identifying that something was going on at Walmart that very few believed or understood. Whether you believe Walmart is the devil incarnate or a cheerleader for what they are doing – the truth that lies behind their efforts lies largely hidden.
I believed and still believe, that no organization on the planet has more power or potential to very quickly effect positive social and environmental change than Walmart. More fuel-efficient trucks is easy low-hanging fruit, but when Walmart starts telling P&G to reformulate and redesign their products – we’re moving into uncharted territory.
Was Walmart ever serious? Yes. I’ve looked Lee Scott in the eyes – he was a believer. When things started out, it wasn’t about greenwashing. The traditional Walmart business model was and remains broken, the stock was in the toilet. Sustainability was a smart strategic move with a sound business case. How far they would go remained to be seen.
What about the social issues? This has always been the elephant in the room. Walmart didn’t and still doesn’t know how to deal with health care coverage, raise wages to livable levels, eliminate terrible conditions in its factories, or know how to grow without killing local communities and economies.
Michael Duke became CEO in February 2009, replacing Scott. Duke joined Walmart in 1995. I believe that, from the day Duke started, the initiatives that Lee Scott championed, but never saw come to fruition, stalled and then slowly unraveled.
Mother Jones reported in a March/April 2012 story:
“Just before Scott stepped down in 2008, at a hugely publicized event in Beijing, Walmart pledged to make Chinese suppliers agree to comply with labor and environmental laws and standards starting in January 2009. (All other suppliers were to comply by 2011.) Yet of its 2011 Global Responsibility Report, Walmart had no updates except to say that the compliance agreement ‘is being strengthened.’
“Walmart had previously committed to eliminate 25 percent of solid waste from its US stores by October 2008. In its 2011 responsibility report, Walmart said it had no data for 2005, 2006, and 2007. Instead, it touted a ‘waste-redirection’ rate of 64 percent in the 2010 fiscal year.
In 2008, Walmart pledged to boost energy efficiency by 20 percent per unit produced at 200 Chinese factories. In April 2011, it announced 119 factories had hit the target. Yet later that month, the Environmental Defense Fund, a crucial partner in China, left the program over Walmart's lack of cooperation, several sources reported. By year's end, the program was dormant.
Walmart's goal to reduce greenhouse gas emissions by 20 percent at its stores and distribution centers worldwide by 2012 was half met by the time of the 2011 responsibility report.”
And even where Wal-mart has made its goals, questions linger. Wal-mart concedes that the use of murky subcontractors is widespread in China, Africa, the Middle East, and Bangladesh. They won't provide details about how they have achieved their goals, whether suppliers were asked or compelled to share factory information, and whether any suppliers lost orders or were fired for unsatisfactory responses.
“While Walmart executives preached sustainability, its buyers pushed him to lower prices by 3 or 5 percent each year. Operating on the thinnest of margins and scrambling to keep up with Walmart's demands, he said, factories just don't have the time or capital to invest in green projects. "They will work the suppliers to death.”
Michael Duke, I think the time has come to give Mr. Ou a call.