Green Supply Chain News: Walmart, Amazon, go Different Ways on Carbon Disclosure Project
Through a special arrangement, presented here for discussion is a summary of a current article from Green Supply Chain News, a sister publication of Supply Chain Digest.
The deadline for suppliers of large companies to submit answers to the Carbon Disclosure Project (CDP) was July 31. Now that answers have been submitted, it seems appropriate to look at the very different approaches taken to respond to CDP as well as how fierce competitors Walmart and Amazon.com are collaborating – or not – on the project.
The CDP Supply Chain process began with a partnership between CDP and Walmart in September 2007, when Walmart decided to use the CDP process to engage its supply chain to report on climate change-relevant information.
The world’s largest retailer requests that its 100,000 or so suppliers worldwide start reporting to the CDP as part of the Walmart’s Supplier Sustainability Assessment. Suppliers complete this assessment online and receive a score.
Questions from the CDP survey include the following:
- Is climate change integrated into your business strategy?
- Did you have an emissions reduction target that was active (ongoing or reached completion) in this report?
- Please provide details of your intensity target.
- Did you have emissions reduction initiatives that were active within the reporting year?
- Have you identified any climate change risks (current or future) that have the potential to generate a substantive change in your business operations, revenue, or expenditure?
- Please describe your gross combined Scope 1 and 2 emissions for the reporting year in metric tons CO2e per unit currency total revenue.
CDP says that it appears twice as many Walmart suppliers are participating in the survey this year as they did in 2010, though it did not offer a specific number of respondents. The completion of the survey is voluntary, but Walmart has said in the past that a supplier’s greenhouse gas abatement strategies could someday affect its standing as a Walmart vendor.
Amazon.com, conversely, which may be Walmart’s most important competitor and has the second largest retail stock market cap globally next to Walmart, is resisting participation in the CDP.
Amazon regularly states its commitment to the environment, and notes for example it has been very involved in working with suppliers to improve package design, citing a case where it showed Philips/Norelco how to improve and reduce its packaging on some products sold through Amazon. Amazon, however, does not participate in the CDP, either for its own operations or for that of its suppliers.
The company believes sustainability issues are up to its customers and suppliers, and its website points to consumer behavior as evidence that e-commerce makes "greener lives" easier. It also believes that mitigating greenhouse gas emissions from its logistics partners is really a matter for carriers such as UPS and FedEx, not itself.
Discussion Questions
Discussion Questions: Â What are your perspectives on the different approaches from Walmart and Amazon to carbon disclosure efforts? Do you think large retailers should force suppliers into the CDP process?
I think that any standards process set up by private industry to address a global problem ought to be suspect on its face.
That said, Amazon seems to be adopting a “pass the buck” road to a better environment while Walmart is using its time-honored approach of “encouraging” its “valued suppliers” to participate in a program it designed.
I don’t know enough about the program to know whether it is good or bad, but it does seem to fall in the province of scientists, not retailers.
“Force” . . . ummm, ummm, ummm
A resounding NO !
Retailers need to focus their attention on the Main Thing — their businesses and their customers. If large retailers have established plans with the CDP, then share the information with their suppliers, and offer them examples of how the plan can benefit all parties — and don’t base it on “pay to play” standards.
The well-endowed Carbon Disclosure Project (CDP) — no profit or taxes here, but well-compensated associates — can provide a solid service to the retail community by sharing some best practices as to how the retail community can benefit from making use of “Green Supply Chains”.
Retailers are, by and large, proud and responsible environmentalists. They don’t need to be beaten over the head by the CDP. Walmart has a solid process in place to reduce packaging and materials waste, thus building efficiencies into their store operations.
Amazon also has a solid process in dealing with the issues. “Force” is not the way to pull a thoughtful fetail community into the discussion about the environment. They are not loaded up with attorneys and special assistants to complete paperwork for the CDP.
I think “force” is a pretty strong word and Walmart is really “suggesting” that suppliers participate, although I realize that a suggestion from Walmart carries a whole lot of weight. Kudos to Walmart for working to make a dent in carbon emissions, well beyond their own company. When politicians are piddling around in the U.S. to avoid any short-term pain, at least we have a UK non-profit and a US mega corporation to lead the way in the interim.
Hear, Hear! to both Ryan and Roger. “Agencies” (bureaus, institutions, etc.) that receive circuitously routed support for what “grades” that appear to be (from the questions cited in the article) largely subjective wind up serving their own purposes and/or the purposes of their political masters. Companies forced to participate in the ratings do not change their core approach or attitudes toward the issue or problem ostensibly addressed by the Agency’s rating system. Those inclined to be green or who find value in such initiatives will pursue them anyway. Others simply lie to get past the screening. It’s a waste.
Amazon is right. To the extent that Walmart is forcing this on their supply chain is against the U.S. Constitution, I think. The results will be damaging in terms of their relationship with Walmart and compared to others.
Walmart needs to work on greening themselves up, like Kohl’s has. And making their own choices about the vendors they use based on consumer needs. In some cases, the consumer flat out doesn’t care…or the cost of what they would have to bear in the improvements right now are too much.
Education on the matter has to be borne by other responsible parties.
Walmart set a “requirement” that its top 100 suppliers use RFID one year and its next 100 suppliers use RFID the next year. The goal was not met but a lot of innovative work did occur. I do not think this requirement will be met but it does spur companies to address a number of issues. Whether the best set of issues and questions have been identified by this company at this early point in the process is a question to be considered. Amazon allows suppliers and consumers to make their own determination which allows for the development of many different standards or no standards and that may not be a reasonable alternative.
More testing of standards and more discussion to agree upon a set of standards that are appropriate for the industry before mandating a set of standards from one company.