Wal-Mart: Sustainability Starts with Small Steps

Discussion
Jan 12, 2010
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By Tom
Ryan

When a Wal-Mart store manager
in North Carolina sent an e-mail to corporate wondering why the lights on
vending machines were lit even though all employees knew the machine was
on, Wal-Mart officials decided to unplug the lights behind the panels in
all its break rooms across its U.S. stores. The result, among other benefits,
was a cost saving of $1.4 million in energy costs.

At a session Monday at the
NRF convention, “Sustainability in Retail – Increasing Profitability and
Impacting the World,” Matt Kistler, senior vice president of sustainability
for Wal-Mart, used that as an example of the importance for companies to just “get
started” in looking for ways to improve sustainability.

“Small things do add up and
you need to have some momentum to get to the big things,” said Mr. Kistler.

As another example, he noted
how a number of years ago the retailer set a long-term goal to double the
efficiency of its fleet of trucks. While Wal-Mart was supposed
to improve its fleet efficiency by 25 percent under the plan, it has in fact
improved by 38 percent through a mix of low-tech and high-tech solutions. This
included reducing the size of the gas tank to make the trucks lighter, as well
as putting side skirts on the trucks to make them more aerodynamic. Higher-tech
solutions included working on new technologies such as using auxiliary power
units to allow drivers to turn off the trucks while idling. It also recently
came out with its first hybrid-fuel truck.

But Mr. Kistler also noted
that only eight percent of Wal-Mart’s efforts to improve sustainability was
within its control; a whopping 92 percent had to come from improvements across
the supply chain. Toward that end, Wal-Mart is working with a number of different
suppliers to “truly drive innovation” throughout the supply chain. He noted
that many of these efforts have side benefits for consumers. For instance,
while Wal-Mart recently worked with suppliers to achieve its goal of improving
the efficiency on flat panel TVs by 30 percent, the consumer also “would
wind up with more in her pocket” through reduced energy consumption.

The company is also working
to build a sustainability index that fully scores products based on their
life cycle. As part of that effort, it’s asking suppliers to answer 15 basic
questions around energy, natural resources, material efficiency, and the social
impact/social component of sustainability. Since all the data and research
is “not as clear as many of us would like it to be,” said Kistler, Wal-Mart
is working with universities to provide an open-sourced database to share
the information it receives and analyzes with the retail community “so we
can make the right decisions on how we apply sustainability to our business.”

The most “ambitious” goal
is to have a consumer-facing element that will enable consumers to start
evaluating products based on their footprint. Mr. Kistler pointed to this
as potentially engaging the consumer in affecting the sustainability movement.

Internally, he noted how
Wal-Mart’s own efforts to encourage associates to commit to personal sustainable
programs, such as quitting smoking or exercising more, is paying dividends
when they come up with ideas that drive company-wide sustainability efforts.

“Obviously, the more our associates
are engaged and aware and looking for opportunities, that can have not only
a tremendous impact on the environment but also for our business,” said Mr.
Kistler.

Discussion
Questions: Are current cost savings enough for the retail industry to drive
sustainability efforts? In what areas of the business do you see the greatest
opportunities for retailers to benefit from sustainability efforts? What’s
the likelihood that consumers will ultimately drive efforts toward sustainability?

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13 Comments on "Wal-Mart: Sustainability Starts with Small Steps"


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David Livingston
Guest
9 years 11 months ago

It will always be cost savings that drives sustainability. Nobody cares about their footprint. That goes for both corporations and individuals. Government has helped by subsidies. No one is going to buy those new lightbulbs if they cost $7. But they sure sell a lot when they are $1. Consumers couldn’t care less if Wal-Mart turns off the lights to their soft drink machines. Wal-Mart doesn’t do this for the consumers, they do it for the stockholders.

Len Lewis
Guest
Len Lewis
9 years 11 months ago

I believe David is 100% right. But it’s also about marketing sustainability and telling customers what it’s going to do for them.

I heard this presentation too. Yes, it is about cutting costs internally and if the ROI is there, Wal-Mart and others should continue doing things like turning out the lights, reducing the size of gas tanks, and sideskirts on trucks. But tell your customers what you’re doing and what it’s doing to keep your prices low, not your stock prices up. For the right creative individuals, this could be an award winning ad and marketing campaign.

Doron Levy
Guest
Doron Levy
9 years 11 months ago

I’m skeptical. Walk through your local Walmart and you will see wasteful habits at the store level. Walmart shouldn’t harp on ‘small steps’. The world’s biggest retailers must start taking ‘big steps’ to convince me (and a bunch of other consultants) that they are truly behind sustainability. A while back, there was a discussion about plastic bags and the effort to get rid of them. Guess what? It’s 7 months later and Non-Toronto Walmarts are still giving away bags for free while most retailers outside the GTA are charging 5 cents.

So are they behind the environment or not? Unplugging vending machines is great but what about the thousands of plastic bags they are putting out every day? I’m going to say what most of us are thinking: This is a PR play for Wal with the sole purpose of fattening the bottom line.

Andrea Learned
Guest
Andrea Learned
9 years 11 months ago
If you read books like Ray Anderson’s Mid-Course Correction, or Paul Hawken’s The Ecology of Commerce, you definitely see that resource efficiency or effectiveness is what draws a lot of businesses into sustainability at first–and that makes a ton of sense. Saving money is an accessible sustainability entry point for even the most tied-to-convention business/industry. The great thing is that if companies can start like that, they will soon see–as Walmart has–that employees will see their human values reflected and jump on board the cause. Green Mountain Coffee Roasters is another great example of this–with employees really rallying around the company’s intent to be sustainable. Once the “profit” part of that sustainable triple bottom line gains momentum in resource efficiency, employees will likely buy in (the “contest” of saving energy dollars is an amazing motivator), further environmental issues can be tended to (the “planet” part of the triple bottom line) and what rubs off–if the community relations and public relations teams are smart with their communications–is that the consumer market will see the momentum and… Read more »
Sean Cline
Guest
Sean Cline
9 years 11 months ago
What began as what most would consider a positive PR maneuver, at a time when Walmart needed some good press, Walmart’s environmental sustainability initiative has quickly turned into a legitimate initiative. Yes, there are serious financial benefits to WMT in being more sustainable itself and in “urging” its vendors to be more sustainable. And of course Walmart WILL continue to capitalize on those financial benefits for the rest of time, along with the general population. That’s the key here…who cares if there are financial benefits to Walmart (and, frankly, many times there are added COSTS to vendors to be more sustainable)? The end result is a more sustainable product life-cycle. How can anything bad come from that? It’s amazing how just in the past year or so there has been a massive shift in consumer demand for more information about “carbon footprints” and “end of life” disposal, greenhouse gas emissions, “greener” products; and, there’s even “an app for that.” Sustainability has, without doubt, hit the mainstream. Rome was not built in a day, and as… Read more »
Roger Saunders
Guest
9 years 11 months ago

Every business needs to keep the core strategies on which they are focused in the forefront of the thinking of their associates. Sustainability, convenience, cleanliness, service of associates, effective allocation/distribution, marketing practices, etc.

When these internal strategies deliver positive operational results, it may make sense to share a portion of the information with consumers. If, for example, front of the house activities in the area of sustainability deliver a cost savings to consumer, protect the local environment, reduce waste, etc, it is maybe worth sharing the information with media and consumers.

However, consumers don’t wake up in the morning asking themselves how they can “make someone else’s business more sustainable.” They’re too busy working on their own lives. The consumer is not going to ‘FORCE’ a retailer to make an adjustment on sustainability.

Kim Barrington
Guest
Kim Barrington
9 years 11 months ago

Seems the most sustainable thing Wal-Mart could do would be to buy local and yet they’ve announced exactly the opposite that they will be importing 80% of their product directly…but I see this as opening up the opportunity for buying local to happen for small business now and giving the consumer the chance to make that choice. In the end, it could spell very good things for the planet and for the economy.

But I don’t think that is why Wal-Mart made that decision. They did it for leverage and their stock prices and their positioning as a low-cost retailer. It had nothing to do with making sustainability a priority.

Craig Sundstrom
Guest
9 years 11 months ago

“…a whopping 92 percent had to come from improvements across the supply chain.”

Translation: WM wants to [pressure] suppliers even harder. I find it hard to get very excited about a concept which (a) few people would even be able do define, and (b) if they can define it, it will be a different definition than someone else’s. As others have noted, this has little to do with “sustainability” and much to do with “profitability”; at least the latter is well understood, and the two will be one and the same if prices are set accurately…then again, WM’s gas tank example probably makes sense only because the time spent on frequent refilling is being paid out at only $7/hr (or whatever the minimum is these days).

Jack Pansegrau
Guest
Jack Pansegrau
9 years 11 months ago

In my opinion, Walmart’s Sustainability efforts are commendable and should be emulated. I also wonder when the ‘Walmart double standard’ will be dropped. To some, there is nothing Walmart can do that is not second-guessed…if Kohl’s, Whole Foods, Starbucks or Target took similar steps, their efforts would likely win praise without the same skeptical commentary. It seems the same, whether regarding health insurance for their workers, wages and so on–a double standard applies.

Walmart has made great strides. Their leadership in the supply chain has saved money and waste–their innovative initiative to develop fuel efficient hybrid trucks is another example–I wonder why the truck manufacturers weren’t the initiators? I believe Walmart’s efforts are very positive.

craig flax
Guest
craig flax
9 years 11 months ago

“Nobody cares about their footprint.” Spoken like a C level marketing guy for GM. People who don’t care about their footprint are not educated to the realities of dwindling resources and the real concerns that come with climate change. I’m pretty familiar with Walmart and their initiatives; I’d be hard pressed to say it’s all about PR. Clearly, it’s all about saving money.

Companies that understand the a big part of sustainability is eliminating waste. No question that WM dislikes waste, but is also very afraid of scaring their customers (hence the continued practice of using plastic bags).

Reading Ray and Paul’s books are great steps to understanding that caring about your footprint is both great for the planet and great for your company. PR alone won’t work in this environment. Results and transparency are the new black.

Kai Clarke
Guest
9 years 11 months ago

These comments reflect an unrealistic approach to sustainability and the impact that Wal-Mart claims to have with its partners. Wal-Mart does not purchase products because they have a smaller carbon footprint or because they offer a substantial sustainability impact over another competing product. Until Wal-Mart is willing to put their money into play and actually purchase products which have a demonstrable impact on sustainability, this is just puffery.

Wal-Mart really doesn’t do anything about sustainability vis-a-vis their suppliers until their purchasing requirements and vendor evaluations include this as a key component of the assessment, or are a requirement in the purchasing process.

Jeremy Lambertsen
Guest
Jeremy Lambertsen
9 years 11 months ago

Everything is not about profits or cost savings. EVERYTHING IS ABOUT VALUE. We increase stakeholder VALUE. What is value? Money? Sure. Standard of living? Sure. The air we breathe? The water we drink? The open spaces we enjoy? Yes, yes, yes…. People value a lot more than money. Money is still the major driving force, but it is no longer the solitary driving force in our society. We are actually beginning to care about other things. We are still self-focused. “I care about things that impact me.” I care when the trail I hike is covered in litter and the air I breathe is so polluted I can see it. If you give stakeholders the WIFM (what’s in it for me) they will care. We want a good product for a good price that’s good for the world around us. Every retailer can and should deliver this expectation–and then work to exceed that expectation.

Suzanne Morgan
Guest
Suzanne Morgan
9 years 10 months ago
Wal-Mart is doing a great thing for the environment regardless of their obvious associated motive of improving the bottom line. Good for them and hopefully their competitors are even more successful…our planet depends on it regardless of how consumers respond. As for changing the opinions and more importantly the habits of consumers, Wal-Mart can not be held to task. As a model marketer, consumers will always be skeptical of Wal-Mart’s goals. None of us are out to line the pockets of Wal-Mart or any retailer. As consumers we will only make decisions to change our ways based on how those decisions effect us. The sustainability movement has to be driven by the combined forces of government, private and public institutions, industrial and commercial business. As an example; the state of Nevada (and possibly other US states) doesn’t even have a recycling program. If you want to recycle you have to collect and transfer your garbage to select and disparate locations yourself. Every organization needs to do its part and Wal-Mart has set a demanding pace.… Read more »
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