As the world’s largest retailer, Walmart serves 200 million customers with nearly 2 million staff and a base of 60,000-plus suppliers, who provide the products to sell – which also contribute 90% of the chain’s total environmental footprint. Byy one estimate, the total revenues of Walmart’s suppliers equal one-third of global output (GDP) – with a likely similar share of environmental impacts. Shift this supply chain and you can change the world fast.
How? By scoring your suppliers on sustainability. Corporate leaders like Walmart are beginning to rate and rank suppliers with a scorecard tracking sustainability, weighting those factors alongside price, quality and service, and shifting the mix of products that is merchandised in stores. Walmart expects to start at the company level, proceed to the category level and end up at the product level when it’s complete – from local, national and global suppliers (including the large share of China’s exports that Walmart receives).
To accomplish this massive transformation, Walmart has opened up its internal workings to “outsiders” – including its suppliers (those pursuing sustainability and those who need to get started), environmental- and socially-minded non-profits (like Environmental Defense Fund, Conservation International and NRDC), and a range of leading experts and sustainability advisors (including BluSkye Consulting and HIP’s CEO + Founder). In conjunction with Walmart's buyers and staff, this cross-sector group is formalizing a supplier scorecard for sustainability.
Wal-Mart SVP of Sustainability Matt Kistler is heading this ambitious global effort, and is speaking publicly about the company’s efforts. Senior Director Rand Waddoups and his teammates are managing multiple pilot initiatives, including keeping an open dialogue with bloggers critiquing the company.
A cross-sector “sustainability working group” is building on the “sustainable value networks” Walmart launched across a dozen product categories (plus packaging) in conjunction with its strategic consulting partner BluSkye. In dairy products’ packaging, a radical new square container now holds more than 50% the milk per cubic foot than previous cartons (and is cheaper to move and transport). In the jewelry department, the Love, Earth line allows customers to track online where necklaces and bracelets were sustainably sourced, handled and sculpted.
Earlier this month in northwest Arkansas, Walmart brought together over 150 representatives of suppliers, NGOs, Walmart buyers and advisors (like HIP) to share and co-design the latest version of the sustainability scorecard for suppliers. This three-day meeting culminated in a broader awareness of the “Big 3” goals (100% renewable, clean energy; zero waste, including products and packaging; and sustainable products, benefiting society and the earth), feedback on and refinement to sustainable performance measures, and a consensus to track the full “lifecycle” of products from source to manufacturing to transport to use to recapture/re-use (or as Bill McDonough would say, "cradle to cradle".
Now, imagine rolling a supplier scorecard out across multiple product categories – and you see how Walmart’s leadership will help change the world, and accomplish sustainable, profitable growth. By applying measures of Human Impact – less energy and climate impacts, reduced waste, lessened ecosystem impacts, closer social and community ties – suppliers will develop more sustainable products for customers to purchase, leading to a more environmentally sustainable and socially benefitical world - while at the same time increasing revenues and lowering costs for Walmart and its suppliers. This is the essence of a HIP approach.
As a HIP customer, this means you will find more health-oriented products like Burt’s Bees personal care for your body, more eco-products like Clorox GreenWorks for your home, lighting products featuring low-usage LEDs in store displays and for purchase, and health-care innovations like the $4 generic pharmaceuticals and new financial products like a low-fee debit-card for the 10 million low-income families without a bank.
As a HIP investor, these initiatives are increasing in size and share at Walmart. The top three goals are being pursued each at the strategic, procurement, stores, and employee levels. With CEO Lee Scott leading the way – “the sustainability train has left the station, you need to be on it” – Walmart and its Board are serious about creating value for shareholders, staff and society.
All of this - the sustainability pilots, related supplier scorecards and increased transparency - is a major shift from the April 2007 HIP Scorecard (TM) that we published in Fast Company magazine (http://www.fastcompany.com/investing/21-walmart.html) [NOTE: you may need to hit reload for this link]. At that time, Walmart's management practices and human impacts were rated on the lower end of the 21 companies evaluated, though still in a core group of industry leaders. However, over the past year, Walmart has continued to become more open, more systematic and ramped up increased sustainability in an increasingly comprehensive and swift manner.
And at the Walmart quarterly milestone meeting celebrating sustainability successes including Earth Month (April) record sales of sustainable products, actress Cameron Diaz, a sustainability advocate herself, encouraged all Walmart staff: “Everyone makes a difference with their purchases,” “economics alone don’t matter if you don’t have a planet,” and “This is not just a trend, but an absolute necessity,” and finally “I know you guys can save the planet!”
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