Trends

One to Watch: Wal-Mart’s Environmental Footprint

Image from Walmart, via Treehugger

Wal-Mart is the largest retailer in the world and as such, the world’s most targeted business: subject to criticism for both alleged and confirmed wrongdoings. Thanks to its ever-growing reach, its environmental footprint is particularly significant.

Green Initiatives

In 2005, Wal-Mart famously made a commitment to pursue three ambitious long-term environmental goals: to produce zero waste, to be powered by renewable energy and to make more “environmentally-preferable” products. On February 1, 2007, Wal-Mart unveiled ‘Sustainability 360’, its company-wide emphasis on environmental sustainability.

Since then, Wal-Mart has developed a robust set of policies and management systems, which incorporate environmental considerations into the vast majority of its operations. Though it is impossible to list each directive here, the big ones are worth noting. The company has signed 10-year contracts with leading solar providers as it pursues worldwide installation of solar panels on all stores. In April 2009, it added wind power to its renewable portfolio. Recently, it introduced the “Sandwich Bale” method of packaging loose plastic, and has to date diverted over 200 million pounds of waste from landfills.

Wal-Mart has taken extensive measures to phase out PVC packaging, pesticides, BPA plastics and cleaning toxins, giving competing retailers little choice but to do the same. One of the company’s more ambitious goals involves the overhaul of its supply chain, adding its own energy efficiency requirements, including making its 60,000 suppliers adhere to stricter standards. With most of its suppliers in China, the company hosted a gathering of over 1000 suppliers, Chinese officials and NGOs in Beijing in order to outline a set of aggressive sustainable supply-chain goals called the “Global Responsible Sourcing Initiative.” These initiatives (and many others) are re-visited regularly via quarterly Sustainability Milestone Meetings.

Given the scope of Wal-Mart’s sustainability disclosure, and its breadth of environmental action, the company emerges as an obvious leader in this domain.

Still, it suffers from a major lack in credibility. This stems, in part, from its involvement in a number of high profile controversies involving employee, supplier, community and customer groups. With its long history of acrimonious behaviour, many wonder if its environmental efforts are a publicity stunt meant to repair a battered public image.

Widely criticized

Many environmental groups claim Wal-Mart’s goals are overly ambitious and disconnected from quantitative, up-to-date disclosure. Reduction plans are not benchmarked against baseline figures so it is difficult to estimate whether change is occurring. Five years after announcing its commitment to sustainability, Wal-Mart has yet to provide a clear performance review. Much of the information relating to its emission levels is kept confidential.

Wal-Mart is also criticized for overburdening its suppliers. Due to its massive scale of operations, Wal-Mart’s supply chain is one of the largest in the world, spanning over 70 countries. In 2007, it began considering new criteria to assess its suppliers on the basis of their environmental efforts, impact and improvement. By passing along its own environmental principles to its suppliers, the company felt that it could make a further impact in reducing the harm of its business. In its 2008 Sustainability Report, the company states that by encouraging suppliers to save energy and resources, lower operating costs would result. The ultimate savings could be passed on to the Wal-Mart customer. Meanwhile, the International Labor Rights Forum claims that Wal-Mart is “bullying” its suppliers towards sustainability, forcing them to bear most of the costs of its sustainability efforts or risk losing their lucrative contracts.

Image from Wikicommons

Finally, there is the notion that Wal-Mart’s business model is inherently inconsistent with sustainability values. With well over 7,800 “big-box” stores, can Wal-Mart’s sheer scale ever allow for sustainable operations?

Supercenter stores are open 24 hours a day, using almost double the rate of energy of a competitor’s “super store.” The parking lot at a Supercenter is three times the size of the store itself (parking lots are major contributors to “non-point source” water pollution, the leading cause of water pollution in the U.S.). According to the U.S. Institute of Traffic Engineers, a regular-sized Wal-Mart will draws 850 customers in cars per hour. As a big-box retailer whose success is obviously based on consumption, there is merit to the perception that Wal-Mart’s business model is inherently unsustainable.

Although it faces deep skepticism, Wal-Mart’s environmentalism signals a commitment to positive, long-term change. Notably, these goals and initiatives have made an impression on its critics. Carl Pope, Executive Director of the Sierra Club, has said several years ago that Wal-Mart’s new commitments are “important first steps for a company with such a profound impact on our environment.”