Sustainability has been a major platform for retail giant Wal-Mart since 2005 and the company continues to enlist the help of suppliers to move the needle.
Wal-Mart on Thursday (Sept. 12) held its annual Global Sustainability Milestone meeting in Bentonville and presented nine initiatives that have raised the company’s overall sustainability index reading by 12% in the past year. Duncan Mac Naughton, chief merchandising officer for Walmart U.S., said the retailer couldn’t make that kind of progress without the help of its suppliers.
Wal-Mart CEO Mike Duke said the company is working with about 1,000 suppliers in categories on various sustainability initiatives. But by the end of 2014, he said participation would be broadened to include 300 product categories and engage up to 5,000 suppliers around the world.
Wal-Mart rolled out its sustainability index in 2009, a measurement system used to track the environmental impact of products. Last year the company provided sustainability guidelines for 100 categories and Thursday’s meeting was a chance to recap the progress since that time. Wal-Mart said its general merchandise department has improved its index product sustainability score by an average of 20%, while grocery moved up 12%.
“With the sustainability index, Wal-Mart is applying the science and research that we’ve developed to create a more sustainable supply chain globally,” said Kara Hurst, CEO of The Sustainability Consortium.
Nine groups spoke at Thursday’s meeting, touting their progress in sourcing sustainable products while working together with suppliers to innovate new packaging, reduce chemicals used and facilitate more recycling – all of which are better for the environment. High on the list is a broad range of recycling activities as more than 29 million tons of valuable plastics are sent to landfills every year in the U.S. at a cost of about $6.6 billion annually.
Coca Cola has found a way recycle more of its plastic bottles like the holiday ornament cola bottle which was discontinued last year because it could not be recycled. The beverage giant said the shrink wrap label rendered the bottle as non-recyclable. This year that product will be back because they have found a way to perforate the label so it breaks away from the bottle during recycling.
A team from Hanes said it plans to be a “zero landfill” company by 2020 as it continues to source recycled materials for the products it makes, such as tee shirts and fleece sweatshirts and bottoms. Hanes officials said 5% of the content found in fleece or cotton tee shirts sold at Wal-Mart comes from recycled plastic bottles. The company also works with farmers who employ sustainable practices such as growing switch grass which also goes into cotton garments.
Other U.S. suppliers presenting at Thursday’s meeting included Kellogg's, Crayola and Technical Consumer Products — the supplier for private label “Great Value” light bulbs for Wal-Mart.
The retailer said that by the end of 2017, U.S. Wal-Mart and Sam's Club stores will get 70% of their goods from global suppliers that use its sustainability index. This ambitious agenda by Wal-Mart has been scrutinized heavily by analysts and other sustainability experts.
Jason Long, a supplier consultant in St.Louis with Shift Marketing Group, said Wal-Mart has put some teeth into their sustainability efforts by doling out performance objectives, but there is still a lot of confusion in the supplier community, particularly among small-to-midsize firms.
“Wal-Mart hasn’t done a good job of explaining the sustainability scorecard to its vast supplier base. I’m hearing more and more from suppliers who are trying to understand and demystify the sustainability scorecard requirements and that process,” Long said.
Retail sustainability expert Stacy Mitchell said Wal-Mart pivoted to the supplier emphasis in the last year or so while other goals once stated where abandoned. Mitchell is a research analyst at the Institute for Local Self Reliance in Portland, Maine. She said Wal-Mart does a great job picking certain areas to focus on, but avoids issues like responsible land use as it continues to build sprawling, single-story structures five miles within its other stores.
Mitchell said there is still lots of room for improvement in Wal-Mart’s own sustainability goals but it may be easier and cheaper for the retailer to shift more focus on the supply chain for which they can take also credit.
Alisha Staggs, a project manager at the Environment Defense Fund in Bentonville, said in a May blog that the retail giant’s sustainability index requirements were an ambitious goal, noting that there would likely be some who “think Wal-Mart is taking this too far.” Staggs noted EDF is onboard with Wal-Mart’s sustainability index goals, and believes the Wal-Mart push will help achieve the kinds of transformational change needed.
“With over 100,000 suppliers, Wal-Mart has the ability to use the Sustainability Index to move entire industries to go beyond what is required by law, benefiting consumers, workers and the planet,” she noted.
Wal-Mart said the sustainability goals are being expanded across its global operations. Walmart Chile, Mexico will launch the index in their markets in 2014. South Africa’s Massmart has already begun to include key index questions in its supplier sustainability surveys.
“We’ve reached an acceleration point where we are moving from measurement to results. We’re starting to really drive progress with the index,” Duke said. “This is about trust and value. Using less energy, greener chemicals, fewer fertilizers and more recycled materials – all of this – is the right thing to do for the planet and it’s right for our customers and our business.”