Wal-Mart eyes ‘phase three’ of its sustainability plan, critics want more

It’s been more than a decade since Wal-Mart Stores publicly began its sustainability journey, and while there have been notable accomplishments, the greater work is yet to be done, according to Wal-Mart CEO Doug McMillon. Greater work is what critics of Wal-Mart’s sustainability program are calling for.

At the retailer’s 2015 Sustainability Milestone Meeting held in San Bruno, Calif., Tuesday (Feb. 24), McMillon shared a recently shot video clip of former Wal-Mart leaders revisiting the sustainability origins.

Former CEO Lee Scott said in the video that Wal-Mart first looked at ways it could save costs through its own green initiatives such as recycling and waste reductions. But it was Hurricane Katrina that drove the second phase of the company’s sustainability efforts. He said the Wal-Mart that showed up for Hurricane Katrina also needed to be the Wal-Mart people saw everyday.

BETTER STORY
“We needed a better story, the world had changed around us and we hadn’t changed,” Scott said. “Customers began to believe businesses had a social responsibility that goes way beyond providing values. … Everything negative about being big comes to you without any effort, but how can you take the power that size and scope give you and use it to do something really good.”

McMillon said during Katrina was the first time he can remember Lee Scott saying find out what was needed and make it happen and the costs of it all could be tallied up later. From there he said Scott began to connect the dots and bring in more stakeholders which kicked off Phase II of the sustainability agenda where key benchmarks were set.

He said the company has now moved into “phase three,” in which the company will “reshape entire systems.” McMillon said a more sustainable outcome is being sought from the earliest origins of product development to the way people making the product are treated, through each step in the supply chain.

No details were given by McMillon on the new phase three. The majority of meeting time was devoted to brief panel discussions that featured suppliers and other partners. Wal-mart did announce along with the meeting its “Sustainability Leaders” shop. It’s part of the Walmart website that helps customers find and buy products from suppliers “leading in sustainability.”

BENCHMARK UPDATE
The retailer provided the following feedback on its three major benchmark initiatives during the meeting. The information was presented in a video and there was no further discussion.

• To be supplied 100% by renewable energy — About 25% of Wal-Mart’s global electricity is generated by renewable sources.
• To create zero waste — Wal-Mart’s U.S. business diverts 81.6% of its wastes
from landfills. 
• To sell products that sustain people and the environment — Wal-Mart’s work
with its suppliers through sustainable sourcing have increased capacity in the supply chain.

For example, Wal-Mart launched an affordable organic brand in Wild Oats and it worked with suppliers to reduce sugar and salt in product formulations and promoted ingredient transparency in labeling. Wal-Mart said its work with local sourcing has saved customers $3.5 billion on fresh produce.

PARTNERS WEIGH-IN
Attending the meeting were the Sustainability Consortium and the Environmental Defense Fund. Officials with both groups said the retailer’s efforts to work with suppliers is the best way to move needle in sustainability long-term. They also noted that Wal-Mart’s ability to convene a meeting and keep the conversation relevant are huge benefits for the sustainability movement which is now part of mainstream awareness.

Suppliers like Henkel, who own Purex detergent, was singled out by McMillon for working with merchants to deliver a more concentrated product, reducing the water content and bottle size for a 30% more sustainable product.

Jason Foster, founder of Replenish, said most cleaning products are 90% water and he designed a bottle that allowed users to replace the concentrated soap and add their own water as needed. The bottom of the bottle unscrews to allow for a refill pod and this design allows them to reuse the same bottle many times. He said the product is sold on Walmart.com.

“We believe this product will eliminate a billion bottles in landfills, a billion miles traveled and far less chemicals used in plastic manufacturing. Incorporating sustainability in product design is key to making a real difference,” Foster said. 

GREENWASHING
The Institute for Local Self Reliance has been a vocal critic of Wal-Mart’s sustainability effort. The group recently asked Wal-Mart to “stop greenwashing and commit to sustainability,” in its November 2014 report on dirty energy and carbon pollution.

The report finds that Wal-Mart is one of the nation’s largest users of coal-fired electricity, and that its heavy reliance on coal pumps nearly 8 million metric tons of carbon pollution into the air each year.

According to the report, Walmart’s U.S. operations use nearly six times the amount of electricity as the entire U.S. auto industry. The operations use more than 4.2 million tons of coal each year, accounting for nearly 75% of the company’s total emissions from U.S. electricity use.

“Wal-Mart has made remarkably little progress in moving to renewable energy, while other national retailers and many small businesses are now generating a sizable share of their power from clean sources,” said Stacy Mitchell, a senior researcher at ILSR and co-author of the new report. “Despite making a public commitment to sustainability nine years ago, Wal-Mart still favors dirty coal-generated electricity over solar and wind, because the company insists on using the cheapest power it can find.”

Many other retailers, including Kohl’s and Ikea, are outpacing Wal-Mart in the shift to renewable energy. Ikea has installed rooftop solar panels on 90% of its U.S. stores, including in many heavy coal-using states where Wal-Mart has no renewable energy projects, Mitchell added.

Critics like Mitchell agree that Wal-Mart does a good job motivating its suppliers to create greener packaging and better-for-you items, but if the retailer really wanted to make a difference it would seek to reduce its own giant carbon footprint.

“If you dumped coal on a football field, you’d have to pile it 35 feet high, from end-zone to end-zone just to power Wal-Mart’s U.S. stores for one week,” Mitchell noted.