A greener Wal-Mart is a slow work in progress

by The City Wire staff (info@thecitywire.com) 40 views 

Wal-Mart has plenty of fans and critics when it comes to the retailer’s sustainability initiatives. When former CEO Lee Scott boldly announced the retailer’s sustainability platform eight years ago, there were doubters that Wal-Mart would stay the course.

While the journey to a Green Wal-Mart is a long one, there is some progress being made. In fiscal 2013, the retailer said its bottom line benefited $150 million from sustainability initiatives, such as solar and wind energy projects, fuel cell installations and its zero waste program. This was on top of $231 million it saved in 2012 from waste reduction and recycling.

Katie Ware, spokeswoman for the Environmental Defense Fund’s corporate partnership program, said there is a direct correlation between sustainable spending projects helping to boost bottom lines profits over time.

“We have had a partnership with Wal-Mart for the past seven years, and have worked directly with the retailer on multiple projects: developing the sustainability index that it now uses with its suppliers; reducing harmful chemicals in products sold; and optimizing fertilizer use among the agricultural farms that supply produce and other food items,” Ware said in a phone interview.

Wal-Mart is an active member of the Green Power Partnership with with the Environmental Protection Agency. Each year the EPA ranks its Green Power partners on sustainability impact — reducing electricity usage, while also developing new renewable energy capacity generation.

Among Fortune 500 company’s Wal-Mart ranks No. 5 in terms of renewable energy used, according the list released last month. No. 1 Intel Corp. used 3.1 billion kilowatt hours, 100% of its total electricity usage. No. 2 Microsoft used 1.935 billion kilowatt hours, 80% of its total electricity usage. No. 3 Kohl’s Department Store used 1.536 billion kilowatt hours, 105% of its total electricity usage. No. 4 Whole Foods used 800.2 million kilowatt hours, 107% of its total electricity usage.

No. 5 Wal-Mart Stores used 751.4 million kilowatt hours, 4% of its total  electricity usage.

Stacy Mitchell, environmental expert with the Institute for Local Self-Reliance, said there is one glaring difference between the other top four companies and Wal-Mart.

“Just 4% of Wal-Mart’s energy used is renewable. They are quite willing to purchase renewable energy in markets where other electricity rates are already high, but don’t want to discuss core aspects of their business model that are far from efficient, such as their sprawl, land use and construction design,” Mitchell said in a phone interview.

She said another way to evaluate Wal-Mart’s professed leadership on climate is to look at its greenhouse gas emissions intensity — the volume of pollution it produces per $1 million in sales. Wal-Mart’s emissions intensity – 45 metric tons of CO2e per $1 million in sales – is higher than that of competing chains, including Costco (16 metric tons) and Target (42 metric tons), according to the Mitchell.

Costco’s emissions intensity is only about one-third of Wal-Mart’s, in part because Costco’s high-wage workforce generates more sales per square foot and therefore uses less energy to produce the same revenue.

Mitchell said Wal-Mart has received loads of media attention for sustainability efforts when it’s the suppliers doing most of the heavy lifting. But not everyone sees it that way.

Ware said one of the reasons EDF has made it a point to work with Wal-Mart on sustainability goals is because of the exponential effect which can be realized with the the Wal-Mart lever is applied.

“They are huge in terms of scale and when their suppliers – 100,000 strong – all get onboard on issues like reducing harmful chemicals throughout the supply chain, that can be a game changer,” Ware said.

Last fall Wal-Mart announced a new policy on sustainable chemistry in consumables. This was sorely needed across the industry given that some 40% of the products tested by the EDF were found to contain chemical of “concern,” Ware said.

Beginning in January 2015, Wal-Mart will require suppliers to provide online public ingredient disclosure for consumable products sold at Wal-Mart. Consumable products include commonly used items like baby lotion, cosmetics, shampoo, spray cleaners and air fresheners.

The retailer also prioritized a list of 10 chemical ingredients as its initial list of high priority chemicals that are targeted for continuous reduction, restriction, and elimination, using informed substitution principles. Wal-Mart said it would regularly review if additional chemicals should be prioritized. Also, Wal-Mart will begin to label its private brand cleaning products according to EPA safer product labeling program.

Ware said harnessing the massive scale of Wal-Mart's business to move hazardous chemicals out of the supply chain and off store shelves will have ripple effects across the entire industry.

No one argues that consumers today demand safer products and they are reading the labels. EDF said it pushed hard for this policy, which sets a new standard for the retail industry and sends a strong signal to suppliers that it’s time to get serious about phasing out hazardous chemicals in products. Wal-Mart’s largest supplier, Proctor & Gamble, was already onboard making a similar announcement the prior week before the retail giant.

Another area where EDF believes Wal-Mart can move the needle is working with suppliers to reduce nitrogen based fertilizers, which is responsible for nearly half of Wal-Mart’s carbon footprint in its supply chain.

Ware said the EDF has spent several years working with farmers to optimize fertilizer use on farms. Wal-Mart recently announced commitments from 15 suppliers to encourage better fertilizer use in their supply chain. These changes will touch more than 30% of the food and sales in the North America.

“That’s huge,” Ware said.

EDF estimated this agricultural initiative would save seven million metric tons of greenhouse gases, in addition to protecting water and soil quality.