Last month, I wrote three blogposts adding up to more than 2,000 words about Walmart’s supplier sustainability index. I did so because I think it’s a big deal, but skeptics remain. Some people simply can’t accept the fact that Walmart can do anything that’s good for its people or the planet.
In a guest post, Alisha Staggs of the Environmental Defense Fund reacts to my blogposts and argues that the Walmart index will, in fact, have a meaningful impact. Alisha works for EDF in Bentonville, Arkansas, where Walmart is based. She works on the supplier index and with The Sustainability Consortium, a broader coalition of retailers, brands and NGOs that is developing ways to identify and measure the most important environmental and social impacts of consumer products. Alisha is trained as a biologist and has an MBA from the University of Arkansas.
Here’s what Alisha has to say, and I’ll offer a concluding comment or two below.
In Marc Gunther’s recent article “Walmart’s index: a real life toy story,” he calls the Walmart supplier Sustainability Index, “the biggest environmental initiative in the company’s history,” and Environmental Defense Fund (EDF) agrees. He also questions whether “Walmart is taking this too far”” and “how the world’s largest retailer is exercising its market power.”
With a 25-year track record challenging companies to make decisions that are good for the environment and the economy, we at EDF are used to asking these types of tough questions.
That’s precisely why we have an EDF office based in Bentonville dedicated solely to working together with Walmart to advance sustainability. Because we don’t take money from the company, we can push hard to achieve the kinds of transformational change of which it is capable.
When it comes to the Sustainability Index, we’re on board. And here’s why:
With over 100,000 suppliers, Walmart 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.
The recent launch of the Index marks a highly anticipated milestone three years in the making for Walmart. Put it this way, if Walmart’s sustainability journey were a bestselling trilogy, we’d be starting the second book. In the first book, the goals were set, the groundwork built, some smaller battles were won and lost. ..but now we’re getting to the real action. As the environmental advocate in the room, this is a book I don’t want to put down.
If you missed the first book (where were you?), Gunther gives a nice recap here.
For the first time, environmental outcomes truly worthy of Walmart’s scale seem achievable: Major reductions in greenhouse gas emissions. Improved efficiency across supply chains and sectors. Improvements in water quality and human health. The list goes on.
Beginning this year, Walmart will use The Sustainability Index to influence the design of its U.S. private brand products and will require its buyers to set specific sustainability objectives that will be tied to their annual reviews. For example, Gunther zooms in on Walmart’s senior buyer for baking commodities, Tim Robinson, in another recent story to show how this is happening in real time. Of course, Robinson’s story is one of many.
By the end of 2017, Walmart will buy 70 percent of the goods it sells in U.S. stores and U.S. Sam’s Clubs from suppliers who use The Sustainability Index to evaluate and share the sustainability of products.
And while we see the Index moving in the right direction, EDF continues to ask the tough questions. How do we keep the momentum going across hundreds of buyers and thousands of suppliers? How do we avoid unintended consequences? How do we track and measure the true impact of progress on the ground? What is the full potential of the Index? Is incremental change enough to get us where we need to be by when we need to be there?
These are the questions to be answered in the second part of this sustainability story, and I have my fingers crossed for something truly epic.
Just a couple of thoughts on this. First, just as a point of clarification, although EDF does not take corporate donations from Walmart, Environmental Defense is a grantee of the Walton Family Foundation, getting about $13.7 million in 2011, according to this accounting. Sam Rawlings Walton, the grandson of Walmart founder Sam Walton, sits on EDF’s board of trustees.
Second, while the index could lead to “major reductions in greenhouse gas emissions” among Walmart suppliers, as Alisha writes, it should be noted that Walmart’s own GHG emissions are rising in absolute terms as the company adds new stores. See the chart here. Walmart says it has reduced GHG emissions by 20% since 2005, but that figure (which is impressive) refers to the stores, clubs and distribution centers that were opened in 2005, and excludes new facilities. So Walmart is struggling, as most companies do, to figure out how to grow its business and simultaneously reduce its impact.
That said, I’ve spent enough time with people at Walmart and talked to those who do business with the company to be convinced that the company is serious about sustainability, and that this supplier index is going to have ripple effects throughout the consumer products sector. EDF’s efforts to hold Walmart accountable can only help in that regard.