Have I fallen in love with Walmart?

In 2006, I wrote a cover story for FORTUNE with the headline: Wal-Mart Saves the Planet. Since then, I’ve written dozens of stories about the retail giant. I’ve reported on Walmart’s impact on the gold mining industry (Green Gold in FORTUNE), its efforts to protect child laborers in Uzbekistan and salmon fisherman in Alaska (Walmart: A bully benefactor on Fortune.com), the launch of a path-breaking sustainability index (Inside Walmart’s sustainability index at GreenBiz), LED lights in Walmart parking lots, the company’s CSR reports, etc. I’ve been critical at times–pointing to Walmart’s BIG problem: climate change and writing that Walmart CEO (Mike Duke) has a problem with gays–but most of my coverage of the company’s sustainability effort has been laundatory.

Now here comes Stacy Mitchell, a smart reporter, with a six-part series in Grist called Walmart’s Greenwash: Why the retail giant is still unsustainable. She assails Walmart for promoting suburban sprawl, making only token efforts to buy renewable energy and selling cheap throwaway stuff. She also faults mainstream environmental groups for focusing “on the small bits of good that Walmart could do—reduce PVC in packaging, for example—while ignoring the much larger consequences of its ever-expanding business model.” She also says that she has been “shocked by just how much of a public relations boost the media have given the company and how little public accountability they have demanded in return.”

These are serious criticisms that deserve a responses. Stacy highlights some important points. Fundamentally, though, we disagree about Walmart, and this post (it’s necessarily longer than most) is an attempt to explain why. Some of our differences are probably a result of what psychologists called confirmation bias, which describes the way all of us seek out, sift through and read evidence in ways that confirm our preconceptions. Confirmation bias is a problem in journalism, politics, economics and even in the so-called hard sciences.

Stacy Mitchell

I’m sure that my experience with Walmart has left me vulnerable to confirmation bias. I’ve visited Bentonville, gotten to know executives at the firm, and the company has participated in Fortune’s Brainstorm Green conference, which I co-chair;  my career and reputation have been helped by my reporting on the company. I suspect the same is true of Stacy, who wrote a book in 2008 called Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses. She has “advised numerous communities on strategies and policies to limit chain store proliferation and strengthen locally owned businesses,” according to her bio.

So read on (skeptically) as I try to sort through some of the issues she’s raised.

Renewable energy: In an article headlined Think Walmart Uses 100% clean energy? Try 2%, Stacy notes that Walmart has been slow to adopt renewable energy. The company has several big, ambitious, stretch goals –  one  of them is to be powered by 100% renewable energy — and she writes, accurately, that  ”journalists often repeat these goals verbatim, so they function like stealth marketing slogans that infiltrate media coverage.” Stacy did her own calculation and found that a mere 2% of Walmart’s operations are powered by renewable energy.

That doesn’t even make Walmart No. 1 among retailers, let alone when it is compared to other big companies and government agencies. Walmart ranks No. 15 in EPA’s top 50 green power purchasers, and ranks No. 5 among retailers, behind Kohl’s, Whole Foods Markets, Starbucks and Staples–smaller companies that buy more renewable energy than the Bentonville behemoth.

I asked David Ozment, Walmart’s energy guy, about this, and he told me that the company expects to move up the list next year. Progress in such a big company takes time. “We’ve got to plant this forest, one tree at a time,” he said. Recently, Walmart struck a deal with Solar City to add solar photovoltaics to another 61 sites. Walmart is also one of the largest, if not the largest, customers of Bloom Energy, having installed Bloom’s fuel cells at 26 sites. It’s also  experimenting with on-site wind turbines at a couple of stores. So all the movement is in the right direction.

But the numbers remain small. Walmart and Sam’s Club have about 4,400 stores in the U.S.  The trouble is, as I wrote in GreenBiz last spring, that “buying renewable energy would drive up (Walmart’s) costs, with no tangible benefits to customers, and put the company at a competitive disadvantage.” Walmart’s not willing to do that.

Cheap stuff: In a story headlined Is Your Stuff Falling Apart? Thank Walmart, Stacy writes about a $6 toaster (!) and $10 jeans. Americans are not only buying more stuff, we’re throwing away more than ever, she reports–an average of 83 pounds of textiles per person, mostly discarded apparel, each year, four times as much as we did in the 1980s. She writes:

Where once we measured value when we shopped, Walmart trained us to see only price. Its hard bargaining pushed manufacturers offshore and drove them, year after year, to cut more corners and make shoddier products….

While there are certainly factors beyond Walmart that have contributed to this ever-expanding avalanche of consumption, the company has been a major driver of the trend. Its growth and profitability rest on fueling an ever-faster churn of products, from factory to shelf to house to landfill.

This, too, is an important point. If Walmart and its suppliers make things more efficiently, but the company sells more and more and more things, the planet probably will be worse off. (I say “probably” because if goods sold by Walmart merely  displace goods made more inefficiently  by others, the planet could actually be better off.) But the bigger question here is, who’s responsible for what Stacy describes as “this ever-expanding avalanche of consumption?”

It doesn’t please me to say so but people who buy cheap, throwaway stuff do so because they want cheap, throwaway stuff, or because they can’t afford to buy more expensive, durable stuff, like a Patagonia jacket or the $249 All-Clad Deluxe Slow Cooker that I was eyeing the other day at Williams-Sonoma. The Hamilton Beach slow cooker  at right sells for $14.88 at Walmart.

Markets are far from perfect, goodness knows, but retail markets are more competitive and transparent than most. People get what they want, for the most part. Saying that Walmart “trained us” to see only price reminds me of the argument that big-box stories destroyed Main Street, or Amazon and Barnes & Noble put the independent bookseller out of business. No, they didn’t–their customers did.

The sustainability index: At Grist, Stacy’s story is headlined:  Walmart’s promised green product rankings fall off the radar. She writes: “Was the index just a PR ploy from the start?”

Oh, come now. If this was a PR ploy, the index has been an even bigger flop than the critics would say.  After all, the green product rankings have fallen off the radar, as the Grist headline notes.

One reason you haven’t heard much about the index is that it takes an enormous amount of work to do science-based, life-cycle analyses for tens of thousands of consumer products–that’s the goal of the project. This is going to take time, and it is going to be controversial, but the fact is that the undertaking has won broad-based support not just from Walmart suppliers who, arguably, could be muscled into joining, but from competitors including Best Buy, Kroger, Marks & Spencer and Safeway. Seventh Generation, Stonyfield Yogurt and NGOs including Environmental Defense Fund, NRDC and the World Wildlife Fund are also working with the university-based Sustainability Consortium. This is a big deal.

“So far this has done little to alter business as usual,” Stacy writes. Uh, no. People I respect–I’m thinking here about Hunter Lovins, Catherine Greener and others–who spend their lives working with companies to improve environmental performance tell me that Walmart’s efforts to green its supply chain, including the index, have already had a big impact on the entire consumer products industry.

Suppliers in China are taking note, too. For a nuanced look at Walmart’s impact there, read How Walmart is Changing China, a terrific piece by Orville Schell in The Atlantic. He writes admiringly of the work being done by Walmart but ends on a somber note:

However smart, prescient, and successful Walmart’s sustainability efforts actually turn out to be, just how “sustainable” is the whole bloody global-retail proposition that lies at the heart of the company’s amazing progress? Maybe Walmart’s new initiatives will pencil out in a business sense for the company and, within the terms of the current retail game, even serve as a model of good environmental stewardship. But will the hyperactive retail-consumption model that it has pioneered for global consumers pencil out for the world?

…The bitter reality is that even if unrestrained consumerism becomes less environmentally destructive per unit of production than it was in the past, it is still unsustainable in the long run. So even as this most innovative of corporate and statist green strategies may represent an environmental breakthrough and good business for Walmart, and good politics for the Chinese government, it may nonetheless end up being very bad business for humankind.

What Walmart can’t do: If you pay attention to Walmart, you can’t help but be impressed by its size and power. Schell, a veteran journalist, describes it  “as a corporate entity larger in scope and logistical complexity than any other in human history.” He writes: “Compare Walmart’s annual revenue with the GDP of sovereign nations, and it ranks in the top quartile.”

But it’s easy to overestimate Walmart’s power. This, I think, gets to the heart of the differences between those of us (like me) who believe that Walmart is part of the solution to the world’s environmental problems and those (like Stacy) who believe it is the cause of those problems.

Imagine, for a moment, that Walmart shut down tomorrow. Would the world become less globalized? Would people buy and shop less? What would take its place–locally-owned, small-scale merchants or other big-box stores like Costco or Target? Would Walmart’s 2.1 million workers be better off? How about its 200 million customers?

Walmart didn’t just spring, fully-formed, from the mind of Sam Walton. It grew into the world’s biggest company because it served people’s needs. Maybe not mine–I’ve spent less than $100 in my life at Walmart. Certainly not Stacy’s. But hundreds of millions of  people, not just in the U.S. but around the world, shop at Walmart, in large part because the company has enabled them to buy things that were once beyond their reach. Walmart isn’t a bunch of conniving businessmen in Bentonville, Arkansas. Walmart is us.

It should go withouit saying that Walmart didn’t create consumption or globalization. Nor can it stop them. All it can do is try to make consumption and globalization more sustainable and humane.

As Elizabeth Sturcken of the Environmntal Defense Fund, who works with the company, put it:

Is Walmart still unsustainable? Yes? Probably 95% of our consumer goods, and retail and supply chain system is. But does anyone have more power to change that system than Walmart? No.

It’s not all good or all evil. As usual, the reality is more complex.

So, by all means, let’s hold Walmart accountable.

Let’s ask its top executives–notably, Mike Duke–to speak more publicly and forcefully about sustainability, so that everyone in the organization understands that it matters.

Let’s ask Walmart to build sustainability metrics into its compensation system. There’s no more powerful signal to employees that a company cares about going green.

Let’s ask Walmart to set near-term targets for buying renewable energy or reducing waste to put more teeth into those long-term aspirational goals.

Let’s ask Walmart to begin a conversation with its consumers about what to buy and what they can afford.

And by all means let’s ask Walmart to be a louder voice in public policy debates about energy and climate change.

But there’s no point asking Walmart to stop being Walmart.

Comments

  1. Thanks for this piece, Marc, and the thoughtful perspective. WalMart’s a mixed bag, to be sure (ain’t we all!), but it’s just way too easy to criticize, and damn hard to transform a large organization, and to get everything right. (Once again, who of any of us has?)

    I completely agree with you re “The Sustainability Index” — WM’s “100% renewable energy/zero waste/only sustainable products” declaration has probably generated more sustainability awareness in businesses around the country than any single from regulators or NGOs. We’ve seen an immediate and profound impact on the flow of companies that come to us at Natural Logic, and the kind of assistance they’re looking for. WM deserves ample credit for moving the agenda at tens of thousands of companies.

    But I strongly disagree with you about “Cheap Stuff.” As Dave Gustershaw of Interface is fond of pointing out, each additional kilogram of stuff moved an additional kilometer means (all things being equal) more environmental impact, so the challenge of “sustainable consumption” — and the related challenge of “how can companies make more money selling less stuff?” — are on a very short list of questions at the heart of the matter. (The others: getting the prices right, and escaping the trap of short-term-ism — but more on those another time.) I just don’t buy it when companies say “we’re just responding to consumer demand” and then spend billions to _shape_ that consumer demand.

    By the way, why would buying solar “put the company at a competitive disadvantage” when it doesn’t do that for “Kohl’s, Whole Foods Markets, Starbucks and Staples”?

    PS: WalMart _isn’t_ us. The “us” who shop there (or don’t) do have substantial impact on what they do, and yes, markets do move business decisions, but it feels just a wee bit too simplistic, in these days of TARP x 11, to suggest that “we’re all one.”

  2. Thanks, Gil, for this very thoughtful comment. I’m interested to read that “WM deserves ample credit for moving the agenda at tens of thousands of companies.” That supports what I’ve heard in my reporting.

    As for solar, my assumption is that Walmart shoppers are more price sensitive than those at Sbux or WFM. So paying extra money for a commodity (electricity) makes little sense for Walmart. Sbux, WFM, Kohls and Staples have more room in their pricing plus I’d argue that WFM and Sbux get brand benefits from being powered by renewable energy.

    Your point on cheap stuff is excellent. “How can companies grow by selling less” is a terrific question. I wish I knew companies that have figured out answers. Apple with music, Amazon with ebooks, for sure. Method, maybe? If we could de-couple “stuff” and economic growth, that’s be great. But how? A good topic for future conversation.

  3. Agree with Gil, this is an incredibly thoughtful analysis … but I still can’t shop there.

  4. Thoughtful, balanced piece; well done.

    I was wandering around the Patagonia store here in Boulder recently while an out-of-town visitor browsed. I ran across a display of knit caps retailing for, I think, about $25. The motto on the caps (and also on expensive T-shirts elsewhere in the store): “Live simply.”

    So by forking over $25, we can proudly proclaim our independence from the consumerist cult of “stuff” — by buying more expensive stuff!

  5. Stacie Chappell says:

    Thanks for your thought provoking article – it is very timely for me. I have recently been researching the “Walmart Issue” and am interested in your thoughts on Walmart’s culpability in creating consumers that can’t afford to buy things (like your WIlliams and Sonoma cooker). I have been learning about their practise of teaching new recruits how to use food stamps (speaking to their practise of low wages – sometimes described as non-living wage) while posting record profits at the other end of the business model. What are your thoughts?

    • Stacie, thanks for your comment, these are good questions but I don’t have first-hand knowledge of Walmart’s hiring and pay practices. They have obviously been the subject of a lot of criticism and I believe that among its competitors Costco pays higher, as do unionized supermarkets. The important thing here is to look at Walmart in context–compare it to Target or the Dollar Store chain or Best Buy or other competitors. But again, I’m not the expert here.

  6. Marc: You wrote
    “Your point on cheap stuff is excellent. “How can companies grow by selling less” is a terrific question. I wish I knew companies that have figured out answers. Apple with music, Amazon with ebooks, for sure. Method, maybe? If we could de-couple “stuff” and economic growth, that’s be great. But how? A good topic for future conversation.”

    Here’s one approach (but Patagonia isn’t just decoupling stuff and growth; they’re decoupling business and growth!)

    Decoupling would be a great topic for Brainstorm Green. Is your agenda set? Shall we put something together?

  7. Marc,
    Great article. For many years, the overall goal was to link sustainability goals to evaluations for all management associates to truly create change throughout the company. Packaging/Products, Zero Waste and Renewable Energy were goals that aligned those key internal leaders to develop strategies for moving the company down a new path it has never been before. Several goals are far from being met but many have changed complete supply chains even for the other retailers who buy similar products. Your direction was spot on with the walmart Executive leadership needs to talk about Sustainablity more and where Walmart is on meeting their goals. I know the NGO’s want to know. Finally, Walmart needs to bring sustainability back into the conversation with the merchants who make the buying decision which puts the supply chain in motion.

  8. ripefruit says:

    Actually Marc you may have been too harsh in your critique of Grist.

    At the Consortium–all companies share equally in driving the outcomes of the work, this isn’t all on WMT–and your articles do little to inform stakeholders, your readers, colleagues much less critics of the TSC what is going on sincerely within the depths of conundrum of LCA based work and creating a means to leveraging social and environmental change together from fisherman, farmers, mining companies, chemical, to suppliers to manufacturers and onto retail for example. What is actually going on—clearly there is an appetite to know more.

    It’s a mass of chaos, personalities, brilliance and politics all at once—at once functional and altogether dysfunctional at the same time. But to be precise—you have to be in it to win it whether paying member or nonpaying a critic, genius, troublemaker, scientist, academic, environmentalist, human rights campaigner, government administrator, organic, not so organic, 6 Sigma slimmed, or Buddha with kaizen—its depressing, intellectually challenging, inspiring and crazy all at once. The actual story needs to be told—but it critical this work continue to evolve so we can address increasingly pressure on multiple stakeholders to reduce the environmental and social impacts associated with global consumption. Retailers, manufacturers, suppliers, governments, NGOs, researchers and consumers all hold a stake in the sustainability of global product production and use. And yes “not buying junk” and learn to “de-couple “stuff” and economic growth.”

    Frankly putting the onus on WMT and accolades only on the company leads to more missed opportunity and I think you would do well Marc to collaborate with Stacy to go further into depth of sustainability reporting and questioning—really use those analytical journalistic skill—that would be outstanding for just about everyone. The story has yet to be told in my opinion.

    The work is not primary life cycle analysis rather its a collection of what is known and published in the sciences–more so its an indication of how bent science sometimes is in commercial agendas, and where science fails to address what is simple and right in front of us all with dwindling natural resources; we consume far too much “junk” we have little guidance on how to eliminate over consumption and over population too.

    The greater opportunity for the academic, and research and development world is to identify where there are incredible gaps in knowledge and science and offer academic, industry, stake holders in the NGO world as well as governments to identify where more study maybe needed. But, I think what is painfully obvious and what your colleagues at Grist maybe trying to point out (albeit too focused on WMT) is that there is an over abundance of almost rotten fruit right before us in business and civil society to take action upon.

    We don’t need finite models of measurement or key performance indicators to know the simple stuff that needs to be eliminated and handled in industry. The entire supply chain for instance needs to harvest the immediate opportunities and work on the longer term investment in changing our over sized and outdated mode of bringing goods to market. Immediate opportunities would include items like over packaging, formula changes which prevent pollution and promote and end to water abuse, infrastructure creation which cuts transportation and builds closed loop systems, a paradigm for industrial ecology– you know the simple stuff in front of everyone that continues to be ignored or glossed over.

    To be honest much of the creation of large buyer tools or tutorials or conversation starters is what the development of Category Sustainability Profiles and Key Performance Indicators for retail is about– big business acting upon, trying to figure out, and providing more sustainable products to market while educating consumers where they too can have impact with their pocketbooks to drive change in business. This is the key opportunity across all producers, categories and, with individual consumers.

    With that said one could question whether any of this is/was necessary because what all this secondary research and LCA compendium making– proves out is that the NGOs and governments, and the average Joe have been on the money with critique over the decades.

    ? If we keep liquidating the planet and remaining in analysis paralysis—we loose the greatest opportunity ever in business and the world—to save ourselves from the same fate the people of Easter Island faced so long ago.

    “On an island as small as Easter, it was easy to see the effects of the deforestation as it was taking place. But the inhabitants continued their destructive actions. They probably prayed to their gods to replenish the land so they could continue to harvest it, but the gods didn’t answer. And still the trees came down. Whatever one did to alter that ecosystem, the results were reasonably predictable. One could stand on the summit and see almost every point on the island. The person who felled the last tree could see that it was the last tree. Nonetheless, he (or she) still felled it.”

    What is interesting is I often wonder if frameworks and measurement systems would have helped that person not fell the last tree? I would hope so—but that person probably wasn’t dealing with the tide of capitalism and business either that our world is today. It’s a hard road to hoe and fix—no doubt.

    This is particularly so if the economic imbalance between buyer and supplier means the cost of goods obtained from afar is so low– that distance and transport are not inhibiting factors. However, it is just a matter of time until the inequity of this situation (the excessive use of resources by one group of people at the expense of others) is no longer tolerated, and citizens of the over-consuming western nations will be facing the same issues as are the people of the Pacific islands. “(Maradel K. Gale, J.D. Director, Micronesia and South Pacific Program, Associate Professor, Department of Planning, Public Policy and Management @University of Oregon)

    Get at it Marc—hope you will take a journalistic endeavor and show the real tales from the inside of TSC with colleagues like Grist and from bigger journalism to the grassroots journals.

    It’s ripe fruit.

  9. Brian Leeper says:

    In terms of defining who is actually driving this (consumers v consumer demand shaped by mass retail) cross reference the WM shopper against their aggregate unemployment rates. What you will find is that unemployment is far higher among WM shoppers and education levels are lower than national averages. Many of the people shopping at WM have no option to buy anything but the cheapest goods possible.

    Should WM be encouraged to make changes to serve this population while improving sustainability? Of course. However, changes need to be made in a way that doesn’t affect price point. As it is WM is losing substantial business to the dollar stores due to the economic reasons cited above. The 4 main dollar store chains now have more locations than all drug stores combined. Failure to follow the customer base to their choice in retail will result in failure to address the consumerism driving current supply chain practices. Loosely paraphrased from above the current [over]focus on WM is creating missed opportunities. WM may be the biggest retailer, but their power is dwarfed by the power of their consumers.

  10. Targeting the big corporations is easy, but it masks the enormous impact that those companies can have compared to the corner coop or organic fruit market. McDonald’s changes its plastic lids, Petrobras reinjects carbon dioxide into oil wells, Walmart give sustainability guidelines to suppliers — these things have a much larger impact on climate change and resource use than an entire army of sustainability consultants or environmental activists.

    These doesn’t mean these companies should be let off the hook for the messes they make, nor should they be seen as innocent victims or guardian angels.

    My problem with the Grist vision is it doesn’t call attention to the underlying driver of Walmart’s business, which is the consumer demand. Yes, of course Walmart is spurring this demand, but we can’t pretend we’re really doing anything about the environment if we just go after the manifestations of the problem (big box retailers) rather than the problem itself (people’s desire for low quality low cost products). Raising consumer consciousness about the effects of their shopping habits is somehow missing from this picture, in large part because it’s a lot harder to tell consumers to change their behavior than to tell them they are victims of a capitalist environment-destroying machine.

    This is actually much the same problem I have with Gernot Wagner’s “But Will the Planet Notice” approach which is based on the idea that individual actions like recycling and shopping local should come second to pressuring politicians for broader changes like the creation of an emissions trading system. Again, like Walmart, congressman aren’t going to change their votes on environmental legislation just because they get a flood of letters from activists, they change their votes when they see a major shift in public opinion in their districts that will affect their political survival. This requires raising consciousness among by getting Middle America to believe the environment matters. Doing that might also convince people to rethink their habit of buying crappy Chinese products at Walmart.

    I can think of a lot of good reasons to go after Walmart (the labor issues mentioned here are excellent ones). The fact that the company is trumpeting its sustainability efforts does not strike me as the primary one.

Trackbacks

  1. [...] green push for Grist. It makes important points but must be read in concert with “Have I Fallen in Love with Wal-Mart?” by the sustainable business analyst Marc Gunther.In a section on Wal-Mart in “The [...]

  2. [...] Wal-Mart’s sustainable efforts. Most have been laudatory, but in his December 2001 article Have I Fallen in Love with Walmart? he talks about coming across a six-part series for the Grist by Stacy Mitchell called [...]

  3. [...] with a single idea, or it may be an idea that is systemic, but for the tempered radical the goal should be forward progress.  Even in the face of [...]

  4. [...] the end, whether Walmart is really a “sustainable company” is questionable. The truth, in fact, is quite nuanced.To that end, Walmart’s critics and fans should take a look at Walmart’s 2012 Global [...]

  5. [...] the end, whether Walmart is really a “sustainable company” is questionable. The truth, in fact, is quite nuanced. To that end, Walmart’s critics and fans should take a look at Walmart’s 2012 Global [...]

  6. [...] Need another example? Walmart. Despite its reputation, if you haven’t heard about its impressive efforts on the environment, you’re missing something.  A 2006 front-page article in FORTUNE outlined how CEO Mike Duke was leading the charge to make Walmart look at its impact differently (For an interesting read, check out author Marc Gunther’s update). [...]

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