Talking sustainability with Wal-Mart

Wal-Mart’s sustainability efforts are leading to some unorthodox conversations inside the retail giant. Consider meat and bottled water—some workers at Wal-Mart have promised to eat less meat and drink less bottled water as part of their “personal sustainability projects” because both are bad for the environment. More than 18,000 Wal-Martians have pledged to quit smoking as part of their PSPs, which are being promoted out of Wal-Mart’s home office in Bentonville. You see the contradiction, don’t you? Wal-Mart sells lots of meat, bottled water and cigarettes. So it’s asking its workers to stop buying stuff that it’s selling in vast quantities to its customers.

According to Rand Waddoups, who is Wal-Mart’s senior director of strategy & sustainability, this can be awkward for the company buyers in charge of meat, bottled water and tobacco. Traditionally, it’s the goal of buyers to drive sales in their category. But Waddoups tells me, “Wal-Mart doesn’t want to increase the sales of tobacco. So if you are the guy whose job is to increase sales and profits in tobacco, that’s hard place to be.”

“Maybe not all of our buyers should be increasing their sales and profits,” he muses. Instead, they are lobbying for change. The company’s bottled water buyer, he says, has been encouraging suppliers to use less plastic in their bottles. The buyer is also thinking about selling water to people who could refill their own containers. Similarly, meat buyers are “doing some really neat things about decarbonizing their supply chain,” Waddoups says. “They’re improving what they can, and they are getting excited about other alternatives.”

I spoke to Waddoups last week as part of a series of calls on Leadership and CSR that I’ve been hosting for Net Impact, a nonprofit association of young business leaders who want to use business to improve the world. You can listen to my conversation with Waddoups here.

Rand has been at WMT for eight years. We met last spring at the Milken Institute’s global conference, and enjoyed a dinner together. An MBA from the University of Arkansas, Rand started at Wal-Mart as a merchant, which means he had to buy, price, promote and place products. “My responsibility was ice. Frozen water. I increased sales and profits,” he recalls. He moved into strategy and sustainability a couple of years ago, and clearly has a passion for the work.

The economic downturn, slump, recession or whatever you choose to call it has not slowed down Wal-Mart’s sustainability work at all, he says: “There’s been no better time to apply sustainability than when times are tough. It is absolutely in line with the everyday low price philosophy.”

So Wal-Mart is pushing ahead on multiple fronts. A couple of initiatives in particular excite Rand—a summit in China later this month when CEO Lee Scott and other Wal-Mart execs will pull together about 1,000 suppliers to talk about sustainability. I’d expect that Wal-Mart will move forward then with a “sustainability scorecard” that it plans to use to rate all of its suppliers, as a way to persuade them to reduce their own energy usage, emissions and waste. Scott told me last spring that he also wants to use the summit to reinforce the message that Wal-Mart intends to seriously enforce labor standards at supplier factories around the world.

Rand also said he’s excited about Wal-Mart’s “zero waste” goal. This will take years to accomplish, of course, but already Wal-Mart is throwing away a lot less and recycling more. The people who run its TLE (that’s Tire Lube Express) operations are recycling used motor oil, oil and air filters, oil bottles, etc. The company wants to find ways to turn more of its food waste into compost. It’s reducing packaging, as has been widely reported.

Wal-Mart is so big that it doesn’t even know how much stuff it is throwing away, in total. “One of our greatest struggles is to know where we are,” Rand says. But here’s compelling evidence of progress: In 2006, Wal-Mart’s trash was an expense because the company had to pay haulers to take most of its away. This year, it is a revenue item because it makes more from selling recyclables than the cost of sending waste to landfills. “On the whole now, WMT makes money on its trash,” Rand says.

Of course, Wal-Mart, like every company, has a long, long way to go to become “green.” “I think it’s important for all businesses to recognize that they are not sustainable,” Rand says. For now, there are unavoidable tensions between the fundamental drive of Wal-Mart (and all companies) to sell more stuff, and the environmental imperative that we use less of everything that isn’t renewable. The only way out of that box is to redesign products and services so that they are truly sustainable–a gargantuan task.

In that context, the conversations around PSPs are intriguing. About half a million Wal-Mart employees have taken on their own sustainability projects. (Here’s a 2007 New York Times story about them.) Wal-Mart associates are carpooling, recycling, losing weight, exercising more, watching less TV, etc. For his part, Rand turns his food waste into compost for his garden—relieving him of the need to buy tomatoes from his employer, at least during harvest season.

It’s hard to know where all this will lead. At the very least, the involvement of thousands of rank-and-file employees create its own pressures for Wal-Mart to take sustainability seriously. There’s no turning back now.