Wal-Mart president and CEO Mike Duke at 2009 Sustainability Milestone meeting
Earlier this week, sustainable business journalist and blogger Marc Gunther broke the news that Wal-Mart would “unveil plans to measure the sustainability of every product it sells.” During its Sustainability Milestone meeting yesterday in Bentonville (which was also webcasted), president and CEO Mike Duke outlined the plans for the new index. Turns out that the company’s plans are even more audacious than expected: Wal-Mart plans for a sustainability index will not only bring together universities, NGOs, and the company’s suppliers, but will also reach out to the larger retailing industry. The eventual goal: an open, shared database that will ultimately provide the means of communicating substantive information to consumers about the sustainability and lifecycles of the products they purchase.
Duke laid out a three-step, five-year process for the development of the index:
- A survey of Wal-Mart suppliers on their efforts related to energy & climate, materials efficiency, natural resources, and people and the community.
- The creation of a sustainability consortium consisting of universities, NGOs, retailers, suppliers, and government.
- The translation of the information gathered and analyzed by the consortium into “a simple tool that informs consumers about the sustainability of products”
There’s no doubt that this is a huge undertaking, with a number of intrinsic hurdles. Following yesterday’s meeting, several bloggers, writers and journalists (including Andrew Winston, Joel Makower, Ariel Schwartz, and myself) joined a call with senior vice president of sustainability Matt Kistler. Among the additional details revealed during that call:
- Wal-Mart is already discussing the development of the index with competitors: a representative of Best Buy was at yesterday’s meeting, and the company has discussed the concept at meetings of the grocery industry.
- The goal of transparency will certainly run up against intellectual property concerns. Wal-Mart and consortium members don’t have an solution to this conflict yet, but it’s part of the discussion with suppliers as they complete the 15-question survey.
- While plans for the index don’t necessarily include supplier rankings on sustainability criteria, the information gathered during the process of assessing product sustainability could prove a “tie-breaker” for the company as it decides on the suppliers from which it will continue to buy.
- Wal-Mart is spearheading this effort and providing initial funding; it does not plan to (or want to) “own” the index. While Kistler wouldn’t name any potential owners, he did note that the company had discussed this issue with some NGOs and universities.
It’s a bold plan, no doubt. There’s also no doubt that there are issues that will arise from the start: a few partners of the consortium, for instance, will immediately raise some hackles (I won’t name names… take a look, and you’ll see what I mean). Gunther notes that some potential university partners are struggling with the nature of such research:
…[does] measuring the environmental impact of, say, a flat-screen TV qualifies as academic research and what it means for businesses including Wal-Mart to pay for the effort. One academic, who’s enthusiastic about the idea of an index, told me he’s getting questions like these from colleagues: “Are we getting hoodwinked into being a corporate shill? How can we defend this as academically legitimate research?”
Those are questions that will undoubtedly be asked, and answered, and asked again as the process moves forward. One thing’s very clear: Wal-Mart’s changed dramatically over the past five years from a company famous for lashing out at criticism to one that’s inviting critics to take a closer look. That’s significant… we’ll need to make sure to accept that invitation regularly.
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This is an important step towards consumer education and proper labeling. The fact that it’s coming from Wal-mart instead of an NGO or advocacy group makes if much more likely to succeed, however, transparency is going to be the name of the game if it’s going to be legitimate.
Somehow, I doubt that this is the right approach. Good initiatives usually excell in cutting off all the extra fat, not in biting off as large a piece as seemingly possible.
Also, support should come like it does for silicon value start-ups: by public recognition of the value of the offered service and subsequent growing user base, not by building up a big alliance of organisation in advance of having a usable product.
Finally, however much Wal-Mart has appeared to change over the past five years, it is still a company whose primary concern is to sell more stuff, not to help sustainable business practice diffuse across the world. I can understand their motives, given the PR disasters of the past decade, but they as an organisation are inherently less genuine in this endeavour than if the initiative were spearheaded by a start-up.
It’s the conceptual impact and interest that’s important here. What’s the likelihood that the general populous, most of which are at least familiar with WM, are going to hear of, much less pay any attention to, a start-up? IF it weren’t for extremely interested and very informed consumers like ourselves, most start-ups would go unnoticed without at least having a large and well known backer, and even then would likely be a “shot in the dark”.
Having previously performed IT and financial analysis services for several years under one of WM’s primary product vendors, I can attest to the power of WM as an entity pushing down policy and directives to their suppliers. This is exactly how they are able to run so lean and keep their margins up while still pushing change. Don’t comply and they can make things really tough or even cut you off. Though, like “trans fat”, there is a LOT of PR “spin” involved here, if they push this out it’s likely to happen to some degree. Do any research on RFID and where it is today and you will find that much of the strong push was initiated by WM. Something to chew on at least.
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