For most environmentally-minded individuals, big box retailers like Wal-Mart are the epitome of social and environmental corporate irresponsibility. From bringing every imaginable cheap pre-packaged piece of junk to people in every corner of the civilized world, to increasing their bottom line profits by refusing benefits to its workers and beating down its already inexpensive over-seas suppliers, Wal-Mart, and others like it, have mastered the art of selling things at cheap prices no matter what the collateral costs may be.
Big Blue Wants To Be Green
That being said, Wal-Mart, as of late, has been making fairly large, and very public, strides to become more environmentally friendly and socially responsible. It has installed solar PV systems to power a few of its stores, purchased renewable energy offsets, donated to environmental/social charitable organizations, and have instituted numerous other company wide sustainability-focused initiatives. Though Wal-Mart has had quantitative success at lowering its stores’ operational energy consumption since embracing its new self-imposed ’sustainability measures’, the company’s overall carbon footprint continues to grow due to it’s seemingly never ending expansion as well as its heavy dependence on transcontinental shipping (which we all know to be enormous emitters of CO2).
Wal-Mart’s enormous size and reach is both its problem and its salvation. The company wields enormous sway over its suppliers. So anything Wal-Mart wants them to do, they pretty much do. That’s good news if Wal-Mart wants to do good; bad news if it wants to do otherwise. Thankfully, Wal-Mart’s latest environmental initiative seems to be not only good news, but an ambitious and far reaching undertaking should it actually be implemented.
An Ambitious Rating And Labeling System
It was announced this week that Wal-Mart has plans to determine the environmental and social implications of every product it sells on its shelves and then label those products according to a universal rating system the company plans on having developed. The system will give products a score based on how environmentally and socially sustainable they are over their lifetime: somewhat like a nutritional label for the Earth. A similar labeling program called the Carbon Reduction Label, focused mainly on a product’s carbon footprint, has been underway for a couple of years in the U.K, but has been a voluntary program individuals or business can choose to opt in for or not. Wal-Mart’s program is intended to be applied to all of it’s 100,000+ suppliers; without choice.
Ostensibly, this labeling will better inform Wal-Mart’s customers of the impact the product they are considering on purchasing has on the environment as well as the people who contributed to its manufacture. Studies have shown that when people are made more aware of the negative impact something has, whether it’s environmentally related, health related, etc., their decision making process is effected and often times they will not choose to purchase something they in fact would have otherwise. This is the basic psychology behind almost all labeling.
So the environment benefits come into play when suppliers, not wanting to have a ‘bad score’ with Wal-Mart’s still abstract rating system, make the needed changes to their product materials, manufacturing processes, workforce, etc. in order to receive a better score; thereby appealing to more of Wal-Mart’s customers. The subsequent unintended benefit to all this lies in the assumption that these products will now be better for the environment as an indirect result of the rating system.
So How’s This All Going To Work?
The question then becomes: How is Wal-Mart going to develop a universal rating system that will sufficiently and effectively evaluate the environmental and social sustainability of every single one of its products and how will it work? The answer so far? Wal-Mart won’t develop it and it doesn’t know how it will work. The latter is probably due to the enormous complexities surrounding the undertaking of trying to come up with criteria that can be both quantified and applied to a very broad range of products. This daunting task will most likely fall on the shoulders of the Sustainability Consortium which is jointly administered by Arizona State University and University of Arkansas. Much of Wal-Mart’s ’sustainability policy’ thus far has been developed by the Sustainability Consortium, so most are assuming they will continue in their role by developing the universal rating system.
Wal-Mart says in the meantime they will be asking its more than 100,000 suppliers around the world to answer 15 simple questions about the sustainable practices of their companies. Questions include “Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets?” The largest United States suppliers will be asked to respond by October. Deadlines outside the United States have not been set.
Going Green To Make More Green
It should be noted that Wal-Mart is a juggernaut in the world of business today not because it has been a pinnacle of altruism or philanthropy, but because it has made decisions and policy based on what would earn it enormous profits and fuel its continued expansion. So rest assured that any decision made by Wal-Mart is going to be one with which they intend to increase their bottom line. Though publicly pitched as a sign of its commitment to the environment, the majority of their sustainability initiatives thus far, like reducing the energy consumption of its stores, have been intended firstly to cut costs. In much the same way, the real impetus for Wal-Mart’s newest labeling plan is to try to appeal more to an increasing environmentally leaning demographic (born between 1980 – 2000) and their purchasing power.
So does this lessen the possible positive effect Wal-Mart and its initiatives could have on the environment? Absolutely not. Wal-Mart is recognizing a trend in the marketplace and being the savvy corporation that it is known to be, is taking steps to keep pace with that trend. The fact that Wal-Mart is branding such efforts to appear as if they’re solely being done for environmental reasons is just good marketing and is somewhat beside the point when discussing the far reaching positive implications of such efforts. Because of the companies size and power over its suppliers, Wal-Mart is one of the few companies in which doing a little to help the environment can actually do a lot. Many environmental activists forget that it’s almost always the most profitable businesses that can have the most effect in the marketplace and beyond.
The Disease That Tries To Cure Itself
But in the end, the very nature of Wal-Mart’s business model and operation make it inherently unsustainable in the long run. No matter how many green initiatives it undertakes or how much power it can save, the existence of Wal-Mart itself precipitates many of the negative environmental and social consequences of human actions sustainability initiatives are designed and intended to mitigate. Yet Wal-Mart isn’t going anywhere anytime soon, so this may be one of those rare instances where ‘less bad’ may be the best case scenario.
The Good: Given Wal-Mart’s enormous size and scope, its new sustainability rating system and labeling initiative could really have a far reaching positive environmental and social effect amongst its 100,000+ suppliers. The labeling may help enlighten many of its customers who otherwise would have no clue or interest in the effects the products they purchase have on the environment.
The Bad: The complexity of coming up with sufficient criteria for the rating system is daunting and will most likely have to be extremely general to cover Wal-Mart’s enormous range of products. The ‘questionnaire’ it’s currently circulating amongst its suppliers is anything but verifiable. Wal-Mart itself is inherently unsustainable.
The Bottom-Line: If the universal rating system and subsequent labeling program actually get off the ground, it will be a huge step forward for Wal-Mart’s sustainability profile. Not only will the system strongly encourage suppliers to implement more sustainable practices and materials into their products and operation, but it will better educate customers about the impact the products they choose to purchase have on the environment.
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