Walmart's Sustainability Index: The Hype and the Reality

[Editor’s note: See further coverage by Senior Writer Marc Gunther, Executive Editor Preston Gralla, sustainability consultant Catherine Greener and by our news staff.]

Walmart has just unveiled its new Sustainability Index, a project that's been in the works for more than a year, but which is -- finally, after much anticipation and more than a little handwringing by industry, activists, and others -- part of the public discourse. The advance stories over the past few days have been amped up to the point of breathlessness, involving adjectives like "huge" (perhaps) and "audacious" (probably), with one story suggesting the Index will "shake the world" (um, no comment). Such hyperbole is understandable: any green commitment that Walmart makes is potentially a big deal. But now that reality has hit, it's time to take a more sober assessment of what's really going on here.

I've been watching the Index unfold over the past year. I've seen early iterations, talked to some of the many suppliers, nonprofits, academics, and consultants that Walmart has engaged in this effort, and viewed the final product.


My assessment: Like so many things related to both Walmart and sustainability, there is both more and less going on here than meets the eye.

The story in brief: Walmart's Sustainability Index is geared toward creating a way to gather sustainability information about companies and, eventually, products sold in Walmart stores. The Index will result from a set of 15 questions Walmart is asking of its 60,000 or so suppliers. (You can download the questions here -- PDF.) It has asked for responses by October for its U.S. suppliers, later on for those elsewhere.

The 15 questions are grouped into four buckets: energy and climate, material efficiency, natural resources, and "people and community." That last category is particularly clever, as it allows the company to demonstrate that its concern lies beyond environmental issues to the broader arena of sustainability, which includes social issues, though the five questions included in that bucket barely scratch the surface of this topic. For example, they don't address most worker issues, like wages, health care, and the right to air grievances, among many other topics generally included in this arena.

Despite the much-ballyhooed launch, the Index isn't exactly new. The company began using a similar set of questions with suppliers about a year ago for its own private-branded products -- so-called house brands like Sam's Choice and Great Value; the company has around 30 such brands. It started with dairy products, followed by textiles, which includes both home furnishings and apparels. Toys and electronics follow. Many of the manufacturers of those house brands are also major consumer product brand manufacturers, so this won't be news to many of them.

Despite what the headlines have been saying the past few days, this isn't a product-rating scheme -- at least not yet, and likely not for several years. For now, Walmart will be using the results of the 15-question survey to assess companies. The questions, as you'll see, don't get down to the product level. In a second phase, the company plans to develop more sector-specific questions -- say, for agricultural products or jewelry or electronics. Eventually, the company hopes that the Index will address individual products. But that's not currently in the works.