With the announcement of Walmart's Sustainability Index and the release of 15 questions for its suppliers, the retail giant has ignited a far-reaching dialogue on supply chain transparency and environmental sustainability, and demonstrated that it has the ambition and clout to not only change the way suppliers operate their business, but how they see their business.
Walmart's plan is to roll out a universally adopted rating system for the retail industry, the Sustainable Index, which assesses suppliers based on environmental and social criteria. Walmart is starting with 15 questions for its suppliers, crafted in collaboration with thought leaders in academia. The questions, which vary in complexity, are grouped into four broad areas of environmental analysis: energy and climate, material efficiency, natural resources, and people and community.
If you are a Walmart supplier that is just beginning to think about environmental impact, or even if you are already recognized as a leader in the space, you can use this as an opportunity to create or enhance your sustainability strategy, and create value for your company. Perhaps most importantly, the 15 questions offer an opportunity to partner with a key retailer, gain insight into it processes, and enhance your market position. Depending on where you are on your trajectory, the following guidelines will help you frame your thinking around the index.
If you have just begun to think about sustainability as a business strategy ...
Walmart's 15 questions can be boiled down to 3 simple ones:
1. Do you measure and set goals for your environmental impacts?
2. If so, what impacts are you measuring, what are your goals, and are they consistent with recognized standards?
3. Do you know if your suppliers are doing the same?
Answering Walmart's questions may require resources and processes your organization has yet to set in place. If you're helping to begin to integrate sustainability into your organization, this is an ideal opportunity to shape your processes to meet the challenge. Here's a simple, proven approach for getting started:
1. Set environmental impact baselines: Establish energy, carbon, water, and waste baselines against which progress can be measured.
2. Establish impact reduction goals: Align environmental impact data with broader business operations and set reduction goals that drive both cost and environmental outcomes.
3. Prioritize reduction initiatives: Choose and implement initiatives that will yield the greatest progress against your goals.
4. Track and report progress: Measure progress of reduction initiatives relative to baseline and goals using Greenhouse Gas Protocol or Global Reporting Initiative methodologies.
5. Publicize success: Convey your progress to external stakeholders through company sustainability reports and external venues such as the Carbon Disclosure Project or Ceres.
If you have already begun this process and are anticipating next steps ...
Beyond these 15 questions, you should begin to anticipate Walmart's next steps. Walmart intends to make this index "open-source" and owned by a consortium of stakeholders with mixed interests, and we predict that the Sustainability Index will rely heavily on existing, publicly-available reporting and certification standards.