As Leslie Dach, a top Wal-Mart executive, put: "It is really a Walmart approach to solving a problem.... The size and scale of this company can be put to use to make a real difference in the world."
That's no doubt a good thing. Better, as one of my sources told me, to improve practices at 10,000 factories around the world than simply to make WMT's operations more efficient. "Sensational" was how Fred Krupp, the president of Environmental Defense Fund, described it, during a lovefest with Walmart CEO Mike Duke, which was webcast on Treehugger, of all places.
Duke praised EDF, saying: "Our NGO partners have pushed us and been patient with us."
Krupp returned the favor. EDF has planted two staffers in Bentonville, Arkansas, to work closely with WMT, and he said: "I don't think there's any better money we are spending anywhere."
Specifics about how the carbon reduction effort would work were few, understandably so since it is new. "This is uncharted waters," said Elizabeth Sturcken of EDF. (Here is her excellent analysis, with some detail on initiatives in packaging and around dairy products.) Right now, there's little data available to measure the carbon impacts of the products that Wal-Mart sells, particularly if you want to include how they are made, shipped, used and thrown away, as WMT does.
Walmart said it would start with the products that have the most "embedded carbon" and seek GHG reductions that are "economically viable." The company has already had success getting suppliers to use smaller packages, from concentrated detergents to lighter-weight DVD cases.
Walmart itself, though, wants to get bigger. Duke was straightforward about this. "We are a growth company," he said. "We want to add square footage. That's the reality of our business."
Critics are unsatisfied. Here's reaction from Stacy Mitchell, a senior researcher with the New Rules Project, a program of the Institute for Local Self-Reliance:
By focusing on suppliers, Wal-Mart continues to deflect attention from the enormous greenhouse gas implications of its own business model. Wal-Mart is rapidly expanding in China, Mexico, and other countries, where it is destroying neighborhood businesses and replacing them with an auto-oriented form of big-box shopping that is highly polluting. Under Wal-Mart, local and regional systems of economic production and distribution are giving way to global supply chains, which almost invariably means longer distances and greater fuel consumption.
She's got a point, but the story is more complicated, for a couple of reasons. (Warning: geeky analysis ahead.) First, look at the graphic on the far right, above. Walmart is reducing its GHG emissions per unit of sales, meaning that it's more efficient. So, if its competitors are not doing as well in terms of efficiency, and if it takes market share away, then it's possible that WMT can sell more stuff and the planet will be better off. For example, if Walmart sells lots of Fair Trade coffee, and the locally-owned convenience store around the corner sells less conventional coffee, that's a good thing. Local isn't necessarily better.
Second, and paradoxically, Walmart is actually becoming more local. For example, Walmart has made a concerted effort to buy more from local farmers. Corby Kummer has a terrific article about this in the current Atlantic, in which he asks: Will Walmart and not Whole Foods save the Small Farm and Make America Healthy? The company, he reports, "wants to revive local economies and communities that lost out when agriculture became centralized in large states." Best quote in the story is from Michelle Harvey of EDF who says: "It's getting harder and harder to hate Walmart."
True enough. Nevertheless, in my ideal world, Walmart would set a cap on its own emissions, sell used goods as well as new, nudge people to buy vegetables instead of meat, and share profits with its workers. In today's world, Walmart will try to grow (profits) and shrink (pollution) at the same time. That's about all we can ask of a big company until we, collectively, can find a way to decouple economic growth from environmental harm. That's a job too big even for Walmart.
GreenBiz.com Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability. Marc maintains a blog at MarcGunther.com. You can follow him on Twitter @marcGunther.
Less about cost, more about leverage
Great and lucid article - thank you Mark!
I would disagree with anonymous in thinking that the market is ensuring that the cost reduction is going where it is cheapest. P&G, Coca-Cola and others are less than 20% Wal-Mart's size, and need Wal'Mart's distribution. Consequently Wal-Mart has them make reductions in CO2, will not accept any costs associated with that, and thus ensure that any costs associated with the reduction actually flow to Wal-Mart competitors. We know this is cheaper for Wal-Mart. We don't know that it is the cheapest way of reducing GHGs.
I am one of those who has a love/hate relationship with Wal-Mart. Love because the changes they are driving through the full supply chain promise the greatest environmental benefits rippling through the global economy. And, we know they are doing whatever they can to ensure they trounce competitors, and whatever they can to deflect from the aggravating question of labour. In the book "The Wal-Mart Effect" note is made that if all Wal-Mart's profits were given back to their workers in terms of raising the hourly wage the results would hardly be significant to the workers.
Hence the push to build and burnish the halo on the back of other companies' hard work.
Caroline http://ren-new.com
Walmart optimal carbon reduction
Under certain reasonable assumptions, Walmart's decision to have its suppliers reduce emissions instead of reducing it themselves is both environmentally optimal. Furthermore, Walmart is still bearing the costs of the reductions even though it is the supplying firms who are reducing emissions.
Imagine that a supplier requires $4 million per year in profit to compensate them for supplying Walmart. If they are willing to accept an environmental policy that would cost them $1 million annually to meet Walmart's standards, then it means that they had been making $5 million or more previously. Furthermore, the fact that Walmart knows that the supplier is willing to accept this decrease in profits, means that they are aware that they would be able to get a lower price from the supplier. Thus, Walmart can choose between making an extra $1 million by negotiating a lower price or by forcing the adoption of a pro-environment policy. By pressuring the environmental policy, Walmart forgoes the lower costs that they could have negotiated. This is why they should be praised.
Furthermore, Walmart is also presumably spending the money where it can be most effective. They cost of reducing carbon emissions varies across industries. If the cost of reducing emissions themselves were lower, then Walmart would take the $ 1 million and spend that money on reducing their own emissions. The fact that Walmart is having their suppliers reduce emissions, shows that the suppliers probably have the lower costs. Thus they are spending the $1 million where it will have the most effect.