It’s been exactly a year since Walmart’s historic launch of a Sustainability Index and other measures to assess suppliers and products and, remarkably, the sun still rises in the East and sets in the West.
As I stated in my analysis that day -- July 16, 2009 -- “There is both more and less going on here than meets the eye.” One year later, I’m sticking to that story.
A brief review: Last summer, Walmart announced that it would assess its suppliers on environmental and social criteria. It announced a Sustainable Product Index to “establish a single source of data for evaluating the sustainability of products,” the company said.
Walmart said it would introduce the initiative in three phases, beginning with a survey of its more than 100,000 suppliers around the world. The survey includes 15 questions that “serve as a tool for Walmart’s suppliers to evaluate their own sustainability efforts.”
Second, Walmart helped launch the Sustainability Consortium, a group of universities “that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the life cycle of products -- from raw materials to disposal.” Walmart provided the initial funding and invited others to join in.
Finally, Walmart said it hopes to translate the Consortium’s data into a simple rating for consumers about the sustainability of products -- the ultimate dream of green-minded shoppers.
It was, as my colleague Marc Gunther described it at the time, “an ambitious, comprehensive, and fiendishly complex plan to measure the sustainability of every product it sells.”
So, where are we today?
Green Dreams Die Hard
Walmart’s sustainability dreams don’t appear to have diminished, though I’m pretty sure the company has been humbled by the fiendish complexity of it all. Having watched this unfold and having spoken with those inside Walmart, the Consortium, and several of its major suppliers, it seems clear that the reality of a comprehensive and simple rating of products and companies remains elusive.
But that’s not the sum total of the story.
First, the good news. Walmart has fundamentally changed the conversation about products and sustainability in general, and about the environmental impacts of supply chains in particular. It has shifted the notion of green consumerism from the margins to the mainstream -- from a relatively elite group of relatively upscale shoppers to the mass market that Walmart serves. The mission of the Consortium -- to “work collaboratively to build a scientific foundation that drives innovation to improve consumer product sustainability through all stages of a product's life cycle” -- has revived the science of life cycle analysis, or LCA, the process of assessing and measuring products’ cradle-to-grave impacts. LCA, which has been around for nearly half a century, has enjoyed a renaissance that can be traced to the launch of the Consortium, which views LCA and its variants as principal tools of its trade.
Similarly, Walmart’s move has enlivened the conversation around supply-chain environmental management, the practice of pressing manufacturers to reduce the waste, toxicity, and resource intensity of their products -- in effect, to ship fewer environmental problems to their customers. There’s not a single business conference, green or otherwise, I’ve attended or spoken at over the past year in which Walmart hasn’t been a topic of conversation, whether on stage or in the hallways. Walmart is by no means the first or only company to press suppliers to reduce their environmental impacts, but its aggressive, highly visible efforts have gotten the attention of companies and sectors that thought they might somehow be unaffected.
But, as I said, the complexity of assessing companies and products has befuddled Walmart and the Consortium, and has engendered resistance and pushback by some leading suppliers, even a few of the roughly 50 members that have joined the Consortium. Simply put, the reality isn’t living up to the launch-day hype.
The Fate of the Fifteen Questions
Let’s start with assessing companies. The 15 questions that comprise Walmart’s Supplier Sustainability Assessment Tool were superficial at best, voluntary in nature, and the answers are largely yes-or-no, self-reported, and unverified. (“Responses to this questionnaire will be accepted in good faith, relying on the integrity of the supplier,” the company stated in an FAQ [download - PDF]. “Violation of that good faith will be considered very serious by Walmart.”)



















































































































I may yet become a shopper of
I may yet become a shopper of walmart. That would be a big change in my shopping habits. Walmart has begun by asking the questions. It has been agreed by all that the path is long and complicated. I thank Joel for his follow up questions and concerns about the progress. And I thank Erik and Kevin (walmart folks I presume) for their updates and continued diligence. I'd be sure those smart folks at walmart can re-evaluate their goals into shorter term, more manageable ones. Good news of progress, any progress, is very much appreciated.
Walmart
Rome wasn't built in a day.
I think it's fair to say that if Walmart is willing to invest the time money and effort into something, it is serious.
It is a wide encompassing field. It is a new field. It has to start somehwhere and evolve. The objectives seem to be widely shared and steps will be taken, information shared and new systems and technologies will be developed and implimented. It is doing to be a very dynamic process where everyone wins in the end.
All in all it's very positive.
I don't know how useful it is to be overly optimistic or unduly pesimistic.
Expectation drives Investment which leads to Innovation
Thanks Joel, for a very insightful analysis. I couldn't help but think that one year ago WalMart was beginning to set an expectation about the future of retail that was going to change global business. If WalMart had stuck to its higher and hyped expectations (i.e. supporting a sustainability index and dropping suppliers who didn't meet the grade), we might have seen suppliers making investments that would yield innovative and more sustainable ways of doing business.
I am still optimistic that we are only seeing baby steps to be followed by more substantial action. Clearly a push from government (where expectations have the force of law) wouldn't hurt.
Andrew McKeon, carbonRational, www.BusinessClimate2010.com
Well and Good - But...
All very nice, and there's never any harm in some more consumer research, but without quantifying, reporting and then using an outcome it all looks a little "easy". If LCA is the way forward, and there's no good reason why not, then the answer currently lies with carbon measurement; whether we like it or not. When it's all counted up, and retailers make purchasing decisions based on it, "Sustainability" is always the winner.
Incidentally so are those with least as work moves to lower carbon economies as the cost of the oil subsidy goes up.
Green Data vs Sustainability
Kudos to Walmart and the Consortium for raising awareness of supply chains' negative impact on the environment. While the greatest tangible result has likely been to Walmart's bottom line, the value of their Public Service Announcement cannot be underestimated. Thank you!
Thus far, the effort appears to be more of a data gathering exercise than actionable items to better the world. Identifying and DROPPING suppliers that don't comply to the criteria would have a far greater influence on compliance than hand holding and "encouraging". As Auden Schendler wrote in his Harvard Business Review blog, "Too Many Visionaries, Too Few Grunts" ( http://lnkd.in/U3ef9k ), it's time to take action!
I look forward to the day when Walmart, and others, move beyond simply collecting "green data" and take a true stand on Sustainability, addressing Fair Trade, Cultural Preservation, and Livable Wages - that could be world changing!
Value added and understated
Thank you, Joel, for the follow-up on Walmart's unveiling of a Sustainability Index. I agree with the you that Walmart's specific goals have not been met, as a practice, and you show us the real purpose of and impact of what Walmart has done:
"This is both more and less than meets the eye. Walmart continues to deserve credit for its commitment and audacious goals, and for the ripples it has created. And, to be fair, no one expected miracles in just twelve months."
I think the real beauty of the article is that you reflect for us a trap in understanding (and highlight the primary challenge for sustainability) that is reflected in the structures of the business world; the focus on the short term, due to pressures of competition and financial structures, and that we need to see immediate action and quick changes. You did highlight the time factor, and we should fully recognize the immense impact that the Walmart's actions have had on the world. You describe the benefits of moving the conversation forward, yet those benefits, after only one year, are historical, and underplayed in your article. And they will remain historical because people are not giving up on the sustainability change idea. It will continue to move forward and impact businesses, governments, everything. The importance of improving the quality and quantity of the dialogue around sustainable organizational design cannot be be understated. And this much progress in one year is remarkable.
This reminds me that we need to notice our paradigms of measurements in business and of change in organizations. It is one lens, falling within the paradigm of short term business thinking. It reminds us of how important it is to choose the right indicators and measurements in designing and changing a system. Choose short-term thinking paradigms, and that will determine how you make decisions and run the business. Choose long term thinking paradigms and that changes decision making. Hold the paradox and choose both, and that gives a very different third way. This reminds me also, of how important it is that we refer to Critical Thinking guidance http://www.criticalthinking.org/CTmodel/CTModel1.cfm to make us more clear about our thinking as we progress the issue of sustainability in our time.
Cheers, Eric
It's a marathon, not a sprint
I agree, Eric. There is a long road ahead. The green marketplace, despite 20 years of fits and starts, remains in its infancy. It's taken us decades to create this society of (over)consumption, and getting things realigned will require a complex ecosystem of consumers, companies, investors, activists, academics, and maybe government.
It's important to note that the "hype" I refer to in this article wasn't necessarily generated by Walmart or the Consortium, but by dozens of bloggers, journalists, and others that created their own narratives of what Walmart is up to. For its part, Walmart didn't do much to tamp down this speculation and irrational exuberance. So, my intention was to reconnect everyone back to reality.
Real progress requires metrics and transparency
Until and unless something concrete, in the form of numbers/data is made available for consumers (of Walmart or anywhere else) to compare their choices in absolute terms for the relative sustainability, all of this will continue to reside in the realm of greenwash/vaporware/hubris to those of us on the outside of the "consortium".
The "consortium" will have to demonstrate it is out for more than its members own best interests, if we are to have true progress toward sustainability.
Is there a Consumer Advocate for Sustainability included in the mix? That seems like a big gap, along with the above mentioned lack of clarity on what social sustainability criteria (living wage? Safe work conditions? profit sharing? etc.) will be utilized by Walmart with its suppliers.
Sustainability Consortium
Thanks Joel for revisiting us on our Birthday! We definitely agree with you that the efforts are complex. As you've mentioned, we've spent our first year designing the overall system for business-to-retail reporting, and have also worked hard to recruit and engage many other retailers, so that the system truly does have universality.
Regarding an Index, I can say without hesitation that many if not most of our Members, and the researchers and staff at the Consortium, still see "consumer facing communication" as a key goal, and many would like to see prototypes as soon as possible. Our solution of separating our standards from an Index recognizes the boundaries between science and business--while our standards will be based on science, and the creation and operation of an Index requires decisions beyond science. Hence our standards for business-to-retail reporting will be able to be used by third parties wishing to create market-oriented programs. We are sure there will be more and more clarity on this as we get closer to releasing our first set of standards next spring.
In the meantime, in order to support eventual consumer-facing solutions, we have initiated a robust Consumer Science research initiative that is exploring fundamental questions about the effectiveness of ecolabeling and consumer communication.
Kevin Dooley, Senior Advisor, Sustainability Consortium
That's good news, Kevin
Thanks, Kevin. That's good news about the "consumer-facing communication." I know that the world is hoping that Walmart and the other retailers that join the Consortium will come together to find a unified means of measuring and labeling products. That is sorely needed to bring green shopping to the masses.
Best of luck on all the work that lies ahead.
dropping suppliers
I took a class on Sustainability Metrics with many guest speakers from industry. I often asked if they dropped suppliers due to their ratings. The answer was uniformly - No. The response is that they work with the supplier to bring up the rating. I think only one CEO said they had dropped one supplier who would not work with them. I'm sure that this would be Walmart's response. They don't want this to be punitive - they want to keep their suppliers and improve the practices of these vendors. To see some numbers, some metrics on all of this would be very interesting.
Joel - Great catch on the
Joel - Great catch on the social aspect of sustainability. No doubt, Walmart's efforts are bringing this discussion to the mainstream, but addressing "sustainability" without including the social impacts of labour conditions and their products is nothing more than eco-efficiencies with lipstick on. I am cheering Walmart on and hope they find a way to use this positive momentum they've created. Let's hope they take a structured, whole systems view of their business and its impacts, and define what sustainability is, so that they can begin to move forward in a strategic fashion towards a truly sustainable future.