Walmart and the Sustainability Index: One Year Later

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.”)