How much of a difference can Walmart really make?
How much of a difference can Walmart really make?
[Editor's note: In this analysis, GreenBiz Senior Editor Marc Gunther examines Walmart's latest sustainability report and asks: Is it good enough? For more on the just-published report and results, see Eric Louie's post, "Walmart creeps forward on its sustainability goals."]
Walmart (NYSE: WMT), the world’s biggest retailer, is “becoming a more sustainable, responsible company and building meaningful, long-term change.”
So says Mike Duke, the company’s CEO, in the introduction to Walmart’s 2012 global responsibility report, which was released today. [By the time you read this, it should be available for download here.]
Assuming he’s right -- and I think he is -- that’s good news. But is it good enough?
The 126-page report is jam-packed with data and anecdotal evidence. It lists 10 ways that Walmart made a difference last year. Among other things, the company:
Reduced waste by 80 percent
Expanded locally grown produce (up by 97 percent)
Pledged to source $20 billion from women-owned businesses in the U.S.
Saved customers $1 billion on fresh fruits and vegetables
Announced a “Great for you” icon that will help shoppers identify healthier food items.
These are meaningful accomplishments and commitments. Indeed, it’s hard for a fair-minded person not to be impressed by the scale, the scope and the range of Walmart’s activities just in the environmental arena -- installing LED lights in stores, testing fuel cells and offsite wind projects to generate cleaner energy, buying more sustainable seafood, cotton and palm oil.
Read the report, and I think you’ll agree that Walmart is “greener” and more responsible than it used to be (that’s Duke’s claim), that the company does a lot of good (by delivering value to its customers and providing employment to 1.4 million people in the U.S. alone) and that it is a powerful driver of efficiency throughout the global economy (that’s at the core of Walmart’s business model, and its peculiar genius as a company).
As I read the report, I was reminded of that even Walmart -- which is arguably the world’s most powerful company -- can only go so far when it comes to protecting the planet.
Here are a couple of examples, both related to climate change, beginning with these charts:
The top chart shows that Walmart’s greenhouse gas emissions per million dollars of sales are declining. That’s a measure of efficiency, and the performance is stellar -- it’s the result of operating more efficient buildings and a cleaner fleet. But in absolute terms, which is what matters to the earth, and to anyone who cares about climate change, Walmart’s CO2 emissions are rising, as the second chart shows. Remember, scientists estimate that we need to reduce emissions dramatically or face potentially catastrophic climate change. Bottom line: Despite all of its efforts, Walmart’s making the climate crisis worse.
That’s because Walmart can’t stop people from buying stuff, including lots of stuff they probably don’t need. To the contrary, as a public company accountable to its shareholders, Walmart must try to sell as much stuff as profitably as it can to as many people as possible, everywhere in the world. Doing so efficiently is better than doing so wastefully, of course, and in theory Walmart can generate net benefits for the planet by taking market share away from inefficient competitors, assuming consumption is flat. But you can be sure that the growth of Walmart’s sales — from $315 billion in 2005, when it launched its sustainability drive, to about $444 billion in FY2012 — is largely driven by the fact that people are consuming more. In today’s world, that means generating more climate pollution.
Having said that, we could all consume as much as we wanted, sustainably, if we got all of our energy from renewable sources and generated zero waste. Not coincidentally, those were goals that Lee Scott, the architect (maybe even visionary) behind Walmart’s sustainability efforts, laid out in 2005. On waste, Walmart’s doing very well, largely because eliminating waste makes business sense. (Scott liked to say that you pay twice for waste, once when you buy it in the form of packaging or whatever, and once when you pay to have it thrown away.) As the new report explains:
In 2011, Walmart U.S. prevented 80.9 percent of the waste generated by its stores, clubs and distribution centers nationwide from going to the landfill. This has the potential to prevent more than 11.8 million metric tons of CO2 emissions annually, the equivalent of taking more than 2 million cars off the road.
The zero landfill waste program returned more than $231 million to the business last year through a combination of increased recycling revenue and decreased expenses.
But progress towards the renewable energy goal has been much slower. Duke writes:
As of 2010, Walmart-driven renewable projects globally provide 1.1 billion kilowatt-hours of our buildings’ electricity needs, or about 4 percent annually. We purchase another 18 percent from the grid, for a total of 22 percent renewable electricity.
The reason Walmart hasn’t bought more solar or wind power or fuel cells is that renewable energy, even with government subsidies, costs more than fossil fuels. Walmart simply can’t afford to pay more than its rivals do for energy and still deliver those everyday low prices to its customers. Walmart isn’t Whole Foods or Starbucks; its margins are thin.
So what can Walmart do to become a better friend of the earth? The first and most obvious is to speak out more strongly about the need for governments to put a price on carbon emissions. (If that’s in the report, I missed it.) It could stop making campaign contributions to politicians who don’t believe that climate change is real, or don’t think we need to do anything about it.
Second, and this is trickier, Walmart could do more to try to change consumer behavior. It sells lots of efficient light bulbs and compact laundry detergent. What if it tried to sell more durable clothes and shoes? Or less meat? Or fewer crappy toys? It’s moving tentatively in these directions, by promoting healthier foods in its stores and working on a Sustainability Index to measure the impact of thousands of products. But these efforts face “challenges,” as the company likes to say.
Have you noticed, by the way, that no company has problems any more? They have “challenges.” (Kids don’t have problems, either. They have “issues.”) And maybe that’s part of the reason why I can’t feel all that cheery about Walmart’s 2012 Global Responsibility Report. Yes, Walmart is doing as much as any big retailer or consumer goods company to limit its environmental footprint, and, yes, the company deserves credit for being a leader.
But the bland recitation of accomplishments and challenges, with little passion or sense of urgency, is a reminder that we can’t rely on Walmart, or any other company or group of companies, to protect the planet from global warming. For that, we need deep changes in our politics and culture.
And that’s not a challenge, folks. That’s a problem.