At business schools like Berkeley-Haas that specialize in corporate sustainability, Walmart has become the unlikely gold standard for its groundbreaking, ambitious initiatives. So when I had the opportunity to attend a summit on the rollout of the company’s much-hyped sustainability index at the Walmart home office in October as part of a fellowship offered by the Center for Responsible Business and Walmart, I was more excited than I ever imagined I would be about a trip to Arkansas.
The purpose of the meeting was to introduce the supplier sustainability scorecards that Walmart had developed as part of a three-year effort with The Sustainability Consortium to a subset of Walmart and Sam’s Club merchants. These merchants would be responsible for engaging their suppliers to not only fill out the scorecards but also identify opportunities to improve their sustainability performance. Walmart announced in September that sustainability would now play a role in the merchants' annual performance reviews, which help determine pay raises and potential for future promotion, signifying that the company takes this initiative seriously.
The stakes are high for the success of this initiative. As the largest retailer in the world, Walmart has the potential to fundamentally change how companies across the globe factor environmental considerations into the way they do business. If Walmart asks suppliers to improve the sustainability of their operations, the impacts will ripple across a range of industries, from groceries to apparel to electronics. Competing retailers could also be pressured to follow suit, expanding this effect even wider.
But the challenges around educating and motivating buyers to invest time and energy into developing a sustainability strategy for their suppliers are immense. Walmart’s buyers are high-powered, busy professionals whose performance is measured on a daily, monthly and quarterly basis, so the idea of taking the time to develop a plan that would not yield results for more than a year was hard for them to digest. Additionally, sustainability is a whole new language to buyers. This is not something they are trained in. Without any guidance, it is very difficult for them to know where to start, how to identify which issues are the most important and what the environmental tradeoffs are of investing in one project over another.
Finally, greening a supply chain as massive and complex as Walmart’s is no easy task, even for experts. The current lack of transparency or processes for collecting and reporting accurate information all the way up and down the supply chain is a problem that cannot be solved without serious structural changes and education efforts.
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