Wal-Mart to Expand Environmental Efforts to Chinese Suppliers

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OAKLAND, Calif. -- Wal-Mart has announced another step in its efforts to make its supply chain more sustainable as a new report comes out explaining the benefits, both environmental and other, of a greener supply chain.

The retailer is planning a meeting with about 1,000 Chinese suppliers later this year to set environmental goals similar to or in line with company-wide goals or initiatives it has started in the United States.

"I'm very confident that we are going to see in China more progress than any of us has imagined," Wal-Mart CEO Lee Scott told the Financial Times. "Part of it is . . . because the Chinese government has just now really got on the sustainability process as far as understanding what it is going to mean for them in the long term. And they're being really aggressive."

About 30 percent of all foreign purchases in China are made by Wal-Mart, which is pushing its suppliers to reduce their impact on the environment through using less resources and emitting less pollution and greenhouse gases. The company plans to reduce the amount of packaging used by products by 5 percent by 2013 and created a packaging scorecard to help suppliers see where they can make improvements. At a recent talk at University of California-Berkeley, Wal-Mart's Senior Vice President for Sustainability Matt Kistler said its supply chain makes up 92 percent of its environmental footprint, and the company has direct control over only 8 percent of its footprint.

Aside from the environmental benefits of less resources being used, less waste being made and fewer emissions being produced, a greener supply chain can affect the bottom line for businesses and consumers.

A report by Diamond Management & Technology Consultants, Inc. makes the case that adding green practices throughout a supply chain can reduce costs, make it more efficient and increase shareholder value. Nestle, for example, has saved $510 million worldwide between 1991 and 2006 by reducing packaging.

"The Case for a 'Green' Supply Chain: Turning Mandate into Opportunity" makes some recommendations on how to approach making a supply chain more earth-friendly. A company must start with an overall, long-term strategy and regularly analyze and prioritize different efforts and programs.

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