Walmart Digs In Deep to the Sustainability Index

"Not only do we not have it all figured out, we don't want to have it all figured out right now, that's why we're working with all of you."

So said Rand Waddoups, Walmart's senior director for sustainability, during an extensive -- and exclusive -- 90-minute conversation with our executive editor Joel Makower, in the webcast "Getting Ready for the Sustainability Index."

The webcast brought many more voices to the conversation: Hundreds of people attended, representing some of Walmart's largest suppliers, and some of the biggest and most forward-thinking companies in the world.

Everyone convened hoping to get answers about a new, sweeping program announced just over two months ago. And despite Waddoups' repeated caveat that the Index is still very much a work in progress, the webcast did serve to clarify many elements of a world-changing project.

Walmart's Rand Waddoups

First and foremost among the takeaways from today's event is that calling this "Walmart's Sustainability Index" is a misnomer; the concept of the project has first and foremost been to create an open and all-inclusive system to measure the environmental impacts of retailers' products and operations.

"We want this to turn into something that is far bigger than Walmart, far more important than any one company," Waddoups said. "We announced it to the world so we could call on the world to join the effort; you have to call on the world to join the effort to develop the effort so they have ownership of it."

Waddoups said that the end goal of the Sustainability Index -- which is likely five years from reaching its full implementation of having on-shelf products bearing sustainability scores -- is to respond to the growing demand for transparency the company is hearing from its customers.

"[The Sustainability Index is] unique and is driving value in a way that's creating customer trust, creating ways to connect with customers in a way you haven't been able to do in the past," Waddoups said. "Transparency is becoming the expectation of our customers. This is becoming the new normal for how we do business."

In the intervening five years, of course, plenty of work remains to be done. Much of that work is currently being driven by the Sustainability Consortium, a group of academics and retailers that are doing much of the development of lifecycle analysis (LCA) methods that are accurate and relatively streamlined. (You can read more about the Consortium in this article from Joel Makower.)

Walmart's 15-question Sustainability Assessment. Click for full-sized.

While the Consortium works on developing a useful LCA tool, Walmart's "top-tier" suppliers will begin answering the 15 questions on the Sustainability Assessment. Walmart suppliers can fill those questions out online at Walmart's Retail Link. Once the questions are answered online, suppliers will get instant feedback both on how their operations measure up, and how they compare to other suppliers in their category.

There are three "scores" for the Assessment: Suppliers will be rated either "above target," "on target" or "below target." And the Retail Link results page will also offer tips on how a company can improve their performance.

Explaining the simple nature of the current assessment, Waddoups said, "We want to know if you've measured it; if you've measured it, that's important. If you've measured it and you're making progress, that's even better."

But, addressing a key concern of many of the webcast's attendees, Waddoups said that suppliers will not be able to see the actual rankings of their competitors; they'll simply see a distribution of scores for their relevant department -- for example, they'll see all the scores of toy department suppliers, but not individual scores.

Similarly, proprietary information will not necessarily need to be shared; Waddoups described that as one of his key concerns entering into the Sustainability Index project, and said that the Consortium has come up with "some really exciting, simple and effective means" to get the environmental-impact data they want without sharing proprietary data.

Walmart suppliers aren't even required to take part in the Sustainability Index, though Waddoups made it clear that it would be in a company's best interest to take part -- and to take it seriously.

"Walmart is looking for leadership: We want to identify who the leaders are, reward them for what they're doing, and do it in a way that's credible," he said. "If a supplier says they don't want to participate and don't want to be transparent, are we going to dump that supplier tomorrow? Absolutely not. If a supplier chooses not to participate, they will simply be considered not a leader, and their scores will reflect that in the future."

What it all comes down to is improving performance on all three levels of the triple bottom line. Waddoups stressed the financial benefits of improving environmental impacts repeatedly, while also expressing high hopes for the boost the Sustainability Index can give to green business practices.

"We wouldn't be doing this if we weren't tremendously excited about the possiblities it offers for people and the planet but also for our businesses," he said.

The 90-minute webcast will be archived for 90 days; if you have already signed up, you can go back at any time and listen and download the slides. You can also still register for the webcast by clicking on http://tinyurl.com/GreenBizWalmartWebcast.