Wal-Mart's First Sustainability Report: Just a Gesture or a Just Account?

When Wal-Mart talks, people listen, whether they agree with the message or not. Two years after Wal-Mart CEO Lee Scott announced the company's environmental goals in his "Twenty-First Century Leadership" speech, last week Wal-Mart released a report of its progress, "Sustainability Progress to date, 2007-2008." Full of figures and charts, it covers many sustainability issues from health care coverage and green products to Wal-Mart's giving in local communities to supply chain safety.

Wal-Mart set three ambitious goals as announced in Scott's speech: to be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain natural resources and the environment.

David Tovar, Wal-Mart Stores' Director of Media Relations, explained: "We look at this report as an important first step to make our sustainability efforts known. Our efforts have been extensive and we are committed to reaching our goals."

"We view our sustainability work as a journey that provides value to our consumers. We know there are challenges that remain, but we are committed to transparency and making this information available to the public as we work toward our goals," Tovar added.

The report traces Wal-Mart's commitment to sustainability, from consumer to employee, from manufacturer to storefront. The report reads: "We have found that there is no conflict between our business model of everyday low costs and everyday low prices and being a more sustainable business. To make sustainability sustainable at Wal-Mart, we've made it live inside our business. Many of our environmental sustainability efforts, for example, mean cost savings for us, our suppliers and our customers."

Wal-Mart's Tovar explained that Wal-Mart plans to keep stakeholders updated on sustainability with additions to Wal-Mart's web site. No future sustainability report is in the works currently. Wal-Mart will continue, however, to publish its annual "Report on Ethical Sourcing," which it has made available for the past three years.

Here are some of the numbers the report supplies: In 14 worldwide markets, Wal-Mart has 7,022 stores with 1,900,000 employees. It reports $344,992,000,000 in revenues for 2006-2007. In the US, the average full-time hourly wage in 2006-2007 was $10.76. Almost nine thousand factories were audited during this period, with 40 percent of the factories receiving high-risk violations. During 2006-2007, $500 million was invested annually to help meet sustainability goals.

One area highlighted in the employee section of the report is Wal-Mart's commitment to extend health care to all its Associates (i.e., employees). Wal-Mart reports that healthcare is available to all its employees, full and part time and their children, with more than 90 percent of its workers having health care (albeit not all covered by Wal-Mart plans).

Of the employees that have Wal-Mart health care for the first time, 53 percent had no health care before, 27 percent said they couldn't afford health care coverage and 7.8 percent said that they were on Medicaid.

The report notes: "The fact remains that 9.6 percent of Associates say they do not have any coverage at all. That's too many. So perhaps one of our greatest challenges is to better understand why this 9.6 percent decline coverage and what we can do to encourage them to choose it."

The response to the Wal-Mart report has been mixed. Most groups applaud Wal-Mart for a step in the right direction and ask it to continue working toward its goals.

"As the only environmental group with an office in Bentonville, Environmental Defense knows that Wal-Mart is serious about its sustainability program," said Gwen Ruta, Director of Corporate Partnerships at Environmental Defense, a non-profit environmental rights group which helped review drafts of the report. "The company is moving in the right direction, and learning as it goes," she added.

The Big Box Collaborative, a coalition of shareholder activists, environmental, and labor right groups that works to transform large retailers, in particular Wal-Mart, was more cutting in its response to the report: "Wal-Mart continues to give anecdotes with few facts about their systemic change and impact," said Trina Tocco, Coordinator for the Big Box Collaborative.

"It is disturbing to think that even all of changes Wal-Mart purports, they still aren't able to decrease their impact overall because of their unsustainable growth model. This report covers quite a bit of info, but yet doesn't provide enough in depth detail," Tocco continued.

The Interfaith Center on Corporate Responsibility (ICCR) released a statement on the sustainability report. The ICCR has filed a shareholder resolution at Wal-Mart for the past three years requesting Wal-Mart issue a public sustainability report.

"We welcome Wal-Mart's Report as a first step. It demonstrates a commitment by the Company to both develop internal mechanisms for implementation and to be transparent with respect to its sustainability initiatives," ICCR's statement reads.

"It is clear that this first Report demonstrates progress particularly toward the environmental goals that President and CEO Lee Scott articulated two years ago. We recognize that collecting information on key indicators for environmental goals is less difficult than attending to social performance indicators, but without social indicators, the Report pales," ICCR's statement continues.

Environmental Defense offers some specific examples of how they would like Wal-Mart to provide "more transparency, context and a more systematic assessment of progress relative to environmental goals." Environmental Defense suggests Wal-Mart offer more data to help the reader verify all the information in the report.

"Because everything is happening so fast," Tovar explained, "we are going to post sustainability information as it is available. We are being as transparent as possible."

The report is a first stab at creating a sustainability report that sheds light on the largest retailer in the world. And just like Wal-Mart starting to offer florescent light bulbs, even the small changes at Wal-Mart can have a profound rippling effect through its vast supply chain and the economy. Wal-Mart now needs to continue its journey into sustainability, continuing its commitment to its consumers, shareholders and other stakeholders to create a safe supply chain and meet its environmental and social goals.

Editor's note: Bill Baue, a frequent writer for SocialFunds.com, contributed to the writing of the Wal-Mart sustainability report.