Two Steps Forward

Inside Walmart's 2025 sustainability goals

Today, Walmart is taking the next step in its 11-year sustainability journey, as CEO Doug McMillon announces a series of 2025 goals. For the first time, the company is putting some hard targets and timetables on what had previously been largely aspirational goals. It's a big step forward.

Indeed, the company is promising nothing less than "a new era of trust and transparency," as laid out by McMillon at the Net Impact conference in Philadelphia.

It's been a long time coming. In 2005, then-CEO Lee Scott set three aspirational sustainability goals for Walmart: to create zero waste, operate with 100 percent renewable energy and sell products "that sustain resources and the environment." Since then, the company has been working to live up those ambitious aspirations, boasting a number of successes along the way.

Now, more than a decade later, the company decided it was time to up its game. Specifically, the world's largest retailer is committing to, by 2025:

  • achieve zero waste to landfill in Canada, Japan, U.K and the U.S.
  • be powered by 50 percent renewable energy sources under a plan designed to achieve science-based targets
  • double sales of locally grown produce
  • expand sustainable sourcing to cover 20 key commodities, including bananas, grapes, coffee and tea
  • use 100 percent recyclable packaging for all private-label brands

The company says it is the first retailer with an emissions-reduction plan approved by the Science Based Targets Initiative, a partnership between CDP, U.N. Global Compact, WRI and WWF, which helps companies determine how much they must cut emissions to prevent the worst impacts of climate change. Almost 200 companies have committed to science-based targets for their own operations, according to Eric Olson of Business for Social Responsibility.

Under the plan, Walmart will use a combination of energy-efficiency measures, along with with a commitment to source half of the company’s energy needs from renewable sources, resulting in an 18 percent emissions reduction in its own operations by 2025. The company says it also will work with suppliers to reduce their emissions by a gigaton by 2030.

Not all of the goals are specific. For example, among the new 2025 commitments is to source "more commodities produced with zero net deforestation, including Brazilian soy and private label pulp, paper and palm oil." The company isn’t specifying quantities for such sustainably sourced commodities.

Roiling and rethinking retail

The new commitments come at a time when Walmart is being buffeted by changes, as online and brick-and-mortar stores blend into what retailers call an "omnichannel strategy," where shopping moves seamlessly between the physical and virtual worlds. The roiling and rethinking of retail gave the company the opportunity to revisit and revamp its environmental and labor practices.

"As we've been articulating our business strategy over the last year, we've also taken a fresh look at our social and environmental goals," Kathleen McLaughlin, the company’s chief sustainability officer, told me earlier this week. "We said. ‘Let's take stock of the last 10 years. What have we learned, and what's really on the horizon for the next 10 years?’ So it's a natural time for us to do that." She called the new commitments "the broadening and deepening of our agenda."

She continued: "We really think at the heart of it, it's about transparency and trust, not only in sustainability — in terms of what are these products, where did they come from, how did they get made — but more broadly, economic opportunity and the role we can play in communities."

Job of first resort?

Toward that end, along with the company’s new environmental goals are several other commitments related to its workforce. For example, within the next decade the company aims to:

  • put "millions of people" through training to equip them with portable skills to get ahead, whether they stay with the company or move on to another.
  • foster predictability and stability through paid time-off and predictable schedules.
  • ensure men and women are paid equally for the same work.

Above all, the company says, it wants to be the job of first, not last, resort.

"Walmart will further its efforts to afford a good experience for the thousands of people who come to the retailer for their first job," according to a company statement released today. "Associates will be provided with workplace mobility — a good start, new skills and a clear path to grow and succeed — whether or not they remain with the company."

To further these efforts, Walmart recently signed on to the White House First Jobs Compact, a nationwide effort to help connect out-of-school, out-of-work youth ages 16 to 24 to their first jobs.

None of this is likely to transform overnight. Building such programs for the company’s more than 2 million employees — about 1.4 million in the U.S. alone — will be a daunting challenge.

But such efforts may be a necessity for the company, given Walmart’s reputation for low wages and high turnover. "We've learned we could probably raise our game in terms of how we're taking care of our own people, and how people perceive us," said McLaughlin.

"As we've gotten into all of our supply-chain work, we've really come to appreciate the interplay between social issues and environmental issues and economic issues. So whether we're talking about seafood or apparel, we're looking end-to-end at these supply chains and trying to rewire the way they work to make them more sustainable for people as well as the planet."

A clearer view

Walmart’s newfound commitment to transparency likely will surprise some of its biggest critics, who long have viewed the behemoth from Bentonville as a giant, impenetrable beast. But, according to Dan Bartlett, we’ll be seeing more efforts by Walmart to give its stakeholders a clearer view of the company’s intentions, and how those intentions align with the company’s objectives for both stockholders and stakeholders.

"This is not some path we're going down exclusive from our business, just to address a reputational issue," explained Bartlett, Walmart’s executive vice president of corporate affairs. "It's interesting that the inflection point on our sustainability goals of 10 years came at a time when our company was going through an inflection point on how we're going to serve customers for the next 50 years. And we didn't look at these things separately."

The notion of building trust is one that CEO McMillon has been talking about for the past couple years with investors and analysts, and the company has gradually been opening up with labor and environmental groups, among others. Said Bartlett: "We need to aspire to be one of the most trusted retailers in the world. And to do that, we can't just give lip service to these issues."

Added McLaughlin: "There's just too much interplay between social issues, environmental issues and economic issues. There may be some gaps in the short term, but in the long term, they all converge. So it's actually in the interest of business to address these things."

I asked McLaughlin and Bartlett how much of a stretch they considered these new goals to be — relatively easily attainable, or moonshot initiatives that they don’t yet know how they’ll reach?

"Because we're Walmart, when we say we're going to do something, you can bet we've thought through some details and we've got some plans in place," responded McLaughlin. "We might not be able to see exactly how we're going to get somewhere, but we've done the work that says, 'This is credible for us to start down this path, and we have thought through some specifics around it.'"

Added Bartlett: "When you think about big, systemic issues, like worker dignity, we can't sit here and tell you today how each element of that very vexing issue is going to get solved. But we know when we lean into it, it usually results in a pretty good outcome."

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