Inside Walmart's Sustainability Consortium
When Walmart made its much-ballyhooed announcement last month that it would launch a Sustainability Index, one key part of that announcement got short shrift. The retail giant also announced the creation of a Sustainability Consortium, a group of academics and others with the ambitious agenda of "establishing the scientific standards to measure the sustainability of consumer products."
With Walmart and the Index at least temporarily out of the spotlight, I decided to look into the Consortium to understand what it was all about. My interest in doing so was piqued by inquiries from sustainability executives at several large companies who wanted my take on the Consortium and whether they should join.
An initial look at the Consortium raised a number of questions. For starters, I was intrigued that major consumer product companies were paying to join a consortium whose principal purpose was to set the standards by which these companies' products would be judged. Was this some kind of fox-and-henhouse charade? Moreover, membership isn't cheap. The Consortium is asking "founding members" to pay between $50,000 and $250,000 a year for three years, with lower membership levels at $25,000 for smaller firms with fewer than 500 employees and $10,000 for government and nongovernmental organizations -- each with a three-year commitment. Each membership category offers its own combination of benefits, all contained the group's a membership application (Download - PDF).
So, what's really going on here? What do companies get for their money?
To find out, I interviewed the Consortium's co-directors, Dr. Jay S. Golden, from School of Sustainability at Arizona State University, and Dr. Jon Johnson, from the Sam M. Walton College of Business at the University of Arkansas. Their two schools are co-conveners of the Consortium.
Johnson and Golden started with a little history. The Consortium idea emerged about a year ago as Walmart gathered groups of experts to help further its own sustainability goals. "The idea of quantifying sustainability of products arose," explained Golden. "We were thinking about what kind of body could make that come to life. It became very clear to us that no one researcher, no one institution, could do that because you're dealing with geographies around the world and with various sciences -- physical, life, and engineering -- and that required a multidisciplinary approach. So we outlined a proposal to Walmart to develop a consortium of academic researchers from institutions to think through the process and try to bring it to life based on the best available sound science and engineering principles available."
It's important to note that the 15-question supplier assessment that Walmart recently introduced to evaluate companies is not part of the Consortium's work. Rather, the Consortium's mandate is to focus on how to evaluate products, which Walmart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores. (The company has suggested the product ratings might hit store shelves in about five years, but it's become clear to me that no one really has a firm grip on a reliable timeline.) Walmart has stated that it is hoping other retailers will adopt the standards, and that the eventual standards be "owned" independently, at an appropriate nonprofit, university, or other entity.
To create the product standards, the Consortium is relying on lifecycle modeling, a complex and heretofore costly methodology that, as I recently wrote, seems to be undergoing a renaissance. Creating the full complement of lifecycle-based standards that address the mind-boggling array of products that Walmart and other retailers carry -- apparel, baby products, electronics, groceries, jewelry, pharmaceuticals, toys, and much more -- is the Herculean task the Consortium is undertaking. Accomplishing this will require a vast number of people ... and vast sums of money.
Which is where membership comes in. Already, more than a dozen companies have ponied up, including Cargill, Clorox, Dial, Earth Friendly Products, General Mills, Henkel, Monsanto, Pepsico, Procter & Gamble, SC Johnson, Seventh Generation, TetraPak, Tyson, Unilever, Walmart, and Waste Management.
Jay Golden explained the core of the group's activities. First, there's the foundational research. "We're trying to put the right science, the right data, and the right metrics in there," and then place the data into an open-source system for all to use. "Think of it almost as Linux," he said. The group is developing a tool called Earthster, a sophisticated open platform for making lifecycle assessment easier, faster, and cheaper, in part by pooling existing databases and models, then tapping the larger community to share data, research, and results.
Another facet of the Consortium's work involves understanding consumers and how to effectively communicate to them information about the sustainability attributes of a wide range of products and sectors. "How do you bring coherence and harmonization to these different efforts?" asks Golden.
So, will Consortium members get special access to the lifecycle databases and consumer research? No, the Consortium's work will be open to all. Johnson and Golden repeatedly emphasized that the Consortium will be fully transparent about its activities. (You already can find every presentation, white paper, and meeting summary to date on the group's website.) Says Johnson: "Transparent is a word that Jay and I use probably fifty times a day these days."
What, then, does membership in the Sustainability Consortium offer?
The best case Johnson and Golden could make was that participating companies will gain a great deal of knowledge by being at the table where the hard work of developing standards is being done. "I think it is safe to say that a company that is engaged in the process and is sponsoring research that explores lifecycles that are relevant to that company -- they are probably in a better position to learn from the process," explained Johnson. "There's a lot of benefit to being in the room and being involved in the research that goes beyond the published results." As such, he explained, participating companies will be better able to put the information and systems to use, "whereas companies that are waiting on the sidelines to see what happens are going to be on their heels."
What about some of the other membership benefits being offered, such as seats on advisory councils and sector working committees, invitations to various workshops and meetings, updates via newsletters and publications? Will nonmembers be deprived of such things?
Not really. Everything will be public, though Golden and Johnson suggested that paying members will get guaranteed slots or preferential seating at meetings, while nonmembers will have to queue up on a space-available basis.
Having delved into all this, I'm still not entirely sure I understand the real value proposition of membership in the Sustainability Consortium. The part about the learnings one might derive from being at the table is certainly valid, and that could well be worth the membership fees for some companies. Beyond that, membership seems to be primarily about supporting the Consortium's important work -- in a word: philanthropy.
And that brings us back to the question of propriety. While I don't doubt for a second the sincerity or integrity of Johnson, Golden, and their colleagues, and their stated intention of avoiding conflicts and pursuing transparency, I'm concerned about the optics of it all: the perception that major manufacturers are helping to create the methodologies or otherwise set the rules of rating products, presumably to their advantage. And I worry that this perception could undermine the reputation of the work the group will undertake.
The one thing I learned for certain about the Consortium -- and, for that matter, about all of the sustainability rating initiatives Walmart has put into play -- is that they are as amorphous as they are ambitious. That is, their design and execution, not to mention their timetables, remain very fluid. One hopes that as these initiatives take shape and gain traction, their leaders will take exceptional care to ensure that their work will be unassailable. Anything less, I'm afraid, will be seen by the public as unacceptable, or worse.