Walmart wants to know the true cost of its products

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This series of articles will feature the perspectives, experiences and objectives of individuals working for member companies of the World Business Council for Sustainable Development (WBCSD). These people carefully and successfully have navigated the interface of business and sustainability: What are the leadership skills and qualities that support this work? What motivates the people doing it? And how do they walk the potentially tenuous line between hardline business decision-making and sustainability goals? The series will explore these and other questions.

This interview has been edited for clarity and length.

Katherine Neebe is a director of sustainability at Walmart, leading on the retailer's relationships with external partners, subject matter experts, NGOs and other members of civil society.

She has worked at the intersection of business and the environment for most of her career, marketing early Energy Star home appliances to U.S. consumers and managing a $97 million collaboration at the World Wildlife Foundation (WWF) that protected fresh water across 47 countries. Katherine brings a passion for sustainability and business acumen to her role, creatively identifying the trends, solutions and customer tendencies where business and sustainability converge.

Here are some highlights of a conversation Katherine and I had last month.

Emily Grady: What inspires your work in sustainability?

Katherine Neebe: When I got my start in sustainability, we were trying to figure out how to get every day Americans to buy energy efficient products. The fascinating thing I learned in that role was that everyone wanted to get to the same destination, but everyone had very different motivations for getting there.

For example, for the retail community,  compact fluorescent lamps were a cutting-edge technology and they had a much higher margin than the traditional incandescent bulb  the retailer would only have to sell one CFL for every 50 incandescent bulbs. From a manufacturer perspective, it was all about creating a new market: more shelf space; more branding; more opportunities to engage the consumer.

From a customer standpoint, there were convenience and cost saving factors. For civil society, the motivation came from reducing energy use and helping mitigate climate change. The utilities cared about demand side management. Everyone used different language and yet everyone’s goal resulted in the same outcome. I love the opportunity of trying to figure out how to package sustainability in a way that resonates with all of the stakeholders.

The other thing I love about sustainability is how hands-on it can be. When I was at WWF, there was nothing I enjoyed more than talking to a plant manager at a Coca-Cola facility and asking, "Where do you get your water from?" When she pointed to the spigot, I took her out into the field and said, "This river basin is where you draw your water from, and this is the community that uses that water, too."

I think when you have real-world, grounding experiences that demonstrate how we all depend on natural resources, you’re more likely to conserve and pay attention to the resources you use. You’re more likely to come up with interesting solutions, too.

Grady: What changes have you seen in the sustainability profession since you started your career?

Neebe: When I started my career in 2000, a company could be thought of as sustainable simply by switching out their light bulbs from a more energy intensive lighting system to a less energy intensive one, and that was really the vanguard of sustainability. Today, interventions have grown more nuanced and complex, requiring more people and expertise to make happen.

At Walmart, we have pivoted to engage the entire value chain to drive towards system-level solutions. I think companies are beginning to appreciate the challenges and opportunities of addressing sustainability holistically, from the social and environmental angles.

Also, the private sector is finally embracing goals and commitments that are in line with what science tells us is necessary to have the type of change that we need —  this is real progress. For example, Walmart is participating in a science-based targets initiative where we’re committing our business operations and supply chain to ambitious greenhouse gas emissions reduction goals based on the latest science, supporting the Paris Agreement.

Grady: What led you to sustainability in the first place?

Neebe: I went to graduate school at the University of Virginia and one of my professors there was Ed Freeman, who, along with some others, was one of the originators of the concept of stakeholder value (as opposed to shareholder value) being a critical component for businesses to advance.

I’d worked in sustainability for a couple of years before grad school, so this line of thinking resonated with me. Shareholders are certainly important, but a business is also there to serve its customers, its workforce and its community by working with its supply chain responsibly.

From a world view standpoint, if we’re all going to move forward, we need business to help meet customers and citizens in the ways they expect — and the way that you can get there is by thinking of the universe of stakeholders that you need to serve to do that. We need healthy, functioning societies in general and certainly for businesses to survive in the long term.

At Walmart, we’ve started talking about everyday low true cost, and we’re trying to deliver this for our customers. Of course, we deliver the everyday low cost that people are expecting, but also thinking through what is the true cost of those goods and services and how do we make sure that we are solving for today as well as for tomorrow.

Grady: When you look at the business and sustainability nexus today, what do you think is on the horizon?

Neebe: Over the past few years, we have seen a significant amount of integration of social and environmental issues. I think bringing together multiple challenges so we can solve for several at once will be fundamentally transformative.

For example, we are seeing things such as animal welfare enter the discussion much more robustly than before. Similarly, getting chemicals of concern out of products is a newer dimension of the sustainability discussion. I think we’re seeing an expansion of what is included in the definition of sustainability. I think it will continue to grow.

Over the next five or 10 years, we’re going to have a lot more data and insight into what’s happening in our supply chains. Transparency is becoming much more feasible at scale, zooming all the way down to, for example, the farm where things are produced. I think we’re also going to be able to do a better job of figuring out how and what the consumer wants.

In fact, many of these changes are underway now. Our customers increasingly care about things that impact them, their families, their communities and then more broadly their state, their country or the world at large. Transparency is and will continue to be fundamental to our relationship with our customers.

Grady: Do you think Walmart has a role to play in educating customers about these topics?

Neebe: There’s a philosophy at Walmart that the customer comes first, always. One of our strengths is understanding our customer: what they are looking for; what they want to buy; what is on their minds. We have a valuable role to play in terms of giving our customers access to information so they can make the choice that’s right for them and their family. I think providing people with information is critical. At the end of the day, the choice of what to buy is personal. Access to information and transparency can help people make more informed choices.