When It’s Wal-Mart, How Much is Good Enough?

When It’s Wal-Mart, How Much is Good Enough?

That's a hard question to answer of the world's biggest retailer. Frankly there's a lot of good and some not good enough. Today, Wal-Mart released its 2009 sustainability report. Since Environmental Defense Fund is working with the firm on its sustainability initiative, now is a good time for us to share our perspective on Wal-Mart's progress and the new report.

We'd like to acknowledge some positive things and highlight areas where we feel the company could do better.

First, let's talk about the basics for a sustainability program and report: Meaningful and ambitious goals along with interim milestones and clear timelines are essential. How can we tell whether a company is on track? Pretty simple -- The goals are associated with clear metrics and the data supporting them is transparent. Wal-Mart's new report represents a big improvement over its predecessor (PDF) in straightforwardly matching goals with progress. Metrics are explicitly described and Wal-Mart is candid about where goals have changed, progress has been slow or measurement unclear. We applaud this.

The Achilles heel of this report, however, is data. In a company as big and complex as Wal-Mart, transparency is key to ensuring the credibility of its claims and the impact of its leadership. The data behind claims of progress should be made available. For example, the report states that water use declined by 35 percent at Wal-Mart China. Is that aggregate water use for all stores in China? Average per store? Over what time period? What was the baseline and what is current usage? This information would allow the reader to understand the context for the claim and to more readily benchmark Wal-Mart's performance.

Now let's talk about the substance of Wal-Mart's sustainability initiative. Wal-Mart has some truly ambitious aspirational goals: To be supplied by 100 percent renewable energy, to create zero waste and to sell sustainable products. The company has also jumped headlong into sustainability across the company, perhaps more deeply than any other company we've worked with -- working on fuel-efficient trucks, sustainable seafood, organic clothes and food, building efficiency and renewable energy, among others. Wal-Mart has also been masterful at harvesting business benefits as they go, reinforcing the importance of the sustainability program among its managers and board.

But what do we know about how Wal-Mart's actions are measuring up against its aspirations? Well, not surprisingly, it's a mixed bag.

Some really impressive efforts and leadership …

Take renewable energy. According to the figures presented in this report, Wal-Mart anticipates that during 2009 it will source about 1 percent of its energy in the U.S. from renewables, so there's a long way to go to reach the 100 percent renewable goal. Yet the company is a major solar installer in the United States, recently announced plans to nearly double solar capacity in California and is working with EDF to bring next generation thin film solar technologies into the marketplace. These facts tell you the magnitude of the challenge facing both Wal-Mart and the country on renewable energy.

On waste, the company reports diverting 57 percent of the waste generated at U.S. stores and Sam's Club facilities from landfills. Laudable. At the same time, it reports that stores in Japan have reached 75 percent waste recycling and a model store in the U.K. reports that 95 percent of its waste is diverted from landfills. What will it take to get to these levels across the globe?

And some missed opportunities …

Wal-Mart is lacking an ambitious goal on climate change -- the most pressing environmental issue of our generation and one which must be a component of any comprehensive sustainability program. Yes, the company has set goals for reducing greenhouse gas emissions at existing stores and increasing energy efficiency in its truck fleet. The problem is that, as Wal-Mart grows, so does overall greenhouse gas emissions. In fact, the report includes graphs showing that, while CO2 per unit of sales has declined over three years, total corporate CO2 emissions have increased:

Click here for a full-sized version of the chart. Source: Wal-Mart 2009 Global Sustainability Report.Wal-Mart 2009 Global Sustainability Report

In other words, the company's contribution to the problem of climate change continues to increase. Yet we know that, with gutsy leadership, companies of Wal-Mart's size and scope can find ways to grow their business while shrinking their footprint. GE, which has grown 13 percent annually on average since 2003, recently reported that it had exceeded its goal by reducing greenhouse gas emissions 13 percent below 2005 levels.

We'd like to see Wal-Mart make a corporate commitment to reduce total greenhouse gas emissions, perhaps by using its strongest leverage – its supply chain. With a unique opportunity to help its suppliers decrease their carbon output, Wal-Mart can reduce total emissions associated with its business even while it expands.

There's much to be positive about in Wal-Mart's sustainability program, but there's also a long, long way to go. In future entries on the EDF Innovation Exchange blog blogs.edf.org/innovation, we'll drill down into specific issue areas to provide commentary on progress made and to help impart a sense of urgency, imperative and inspiration for that yet to come.

Gwen Ruta, vice president for Corporate Partnerships at Environmental Defense Fund, spearheads its work with leading multinational companies to develop innovative, business-based solutions to environmental challenges and to drive change through the corporate value chain.