How Wal-Mart Measures and Manages Its Social and Environmental Impact

How Wal-Mart Measures and Manages Its Social and Environmental Impact

Editor's Note: GreenBiz.com guest columnist Amie Vaccaro is an associate at Social Venture Technology Group. In this post, she writes about a recent workshop on social impact assessment led by SVT Group Founding Partner Sara Olsen.

If you are trying to do good in the world (as opposed to just making money), how do you know if you're having an impact? How do you measure and manage that good?

The recent Global Social Venture Competition culminated with a full-day symposium on Social Entrepreneurship. Sara Olsen, founding partner of SVT Group and a leading practitioner of impact management, led a workshop on social impact assessment at the symposium. Candace Taylor, director of Corporate Strategy and Sustainability at Wal-Mart and co-founder of Urban Oasis Development discussed her work as a case study example.

Impact measurement is a new and evolving discipline. Practitioners, like Olsen, are developing environmental and social accounting methods. Historically we have focused on financial value, which misses the broader picture of people and planet.

One emerging tool is social return on investment (SROI) analysis. SROI is an attempt to understand and manage the non-financial value created by an organization relative to the investment required. SROI is comprehensive, and measures the net impact of an organization, so that both positive and negative impacts are taken into account. While some people look for a monetary measure of SROI (dollars per impact) only, SROI includes quantitative, qualitative and narrative information about impact as well.

Taylor started her career in sustainability with partner Blaise Rastello, winning the Global Social Venture Competition for Urban Oasis, which is a real estate development organization that turns brownfields into green buildings for affordable housing and community facilities. She quantified the impact of her work there by looking at the health benefits to the communities affected -- for example, by tracking the projected decrease in asthma rates that would result when residents moved to UO's energy efficient buildings developed using sustainable building practices.

Now at Wal-Mart, Taylor is in charge of implementing their corporate sustainability strategy. According to Taylor, Wal-Mart serves 176 million customers per week (online and in-store).

Olsen describes the impact management process in three steps: measure, manage and communicate. And it's not easy, especially for a behemoth like Wal-Mart. Taylor admitted that it's taken three years just to measure the baseline quantity of waste leaving all Wal-Mart stores in the United States.

Wal-Mart is working to manage its impact guided by three high-level, aspirational sustainability goals, which are as follows:

1)    To achieve 100 percent renewable energy supply
2)    To create zero waste
3)    To sell products that sustain our resources and environment

Wal-Mart is also working to create practical goals within each category. Three goals within the third bucket of sustainable products include:
1)    Drive defective returns virtually out of existence
2)    Reduce packaging by 5 percent globally
3)    Make energy intensive products 25 percent more efficient by 2011

Sometimes just asking the right questions of the right people is enough to get the ball rolling.

"We just asked Wal-Mart's 57,000 suppliers about their packaging practices and they are already making improvements," Taylor said.
Olsen has worked closely with a broad array of nonprofit, foundation, for-profit and investor clients to develop impact management systems, and recommends the following key design criteria:
• The metrics you track should yield information that is useful to managers and staff
• Data collection should be feasible and minimize staff burden -- where possible, performance relative to the mission should be assessed using data staff already track in the course of regular operations; and
• Data obtained should be credible by the standards of those key stakeholders who need to use the information to make decisions

She recommends embarking on the process of understanding your non-financial value by asking the following questions:
• What human problem are you solving?
• Who are the key stakeholders?
• What is your addressable impact? (i.e . What portion of the problem do you aim to solve?)
What value/impacts are you creating? (Positive and negative)
• What is the root source of that value? How do you measure its health and embed that into regular operations?

"Ultimately," said Olsen, "the highest-impact sentence in the world is, 'What is your impact?' "