Walmart, Marks & Spencer, Nike: Harbingers of Change?

Walmart, Marks & Spencer, Nike: Harbingers of Change?

A few years ago, a book entitled Change or Die made the case that despite the exhortations of management hipsters and hyperbolic CEOs, companies seldom change the way they operate and people rarely modify their behavior. That in fact, even when a crisis demands change, the scientific evidence shows that nine out of ten times, we don't.

For many readers, it was a startling assertion. But for those who've spent years trying to persuade business to break with convention and commit to an authentically sustainable ethos, the argument that CEOs are as "resistant to change as anyone" was remarkably ho-hum.

Never mind the surging number of C-level execs who are lining up at sustainability conferences to pronounce their passion for "responsible" corporate behavior -- too many are too ready to settle for tiny tweaks to the status quo. They glorify their efforts to be a little less bad, hailing them as examples of important change. Meanwhile, business as usual continues apace.

Despite abundant evidence that melding a deeper business purpose with profit amounts to a powerful competitive weapon, many companies, perhaps even most companies, won't willingly alter their behavior. Nonetheless, they will change -- and not because they've suddenly seen the light. They'll change because massive numbers of consumers, a growing horde of competitors, farsighted partners, values-driven employees, and even that laggard indicator, the federal government, makes them.

At long last, it feels like real change is beginning to take hold -- at least among a few exceptional companies.

Walmart, a Change Agent?

Consider Walmart's recent announcement that by 2015, it intends to pull 20 million metric tons of greenhouse-gas emissions out of its global supply chain -- an amount equivalent to idling 3.8 million cars for a year. Sure, the pledge was, in part, a corporate image job. And yes, we agree with skeptics like Big Box Swindle author Stacy Mitchell, who argues that Walmart should focus first on the "enormous greenhouse gas implications of its own business model."

But think about what this means for Walmart's suppliers. They are accountable to not just the world's largest retailer, but the world's largest company. In China alone, the Bentonville behemoth holds sway over 10,000 suppliers, and it is making sustainability a benchmark for all. Speaking to the Washington Post, the director of the Beijing-based Institute of Public and Environmental Affairs described Wal-Mart thusly: "They are the rule setters."

Given its enormous clout, it's not unwise to conclude that in five years, a goodly number of Walmart's suppliers will indeed be leaner, meaner, and undeniably greener.
Another sign that change is afoot: Four days after Walmart issued its latest big green proclamation, the UK retailer Marks & Spencer made one of its own: to ensure that by 2015, half of its 36,000 product lines will include at least one sustainable attribute, such as a certification from Fair Trade or the Marine Stewardship Council.

The mammoth undertaking, the next phase of M&S's Plan A ("because there is no Plan B"), will push 2,000 suppliers and 10,000 farmers towards sustainability. It's all part of Marks & Spencer's audacious aim to become the world's "most sustainable major retailer" within five years.

Make no mistake, M&S's bid for the top of the eco-heap is not simply about building the brand or scoring PR points. It's also about leveraging sustainability to win market share.

"We're never going to beat the big guys on price," Mike Barry, M&S's Plan A chief, told us. "But if we can drag them on to a battlefield that's marked out in terms of trust and responsibility, we've got a chance of winning."

The Nature of Change is Changing

So what's changed about change? Why are ex eco-villains like WM and M&S (which once was embroiled in a big controversy over pesticides" target=new>pushing beyond incrementalism? Why are they altering their behavior -- as well as the behavior of thousands upon thousands of their suppliers -- in significant ways?

Part of the answer can be found in Wal-Mart's collaborator in drafting its sustainability plan, the Environmental Defense Fund, as well as the scores of other non-profits that propelled the giant down a greener road. Activists have been wielding the stick and offering the carrot for many years, but now they are arguably more skilled and irrefutably more powerful.

Over the past fifteen years, non-governmental organizations have grown dramatically to become the eighth largest economy in the world, with annual operating budgets of more than $1 trillion. Not so long ago, Walmart viewed NGOs with outright hostility, but learned painfully that it couldn't build a big enough bunker to hide from them. When the giant finally conceded that it needed an environmental strategy, it turned to its critics for help.

Whereas NGOs once were outsiders who challenged the system, increasingly they act as insiders -- a potent part of the system they're trying to change.

And yet, the bigger answer to the change conundrum lies in the bigger problems that confront us all. Exponential growth in the planet's population and the accelerating effects of global climate change mean that companies will rapidly encounter a world where vital raw materials are scarcer and pricier. The hoped for result is that a dearth of resources begets a surplus of innovation.

At least, that's what Nike, which is hugely dependent on water and oil, is aiming for. Recognizing that the gloomier prognosis for worldwide supplies of virgin materials is shaped like a parabolic curve, Nike is pushing aggressively towards closed-loop recycling and it's experimenting with potential solutions like waterless dyes.

"We're looking at everything -- water scarcity, peak oil, climate change," says Sarah Severn, Nike's chief of "mobilization" for sustainable business. "We've done lots of modeling on how all of this will impact margins. It's not a straight path -- there's lots of volatility -- but the environmental challenges that we've talked about for quite some time are starting to come to pass."

While we concede that the notion of looking beyond the next few quarters still doesn't even enter into most executives' frame of reference, we believe those old mental models will change. Indeed, for Nike and other vanguard companies, they already are changing. And when they do, at least some of the companies that get ahead of the change curve will thrive.

As for those that don't, many will no doubt die.

Jeffrey Hollender is Co-Founder and Executive Chair of Seventh Generation, the leader in green household products. He is also the author of Inspired Protagonist, the leading blog on corporate responsibility and a co-founder of the American Sustainable Business Council and theSustainability Institute.

Bill Breen is Seventh Generation's editorial director and a former senior projects editor at Fast Company magazine. They are the coauthors of the recently published book, The Responsibility Revolution: How the Next Generation of Companies Will Win (Jossey-Bass, 2010). Portions of this article have been adapted from the book.