Just How Sustainable Is Walmart?

Just How Sustainable Is Walmart?

In 2006, I wrote a cover story for FORTUNE with the headline: Wal-Mart Saves the Planet. Since then, I've written dozens of stories about the retail giant. I've reported on Walmart's impact on the gold mining industry (Green Gold in FORTUNE), its efforts to protect child laborers in Uzbekistan and salmon fisherman in Alaska (Walmart: A bully benefactor on Fortune.com), the launch of a path-breaking sustainability index (Inside Walmart's sustainability index at GreenBiz), LED lights in Walmart parking lots, the company's CSR reports, etc. I've been critical at times -- pointing to Walmart's BIG problem: climate change and writing that Walmart CEO (Mike Duke) has a problem with gays -- but most of my coverage of the company's sustainability effort has been laudatory.

Now here comes Stacy Mitchell, a smart reporter, with a six-part series in Grist called Walmart's Greenwash: Why the retail giant is still unsustainable. She assails Walmart for promoting suburban sprawl, making only token efforts to buy renewable energy and selling cheap throwaway stuff.

She also faults mainstream environmental groups for focusing "on the small bits of good that Walmart could do -- reduce PVC in packaging, for example -- while ignoring the much larger consequences of its ever-expanding business model." She also says that she has been "shocked by just how much of a public relations boost the media have given the company and how little public accountability they have demanded in return."

These are serious criticisms that deserve a response. Stacy highlights some important points. Fundamentally, though, we disagree about Walmart, and this post (it's necessarily longer than most) is an attempt to explain why.

Some of our differences are probably a result of what psychologists called confirmation bias, which describes the way all of us seek out, sift through and read evidence in ways that confirm our preconceptions. Confirmation bias is a problem in journalism, politics, economics and even in the so-called hard sciences.

I'm sure that my experience with Walmart has left me vulnerable to confirmation bias. I've visited Bentonville, gotten to know executives at the firm, and the company has participated in Fortune's Brainstorm Green conference, which I co-chair; my career and reputation have been helped by my reporting on the company.

I suspect the same is true of Stacy, who wrote a book in 2008 called Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses. She has "advised numerous communities on strategies and policies to limit chain store proliferation and strengthen locally owned businesses," according to her bio.

So read on (skeptically) as I try to sort through some of the issues she's raised.

Renewable energy: In an article headlined Think Walmart Uses 100 percent clean energy? Try 2%, Stacy notes that Walmart has been slow to adopt renewable energy. The company has several big, ambitious, stretch goals -- one of them is to be powered by 100 percent renewable energy -- and she writes, accurately, that "journalists often repeat these goals verbatim, so they function like stealth marketing slogans that infiltrate media coverage." Stacy did her own calculation and found that a mere 2 percent of Walmart's operations are powered by renewable energy.

That doesn't even make Walmart No. 1 among retailers, let alone when it is compared to other big companies and government agencies. Walmart ranks No. 15 in EPA's top 50 green power purchasers, and ranks No. 5 among retailers, behind Kohl's, Whole Foods Markets, Starbucks and Staples -- smaller companies that buy more renewable energy than the Bentonville behemoth.

I asked David Ozment, Walmart's energy guy, about this, and he told me that the company expects to move up the list next year. Progress in such a big company takes time. "We've got to plant this forest, one tree at a time," he said. Recently, Walmart struck a deal with Solar City to add solar photovoltaics to another 61 sites. Walmart is also one of the largest, if not the largest, customers of Bloom Energy, having installed Bloom's fuel cells at 26 sites. It’s also experimenting with on-site wind turbines at a couple of stores. So all the movement is in the right direction.

But the numbers remain small. Walmart and Sam's Club have about 4,400 stores in the U.S. The trouble is, as I wrote in GreenBiz last spring, that "buying renewable energy would drive up (Walmart's) costs, with no tangible benefits to customers, and put the company at a competitive disadvantage." Walmart's not willing to do that.

Cheap stuff: In a story headlined Is Your Stuff Falling Apart? Thank Walmart, Stacy writes about a $6 toaster (!) and $10 jeans. Americans are not only buying more stuff, we're throwing away more than ever, she reports -- an average of 83 pounds of textiles per person, mostly discarded apparel, each year, four times as much as we did in the 1980s. She writes:

Where once we measured value when we shopped, Walmart trained us to see only price. Its hard bargaining pushed manufacturers offshore and drove them, year after year, to cut more corners and make shoddier products….

While there are certainly factors beyond Walmart that have contributed to this ever-expanding avalanche of consumption, the company has been a major driver of the trend. Its growth and profitability rest on fueling an ever-faster churn of products, from factory to shelf to house to landfill.

This, too, is an important point. If Walmart and its suppliers make things more efficiently, but the company sells more and more and more things, the planet probably will be worse off. (I say "probably" because if goods sold by Walmart merely displace goods made more inefficiently by others, the planet could actually be better off.) But the bigger question here is, who's responsible for what Stacy describes as "this ever-expanding avalanche of consumption?"

It doesn't please me to say so but people who buy cheap, throwaway stuff do so because they want cheap, throwaway stuff, or because they can't afford to buy more expensive, durable stuff, like a Patagonia jacket or the $249 All-Clad Deluxe Slow Cooker that I was eyeing the other day at Williams-Sonoma. The Hamilton Beach slow cooker sells for $14.88 at Walmart.

Markets are far from perfect, goodness knows, but retail markets are more competitive and transparent than most. People get what they want, for the most part. Saying that Walmart "trained us" to see only price reminds me of the argument that big-box stories destroyed Main Street, or Amazon and Barnes & Noble put the independent bookseller out of business. No, they didn't -- their customers did.

The sustainability index: At Grist, Stacy's story is headlined: Walmart's promised green product rankings fall off the radar. She writes: "Was the index just a PR ploy from the start?"

Oh, come now. If this was a PR ploy, the index has been an even bigger flop than the critics would say. After all, the green product rankings have fallen off the radar, as the Grist headline notes.

One reason you haven't heard much about the index is that it takes an enormous amount of work to do science-based, life-cycle analyses for tens of thousands of consumer products -- that's the goal of the project. This is going to take time, and it is going to be controversial, but the fact is that the undertaking has won broad-based support not just from Walmart suppliers who, arguably, could be muscled into joining, but from competitors including Best Buy, Kroger, Marks & Spencer and Safeway. Seventh Generation, Stonyfield Yogurt and NGOs including Environmental Defense Fund, NRDC and the World Wildlife Fund are also working with the university-based Sustainability Consortium. This is a big deal.

"So far this has done little to alter business as usual," Stacy writes. Uh, no. People I respect -- I'm thinking here about Hunter Lovins, Catherine Greener and others -- who spend their lives working with companies to improve environmental performance tell me that Walmart's efforts to green its supply chain, including the index, have already had a big impact on the entire consumer products industry.

Suppliers in China are taking note, too. For a nuanced look at Walmart's impact there, read How Walmart is Changing China, a terrific piece by Orville Schell in The Atlantic. He writes admiringly of the work being done by Walmart but ends on a somber note:

However smart, prescient, and successful Walmart's sustainability efforts actually turn out to be, just how "sustainable" is the whole bloody global-retail proposition that lies at the heart of the company's amazing progress? Maybe Walmart's new initiatives will pencil out in a business sense for the company and, within the terms of the current retail game, even serve as a model of good environmental stewardship. But will the hyperactive retail-consumption model that it has pioneered for global consumers pencil out for the world?

…The bitter reality is that even if unrestrained consumerism becomes less environmentally destructive per unit of production than it was in the past, it is still unsustainable in the long run. So even as this most innovative of corporate and statist green strategies may represent an environmental breakthrough and good business for Walmart, and good politics for the Chinese government, it may nonetheless end up being very bad business for humankind.

What Walmart can't do: If you pay attention to Walmart, you can't help but be impressed by its size and power. Schell, a veteran journalist, describes it "as a corporate entity larger in scope and logistical complexity than any other in human history." He writes: "Compare Walmart's annual revenue with the GDP of sovereign nations, and it ranks in the top quartile."

But it's easy to overestimate Walmart's power. This, I think, gets to the heart of the differences between those of us (like me) who believe that Walmart is part of the solution to the world's environmental problems and those (like Stacy) who believe it is the cause of those problems.

Imagine, for a moment, that Walmart shut down tomorrow. Would the world become less globalized? Would people buy and shop less? What would take its place -- locally-owned, small-scale merchants or other big-box stores like Costco or Target? Would Walmart's 2.1 million workers be better off? How about its 200 million customers?

Walmart didn't just spring, fully-formed, from the mind of Sam Walton. It grew into the world's biggest company because it served people's needs. Maybe not mine -- I've spent less than $100 in my life at Walmart. Certainly not Stacy's. But hundreds of millions of people, not just in the U.S. but around the world, shop at Walmart, in large part because the company has enabled them to buy things that were once beyond their reach. Walmart isn't a bunch of conniving businessmen in Bentonville, Arkansas. Walmart is us.

It should go without saying that Walmart didn't create consumption or globalization. Nor can it stop them. All it can do is try to make consumption and globalization more sustainable and humane.

As Elizabeth Sturcken of the Environmental Defense Fund, who works with the company, put it:

Is Walmart still unsustainable? Yes? Probably 95 percent of our consumer goods, and retail and supply chain system is. But does anyone have more power to change that system than Walmart? No.

It's not all good or all evil. As usual, the reality is more complex.

So, by all means, let's hold Walmart accountable.

Let's ask its top executives -- notably, Mike Duke -- to speak more publicly and forcefully about sustainability, so that everyone in the organization understands that it matters.

Let's ask Walmart to build sustainability metrics into its compensation system. There's no more powerful signal to employees that a company cares about going green.

Let's ask Walmart to set near-term targets for buying renewable energy or reducing waste to put more teeth into those long-term aspirational goals.

Let's ask Walmart to begin a conversation with its consumers about what to buy and what they can afford.

And by all means let's ask Walmart to be a louder voice in public policy debates about energy and climate change.

But there's no point asking Walmart to stop being Walmart.