Walmart's Super-Sized Climate Commitment Focuses on Supply Chain

[Editor's Note: For more on Walmart's climate announcement, see Senior Contributor Marc Gunther's post on the news and a post from Elizabeth Sturcken of Environmental Defense Fund.]

The world's largest retailer has set a new goal for shrinking its environmental footprint and is turning to suppliers to help achieve a 20-million-tonne cut in greenhouse gas emissions from the lifecycle and supply chain of Walmart products by 2015.

Speaking at a webcast news conference today, Walmart CEO Mike Duke detailed the latest development in his company's efforts to make the entire business more environmentally responsible. The cut in emissions is about one-and-a-half times the company's projected carbon growth over the next five years and is roughly equivalent to the emissions of 3.8 million cars during a year, he said.

"Today we're announcing an aggressive new goal," said Duke. "There are opportunities throughout the product lifecycle -- from the sourcing of the raw materials to the manufacturing of a product to its transportation and how customers use it, dispose of it and recycle it.

{related_content}"We will be efficient … because we can find the reductions anywhere in the world and at the lowest price. We will be a leader in retail … because we will be the first to take a look at the supply chain on a global scale."
Environmental Defense Fund
President Fred Krupp, whose organization has been working closely with Walmart to craft the new target as well as earlier sustainability measures, praised Walmart's efforts. "This is real leadership ... Walmart is looking at the whole picture," said Krupp, referencing the firm's work to reduce emissions of its fleets and buildings, establish a Sustainability Index and increase standards among suppliers in China and around the globe.

Duke acknowledged EDF's counsel and assistance in developing the new goal (EDF has established an office in Bentonville to work Walmart at its home base), as well as input from the Natural Resources Defense Council and the World Wildlife Fund in the company's broad environmental program.

Other help on the supply chain goal is coming from PricewaterhouseCoopers, ClearCarbon Inc., the Carbon Disclosure Project and the Applied Sustainability Center (ASC) at the University of Arkansas. The organizations will help identify projects, measure and verify reductions and engage with suppliers.

Elizabeth Sturcken, who is the managing director of EDF's Corporate Partnerships program and leads the team working with Walmart, said the company, its suppliers and the various advisory groups collaborating on supply chain emissions are venturing into "uncharted waters." They plan to share their framework for some of the key processes. "We're going to open this up to the world to make sure this is real and accurate," she said.

In a panel discussion and media Q&A following the webcast announcement, Walmart executives and project partners fielded questions about the business case for the initiative, likely buy-in from suppliers and what efforts Walmart has made to reduce the footprint of operations it controls.

With 90 percent of its carbon footprint embedded in its products' supply chain and lifecycle, the company plans to focus first on the sectors that are likely to yield the greatest amount of emissions reductions as well as the greatest amount of cost savings, said Matt Kistler, Walmart's senior vice president for sustainability. The realization of savings that can be achieved is expected to be a chief motivator.

Sectors that are likely to be tapped include apparel, food and products that consume a lot of electricity, Kistler said. He and other Walmart executives also stressed that the company plans to work with those suppliers and provide them technical support in seeking the best ways to achieve reductions.

Walmart has more than 100,000 global suppliers. With its biggest-bang-for-the-buck strategy, the supply chain reduction effort is expected to involve several hundred suppliers, Kistler said.

Walmart ran several pilots with suppliers before announcing the goal, he said. Early successes include that of Fox Home Entertainment, whose reductions in DVD packaging have served as a model and resulted in DVD suppliers eliminating 28,000 tonnes of greenhouse gas emissions last year.

As for emissions from Walmart operations, Paul Kelly of ASDA, the UK's second-largest grocery chain, noted that the Walmart subsidiary achieved a 7 percent absolute reduction in greenhouse gas emissions in the past two years.

"We've taken more than 80,000 tonnes of CO2 equivalent out of Asda's operations since 2007, despite opening 36 stores and serving an additional 2.5 million customers each week," said Kelly, who participated in a panel discussion via telepresence. "We're now producing 66 tonnes of CO2 equivalent for every £1 million of our sales, compared with 83 tonnes two years ago."

Overall as a company, however, Walmart's emissions have increased as the company's most recent sustainability report acknowledges and Senior Contributor Marc Gunther notes in his post today.

The company's measures to reduce some of its impact include working toward:

  • 100 percent use of renewable energy.
  • Zero waste at its sites.
  • A prototype design for new stores to make them 20 percent more energy efficient.

Image courtesy of Walmart.