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Walmart Explains Introduction of Sustainability Scorecards for Product Categories
May 2, 2012
Walmart released its latest CSR report highlighting progress on goals for reducing waste, increasing locally grown produce, and developing sustainability rankings for its products. The report will likely stir the ongoing debate over whether or not the giant retailer, which has a core business model of providing the lowest cost products to the largest possible number of people, can ever be truly sustainable.
The company has had an undeniable influence in championing the business case for sustainability practices. The numbers alone tell a convincing story: since making a public commitment to sustainability in 2005, Walmart has increased sales from $315 billion to $444 billion and built 3,000 stores overseas.
But the company’s vast and growing size makes for a heavy environmental footprint, despite significant logistical and manufacturing improvements. Additionally, Walmart has been criticized and defended for (among other things) its renewable energy goal, its marketing of cheaply made goods, and its slow progress on developing a sustainability index for products.
Earlier this month Walmart answered many of the questions surrounding the sustainability index during a Milestone Meeting at company headquarters in Bentonville, Arkansas. Walmart President and CEO Mike Duke urged leadership teams to accelerate ongoing sustainability initiatives, and about a dozen key figures in the organization discussed the internal rollout later this year of sustainability index scorecards for product categories.
Come hear Jeff Rice, Director of Sustainability for Walmart, speak at the Sustainable Brands Conference June 4-7 in San Diego, CA!
In 2009 when Walmart introduced the idea of a sustainability index to assess the environmental impacts of its products, the public assumption was that everything from a box of crayons to a garden hose would soon have something similar to a nutrition label detailing attributes like carbon inputs, recycled content and end-of-life options. Andrea Thomas, Walmart’s Senior VP of Sustainability told SustainableBrands that such a label is still within the long-term scope of the project, but in the short-term the company is focused on providing the buyers within its merchandizing group with product category scorecards to help them select more sustainable items for sale within stores.
Thomas described the index development process as an evolution: “Ultimately we’ll be getting more information at the product level, but it’s natural for us to start at the broader category level where we can impact more products in the short term.”
She noted that the launch of the “Great for You Icon” earlier this year is an example of a consumer-facing label that fits under the scope of sustainability, but those labels are made possible by the well-developed field of nutritional science. “If you think about the science that goes behind calories, fat grams and all of those metrics, that’s in a different developmental stage than what we have for metrics in sustainability,” she said.
The Sustainability Consortium, hosted by the University of Arkansas and Arizona State University, has taken on the responsibility of providing the product sustainability data for Walmart and other participating retailers like Kroger and Best Buy. NGOs including the Environmental Defense Fund, NRDC and the World Wildlife Fund are also involved in the effort.
Walmart is already piloting 10 so-called Live Better Scorecards developed with data provided by the Consortium, and data is available to create scorecards for another 100 categories by the end of 2012 including cereal, coffee, apparel, hardware, electronics, and toys. Thomas said the scorecards, combined with information self-reported by suppliers, is allowing Walmart to begin ranking (for internal use only) its suppliers on the category level of products.
“There are multiple suppliers and multiple products within a product category,” Thomas explains. “This allows us to understand the sustainability hotspots within those categories and rank the suppliers based on information they provide us on their practices around those hotspots.”
During the Milestone meeting, several members of Walmart’s merchandizing organization explained the critical role the company’s buyers will play in leveraging the scorecards, because they are the ones who “own the relationship” with suppliers and ultimately pick the products that will be sold in stores around the world.
Speakers highlighted several examples of how small changes to single products, amplified across thousands of stores in the U.S. and abroad, can have major impacts on resource reduction. For instance, when the company transitioned away from the plastic forms it traditionally used to display women’s swimsuits, it cut 75% of the packaging weight saving 160,000 pounds of plastic and reducing by more than 80% the number of container loads needed to maintain the seasonal inventory.
Tanya Manwiller, the buyer for Walmart’s computer business in the U.S., is already working with a category scorecard. She admitted she’s not a sustainability expert and that she needed the scorecard to help her determine what improvements to pursue in negotiations with suppliers. As a result, she’s currently focusing on energy – both the energy needed to produce the computers sold at Walmart, and the amount of energy those computers consume in a customer’s home or business.
Duncan Mac Naughton, the Executive Vice President and Chief Merchandising and Marketing Officer for Walmart U.S, said the goal is to make continuous adjustments to the thousands of products Walmart sells. He said in 2013 the scorecards will be formally introduced into Walmart’s joint business planning process with supply partners, along with incentives and recognition for leading suppliers and “family meetings” for those who fail to make progress.
“The customer is telling us ‘Make it mainstream. Don’t give me a green section. And, by the way, remember I’m not going to pay more for it,” Duncan added.