Wal-Mart To Measure Suppliers’ Energy Use

September 24, 2007

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Wal-Mart will measure the amount of energy used to create products throughout its supply chain, including the procurement, manufacturing and distribution process. The retailer is initiating a pilot with a group of suppliers to look for new ways to make its entire supply chain more energy efficient.

The pilot will focus on seven product categories – DVD’s, toothpaste, soap, milk, beer, vacuum cleaners and soda – to determine the overall environmental impact of products. Some of these products are already part of Wal-Mart’s Live Better Index, which serves as a measurement of consumer attitudes and shopping behaviors related to green issues.

One supplier, News Corp.’s Twentieth Century Fox Home Entertainment, initiated a supply chain analysis of the carbon impact of the production, manufacture and distribution of its DVDs. More than twenty of Fox’s key suppliers delivered detailed information on their energy use and greenhouse gas emissions, according to Wal-Mart. Analysis of that data led to an industry standard for measuring the carbon impact of DVDs and provided a methodology for other consumer packaged goods.

Wal-Mart is partnering with the Carbon Disclosure Project. The CDP, an organization that studies the implications for shareholder value and commercial operations presented by climate change, released its fifth annual report today.

“This is an important first step toward reaching our goal of removing non- renewable energy from the products Wal-Mart sells,” said John Fleming, executive vice president and chief merchandising officer, Wal-Mart Stores Division. “This is an opportunity to spur innovation and efficiency throughout our supply chain that will not only help protect the environment but save people money at the same time.” There’s a speech by Fleming on the topic here.

The supply chain initiative is part of Wal-Mart’s Sustainability 360 program which was announced in February. But Wal-Mart has been eyeing the carbon output of suppliers well before that announcement. Almost one year ago today, Wal-Mart announced plans to measure its 60,000 worldwide suppliers on their ability to develop packaging and conserve natural resources. Wal-Mart expects the project to reduce overall packaging by five percent and save 667,000 metric tons of carbon dioxide from entering the atmosphere.

Wal-Mart is also working towards having its electronics suppliers fill out a scorecard that will assess the sustainability of their products.

The company recently announced that its fleet of about 7,200 semitractor-trailer trucks is already about 15 percent more fuel efficient than it was when the company announced its environmental goals in late 2005.

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