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Wal-Mart Says Environmental Initiatives About Money, Not Brand Image

walmart truck2Wal-Mart’s efforts in recent years to adopt renewable energy and supply chain sustainability initiatives is more about the bottom line than it is about image, said Wal-Mart Chairman Lee Scott.

Speaking at the Fortune Brainstorm Green business conference in Laguna Niguel, Calif., Scott indicated that if the efforts had been solely about brand enhancement, the environmental efforts would have surely been scaled back during the recent economic downturn, reports CNET.

“What Wal-Mart has done is approach this from a business standpoint and not from a point of altruism. If we as a company focus on waste, we can make Wal-Mart a better company and at the same time, become a better citizen,” he said at the conference.

Despite saying that image has not been an overriding factor, Scott did say that part of the strategy has been reaching out to those aged 25-35 years who tend to be more eco-conscious, reports Huliq.

Wal-Mart has been setting the bar when it comes to supply chain sustainability efforts, including its packaging scorecard and the far-ranging sustainability index.

The retailer in 2009 introduced its sustainability index to grade suppliers and products on a range of environmental and sustainable factors. In 2008, the retailer’s Sustainable Packaging Scorecard aimed at getting suppliers to reduce the amount of packaging in their products, and eliminating any negative environmental impact of their packaging.

More recently, Wal-Mart’s called for the reduction of 20 million metric tons of greenhouse gas (GHG) emissions by the end of 2015 with help from its suppliers. This translates into 150 percent of the giant retailer’s estimated global carbon footprint growth over the next five years.

In March, the chain began working with its Chinese suppliers to address energy efficiency and environmental impacts.

Even when faced with costly lawsuits, the response has been to institute environmental efforts. One example is the agreement to install solar systems at two planned California superstores as a means of settling two lawsuits it faced over future emissions at the sites.

In other news from the conference, Wal-Mart said it was researching how to construct stores with materials that more easily revert back to the Earth at the end of the store’s life, reports CNN/Money.

In other green building aspects, the store has been using rubber in store baseboards that are made partly from recycled diapers, and using concrete composed of 20 percent fly ash, which is a byproduct of coal power generation.

Packaging efficiencies also play a big role in Scott’s vision for Wal-Mart.

For instance, Scott said more efficient packaging standards for some toys has resulted in 215 fewer containers shipped per year.

Another effort, involving loading trucks more efficiently, is helping cut the company’s fuel bill by 38 percent.

Scott recently participated in a Q&A with Grist, where he discussed the bottom-line goals.

“As I got exposed to the opportunities we had to reduce our impact, it became even more exciting than I had originally thought: It is clearly good for our business,” Scott told Grist. “We are taking costs out and finding we are doing things we just do not need to do, whether it be in packaging, or energy usage, or the kind of equipment we buy for refrigeration in our stores, that there are a number of decisions we can make that are great for sustainability and great for bottom-line profit.”

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5 thoughts on “Wal-Mart Says Environmental Initiatives About Money, Not Brand Image

  1. Lee Scott deserves credit for this honest statement. It may sound absurd but Walmart with its economic approach towards sustainability may create a stronger “Halo” towards the industry to support the sustainability cause than many of the philantrophical programs we see. If the economic equation shows a win many more corporations may understand that it pays off to invest into sustainable business practices and products.
    However there is always an image driver in place. Even if Scott may not admit, Walmart has successully worked against its critics by moving the needle on sustainability. Programs like the “internal sustainability practices” are not necessarily driven by P&L considerations. They are well designed to tackle the critics regarding Walmart’s social practices and they are well in line with a strategy that does not ignore corporate image. May be not a major target but surely a welcomed side-product of the sustainability program.

  2. I admire the honesty of Walmart, and I agree with others that a truly pragmatic approach will help many other (smaller) businesses see the unambiguous benefits of engaging in this debate.

    But at the same time, there is an emerging body of research that shows the importance consumers place on intrinsic motivations to engage in these efforts (it is the right thing to do), as opposed to extrinsic motivations (bottom line, image etc). Consumers see a responsible business as being one that senses the appropriateness of exercising responsibility and stewardship alongside more commercial goals.

    It involves taking certain decisions away from a pure economic market place, and relies on codes and norms, rather than contracts and transactions. Michael Sandel talks about predictably elegantly when he challenges the morality of markets. Some things just should not need markets to motivate.

    Ironically, I am pretty certain (and have some evidence to support it) that an intrinsic approach to much of these endeavours results in far higher reputation and equity gains mid-term, which translate into far more durable value for the firm in question.



  3. Recent analysis of the Wal-Mart sustainability plan found that the firm has set out ambitious goals but offers little evidence that it has delivered against its commitments. Our conclusion is that there will be little impact on the firm’s bottom line from its sustainability initiatives which are too small-scale to succeed. Obliging suppliers to provide data for the Sustainable Product Index makes sense but 95% of the cost for this programme is carried by suppliers and is therefore a supplier sustainability decision not a Wal-Mart investment. For more information view the Verdantix report: Wal-Mart Sustainability Plan Requires An Upgrade.

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