by Cameron M. Burns
Wal-Mart is big.
No, huge.
Wait: enormous.
The company grossed $312.4 billion last year, employs 1.6 million people worldwide, has more than 3,800 facilities in the United States, plus more than 2,600 facilities in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea and the United Kingdom, and more than 138 million people shop at Wal-Mart each week.
Rocky Mountain Institute (RMI) seeks key leverage points in order to influence industry, governments, and the military, but one of RMI’s latest efforts – working with (you guessed it) Wal-Mart – could have a whopper of an impact on the transportation and retail sectors. Last year, the world’s largest retailer kicked off a sweeping environmental initiative to address energy and resource consumption in all its operations. The 44-year-old company retained several forward-thinking organizations, including RMI, to guide it, and we got busy. RMI’s task is to help the Arkansas-based retailer reduce fossil fuel consumption in both transportation and retail stores.
“Ironically, most energy-savings efforts in businesses rank among the lowest-risk investments anywhere and in some cases can return many times their cost of capital,” said RMI Principal Odd-Even Bustnes. “Yet most corporations consistently under-invest in efficiency opportunities. This is an unfortunate misallocation of both financial and natural capital” (see: What is Natural Capitalism?).
In terms of transportation, the Institute has been working with Wal-Mart, which buys about one percent of the nation’s Class 8 trucks (the biggest Class 8 fleet operator except the Pentagon) and indirectly with its suppliers, on a redesign of trucks. In October 2005, Lee Scott, CEO of Wal-Mart announced his goal and intention of flipping the heavy-truck market toward doubled (by 2015) and then possibly tripled net heavy truck fuel economy – thereby reducing carbon dioxide emissions by 26 billion pounds between now and 2020.
According to Odd-Even, the truck platform redesign centers on aerodynamics, tires, transmissions, and auxiliary power systems. Some of the specific changes include a redesign of the tractor to make it significantly more aerodynamic; the addition of trailer “side skirts,” which reduce wind resistance; “wide based” and/or high-efficiency tires, whose reduced rolling resistance improves fuel economy; the replacement of one regular rear axle with a tag (load-bearing only) axle, which reduces the truck’s weight; and a small auxiliary power unit so that cab heating and cooling don’t require running the truck’s main engine. Future versions may gradually become more advanced as manufacturers introduce new models.
Possibly more importantly, since nearly two-thirds of all new U.S. Class 8 trucks – the kind Wal-Mart primarily uses – are bought by about 100 large companies (Wal-Mart being one of them), the giant retailer hopes to influence truck design by demanding better-mileage vehicles, and, as Lee Scott, Wal-Mart’s CEO, has outlined, sharing their findings with other big buyers.
RMI is also in the preliminary stages of forming an informal major-customers’ buying consortium to reinforce Wal-Mart’s influence on suppliers. Additionally, we have been putting substantial effort into forming a network of large U.S. heavy-truck operators involving nongovernmental and governmental organizations that can advise on and are directly or indirectly involved with regulatory issues, with a goal of improving regulatory rules to win large fuel economy gains. And we are considering possible ways to accelerate the development of “concept trucks,” or systems for them, which could speed up the suppliers’ response to major customers’ demand pull.
Wal-Mart has estimated these transportation innovations will save nearly $500 million a year in fuel costs by 2020, and even more in subsequent years.
The other half of RMI’s effort is in the green building department. With RMI’s help and available technologies, Wal-Mart has begun to retrofit hundreds of older stores with more efficient lighting, HVAC, and refrigeration systems, and is building extensive daylighting and more advanced mechanical systems into new stores and facilities.
Perhaps most exciting, however, are Wal-Mart’s experimental stores in McKinney, Tex. and Aurora, Colo. The stores’ grounds are xeriscaped and boast bioswales, pervious pavements, experimental forests, wildflower meadows, and wind turbines. The buildings themselves feature vast photovoltaic arrays, low-VOC materials, efficient ventilation systems, reflective exterior coatings, waste-heat capturing systems, LED lighting, extensive water efficiency and conservation systems, waste oil recycling programs, concrete made with fly-ash, and many other systems and programs. While these two stores are experimental, they’ve allowed Wal-Mart officials to learn about new designs and technologies that will no doubt make it into construction of their new stores.
Wal-Mart is not just walking the talk: it is also making suppliers of its retail goods get on board. This is expected to have a tremendous impact across the retail and several manufacturing sectors, since Wal-Mart buys more than $150 billion in merchandise from more than 61,000 suppliers in the United States.
“Why has Wal-Mart cultivated contacts and relationships with organizations such as Conservation International, Blu Skye and Rocky Mountain Institute?” asked Wal-Mart CEO Lee Scott in a statement about the company’s sustainability initiative. “Wal-Mart is taking a fresh look at these groups’ work. And listening to them – as well as others like them – can help us envision our potential and grow in more sustainable ways. It positively serves every stakeholder in our company.”
Yes, Wal-Mart is big. And helping the retail giant to green up its trucks and stores is not just a big opportunity for RMI – it’s huge.
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Adapted from RMI Solutions Newsletter, a SustainableBusiness.com Content Partner.
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