Walmart is having plenty of problems on the labor front – with its first strike threatened across the country on Black Friday –
but it seems to be moving along on the green side of its business.
The company has been working on greening its mammoth supply chain for some time and now it’s kicking it up a notch.
It will now evaluate its buyers – as part of their annual performance review – based on the sustainability of the products that buy for Walmart’s stores.
Buyers who don’t stock the shelves with green products will see smaller pay raises or bonuses as a result.
The change responds to feedback from Walmart’s suppliers. Although they’re asked plenty of questions on the sustainability of their products, buyers haven’t been using that information to select products, reports Bloomberg.
Walmart is trying to end this disconnect – if suppliers are producing greener products (at the company’s request), then shouldn’t those products end up on the shelves?
Buyers’ decisions are pretty consequential, considering they spend mult-billions of dollars a year on the products they purchase.
They can also influence suppliers to modify their products as they did in the case of computers sold at Walmart. A buyer discovered that only a third of the computers sold had power management systems turned on – the feature that tells a computer to dim the screen or put the system to sleep if someone isn’t using it.
Now, Walmart’s requirement (by Christmas) is that vendors must deliver computers with power management enabled as a default setting, increasing the energy efficiency of the computers they sell without customers having to think about it, reports Andrew Winston in Bloomberg.
Walmart’s industry-leading Sustainability Index – developed in conjunction with industry groups, suppliers, NGOs and other retailers – rates products on a wide range of criteria, such as packaging, energy efficiency and materials. By the end of 2012, it will cover over 100 product categories, they say.
"With every passing year, we also feel more strongly that sustainability is critical to our business and to driving Everyday Low Costs and leverage for shareholders," says Michael Duke, the company’s CEO, in Walmart’s latest responsibility report.
Walmart’s Green Initiatives
Walmart has been tackling everything from packaging to energy use by bringing major suppliers together with cross-functional internal teams.
Cutting operating costs is a big theme of its sustainability program, including its goal to be powered 100% by renewable energy.
Now, the biggest corporate consumer of on-site solar energy, Walmart has 150 solar installations and recently added its first on-site wind turbine. It gets 4% of electricity from renewables right now.
A 90 MW Texas wind farm supplies 15% of the energy for over 300 Walmart stores and Sam’s Clubs, and in California, fuel cells supply energy to 26 stores.
Last year, Walmart saved $231 million through its zero-waste-to-landfill program, by keeping 80% of waste out of landfills and increasing revenue from recycling, says its 2012 Global Responsibility Report. Next year, it plans to add another $150 million in savings to its bottom line.
Walmart has also played up its agenda to promote healthier foods, promising to reduce sodium and added sugars in packaged foods by 2015, while increasing purchases of locally grown produce (97% in 2011). Locally-grown now accounts for 10% of the produce sold in US stores, and Walmart plans to double that over the coming three years. And it’s created a separate Sustainability Index for produce.
The positive effect of Walmart’s progress in operational sustainability is somewhat overshadowed, though, by its legacy of questionable labor practices, not to mention its enormous land footprint and impact on smaller businesses.
Earlier this year, the retailer agreed to play close to $5 million in fines to the US Department of Labor for denying workers overtime pay.
And as much as Walmart has been positioning itself as a "green" company, even expressing support for cap-and-trade legislation in 2006, its political action committee (PAC) contributed lots of cash to lawmakers who helped block the Lieberman-Warner cap-and-trade bill.
The company is one of the biggest political funders, favoring candidates on the state and federal levels who routinely vote against the environment and who are the most active climate change deniers.