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March 19, 2007 | Andrew Winston | Jump to: Comments (0) | Post A Comment

Wal-Mart, the "Epicenter of Sustainability"

Forgive a posting that’s twice as long as normal…lots to discuss on this one…

I had the pleasure of attending the quarterly Sustainability Milestone Meeting at Wal-Mart a few days ago (thank you to Marc Major and Jib Ellison at BluSkye for the invite). The energy in the room was really something. Wal-Mart is of course a long way from sustainable (like the world around it), and faces a range of questions and challenges on the social leg of sustainability. But even given those important caveats, the company is, as Hunter Lovins told the crowd, “the epicenter of the sustainability discussion.” And Wal-Mart is moving fast on the environmental front — faster than the rest of the world may realize. If the company continues on this path, the ripples will be felt for generations to come.

The world’s largest company is starting to act on nearly all the dimensions of a robust environmental strategy as laid out in Green to Gold. I could write many postings on this one meeting, but here are a few examples of the path Wal-Mart is on:

Eco-Plays:

  • Cost-cutting/Eco-efficiency: This is a no-brainer for the everyday low price leader. The energy and transportation execs described a number of initiatives being rolled out in existing and new buildings to cut energy 20 to even 50 percent. And they’re working on hybrid trucks for 2009 to improve fleet efficiency at least 30%.

  • Risk reduction: there was one great moment where CEO Lee Scott asked Sustainability exec Andy Ruben how things were going with getting “that chemical out of baby chew toys”. We can assume they were talking about phthalates. Watch this topic — we may see a big change in chemical use from that one conversation.

  • New revenues: There was less discussion on this side of things, but the company is looking to sell more of all kinds of green products, from CFL lightbulbs to concentrated detergents. In a more interesting example, Wal-Mart is working with small businesses to drive energy efficiency…both a revenue-generating business and a community goodwill play — very smart.

  • Branding: Only some focus on this — Wal-Mart, by its nature, is not likely to go out with a big ecomagination-type campaign. And, as Scott said, “if we make progress in some areas, but not others, we’ll get more criticism than if we had done nothing.” He’s right — it’s Wal-Mart after all. So they’re being careful.

Mindset:

  • Broad thinking about boundaries: The company is working with suppliers to reduce their footprint. I was sitting with good friend Steve Varon who runs Dana Undies, the first supplier to go through the process with Wal-Mart’s guidance — his distribution center cut energy use 52%. Value chain work was clearly on their minds. Energy exec Jim Stanway talked about reducing energy footprint upstream, in-house, and downstream with customers: “Energy is a three-pronged threat and opportunity.”

  • CEO leadership: Lee Scott opened the meeting, stayed attentively for 4 hours, and closed the meeting. ‘nuff said.

  • Apollo 13 (No is Not an Option): As Scott said at the end, “we want our merchandise to be affordable and sustainable.” No “tyranny of the ‘or’ ” here…they’re looking for the ‘and’ solutions.

  • Do the Right Thing: Clearly the leadership thinks there’s a moral center to this movement. The company’s mission is stated on the wall, “We save people money so they can live better.” It’s clear that the company is trying to connect all sustainability efforts to this mantra.

Toolkit

  • Eco-tracking: Lots of discussion about metrics and tracking progress

  • Re-design: See above on the latest test stores and rolling out new design innovations to cut energy use.

  • Culture: Here the focus was on one of my favorite initatives, the Personal Sustainability Project. It’s a way to engage all 1 million plus employees. Every “associate” can commit to a personal goal, from quitting smoking to recycling more at home. It’s a great culture-building tool to bring it down to the individual level.

A final highlight from Lee Scott: “We’re not picking the low-hanging fruit, we’re picking up fruit off the ground…we have a long way to go.” This was one of those perfect CEO moments where he somehow was positive about all he had heard for 4 hours, but lit a fire by saying, “not good enough.”. Scott, and Wal-Mart, clearly recognize now the level of the challenge here, and just how far down the rabbit hole of pursuing sustainability really goes.

Of course there are serious hurdles on the road ahead. In one telling moment, within minutes of the head of merchandising musing about moving away from all kinds of packaging (“why do we even need a box around products?”), someone brought up a cereal box with an ad on the back for an eco-product. This highlighted the challenge, as Steve Varon said, between “what makes a product sell vs. what makes it sustainable”. This kind of consumption/marketing vs. sustainability tradeoff will haunt all of us for a long time — there are no easy answers.

But, we’re definitely on the road. We may all look back at these moments, these meetings, in 2006 and 2007 as the real beginning of the green business revolution. A final word from Scott: “History will judge this effort.”

Andrew

 

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