Greening Walmart

A bit of attention has been given to the ethical promises made by food retailers pertaining to the sourcing of their products. Stepping outside the box for a bit there are some relevant and interest steps being taken by the world’s biggest food retailer on a slightly wider scale than issues finding attention in Australia.

While political leaders failed reach a meaningful accord on how to address climate change in December 2009, subsequent announcements by several countries on emissions targets since the Copenhagen meeting remain highly conditional. Japan’s statements are a good recent example.

Business leaders however have long been stressing to elected leaders that certainty on emissions targets and the methods to manage their costs is critical for investment. With the current impasse, many major corporations are making their own headway and defining their own strategy, regardless of county-to-country action.

Now much of this may well be an elaborate extension of their corporate sustainability strategies – positioning “to be seen as green” to add value to their corporate reputation.

Walmart came out with a major announcement a couple of weeks ago along these lines. It has announced that it will eliminate 20 million metric tons of greenhouse gas emissions across the lifecycle of the products that the company sells globally over the next 5 years. The size of Walmart gives the numbers more shock and awe – it is the same (they say) as taking 3.8 million American guzzlers off the road in that time, yet this represents 150% of the growth in Walmart’s emissions over that same period, if it did nothing.

The immense task involves committing their 100,000 suppliers to cuts in their carbon footprints. 10,000 of those are in China, where the group is one of the relatively new players trying to take a slice of the benefits of rapidly increasing urban retail markets. While the country itself has always put environmental priorities well behind the short-term prosperity of its people, Walmart is biting off a big challenge to push businesses and farmers through the hoops. It is trying to establish its own revolution to lead the Chinese consumer to choice, and give it a better kudos in the US where it depends on the lower unit value of Chinese labour. Right now “quality” is one of the big drivers wrapped into the supplier initiative – the recent melamine scare highlights the issue for the Chinese consumer.

There is little doubt that pollution and environmental harm will threaten China's future growth; and the awareness of climate change are becoming critical to its people. But meeting the promise will be tough. The Walmart model is firmly based on a commitment to "everyday low prices" in all its markets, which in its home US market has long been the source of criticism of its labour and environmental standards. An industry of watchers tracks its progress in these areas, and while the concerns of the US householder is about surviving as the economy searches for a bottom in the recession, one day the ethical standards will attach greater value in shopper choice.

But such standards come at a cost to the consumer, retailer and the retail suppliers. Who wears the lion share of those costs with this initiative will be interesting to watch over the years as the Chinese growth engine splutters and the western world recovers.