If anyone doubted Walmart’s commitment to sustainability as a vehicle to further minimize costs and promote lower prices (see CSR Newsletter from November 5, 2008, below), the firm’s decision to develop a Sustainability Index (profiled in this ABC News video) should convince:
Walmart now asks each of its 100,000+ suppliers the following 15 questions:
Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions
1. Have you measured your corporate greenhouse gas emissions?
2. Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?
3. What is your total annual greenhouse gas emissions reported in the most recent year measured?
4. Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets?
Material Efficiency: Reducing Waste and Enhancing Quality
1. If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Walmart for the most recent year measured.
2. Have you set publicly available solid waste reduction targets? If yes, what are those targets?
3. If measured, please report total water use from facilities that produce your product(s) for Walmart for the most recent year measured.
4. Have you set publicly available water use reduction targets? If yes, what are those targets?
Natural Resources: Producing High Quality, Responsibly Sourced Raw Materials
1. Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?
2. Have you obtained 3rd party certifications for any of the products that you sell to Walmart?
People and Community: Ensuring Responsible and Ethical Production
1. Do you know the location of 100 percent of the facilities that produce your product(s)?
2. Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of, and capacity for, production?
3. Do you have a process for managing social compliance at the manufacturing level?
4. Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?
5. Do you invest in community?
While this project is still in its early stages and these questions are voluntary with no verification process in place, from what I have heard and read, the effort is genuine and, because of Walmart’s reach, promises to shift the focus of the retail sector as a whole.
In addition, what is interesting about this project, and what distinguishes it from Walmart’s prior sustainability work (see below), is that this Index carries the potential to increase short term costs. The scale of the task is huge (a label on every product Walmart stocks that allows customers to compare the relative environmental costs using a common scale). As such, the fact that Walmart is willing to take on this issue, defining its value to the firm and its suppliers over the long term, is an important step forward in Walmart’s commitment to CSR-related issues.
Take care
David
The article in the url below deals with the prospect of firms’ CSR activity contracting during the expected economic recession:
“It is easy to imagine corporate social responsibility being the first fad that companies abandon during the downturn.”
This might be true, except for the fact that Wal-Mart’s CEO, Lee Scott, has chosen now to reaffirm his firm’s commitment to raising the profile of sustainability throughout operations:
“Lee Scott, Wal-Mart's chief executive, told a meeting of 1,000 Chinese suppliers in Beijing: "I firmly believe that a company that cheats on overtime and on the age of its labour, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honour its contracts, will ultimately cheat on the quality of its products."”
The more I see and hear Scott speak on this issue, the more I am convinced he is genuine and, more importantly, is articulating an effective business case for CSR. In making this case, he is driven less by morals or ethics (a subjective minefield from which no firm emerges unscathed) and more by focusing on maximizing the long term value added by his organization:
“Hearing Wal-Mart say this still produces splutters of disbelief. … But Mr Scott has been talking this way since 2005, when he promised Wal-Mart would "sell products that sustain our resources and the environment".”
Two issues remain. First, it is not clear how comprehensive this ethos is throughout Wal-Mart and, as a result, what happens when a decision consistent with Scott’s message to “sustain our resources and environment” increases costs, rather than decreases them? And, second, Wal-Mart’s business model still relies on fostering economic growth through mass consumption and disposal/waste. The second point, in particular, might be a question for society rather than Wal-Mart (although, given the firm’s size, it is becoming hard to distinguish the two), but it still poses a threat to Scott’s claims to sustainability over the long term.
Take care
David
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
An ethics lesson from an unlikely quarter
Skapinker, Michael
829 words
28 October 2008
Financial Times
Asia Ed1
11
