Now and then, you hear something about Walmart going green. But what does this really mean? Isn’t Walmart an evil mega-store known for selling low-quality products and treating its employees badly? So how can we trust their talk about sustainability? I learned more about this last weekend, at a Green Project Management seminar titled “The Tipping Point: Walmart’s Journey to Sustainability.” Sustainability strategist Mikhail Davis discussed Walmart’s commitment to sustainability, from his vantage point of having been one of the consultants who helped them in this effort.
As Davis noted, sustainability is always a journey whose destination you never reach. But it’s undeniable, however you may feel about Walmart, that they’ve undergone a huge transformation — and most significant is the fact that as the world’s largest company, they’ve had a far-reaching influence that goes well beyond their own walls. In fact, a Sustainable Business Forum article notes that some prominent sustainability leaders consider Walmart’s green initiative to be “the best thing to happen to the environment in the U.S. in the past 10 years.”
Still, most people don’t think of using the words “Walmart” and “sustainability” in the same sentence. Walmart hasn’t fully succeeded in telling this story to the public because so much of their sustainability effort is hidden in their supply chain. Yet it was concern about their increasingly bad reputation that led CEO Lee Scott to adopt what he now looks back on as a defensive strategy. It wasn’t long till he was convinced to see sustainability as a business opportunity rather than just a way to stay out of trouble, and the strategy transformed into a long-term offensive one.
Walmart’s adoption of sustainability came from the top: there was no rank-and-file demand for it, and in many ways it wasn’t a natural fit for the company. However, a number of factors made it possible for this strategy to take hold there:
- Walmart is a mission-driven company whose mission is to improve the lot of lower-income people by enabling them to purchase items at lower prices. It wasn’t hard to add sustainability to this mission, especially when it resulted in lower prices and healthier items.
- Walmart’s “Ready, Fire, Aim” culture made the company willing to try new things and take risks.
- Some aspects of the company’s leadership style helped move the strategy forward: Their quantitative leanings helped because the company was hyper-aware of anything that lowered prices and raised sales. Their tendency to be confrontational ensured that they’d push suppliers to do more.
- The company motto “Eat What You Cook” encouraged executives to experience how their decisions affected things on the ground. While CEOs at many companies would consider it beneath them to go out to observe good and bad cattle ranching practices, this was not an issue at Walmart. Getting top executives to see environmental issues first-hand was an important tool in the move to sustainable practices.
The first step Walmart took was to calculate its carbon footprint. This is where Walmart’s story becomes especially interesting, because it was determined that 92% of the footprint was in the supply chain. A strategy was adopted with 3 sustainability goals, the 3rd being the most ambitious:
- Use 100% renewable energy.
- Produce zero waste.
- Sell products that sustain resources and the environment.
To help achieve these goals, the company created networks of participants ranging all the way from Walmart to suppliers to government organizations, and even some NGOs that had previously been some of Walmart’s staunchest foes. Each network developed a sustainable pathway from the company’s current practices to sustainable practices.
They started with quick wins that could be implemented with existing technologies and business models, which helped them make rapid progress on their first 2 goals — and realize substantial savings. In a company with such a quantitative bent, this caught a lot of people’s attention and made it all the easier to move ahead with the overall strategy.
After the quick wins came innovation projects. One example of such a project was Peterbilt producing the first hybrid big rig truck for Walmart. When a company as large as Walmart approaches a supplier with a request, the supplier is more likely to commit the R&D dollars or provide special deals because they know how much business they’ll get in return. In another example of this, GE gave Walmart a deal on LED lights. Not only did this save the company in power costs, but it had an unintended benefit: LED lighting makes products look better, which leads to increased sales. The company’s sophisticated real-time inventory tracking tools allowed them to see this benefit immediately — a good illustration of how Walmart’s penchant for quantitative measures helps promote sustainability.
This example points to another interesting thing about Walmart: The move to sustainability was not driven by consumers any more than by employees. There’s still no widespread green market, and most people think of green as an elitist niche market. So Walmart hasn’t marketed the green aspect of its products as more than a nice side benefit.
They do promote green products by taking actions like placing them in strategic locations in the store — and they continue to keep prices low, showing that sustainability can be affordable. In some case that’s easy — fair trade coffees, for example, are cheaper because there’s no middleman. And in cases where it isn’t easy, Walmart still tries to find a way to go green while keeping products affordable. In a company that considered itself the expert in cutting costs, it’s interesting to see how sustainable practices have taken them even further.
Walmart’s sustainability strategy has endured and become a major part of the organization. The strategy’s effect has reached far beyond just cutting costs, reducing liabilities, and improving their reputation, though those are important benefits. It’s also energized the company and its employees and helped Walmart attract and retain talent by really engaging their ~ 2 million employees. And it’s encouraged innovation both within the company and throughout their extensive supply chain. Walmart still has some real issues to deal with — but whatever you think about them, becoming more green has allowed the world’s largest retailer to occupy a uniquely influential position in the green economy.