Unveiling plans for a worldwide sustainable product index, Wal-Mart Stores Inc. president and chief executive officer Mike Duke said Thursday consumers are demanding more accountability on how products affect the environment.
This story first appeared in the July 17, 2009 issue of WWD. Subscribe Today.
Duke cited the world’s rising population and decreasing natural resources in explaining the ambitious initiative.
“It is estimated that the global population will reach 9 billion by 2050,” he said. “Natural resources for everything we grow, eat, drink, make, package, buy, transport and throw away is outpacing the earth’s capacity to sustain it. Customers want more efficient, longer-lasting, better-performing products. They want to know that the materials in the product are safe, that the product is made well-made and that the product was produced in a responsible way.”
The index will require the suppliers of the world’s largest retailer to assess the impact of their products on the environment. It will establish a single source of data for evaluating the sustainability of products, similar to labels on foods that list nutrition facts.
The plan was outlined during a meeting with 1,500 suppliers, environmental leaders and Wal-Mart associates at the company’s Bentonville, Ark., headquarters and broadcast live on walmartstores.com.
Wal-Mart said the sustainability index — basically a scorecard for holding suppliers accountable — could lead to “higher quality, lower costs and measure the sustainability of products and help customers live better in the 21st century.” Measuring the sustainability of a product poses many challenges, but Wal-Mart said its research-driven approach involving universities, retailers, suppliers and nongovernment organizations (NGOs) could accelerate and broaden this effort.
Wal-Mart is asking its 100,000 global suppliers to complete a survey with questions about energy and climate, natural resources, material efficiency and people and community, with specific questions on greenhouse gas emissions, location of factories, water use and solid waste produced. The retailer is asking its top-tier U.S. suppliers to complete the survey by Oct.1.
As part of the initiative, Wal-Mart is helping to create a consortium of universities, suppliers, retailers, NGOs and government to develop a global database of information about the life cycle of products, from raw materials to disposal. “It is not our goal to own this index,” Duke said, noting that Wal-Mart will partner with one or more technology companies to create an open platform that will power the index.
The last step of the project will be translating the index into a rating that’s easily understood by consumers. The system could take the form of a numeric score, color code or other type of label.
“One of the things we’ve learned in apparel is that sustainability processes are driven by innovative ideas,” Mary Fox, a member of Wal-Mart’s U.S. apparel team, said at the meeting.
“My daily experience with Wal-Mart suppliers is that each of them discuss with me what they as a company are doing towards the sustainability initiative,” said designer Norma Kamali. “For example, I just met with a handbag supplier who is rethinking stuffing the handbags with paper for the floor presentation and coming up with alternatives. Another company discussed the most efficient way to transport the labels or hangtags to save fuel and reduce the carbon footprint.”
Andrew Winston, author of “Green Recovery: Get Lean, Get Smart, and Emerge from the Downturn on Top” (August, Harvard Business Press), said, “Wal-Mart is shouting. This is a little loud for something that’s directional. It’s not like they went all the way to an index. Still, it is a big deal.”
There will be “a lot less consumption, or we’ll define things differently,” Winston said. “In apparel, if you’re using a completely recyclable polyester like Patagonia uses, that’s not the same kind of consumption.” The challenge [for suppliers] will be making the distinction between investments and costs. “Wal-Mart is not going to provide the money,” he said. “These are tight times, but some of this stuff, like retrofitting a facility with energy-saving lighting, pays back so fast.”