Wal-Mart Stores Inc.’s senior director of sustainability, Jeffrey Rice, is practical enough to know that sustainability is unsupportable unless it ultimately has a positive impact on the bottom line.
“Sustainability will only be successful if you can figure out how to make it fit within your own corporate mission,” said Rice, the featured speaker at the U.S. Chamber of Commerce’s Business Civic Leadership Center’s Environmental Innovation Network Webinar, on Monday. “If sustainability is seen as a distraction to the way you do business,” it doesn’t stand a chance.
Wal-Mart operates 10,000 units in 28 countries and employs 2.1 million associates worldwide, including 1.4 million in the U.S. “We touch 200 million customers per week around the world,” he said. “We have a big opportunity to influence sustainability. As a close to $500 billion retailer that gets a lot of trust from customers, we have a responsibility to lead on the big issues.
“We approach sustainability globally, for the most part,” Rice added. “We know sustainability needs to make sense in a local context. We give a lot of flexibility to each of our markets to drive sustainability in a way that makes sense for them.”
Rice called Wal-Mart’s productivity loop the retailer’s engine. “‘Buy for Less, Sell for Less, Grow Sales, Operate for Less’ — this is the mantra we use to say, ‘This is how we do what we do.’ It achieves Every Day Low Price and achieves Every Day Low Cost. In each of these areas, sustainability plays an important role in long- and short-term goals,” he said.
Rice is too pragmatic to believe that Wal-Mart customers will ever pay more for sustainable products. “Our customers care, but they don’t want to pay more for products or be confused by a lot of information while shopping,” said Rice. “Most of our customers wouldn’t take the time to look through an iPhone or read a label. They care about the health and safety of people in the supply chain.
“Customers shouldn’t have to choose between products they can afford and products that are good for the environment,” Rice said, quoting Wal-Mart founder Sam Walton. “Customers are strapped and look to us to help make sustainable products. This is quite different from the way retailers think. It’s not about putting sustainable brands next to other brands.”
What progress has Wal-Mart made since former chief executive officer H. Lee Scott sounded the sustainability cry? To much fanfare, the retailer in 2009, said it would help create a sustainable index and gave the initial funding for a sustainable consortium. To date, the consortium has 100 members. The index measures key performance indicators and category-specific metrics to evaluate a retailer’s performance and supply chain performance.
Wal-Mart has addressed 190 categories and received responses from more than 1,000 suppliers. Buyer index scorecards show how suppliers rank within a category. “It’s a key performance indicator,” Rice said. “We needed a structure that the merchant leadership would latch onto. The buyer gives the supplier a very simple and actionable tool.”
Wal-Mart has 100,000 suppliers, from consumer products giants such as Unilever to “a very small company that supplies T-shirts with local high school logos to a dozen Wal-Marts,” Rice said. “We provide training and Webinars. The buyer index scorecard itself is a training tool. It’s supposed to help suppliers understand where their opportunities are. We’re not going to cut you if you’re not at a certain level.”
Wal-Mart has made a conscious decision not to use sustainability as a way to drive down prices, Rice said. “We think it’s good and efficient for the supply chains.” One of the 200 factories in China involved in a Wal-Mart energy efficiency project saw energy efficiency improve 20 percent. “We didn’t take those savings from our supplier and pass them on to the customer,” Rice said, “but we know it’s helping our supply chain.”