Walmart’s Sustainability Commitment Grows
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by Aran Rice on 11/02/2012
Retailer commits to buy 70 percent of the goods sold in U.S. stores and in U.S. Sam’s Clubs from suppliers who use the Sustainability Index
As someone who has now spent years watching the Walmart supply chain sustainability initiative evolve in fits and starts, I can understand those who have begun to doubt that it’s ever really going to drive significant change in the environmental impact of the products it puts on its shelves. I also understand the frustration suppliers have voiced over this period that, despite an avalanche of public announcements and corporate commitments, there really has never been a clear path to success; one in which the environmental evaluation of a product might influence the decision making of buyers and reward the high performing supplier. Overall, it seems that there has been a creeping sense that the initiative, in its various incarnations, was long on promises but short on follow through.
After the rollout this summer of the Supplier Sustainability Index and this week’s Walmart meeting in Beijing, some of those attitudes, including mine, might be changing. The gathering on Wednesday, led by CEO Mike Duke and members of the Sustainability Team presented further details on a program that may prove to be the beginning of a very significant shift in how the retail giant works with both its buyers and suppliers to meet the lofty goals it has set.
One pivotal announcement was that U.S. based Walmart and Sam’s Club stores are now in the process of making sure that no less than 70% of the goods they sell come from suppliers who are responding to the Sustainability Index. This Index, recently developed in conjunction with The Sustainability Consortium, is actually a highly varied series of category-specific questionnaires designed to identify the most relevant environmental impacts of products across hundreds of different categories. Walmart and Sam’s have already released the Index to over 100 different categories made up of over 500 unique suppliers and, true to Walmart form, have requested nearly immediate responses from these companies. The goal is to release the Index to over 100 additional categories in 2013.
One sign of how seriously Walmart is taking this initiative is not only the short timeline for compliance, but also the speed with which they have begun sending out evaluations to suppliers who have either completed, or not completed, their responses. Many suppliers I have spoken with have been surprised, both by the fact that they have already received documents evaluating their environmental performance but also that these evaluations arrived with benchmarks for how their products stacked up against competitor products in their category. The speed and responsiveness of Walmart’s team around this process in the first wave of target categories or “batches,” has led many suppliers to begin taking a hard look at their own performance and that of competitive brands, understanding that the next step, buyer meetings in which this information will be reviewed, is right around the corner.
To apparently convince both Walmart employees and the rest of the world how seriously they are taking the initiative, this April, Mike Duke announced a new program in which buyers in U.S. Walmart and Sam’s Clubs will have specific sustainability objectives added to their annual evaluations. This is a significant evolution in a process which has often been criticized for lacking teeth. For the first time we are seeing evaluations happening on both the supplier and buyer level, with clearly identified rewards for each participant in the process.
What remains to be seen is how effectively suppliers will be able to manage this sometimes daunting process of reporting their sustainability performance through the Index as well as how effectively the buying group will be able to employ this information in the purchasing process. For now, many of us will wait and see what kind of progress Walmart is able to achieve with the Index in 2013, but it seems that the retail giant may be making good on its promise to bring more sustainable products to its customers and that this promise may come true sooner than most of us had ever expected.
Aran Rice is Vice President of Sales Operations for Renewable Choice.