In 2009, Walmart single-handedly changed the face of corporate sustainability with the introduction of its Supplier Sustainability Assessment (SSA), aka the 15 Questions. As goes Walmart, so goes the marketplace, and since the SSA’s appearance, more and more companies have implemented supply chain sustainability and scorecard programs. As announced at their Global Sustainability Milestone Meeting several weeks ago, Walmart is poised to change the supplier sustainability landscape – again.
In 2012, Walmart will release sustainability requirements specific to 100 of its product categories. This is a significant change from the SSA, which asked general questions of suppliers to assess environmental impacts and readiness to participate in deeper, product-level analyses. Instead, the new initiative will require specific product categories to respond to scientifically-derived assessment criteria developed in partnership with The Sustainability Consortium (TSC). Examples of categories which will have their own questionnaire are apparel, toys, and electronics and the process suggests that each category questionnaire will be looking for information specific to that industry.
In conversations last month with sustainability executives at Walmart, our team was able to ask many of the questions that our customers and others have had around the retailer’s sustainability initiative and the direction that it will be taking in 2012 and beyond. We came away with good clarification around the expectations that Walmart has for its suppliers in the coming years.
Walmart is becoming more aggressive in seeking out suppliers who will help them to reach their 20 million metric ton carbon reduction goal. Early on in the process, there was speculation that only the largest suppliers to the retailer would assist in them hitting this goal, but now they are looking to get everyone involved. To this end, Walmart is creating a Sustainability Hub website that will provide a venue for suppliers to tell the company about the successes they have achieved through operational efficiencies, especially those inspired by participation in the retailer’s program.
One of the most interesting aspects of the Sustainability Hub is the suggestion that it is not only a venue for suppliers to tout their successes, but also for Walmart’s sustainability team to identify and reward top performers. Additionally, it has been made clear that low performers will be invited to Bentonville for what they refer to as “family meetings” to discuss possibilities for improved performance.
Walmart’s executive leadership continues to believe that sustainability is essential for the future and that consumers will become ever savvier in using sustainability metrics and environmental impact as a way to evaluate products and their purchase. This new program will help to increase the transparency of the productivity loop while still allowing the retailer to control product costs.
Walmart expects that its new sustainability index program will be formally rolled out in late 2012, with an incentive plan for buyers and merchandise managers, and a supplier reward system, to be in effect by October, 2013.
With this announcement, Walmart has made it clear that sustainability continues to be a critical corporate initiative and that suppliers across industries will need to continue to prepare for the impacts of this index implementation. Already, other major retailers and manufacturers, including Procter & Gamble, Dell, Kohl’s, and Kaiser Permanente, to name a few, have implemented supply chain sustainability scorecard programs.
If you’re bracing for the changes to come with the new Walmart index, being asked to track and report your environmental performance by your buyer, or thinking of implementing your own supply chain sustainability program, we can help. We’ve worked with hundreds of organizations to develop sustainable business practices, respond to scorecard requests, and report to the Carbon Disclosure Project (CDP). How can we help you?