Wal-Mart’s Sustainability Index: The Greenest Thing Ever to Happen to Retail?
Author: Brian Merchant
Original Publication Date: 14 July 2009
I hate to admit it, but it’s true–it’s getting harder and harder to hate Wal-Mart. Details are surfacing about the gigantic retailer’s initiative to create a massive ‘sustainability index’–one that would meticulously measure the environmental impact of every single item it stocks. Needless to say, the idea alone raises plenty of questions. But if it’s successful, the index could literally change the face of retail forever.
Apologies if that language was a tad grandiose, but it’s actually pretty accurate.
Take it from Marc Gunther’s report in Big Money:
The giant retailer ($406 billion in revenues in 2008) is developing an ambitious, comprehensive, and fiendishly complex plan to measure the sustainability of every product it sells. Wal-Mart has been working quietly on what it calls a “sustainability index” for more than a year, and it will take another year or two for labels to appear on products. But the company’s grand plan-”audacious beyond words” is how one insider describes it-has the potential to transform retailing by requiring manufacturers of consumer products to dig deep into their supply chains, measure their environmental impact, and compete on those terms for favorable treatment from the world’s most powerful retailer.
And this in turn could end up being one of the biggest motivators to make truly ‘green’ products ever. To enter the index, each product will have to undergo an intense life cycle analysis. This will require help from each of Wal-Mart’s 60,000+ suppliers, and some painstaking research. With inspectors and analysts crawling up the supply chain and peeking into every corner of production in order to deliver a comprehensive environmental assessment, we might see some major changes made by some major companies.
But who’s going to be doing the crawling and peeking, exactly? Well, researchers from some of the top universities in the US, for starters. Faculty at Harvard, Stanford, UC Berkelely, and others have reportedly been involved in the planning stages of the index. Wal-Mart’s next move is to announce a ‘sustainability consortium’ (which will debut this Thurs. the 16th) that includes the likes of U of Arizona professors, big manufactureres like Proctor and Gamble and General Mills, and potentially all the aforementioned faculty and even other competing retailers like Target and Costco.
The Last Line of Defense from Greenwashing: Wal-Mart?
Details on how the whole operation will work are still murky, but a label on each product that will help consumers ward off greenwashing will be a key component. But the effect of the index could be much further reaching than that. As Gunther points out:
Wal-Mart has an enormous influence over which products get made, and which don’t. Last year, the company said it would stop selling baby bottles containing the chemical bisphenol-A, which is approved by U.S. and European regulators. (A story that I wrote about this for Fortune magazine ran under the headline “Wal-Mart: the New FDA”). When, as part of its ambitious sustainability program, Wal-Mart said it would sell only concentrated laundry detergent, which uses less packaging and water, manufacturers fell into line.
The program could, essentially, force ungreen products off the market before a label even has a chance to discourage a consumer from buying it–if Wal-Mart continues to be inclined to support products with lower environmental impacts.
Of course, while the idea seems to be pretty inspired thus far, plenty of questions remain unanswered–how will the labeling process work? Who will comprise the consortium, and will it be balanced? Will it grant Wal-Mart too much power to determine which products are sustainable and which aren’t? We’ll be watching.