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March 1, 2010

Green Supply Chain News: Walmart Ups Greenhouse Gas Goals, but Numbers Show Challenge of Making Impact on Total CO2

 

Program will send Walmart Experts Deep into Vendor Supply Chains; Move will Slow Growth of Total GHG Emissions, but Really Moving the Needle is Very Hard

 
By The Green Supply Chain Editorial Staff

Walmart last week announced a new set of programs and goals for reducing the green house gas emissions of its extended supply chain, drawing praise from some environmental quarters but also illustrating the challenge of making an overall meaningful dent in total green house gas emissions.

In a press release, the world's largest retailer said it now has plans to reduce the C02 emissions of its total supply chain by 20 million metric tons by the end of 2015. It will do that largely by working with its suppliers on their own greenhouse gas emissions.

This new effort is in parallel to other programs Walmart has already announced, such as reducing the carbon footprint of its own logistics operations and huge store network, and working on development of a new Green Supplier scorecard.

Walmart says it believes that many of the opportunities to reduce green house gases will also reduce energy use and total supply chain costs.

 
The Green Supply
Chain Says:
The more of a given SKU that Walmart sells, the much more likely it will be targeted early on, unless it has a very low total carbon footprint.

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To develop the new program, Walmart said it worked with a number of third parties, such as the Environmental Defense Fund (EDF), PricewaterhouseCoopers, ClearCarbon Inc., the Carbon Disclosure Project and the Applied Sustainability Center (ASC) at the University of Arkansas.

The program, Walmart said, consists of three main components:

Selection: Walmart will focus on the product categories with the highest embedded carbon. This is defined as the amount of lifecycle GHG emissions per unit multiplied by the amount the company sells.

In other words, the more of a given SKU that Walmart sells, the much more likely it will be targeted early on, unless it has a very low total carbon footprint. It is a simple math calculation of carbon footprint per product times number of units sold.

To find the embedded carbon, the ASC reviewed the GHG emissions associated with all Walmart product categories. This approach, Walmart says, ensures its project team will focus on the categories that have the greatest opportunity for GHH reductions. Reductions can come from any part of a product’s life cycle.


Action: For a project to be included as part of this goal, it must reduce GHG emissions associated with a product in either the sourcing of raw materials, manufacturing, transportation, customer use or end-of-life disposal. Walmart must demonstrate it had direct influence on the reduction and show how that reduction would not have occurred without Walmart’s participation.


Assessment: Suppliers and Walmart will jointly account for the reductions. ClearCarbon will perform a quality assurance review of those claims to ensure methodology, completeness and calculations are correct. When the claims meet the quality assurance check, PricewaterhouseCoopers will assess under consulting standards whether the defined procedures were followed consistently to quantify the reduction claim
.

Walmart says the 20 million ton GHG reduction is the equivalent to taking 3.8 million cars off the road - and that the end result will not make that big a dent in the total carbon emissions of its extended supply chain.

The reduction, if achieved, will be equal to about 1.5 times the expected growth in Walmart's otherwise expected GHG emissions growth during the period.

So, the achieving the program goal would in fact reduce Walmart's total global carbon footprint a bit, but not yet to any significant degree.

Walmart didn't estimate the total carbon footprint of its huge global supply chain, which consists of as many as 100,000 suppliers, and acknowledged that the reductions wouldn't dramatically curtail its current overall contribution to the green house gases many scientists say is causing climate change.

"Is Wal-Mart moving the earth? No, not yet," writes Elizabeth Strucken of the Environmental Defense Fund, which is working with Walmart to help its suppliers reduce both emissions and costs. 

Nevertheless, Strucken is positive on the move, saying  that this is "precisely the kind of innovative approach to reducing carbon pollution that we need right now."

What's your reaction to this latest Walmart Green supply chain program? Is it perhaps getting too intrusive in its suppliers' operations? What will be the challenges? Let us know your thoughts at the Feedback button below.

 

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