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-April 16, 2014 -

Green Supply Chain News: Walmart CEO on Company's Sustainability Progress

 

The Challenge: Much Progress has been Made, but Overall Carbon Emissions Continue to Grow

 
By The Green Supply Chain Editorial Staff

 
The Green Supply
Chain Says:

Starting last year, its buyers are now being evaluated on their use of the supplier sustainability index scores in sourcing decisions, and how much progress is being made in the categories which they manage.

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Current Walmart CEO Mike Duke was handed the sustainability mantle his predecessor Lee Scott had created in the mid-2000s and beyond. Scott's leadership made Walmart one of the most aggressive companies with regard to green supply chain initiatives and goals.

Among many actions that came from that focus, Walmart's establishment of a sustainability scorecard for its suppliers was among the most consequential.

Duke seems to have a passion for sustainability equal to that of Scott. That certainly came through in a recent interview Duke had with the Wall Street Journal's Gerard Baker, which is summarized below.

Winning over the hearts and minds of employees was a key early effort, Duke says, noting that he and Scott talked often about how to inspire all of Walmart's "associates."

"This is not about a small group. It's not about a corporate team," Duke noted. "It's about getting two million people that work for Walmart excited all over the world about sustainability."

And of course there would also be challenges in winning over thousands of suppliers as well, though ultimately Walmart holds a pretty big stick, as it often represents a substantial portion of a vendor's total business.

Duke says there were other big goals and questions.

"How do we create a company that has zero waste? How do we have a company that sets a goal for 100% renewable energy? And a company that also creates products that are sustainable for both individuals and for the planet?" he said in the interview.

And Walmart has really made rapid progress on nearly all of its green goals. Duke notes, for example, that since it established the zero waste goal in 2008, the company has reduced the level of materials headed to a landfill by some 80%.

All that material now goes to "recycling efforts and to produce good material from what some might call trash," Duke said.

The Journal's Baker, to his credit, noted that for all these efforts, Walmart's total greenhouse gas emissions have actually grown since 2005, as mitigation efforts simply can't keep up with Walmart's overall business growth. How does Duke view that contradiction?

"There's nowhere in our strategy that says we want to shrink the company. We still want to keep growing," Duke says.

He adds that Walmart's plans for energy reduction will eventually pay off.

"We want to have a reduction of 20% of energy consumption, in kilowatt-hours per square foot," he says. "So we do want to keep growing the company, but at the same time, per store, per square foot, per customer served, per associate, we want to improve the impact that we're having on the world."

Duke adds that Walmart is taking moves to increase the focus on sustainability by managers. For example, starting last year, its buyers are now being evaluated on their use of the supplier sustainability index scores in sourcing decisions, and how much progress is being made in the categories which they manage.

"It causes the merchants then to look at everything that we sell and say, 'How do we improve the index? How do we make it better?'" Duke says.

He says that Walmart buyers, for example, played a key role in the move of some detergent makers to develop more concentrated versions of their products. That reduces the total amount of packaging materials required, and allows more wash cycles to be shipped in a smaller footprint, allowing manufacturers and Walmart to fit more goods on a given truck.


Walmart is also taking its program global, including active strategies In China.

"We kicked off just a few years ago with a big summit in China with support from the Chinese government and several hundred suppliers in China to increase energy efficiency, create more sustainable production practices throughout China," Duke says. "I think we've made some progress in recent years."

But regardless of what progress Chinese suppliers make, goods sourced from their still have to travel a long way to reach the US. So a big part of Walmart's new push for increasing the amount of US-made goods its sells is sustainability.

"With the focus on sustainability and with rising cost of energy and moving product all over the world, it makes more sense in the long term for more product to be made closer to the consumer," Duke noted.

Are Walmart's efforts in sustainability more about PR than true commitment?

Duke responded to that provocative questions this way: "We want to grow sales and serve more customers. This is really about customers. Where do I think and where does the company believe that customers are headed? That's why we've put so much emphasis on it," he said. "It's also about the people that work for the company. People want to work for a responsible company today. It's about running a better company. And along the way, we've saved hundreds of millions of dollars."


What do you think of Walmart's Green efforts and progress? Let us know your thoughts at the Feedback button below.



 
   
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