U.S. Green Retailing : Will Wal-Mart Profit From Sustainability Labeling

Supply Chain Standards Are High But Wal-Mart's Own Green Standards are Low

The U.S. retail industry and the world was buzzing last week after Wal-Mart staged a high profile meeting with its suppliers and employees, where it revealed plans to create a universal sustainability rating system for products sold in Wal-Mart stores worldwide. A standardized index to rate products on environmental and social impact, and a labeling system that reveals those sustainability ratings to consumers will hold its supply chain accountable to high environmental standards. Green retailing will be more than just a concept.

The idea was called ambitious and admirable by some, audacious and arrogant by others. The word that comes to my mind is "curious."

One of the first steps in this major green initiative is for suppliers of Wal-mart products to answer a 15-question survey pertaining to energy, waste, natural resources, and ethical production. I'm curious how Wal-Mart corporation itself would answer its own question #2 which asks "Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?"

Back in 2007 Wal-Mart announced that it was partnering with the CDP to measure the energy efficiency of its supply chain. "This is an important first step toward reaching our goal of removing non-renewable energy from the products Wal-Mart sells,” the company's chief merchandising officer was quoted as saying at that time.

What about removing the non-renewable energy from its own operations? Wal-Mart is still ranked #15 on the EPA's Green Power Purchasers list, well behind much smaller chains like Kohl's and Whole Foods. So while Wal-Mart itself has not reduced its own corporate greenhouse gas emissions nearly as much as it could have, the company is intent on making sure that its suppliers do that very thing. That seems like a curious double standard.

Wal-Mart has 4,100 buildings in the U.S. None of them have received LEED certification from the U.S. Green Building Council yet. Also, in the past two years, 22 global retailers have been recognized by the Association for Retail Environments for their green interior and exterior design. Wal-Mart is not on that list either. The energy consumption and natural resource practices of its suppliers are going to be scrutinized and held to high standards. Wal-Mart's standards for its own operations, however, seem curiously low.

I'm curious about who is going to take responsibility for verification of all this supplier-supplied data. I'm also curious how many suppliers will fudge the facts if there isn't a stringent global governance infrastructure in place.

By spearheading this retail sustainability effort, Wal-Mart has taken on a role that normally would be played by a government-controlled entity. Since Wal-Mart's $410 billion sales in 2008 were larger than the gross domestic product of 39 countries of the world, in a fiscal sense, the company qualifies as its own country. So, now Wal-Mart is a self-appointed governing entity for the world's supply chain. I'm curious if having a private enterprise in that position is disconcerting to anybody but me.

One of the statements made by Wal-Mart CEO Mike Duke last week was also very curious... more...