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

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


One of the statements made by Wal-Mart CEO Mike Duke last week was also very curious. He said, “Customers want products that are more efficient, that last longer and perform better. And increasingly they want information about the entire lifecycle of a product so they can feel good about buying it. They want to know that the materials in the product are safe, that it was made well and that it was produced in a responsible way."

Is Duke talking about Wal-Mart's customers? I'm curious if the Wal-Mart greeters conducted a survey at the door and had in-depth discussions with shoppers about product lifecycles.

Perhaps it's true that the 200 million people who are making purchases each week at Wal-Mart stores are concerned that the products they are purchasing are "made well and produced in a responsible way." I was under the impression that Wal-Mart shoppers mostly care about price.

If global consumers do care about all the things that Duke says they care about, I'm curious why they aren't making more environmentally responsible purchases right now. High quality eco-friendly and sustainable products do exist now, but most of them aren't sold at Wal-Mart. And customers aren't exactly flocking to the local neighborhood environmentally-responsible store in droves.

Much like the cage-free egg issue, what consumers say they care about, and what they're willing to spend their money on are two different things. Consuming contradictions are always curious.

Of course everyone is curious about who is going to pay for all this sustainability. While Wal-Mart has provided an undisclosed amount of funding to kick off this effort, the company has made it clear that it does not intend to own or fund the project in the long term.

The world's largest retailer has always made it clear that ROI ranks high in its corporate values. For example, when Wal-Mart announced in 2008 that it had signed a contract to use wind energy to power its Texas stores, its position on green retailing efforts was clearly stated. The company's vice president of energy was quoted as saying, "We absolutely are focused on doing things that are good for the planet, but it absolutely has to be good for profit as well."

So, while on the surface it might seem that Wal-Mart's leadership role in this new massive eco-friendly project is altruistic, I think we can safely assume that there is a profit motive behind it all. While profit itself is not a bad thing for a retailer to think about, when attached as a stipulation to social responsibility, all actions are tainted with self-interest. Things won't be done just because they're good for the planet or good for the masses. They'll also have to be "good for profit as well" to get Wal-Mart's participation.

In order for this new global sustainability effort to be "good for profit as well," the tab for all the indexing, labeling, and green improvements throughout the supply chains of the world will need to be picked up by suppliers, public funds, and customers. Wal-Mart will "spur the development," according to Duke, but not take ownership for all that it takes to maintain the ongoing effort. Wal-Mart is glad to set the standards, hold others accountable, and profit from the outcome, but not at the expense of its own corporate profits and shareholder returns.

Benefits without responsibility - it's a position that seems a lot more honorable with a little PR spinning. How curious.

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