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Wal-Mart Eco Plan Sparks Supplier Revolt

October 4th, 2007 · by Tim Minahan · 2 Comments · best practices, enviro/social sustainability, supply management

Kermit the Frog had it right: It ain’t easy being green. Just ask Wal-Mart.

As profiled here, the retailer last week announced plans to extend its environmentally responsible business practices to its supply chain. The pilot program, which encourages suppliers to lower power consumption and waste and produce more environmentally responsible products, received kudos from environmental groups and a boost of confidence from investors. Yet, lobbyists representing Wal-Mart suppliers claim the program runs afoul of corporate ethics. (How’s that for irony?)

The National Legal and Policy Center (NLPC) argues that Wal-Mart’s eco-friendly supply chain strategy is merely a political stunt aimed at calming liberal lawmakers that have been critical of the retailer’s labor, business, and environmental practices. In a new report, the NLPC claims that Wal-Mart’s program puts undo pressure on its 60,000 suppliers to take costly measures to cut emissions and waste to combat what the group calls “the unproven global warming threat.”

The epicenter of NLPC’s gripe is that Wal-Mart officially presents its plan to monitor suppliers’ energy and resource consumption as a voluntary pilot, while public comments from public officials have suggested that eco-friendly suppliers will get preferential treatment when it comes to winning new business.

For example, the report quotes Wal-Mart SVP of Transportation Tim Yatsko as saying, “We made it clear that all things being equal, we’ll give business to operators who show they’re fully engaged” in fuel efficiency efforts. It also cites Wal-Mart’s sustainability program that would, within 18 months, “show preference to suppliers who set their own goals and aggressively reduce their own emissions.”

No word on Wal-Mart’s official response to the report. But I’ll sum up my opinion in two words: So what?

If Wal-Mart — or Airbus or Hewlett Packard or anyone else for that matter — wants to measure and award business based on how well suppliers manage their own carbon footprints, so be it. The NLPC’s argument that it is cheaper for Wal-Mart suppliers to operate using inefficient and wasteful manufacturing and delivery methods is misguided, short sighted, and just plain wrong. (Sort of like arguing that Wal-Mart is unethical for demanding suppliers to use fair labor practices when child labor is so darn cheap.)

The core of Wal-Mart’s strategy is equally about creating lean, cost-effective, and efficient operations as it is about helping the environment. Shedding unnecessary packaging, lowering your power bill, and cutting transportation costs is plain good business. Like movements such as lean manufacturing and ISO 9000 before it, Wal-Mart’s sustainability moves will actually reduce costs and improve operating efficiency across the entire supply chain.

As reported here earlier this year, Wal-Mart says it will invest $500 million in sustainability projects and has set aggressive goals to increase the efficiency of its vehicle fleet by 25% over the next three years. Reduce energy used in stores by one-third. And cut solid waste from U.S. stores by 25% in three years. The retailer has already begun working with suppliers to help them reduce energy consumption, packaging, and waste in their own operations.

The only thing NLPC is right about is that, while not directly mandating that suppliers embrace sustainable business practices, Wal-Mart is certainly signaling the direction of things to come.

To learn more about how sustainable business and supply strategies can help your company, attend Empower 2007. To get a preview of how companies like Microsoft and Kellogg’s are embracing and benefitting responsible business practices, tune into an exclusive podcast short here.

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2 responses so far ↓

  • 1 Ethan Smart // Oct 12, 2007 at 1:30 pm

    It’s nice to see some positive comments in regards to Wal-Marts efforts to “Go Green”. Too much focus has been put on their motivations behind the movement and not enough on the good that can come of it. Whether you believe in the science behind global warming or not, we can’t possibly think that the pollutants we dump into our oceans and skies are helping. For whatever reason they choose to push towards a cleaner planet I am all for it.

  • 2 Dan Burda Shredderhotline.com // Jan 11, 2008 at 12:05 pm

    We are a small firm and have been involved with Walmart and other groups associated with them for an oil bottle grinding project and althouth we have had to fund the development of this ourselves we still feel that if we can help the giants with their problems or help the giants get eco friendly then it is better than nothing at all…one step at a time for us all..

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