Walmart: Environmental accountability in its supply chain

Climate change and environmental accountability are both hot topics in the 21st century. More and more people are becoming concerned about the products they buy and what impact on the climate their production has. It has been reported that also more businesses are increasingly taking environmental performance into account when selecting suppliers. In July 2009, Wal-Mart announced its intention to create a global sustainability index system to keep track of products ratings according to the environmental and social impacts of their manufacturing and distribution. The motivation behind the index is to create environmental accountability in Wal-Mart’s supply chain and to encourage other retail companies to do the same.

Wal-mart Stores, Inc., doing business as simply Walmart, is an American multinational retailing corporation that operates as a chain of hypermarkets, discount department stores, and grocery stores. As of January 31, 2017, Walmart has 11,695 stores and clubs in 28 countries. Walmart is the world’s largest company by revenue – approximately $480 bln (2016), as well as the largest private employer in the world with 2.3 million employees. Walmart Canada has stores in every province and territory, except for Yukon and Nunavut. Walmart Canada has in total 410 stores (January, 31st, 2017).

Every year Walmart posts its Global Responsibility Report (GRR) on its corporate blog and it gets shared via social media. The report usually outlines some key initiatives that took place over the previous years and updates on the progress. For example, one of the ambitious challenges that Walmart defined for itself is to advance toward goal of 100 % renewable energy. Walmart continues to expand the development of on-site and off-site solar, wind, fuel cells and other technologies, to accelerate progress to ultimately be powered 100% by renewable energy by 2020.

Another challenge is to reduce waste across global operations.  Walmart’s goal is to create zero waste by providing innovative solutions to improve waste data management and reduce and divert food and materials from turning into waste.

Walmart is committed to selling products that comply with safety laws and regulations, giving customers trust in the items company sells. Walmart constantly expands the ability to identify and monitor supplier and product compliance and to hold suppliers accountable for adhering to their standards. Walmart also expects suppliers and factory management to provide men and women who work in production with a safe and healthy work environment.

These are just few examples highlighted from the annual GRR reports that are posted on Walmart corporate blog. Environmental news get shared with help of social media bringing awareness to the wider public.

Lessons for Others

Walmart top goals: to be supplied 100 percent by renewable energy, to create zero waste and to sell products that sustain Global resources and environment. The sustainability Index is now being used by 1,300 of Walmart’s suppliers to evaluate the sustainability performance of their products’ life-cycle. Walmart has said that by the end of 2017, it will buy 70% of the goods it sells in the US stores “only from suppliers who use the Sustainability Index to evaluate and share the sustainability of their products if they produce goods in categories where the Index is available”.  Walmart has been experimenting with ways to communicate sustainable products to its customers. In March, it launched a Sustainability Leaders page on official website that identifies products from companies deemed “ sustainable leaders”. There’s been some criticism that it is confusing for the customers to understand the system and that Walmart is not very transparent with its definitions of Sustainability leaders. For example, Walmart’s definition of “leader” is based on how suppliers score on Walmart’s Sustainability Index in each of several product categories, not on the product themselves. However, Walmart, should be credited for thinking about Global impact its products have on the environment and for working together with its suppliers. For such gigantic corporation like Walmart it’s a huge challenge to become environmentally friendly and the leadership set up ambitious goals, so let’s wait for the next annual report to see the progress.

If you have concerns as to the accuracy of anything posted on this site, please send your concerns to Peter Carr, Program Director, Social Media for Business Performance.

---

References