Wal-Mart Pressures Suppliers to Turn Green

By Dan Keane
12:02, September 25th 2007
104 votes
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Wal-Mart Pressures Suppliers to Turn Green

World’s largest retailer and the largest employer in the United States, Wal-Mart Stores Inc., announced it will pressure its suppliers to provide carbon footprint data and look for ways to diminish it, the company announced yesterday. At first, suppliers of seven types of products will be eyed: DVDs, toothpaste, soap, milk, beer, vacuum cleaners and soda. It's worth mentioning that Wal-Mart's network includes more than 60,000 suppliers across hundreds of industries. However, only between 25 to 30 suppliers are participating in this pilot program, with no timeframe set for reporting the carbon emissions data.

"Some of them are things we rarely think about -- like our vacuum cleaners -- and some of them are things we'd rather think about, like beer and movies," John Fleming, Wal-Mart's chief merchandising officer, said yesterday during a news conference in New York. "But each of these products has an impact on our planet."

Wal-Mart is well known for using its tremendous size in negotiations, usually to get lower prices, and the company now plans to use this muscle for advancing its eco-friendly image. The retail giant started two years ago a broad campaign to restructure itself into a environmentally friendly company, vowing to create no waste, to be supplied by renewable energy and to sell more sustainable products in its stores.

The company already rates vendors on their product packaging and encourages them to reduce waste, but it hasn't yet decided whether it will rate its suppliers by their carbon footprints as well. About 3,400 suppliers participate in the product packaging program, which covers more than 13,000 products.

Wal-Mart isn't the only prominent company to take concrete steps towards a cleaner environment. For example, Dell pledged to reduce its carbon footprint by 15 percent in five years and eventually bring it to zero and shoemaking company Timberland introduced a label on some of its products that details the amount of greenhouse gases emitted to produce them.

The company is to work with the Carbon Disclosure Project, which is a nonprofit group supported by institutional shareholders that focuses on climate change and carbon emissions. The CDP will contribute its expertise in the partnership with Wal-Mart. "We are working together [with CDP] to measure our global supply chain footprint and to encourage our suppliers to reduce greenhouse gas emissions," said John Fleming.

Critics rushed to blast Wal-Mart's campaign as a PR stunt, alleging the company is working to clear its image of the many scandals in recent years. However, even its critics acknowledge that if Wal-Mart would really implement the pilot program on a larger scale, it would indeed make a difference due to the tremendous size of the company's operations. Indeed, the company was around $350 billion in annual sales and carries around 200,000 items per store, with around 60,000 suppliers.

However, it's quite clear that lower emissions mean higher prices. Not only Wal-Mart will have to pay the price if it wants cleaner-made products, but suppliers will have to trim they profits to implement eco-friendly manufacturing processes. Even if it will bring about short-term losses, the carbon footprint program could be beneficial over the long term as consumers will be, hopefully, willing to pay more for a product that doesn't hurt the environment.



© 2007 - 2008 - eFluxMedia
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