Walmart at 50
Editor’s note: No one could have predicted that a colossus was in the making when the very first Wal-Mart opened its doors on July 2, 1962, in Rogers, Ark. Billed as the area’s first “quality discount center,” the store promised name brands and 22 departments, from jewelry and hobbies to ladies’ wear and shoes.
The next five decades saw that one store grow into the biggest retailer — and one of the largest companies — in the world, with a global workforce of 2.1 million, net sales of $444 billion and 10,130 stores in 27 countries.
Walmart has capitalized on its massive size and volume in many ways over the years. But the one that has won it the most accolades has been its commitment to the planet. Chain Store Age celebrates the 50th anniversary of Walmart with a look at the company’s broad-based approach to sustainability.
Few retailers — or companies in general for that matter— are positioned to have as much impact on global well being as Wal-Mart Stores, whose footprint touches communities on five continents. As the Bentonville, Ark.-based giant marks the big 50, its culture is committed to identifying, developing and expanding sustainable practices that will improve quality of life the world over — and also help its own bottom line.
“We’ve done all of this because it is the right thing to do for the generations that will follow us. But sustainability is also the right thing to do for our business. Every time we cut back on packaging or fuel or electricity, we save money. Every penny we save adds up for our customers, our shareholders and our future,” said Walmart president and CEO Mike Duke at the company’s annual Global Sustainability Milestone Meeting in April.
However, Duke acknowledged that Walmart has not always moved as fast as the company had planned.
“When you set big goals, you will run into roadblocks … everything from technological and legal issues to policy complications,” he asserted.
Walmart’s achievements and overarching goals in sustainability are spelled out in its “2012 Global Responsibility Report,” which highlighted the company’s progress in its most recently completed fiscal year (ended Jan. 31, 2012). Many of the most impressive accomplishments revolved around sustainability, specifically its utilization of renewable energies, reductions in waste, and development of sustainable products and practices. (See story, page 15.)
In the report, Duke acknowledged: “Size and scale can work for us — and against us.”
While the company’s powerful presence promotes partnerships and conversations with government, academic, corporate and non-government organizations (NGOs, typically associated with the United Nations), Walmart locations in less-developed communities often have limited options for implementing sustainable initiatives.
For instance, Duke also noted, “We recognize we have a ways to go to achieve our goal of being supplied 100% by renewable energy.”
However, Walmart-driven renewable projects have already provided more than 1.1 billion kilowatt hours of Walmart’s electricity needs. The company has also purchased an additional 18% of its electricity needs from the grid, bringing Walmart’s total usage of electricity from renewable energy to 22%.
In 2011, the company also diverted 80% of waste away from landfills in its U.S. operations and made impressive strides in other countries as well, diverting 52% of its operational waste from landfills in both China and Brazil. But Walmart’s sustainability commitment encompasses much more than the traditionally targeted green areas of recycling, reducing and reusing.
Andrea Thomas, senior VP sustainability for Wal-Mart Stores, explained that to understand Walmart’s objective, “you have to step back and look at our company mission: ‘Saving people money so they can live better.’ Sustainability is one aspect of how to live better, but it’s not the only part.”
While leading sustainability, Thomas also works on Walmart’s healthy foods initiative and partners closely with the Walmart Foundation to promote women’s economic empowerment and community programs around hunger.
“These initiatives all come together to help achieve the ‘living better’ goal,” she said.
Walmart certainly has a broader definition of sustainability than a lot of companies, but the chain doesn’t let itself get caught up in the semantics, Thomas noted.
“Under the sustainability umbrella, we look at anything to do with the environment, communities and economic sustainability that will help us continue to serve our customers well into the future,” she said. “We maintain a broad definition because it is more about how we can make a broad impact than how we fit into a very specific definition.”
The retailer’s commitment to make a broad impact is one reason the Environmental Defense Fund (EDF) has aligned itself closely with Walmart. Founded in 1967 and based in Washington, D.C., the organization’s mission is to preserve natural systems while identifying practical and lasting solutions to serious environmental problems. In 2007, the EDF opened an office in Walmart’s hometown specifically because of the breadth of work and influence that Walmart has in the area of sustainability.
“At EDF we think the most important area to focus on is greenhouse gases (GHG) because reducing GHG emissions will have the most stabilizing impact on the global climate,” said Michelle Harvey, senior project manager retail, EDF.
Harvey noted that Walmart has pledged to reduce GHG from its supply chain and is striving to take 20 million metric tons out of the supply chain from 2010 to 2015.
“We’re excited to see such a strong commitment from Walmart, and that they are sharing this back with their suppliers,” she said. “Walmart has the clout, leverage and scale to affect change — not only in the retail industry but across all industries.”
Making improvements in the supply chain encompasses much more than logistics. Sustainable agriculture is a huge focus, for the EDF as well as Walmart. For instance, harvesting palm oil (which is a staple in many products) destroys rain forests, which can have devastating environmental impacts. By 2015, Walmart has decreed that its products will only use sustainable palm oil — a decision that Harvey applauds because it “sets a precedent in the retail industry and provides incentive to manufacturers.”
“The dairy industry has been another focus because it has high amounts of GHG, and Walmart has been a leader by looking at every possible area for improvement — from feed that would reduce cattle [flatus] to the refrigeration systems used for processing milk,” she added.
Harvey also lauds Walmart for seeking positive solutions even when it means bucking a popular alternative. For instance, when the chain’s U.S. operations diverted 80% of waste from landfills, the company found ways to reuse or recycle waste.
“They didn’t send it to an incinerator. Burning waste in an incinerator is just another disincentive for reusing materials,” Harvey said.
One of the biggest accomplishments for the EDF and Walmart is The Sustainability Consortium. The retailer in 2009 provided the initial funding to create the group, which unites the EDF with retailers, suppliers, academics and NGOs to establish scientific basis for making good decisions. The resulting Sustainability Index and scorecards across discreet product assortments will bring consistency in sustainable practices throughout the retail industry.
“There is tremendous opportunity in the work we are doing with The Sustainability Consortium, which is all about working together as an industry,” said Walmart’s Thomas. “By making some small changes as an industry, but doing it with the kind of scale that a large retailer can bring, we can make amazing things happen.”
Connie Robbins Gentry is a contributing Chain Store Age editor.