Wal-Mart is the largest retailer in the world today, and as such they feel that they have to give something more back to the communities that they support. How do they plan on doing this? Well, certainly not by reducing any more prices! Instead, Wal-Mart will be focusing on ascertaining the environmental and social impact of each item that is placed upon their shelves.
To accomplish this somewhat enormous task, Wal-Mart has enlisted the help of environmental groups, suppliers, and educated scholars, to help create an electronic indexing system that would help rate the environmental and social impact of every product.
The objective is to produce a universal rating system that will appoint scores based on how a product will be, both environmentally and socially sustainable, throughout its projected lifespan. The concept is quite similar in fact, to organic nutrition labels on foods.
However, such a sustainability rating system would focus on a wide range of social and environmental consequences, rather on specific details such as waste reduction or lower emissions.
The apparent goal is encourage other retailers, both large and small, to adopt Wal-Mart’s universal indexing system, which is set to be completed over the next five years.
Wal-Mart’s President and Chief Executive, Michael T. Duke, explains that:
“We have to change how we make and sell products. We have to make consumption itself smarter and sustainable.”
Because Wal-Mart is such a retail giant, they are the only ones that could actually pull of such an indexing system on such a global scale.
Michelle Harvey of the Environmental Defense Fund, one of the environmental groups hired by Wal-Mart to help create the indexing system, exclaimed:
“Nobody else could pull this off.”
However, some people are already questioning whether or not Wal-Mart could even finish such a daunting project.
Professor, Jon Johnson, at the Sam M. Walton College of Business at the University of Arkansas, whom the company asked to help create the index, explained that:
“I think it’s going to be a lot of work for a lot of people. But obviously we’re optimistic about the prospects.”
One of Wal-Mart’s major suppliers’s, Unilever, expressed their support for such an indexing system and their Senior Vice President, Joe Cavaliere, called it “a great move forward for the industry.”
Tim Marrin, the associate director of external relations for Procter & Gamble voiced his opinion on the importance of sharing the new sustainability index across the entire retail industry.
“The last thing a supplier really wants is when you’re doing a separate index for every retailer. Wal-Mart has invited the Targets’, the Costcos’, the Tescos’ of the world to come up with a solution so that there are not 5, 10, 15, 20 different standards that retailers are implementing in their markets.”
Other concerns involving the cost of producing more environmentally sustainable goods have also been brought up, as Wal-Mart’s Chief Merchandising Officer, John E. Fleming, knows only too well.
“The first question is always, ‘It’s going to cost more’. But you know, I think we’ve demonstrated time and time again, if you reduce packaging, if you reduce energy, the costs go down.”
The first step in creating the indexing system is to have Wal-Mart’s 100,000 or more global suppliers, complete a 15 question survey regarding the sustainability practices of their company.
Suppliers in the USA have until October to respond, whilst international suppliers do not yet have a deadline by which they need to respond. Those who don’t respond to the survey might face limited business opportunities down the road.
Wal-Mart seems to understand that today’s consumer generation, those born between 1980 and 2000, are making purchases that are based not just on a low price but also on their sustainability factor, such as avoiding products that were made in a sweat factory by children.
Mr Fleming explained that, “These younger consumers, they care deeply about this regardless of what happens in the economy. When I go around to colleges and universities to recruit, sustainability is tops on their list. So I think this will help us build a better business model.”
Hopefully, the success of Wal-Mart’s universal indexing system would force other manufacturers and suppliers to also create more environmentally sustainable products.
Photo Credit: jason.mundy