Walmart: Save Money, Build Better
Mention Walmart in conversation and you're likely to get an earful. Love it or hate it, nearly everyone has a strong opinion about the retail giant. Some people appreciate the superstore for delivering jobs, tax revenue and low prices to local communities. Others believe Walmart destroys family-owned businesses and exploits its workers and suppliers.
Whatever your opinion of Walmart, as the world's largest retailer, the company is a power player in the business world. When Walmart does something new, companies everywhere take notice and usually follow suit.
"People pay attention to the Walmart experiment," says Steve Ashkin, president of The Ashkin Group, Bloomington, Ind., and a Walmart advisor.
Today, the world is watching Walmart's efforts to "green" its operations. About three years ago, the company implemented its "Sustainability 360" approach to environmental stewardship and set out to achieve three goals: Being supplied 100 percent by renewable energy, creating zero waste and selling products that sustain people and the environment. Big goals for a big company.
To turn its vision into a reality, Walmart created its Sustainable Value Networks (SVN) program, which brings together industry leaders to create best practices for purchasing. Currently, the SVNs are developing scorecards to guide buying decisions based on the environmental impact of a supplier's product.
"The goal is to help Walmart figure out how they can offer more sustainable products," says Ashkin, who serves on Walmart's SVN for chemical intensive products.
Walmart is also focusing on its buildings, not just the products being sold inside them. The Sustainable Buildings program takes a two-prong approach to make its facilities more energy efficient, reduce greenhouse gas emissions, conserve water, and increase the use of recycled materials.
First, the company launched its High Efficiency (HE) pilot program in 2007. So far, 11 experimental stores have been built around the country to test various technologies, many of which will be added to all future locations. Consumers can already expect to see many changes at new Walmart buildings, including recycling programs, skylights to reduce lighting costs, efficient LED lights to replace fluorescents in outdoor signage, concrete floors made of recycled cement and low-flow toilets and faucets in the restrooms.
The second part of Walmart's buildings program involves retrofitting its existing facilities with dozens of sustainable technologies, including centralized energy management systems, white membrane roofs and low-VOC (volatile organic compounds) paints.
The company began purchasing wind energy last year for 350 stores in Texas and is now adding solar power to 20 stores in California and Hawaii. Walmart has installed fuel-saving technologies on its fleet to make it 38 percent more efficient, and is now exceeding the national recycling rate by redirecting about 60 percent of its waste away from landfills.
"At Walmart, we're working to make sustainability sustainable, so that it's a priority in good times and in the tough times," said Mike Duke, president and CEO of Walmart at a sustainability meeting last July.
Despite Walmart's massive sustainability undertaking, the company hasn't clearly addressed whether it will pursue a green cleaning program. In fact, official Walmart statements make little mention of housekeeping.
It's not surprising the company is tight-lipped about its cleaning practices. In 2003, Walmart's reputation was tarnished when federal immigration agents raided 61 stores across the United States. They arrested 245 illegal immigrants employed by building service contractors that cleaned Walmart stores. Walmart later agreed to pay $11 million to settle the case.
The incident further fueled anti-Walmart sentiment, particularly among labor unions and other workers' rights groups.
At the time of the raid, Walmart contracted with 110 BSCs to clean approximately 700 of its 3,400 stores. Soon after the public-relations fiasco, however, Walmart ended its contractual relationships and brought its cleaning operations in-house.
Changing its cleaning practices means Walmart is now responsible for buying its own cleaning products. According to Ashkin, the company is in the process of rewriting its contracts to make those purchases greener. Another sign of Walmart's possible commitment to ethical cleaning came last year when the buyers responsible for housekeeping attended the ISSA conference in an effort to learn as much as possible.
Perhaps the most interesting news for the jan/san industry is Walmart's recent decision to help in the development of a new eco-label.
"Walmart understands the importance of information and believes everyone should be using the same language when we talk about these issues," Ashkin says. "And Walmart wants to figure out how to communicate the information to consumers."
Rather than creating its own private labeling system, Walmart has agreed to a more holistic approach. The company will work with a nonprofit organization to develop a comprehensive sustainability index that can be used by any retailer to measure the environmental impacts of every product it sells.
The Walmart Effect
Despite Walmart's recent commitment to sustainability, some question the retail giant's sincerity.
"Walmart has made a name for itself over the past year by highlighting various environmental initiatives, which it sees as an easy way to improve its image ... [but] they must do much more to make amends for an environmentally unfriendly past," says consumer group Walmart Watch on its Web site.
Walmart has always placed priority on low prices and isn't widely viewed as an innovator. But saving money and saving the world are not necessarily mutually exclusive, Ashkin says.
"They see sustainability in terms of becoming more efficient," Ashkin says. "When they eliminate waste, Walmart knows they save money and it helps them become a more profitable company, and there happen to be environmental benefits that come along with that."
Although some environmental activists have criticized Walmart for moving too slow and for not doing enough, the company is not unusual. Few for-profit businesses are willing to take risks without the potential for reward.
"Very few businesses, especially in this economy, are willing to pay a penny more for green," Ashkin says. "Most building owners will do green if it doesn't cost them more money. Walmart is going to go green as long as it doesn't cost them more money and especially if they find ways to save money from what they are currently doing."
So why are Walmart's green efforts big news? Simply put, no other company in the world has as much power and influence to affect the business landscape. When a budget-conscious behemoth shows an interest in sustainability, it sends a clear message that going green is not a passing fad.
"I think there are really huge implications," Ashkin says. "Their competitors definitely pay attention to what they are doing. If they are figuring out these new green stores save them money, you can bet that it's going to affect how their competitors build and maintain similar stores."
Walmart influences far more than its competition. The company spends nearly as much money with its suppliers as the federal government shells out to its vendors. That gives the retailer a lot of power to make demands.
"They have an enormous ability to drive changes through their supply chain," Ashkin says. "For example, as Walmart has gotten more into organic foods, it is affecting the whole agriculture industry."
A clear example of Walmart's power is its recent mandate that suppliers fully disclose all ingredients in their products. The retailer uses the information for its new sustainability scorecards. The decision is particularly important for the jan/san industry, which has had long-standing debates over disclosure.
"Manufacturers wouldn't even give that information to the U.S. Environmental Protection Agency," Ashkin says. "But when Walmart said it wouldn't buy their products, the suppliers agreed to disclose that information."
After Walmart implemented its new scoring system, the Consumer Specialty Products Association started the Consumer Product Ingredient Communication Initiative, a voluntary program to make buyers aware of what is in the chemicals they purchase, including cleaning supplies. The program launched in January.
"I contribute that to Walmart," Ashkin says. "Once manufacturers realized they had to do it for Walmart, they decided they might as well go ahead and publicly disclose their ingredients. That's the Walmart effect and it's a good thing."
Walmart's detractors will likely remain skeptical about the company's motivation to go green and its commitment to the process. While Ashkin isn't surprised by people's reactions, he encourages people to give the company the benefit of the doubt.
"It's unfair to say they are just paying lip service to sustainability," Ashkin says. "They may choose to not do something because it doesn't meet their economic model, but they are really working at it. Walmart is going to raise the bar for everyone."
Becky Mollenkamp is a freelance writer based near Des Moines, Iowa.
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