On July 16, we at Walmart shared our plans for the future of sustainability. On that day, our CEO, Mike Duke, announced a goal that is audacious, aspirational and, unfortunately, somewhat misunderstood. We hope that by explaining our goal and our plans for reaching it, we can help suppliers, NGOs and our competitors understand and join with us in establishing what we call the Sustainability Index.
Our interest in creating a way for consumers to evaluate the sustainability of products really began in 2005. Lee Scott, our CEO at that time, committed Walmart to providing sustainable products as one of our three sustainability goals. Over that time, as we have found new ways to operate more efficiently and more responsibly we also have learned that we can improve our business and contribute to the communities around us, as well. For example, in November 2006 we committed to selling 100 million compact fluorescent light (CFL) bulbs by the end of 2007. We reached our goal three months early and since then have sold more than 260 million CFLs. According to the EPA, during the life of these bulbs, our customers will save more than $7 billion in energy costs and prevent more than 80 million tons of carbons emissions – roughly equivalent to the emissions produced by 12,000 homes in a year.
Still, we know we can do more throughout our Walmart stores and Sam’s Club locations, and throughout our entire supply chain. We want to better understand what we call a product’s “lifecycle,” from the raw materials to its use and, ultimately, its disposal. This will enable us to identify and sell the products that are produced as efficiently as possible with minimal impacts to the environment.
With this goal in mind, we sought the expertise of non-government organizations (NGOs), supplier partners, academics, industry groups and other retailers. We developed key principles that will guide the development of the Index.
First, the Sustainability Index should stand on its own. That is, it does not belong to Walmart. Some key characteristics of the Index reinforce this point:
Second, it’s important to avoid the rush to label the Index. As we said at the time the Index was introduced, it’s expected to take about five years before it will be available as a consumer tool. We believe in the need to build credible and meaningful data transparency in the supply chain. We don’t know what the next five years will bring in terms of explaining sustainability to the customer, but we do believe it’s essential that supply chain metrics be transparent.
Third, the data used to create this Index must be grounded in science and include the full lifecycle of products. This is why Walmart helped establish and has invited other retailers to support the Sustainability Consortium. Scholars and researchers at the Consortium are working with product suppliers, retailers, NGOs and the government to develop a database of information on the lifecycle of products. (More information is available at www.sustainabilityconsortium.org.) The Consortium won’t perform a traditional lifecycle assessment for every product in retail, but the data and data standards they work on will be essential to the coming future of greater product transparency.
Finally, it will take some time to develop a final solution for the Index. We expect the process to be iterative and broken down into manageable pieces that will be addressed over time. What’s necessary today is that we get started. The 15 questions we asked our suppliers to answer recently are a key step to help suppliers prepare for this coming reality.
In a world of increasing population, limited natural resources and a new generation of informed consumers who expect transparency on the products they buy, we as businesses must support sustainable consumption. We believe the Index will help us do our part. It will bring about a more transparent supply chain, drive product innovation and, ultimately, evolve into a simple tool for merchants, manufacturers and consumers to assess the sustainability of any item on a retailer’s shelves.