The Greening of Walmart: Building a Sustainable Supply Chain for America’s Green Consumers
The essay below is an extract of research conducted on the greening measures Walmart has undertaken from the mid-80s to the present day. To read the full essay with sources please contact the author using the contact page.
Sustainable development has become a paradigm to contain the negative externalities of our current economic system to mitigate environmental degradation executed through corporate and political stakeholders. While its corollary is both multifaceted and complex, from a brand marketing standpoint, it seeks to address heightened consumer social consciousness by creating products with the least environmental impact and engaging consumers with ‘value-ladened’ communications. Receptiveness to this form of marcomms is high. In one US survey, 65% of consumers reported they were purpose-driven in their purchases and openly advocate sustainability. The new ‘green marketing’ model is differentiated from the conventional as it is long-term driven, consumer value-orientated, and seeks cradle to cradle product cycles, which is closely aligned to concepts available in the circular economy. A broad consequence of this is sustainable consumption, which is inherently contradictory and problematic, but at the very least, reduces exploitation across the global supply chain, both human and capital.
Moral considerations aside, the move towards sustainable business by ‘going green’ has numerous benefits compared to a non-linear economy. There is an estimated 14% drop in operational costs and a potential 30% increase in business value that leads to an increase in perceived brand reputation, which is a key driver of profitability, with reputation adding 35% of a company’s value. More importantly, consumers prefer ethical businesses with the market growing at 20% year-on-year to around $200 billion for 2018 in the US alone. Therefore, the case for green consumption and eco-friendliness is one of access to new markets and drawing long-term value from consumers.
From value to values
For the world’s largest company by revenue, Walmart, the transition from value to values is an arduous task, with an enormous global supply chain needing to match branding efforts. Despite its early environmental commitment with the introduction of its Environmental Advisory Board in 1989, the company has met criticism of ‘greenwashing’ for promoting environmentally friendly initiatives while also indulging in unsavory practices, thereby creating a false claim. There are perhaps cynical reasons for the pivot to green. The company has been losing market share to competitors as online shopping has become the new battleground. Given that the average green shopper is wealthier, spends more, and is more loyal is an avenue to tap into a new income stream. Walmart’s vice president of strategy, Elm Ruben, once commented that sustainability “it’s not philanthropy”. While the company has made a meandering journey towards sustainability, its development has yet to reach its zenith, and so, there are many points for improvement.
Greening the supply chain
It could be argued that early attempts by Walmart were ineffective because it sought to respond as a retailer instead of a facilitator and steward of environmental impacts. Nearly 90% of its carbon emissions comes from their supply chain. Green Supply Chain Management attempts to integrate environmental conditions both upstream and downstream, which changes disposal procedures, packaging design, farming, and numerous other benefits. This is particularly pertinent for Walmart, as it is a nexus for its suppliers and consumers. It is simultaneously able to meet consumer expectations and inform them of future direction, while also appointing suppliers which are adhering to higher environmental standards. Consumers often see sustainable products as a luxury that is higher priced and for a minority, given this insight, a new model was needed as a road map. This is visible in their emergent low-cost sustainability strategy that brings large-scale sustainability to the mainstream with an aspirational and experimental framework.
Arising from former Walmart CEO, Lee Scott, to “sell products that sustained people and the environment.” the strategy persists to this day and serves as a model for other supra-national retailers. The development of this framework is rooted in the apparent conflict in the retail experience where it was prevented from forming “holistic standards” across products and stores using a systemic solution that went beyond a single product. That said, the business is subject to market forces where Lee Scott said “If the customer wants bottled water, we are going to sell bottled water.”, indicating the journey is also subject to stakeholder engagement, and possible conflicts with nature of a market economy.
A unique aspect of this framework is that it holds the company to global standards which are normally suited to countries. Walmart has voluntarily remained in the Paris Agreement to lower greenhouse gas emissions, is working with the Rainforest Alliance to certify coffee sourcing, and around 90 other NGOs to ensure traceable sustainability.
Green initiatives
Understandably, Walmart uses millions of shopping trolleys each year. As part of a sustainability drive, their supplier (Unarco) now recycles, repairs, and rebuilds old trolleys to avoid sending waste to landfill – part of their zero-waste project. Since inception, this programme has processed 3.4 million carts and saved 407 million kilowatts of electricity, 3.6 billion gallons of water, and 485 million, and 24 thousand tonnes of CO2.
Larger projects, like Project Gigaton, which seeks to remove one billion tonnes of carbon from the supply chain permanently by 2030, specifies guidelines for:
- Sustainable plastic and using (in)organic chemistry.
- Energy use per product.
- Acceptable standards for raw material sourcing.
- Minimum waste incineration requirements.
Walmart has further organised conferences for its suppliers like the Plastic Summit to educate suppliers and report transparently on achievements. These projects are giving hope with commentators seeing tangible hope in how big corporates operate with purpose and not profit.
Final thoughts
Walmart is a leading retailer that has been able to adapt to varying commercial and social conditions since its inception in 1962. The challenges it currently faces are ones that require it to evolve beyond its history to create a company that is effectively a shadow of its past. Sustainable retail has the opportunity to reform and re-energize the brand so that it can help society while also steering clear of previous less desirable practices. As seen with companies like Tesla, having a social purpose need not simply be a means to an end but can also be the means and the end, thus preserving more than just the bottom line.