Green Options

If Wal-Mart is ever going to achieve the status of a company truly committed to sustainable business practices, there’s one 800-pound gorilla that it must address: China. The company’s sustainability summit on October 21 and 22 in Beijing was an attempt to do that, both from a PR perspective, but also in terms of “laying down the law” with its suppliers in China.

Green to Gold author Andrew Winston attended the summit, and listed the following commitments and statements that came out of it in a blog post at Harvard Business’ “Leading Green” blog:

• Supplier commitments: All suppliers will sign new agreements indicating compliance with environmental laws, starting with Chinese suppliers to the U.S., UK, and Canada in just 3 months. Over the next 3 years, all suppliers globally will sign.
• Audits: Wal-Mart will “strengthen” its surprise and third-party audit program
• Supplier goals: The top 200 suppliers will achieve 20% energy efficiency improvement, and most importantly, “By 2012, all suppliers that we buy from directly should source 95% of product from companies that have the highest ratings in audits.”
• Product goals and quality: Zero defective merchandise returns by 2012. Lee Scott connected quality to sustainability in very funny, specific terms: “Customers want a sock that will not fall down even if washed.”
• Transparency: Suppliers must reveal the name and location of every factory they use to make a product, as early as November for apparel, then home goods, toys, and others by the end of 2009. As [Wal-Mart's Vice Chairman Mike] Duke said, “If you sell us tennis shoes, we expect you to know and tell us where it was made and which sub-contractors were involved…If you don’t pose these questions, our customers will…in this age of YouTube there is no trust without transparency.” (Wal-Mart will have more insight into what’s going on at factories than ever before thanks to the work of Ma Jun who runs an NGO that has compiled compliance data on every factory. See his group’s stunning water pollution map here.)
• Dropping suppliers: Wal-Mart will work with suppliers that fail to comply, but “if after a period of time, the supplier does not improve, we will move our business.”

In what is being called the “the most ambitious private sector drive yet” to go green, Wal-Mart told hundreds of the chain’s top Chinese suppliers this week that the store intends to raise standards and “green” its supply chain.

You read correctly.  At this week’s “sustainability summit,” in Beijing,  Lee Scott, Wal-Mart’s CEO,  told top Chinese suppliers that the chain “intends to use its market power to get more than just low prices.” At the gathering: Procter & Gamble, FedEx, Kimberly-Clark, Coca-Cola and Rubbermaid.

The Financial Times called the summit “the most ambitious private sector drive yet to reduce waste and pollution in China’s export-focused manufacturing industries.”

“Our environmental footprint is primarily through our supply chain as a company,” says Matt Kistler, head of Wal-Mart’s global sustainability efforts. “So we have the ability to really build a world-class, better quality, better value supply chain.”