Wal-Mart sets sustainability goals

Retailer’s 3-year forecast in China: 100 new stores, 18,000 jobs

Saturday, October 27, 2012

— Wal-Mart Stores Inc. this week outlined new supply-chain initiatives aimed at lessening the company’s global impact on the environment.

The move came at an event in Beijing that included government officials, suppliers and nongovernmental organizations.

Wal-Mart also updated its retail growth plans for China, which is also the source of many products sold in the company’s stores worldwide.

Doug McMillon, president and chief executive officer of Wal-Mart’s international division, said in a statement that the company would add about 100 new stores and Sam’s Club outlets in China over the next three years. The move is expected to add 18,000 jobs to support the growth.

“Wal-Mart believes strongly that the Chinese retail industry has great potential thanks to economic growth, expansion of the middle class, fast urbanization and government policies to further boost domestic demand,” McMillon said.

As of Sept. 30, the company had 382 stores and about 100,000 employees in China.

Mike Duke, Wal-Mart president and chief executive, said the effect of the supply-chain initiatives “will be global and make a difference with products sold around the globe.”

Wal-Mart’s initiatives in- volve use of a tool known as the Sustainability Index, which measures the environmental impact of consumer products from production through use and, ultimately, disposal.

The commitments the company made include:

By the end of 2017, 70 percent of the goods it sells in its stores globally will be purchased from suppliers who used the index.

Starting in 2013, Wal-Mart will use the index to influence design and production of its private label products.

Also beginning in 2013, Wal-Mart will make use of the index a higher priority in the evaluation of its global sourcing merchants, adding specific objectives.

The Wal-Mart Foundation, the company’s charitable arm, will give The Sustainability Consortium $2 million to help get the consortium going in China.

Camille Schuster, president of California consulting firm Global Collaborations Inc., said setting specific sustainability goals adds credibility to Wal-Mart’s effort.

“Stating they want 70 percent is nice to say, and it may spur a lot of activity, but I don’t necessarily think it’s a goal they’re going to reach,” she said. “But it will get suppliers moving in that direction.

David Hyatt, professor of supply-chain management at the University of Arkansas at Fayetteville, said Wal-Mart has made good progress on the broad goals it outlined for reducing energy use and waste, but that making progress on specific products is much more difficult.

“In the end, it gets down to the central question of, how do you define a sustainable product?” he said.

The university is one of four institutions that make up The Sustainability Consortium.

Hyatt said that certification of product labels number at least 400, but that many are specific to certain production methods, such as organic foods. The consortium, he said, is pushing the consumer products industry toward science-based models that develop a set of metrics for various products.

Wal-Mart’s support, he said, was key.

“When Wal-Mart is moving, the market is moving with it,” he said.

Hyatt said he anticipates companies eventually competing for customers based in part on their carbon gas release.

For now, he said, “this still doesn’t address the messaging to consumers. It’s for buyers to use in evaluating the different suppliers.”

As for consumers, he said, his sense is they are interested, “but they’re not interested in paying more” based on carbon footprints.

Wal-Mart’s stock closed Friday at $75.11, down 21 cents or 0.3 percent. The stock has traded between $55.68 and $77.60 in the past year.

Business, Pages 31 on 10/27/2012