In addition to the price of a product, other factors that can affect consumers’ decisions include quality, safety, and whether the product is made in a responsible way. This includes sustainability – what effect the product has on the community and the environment. The environmental impact of any given product is really the total of all the impacts throughout the entire life cycle of the product, from the raw materials through final disposal. Walmart has embarked on an initiative to try to bring together all the information from the entire supply chain in order for consumers to know the total effect of a product, and eventually include that information on the product label.
Walmart’s Sustainability Index involves three broad stages. The first stage is to take a survey of its suppliers, focusing on energy and climate, material efficiency, natural resources, and people and community. The survey consists of fifteen questions asking the suppliers what they are doing to reduce energy costs and greenhouse gas emissions, to reduce wastes and enhance quality, to use raw materials responsibly, and to ensure responsible and ethical production.
The second stage of Walmart’s sustainability assessment is to create a database analyzing the life cycle of products. The company is working with universities, led by the Arizona State University and the University of Arkansas to develop this database. Suppliers, retailers, governmental and non-governmental organizations will be invited to participate. According to an article on the msn Money website, Proctor & Gamble, General Mills, Tyson Foods, and Unilever are partners in the consortium set up for this sustainability assessment. Competitors invited to join include Costco Wholesale, Target and Kroger.
The third stage is to take the information from the database and provide it to customers in an easy to understand manner, in a product label. Stephanie Rosenbloom, reporting for the New York Times, indicates that the labels will include each product’s carbon footprint, the gallons of water used in its production, and the air pollution the production and supply chain generates, among other sustainability factors. According to Rosenbloom, Walmart’s idea is to create a universal rating system for a broader view of sustainability, showing the environmental and social effects of individual products.
The sustainability index is expected to take several years and lots of work to develop, but Walmart, due to its size, global reach, and the influence it exerts over its suppliers, may be in a unique position to pull it off. The purpose of the sustainability index initiative is to give consumers the information they need to make more informed buying decisions regarding the social and environmental sustainability of products, but would also serve as an incentive for suppliers to create more sustainable products. Matt Kistler, senior vice president for sustainability at Walmart, is quoted in The New York Times article as indicating that the sustainability index could lead to “dramatic changes” in the products that appear on store shelves.
Nicole Maestri, reporting for Reuters, quotes Mike Duke, CEO of Walmart, as stating that Walmart does not want the sustainability index to be a Walmart index but rather an industry standard. This will require support from the company’s competitors in order to gain widespread acceptance and avoid imposing a costly reporting burden on suppliers. According to the msn Money article, Walmart insiders have indicated that the sustainability index could eventually be run by a nonprofit group financed by retailers and suppliers.
Marc Gunther, “Wal-Mart to require ‘green’ labeling” – msn Money
Nicole Maestri, “Wal-Mart Needs industry support for green labels” – Reuters
Stephanie Rosenbloom, “At Wal-Mart, Labeling to Reflect Green Intent” – The New York Times
Sustainability Index – Walmart