Wal-Mart: “We see ourselves as an aggregator of carbon”

I am currently attending the Corporate Climate Response conference in NYC (carbon-balanced flying courtesy of Expedia). The following is a recap of a talk by Jim Stanway, Wal-Mart’s Director of Project Development and leader of Wal-Mart’s Global Greenhouse Gas Strategy team.

walmart

Your partner in lowering carbon?

Against the backdrop of a humorous mockup of a Wal-Mart price notice announcing “rolling back of CO2,” Jim Stanway told the audience he believes high energy prices did more to damage Wal-Mart’s results this year than competition from Target and Sears combined.

Stanway believes Wal-Mart has a key role to play in the carbon markets. The story Jim tells is quite interesting and shows a promising pathway for one of the most unlikely candidates for leading the corporate response on climate change. What started as a defensive regulatory initiative has turned into a lofty set of goals, sixteen working groups, three major environmental initivatives, and a sense of optimism and opportunity around climate change.

A key to Wal-Mart’s success has always been an ability to use its vast scale to drive efficiencies througout the entire supply chain, and the same dynamic is now playing out on the energy realm. Just one example: an internal Wal-Mart lighting team went to a supplier and quickly executed an efficiency plan that cut the suppliers’ utility bill by a whopping 60%.

Everyone benefits in this scenario, as the high cost of energy is felt by suppliers, Wal-Mart employees, and customers. And, of course, the environmental benefits of this enlightened self-interest are hardly incidental.

Wal-Mart’s carbon footprint is 19.8 million metric tons. Stanway estimates the carbon footprint of Wal-Mart’s supply chain at about 200 million metric tons, “a much bigger pool to go fishing in.” Zoom out a step further to Wal-Mart’s 13 million daily customers and even the supply chain number seems paltry.

While it’s not clear how exactly retail chains such as Wal-Mart fit into today’s carbon marketplace, Stanway says the company nevertheless sees itself as “an aggregator of carbon.” The first step in Wal-Mart’s carbon strategy is quite simple and involves partnerships with energy management companies to elevate energy (and therefore carbon) management practices in suppliers. On the consumer side, a major push on compact fluorescent lightbulbs is underway, with a program in the works to jumpstart word-of-mouth marketing by encouraging CFL adoption in 1.3 million associates.

Is Wal-Mart perfect? No, but this morning’s talk gave us great hope for the future.

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  1. P.J. Onori - October 31, 2006

    We need a whole lot more of these nice surprises…
    I’m still waiting for the floodgate to open where corporations, afraid to look bad in the face of the public, start announcing carbon-reducing initiatives as quickly as possible. One can hope.

  2. KC Compton - November 1, 2006

    This is good news, and in response to P.J.’s comment, it isn’t just a matter of the corporations looking good. Anyone with half a brain doesn’t have to look very far down the road to realize that if the planet is uninhabitable, profits go way down. Corporations can be soulless behemoths, but threated profits and suddenly, their attention turns.
    Corporations can also be good citizens — an important notion to keep on the radar at all times. Every time one of them makes such a move, I think we all need to applaud loudly. Yes, one can hope, but one can also demand a different reality than the one we’re collectively facing. We’re all in the same imperiled little boat and just realizing that at the deepest possible level can make anyone — and any company — turn on a dime.

  3. KC Compton - November 1, 2006

    Threaten. I mean threaten … ;-\ –kc

  4. K.Jacobson - November 1, 2006

    It’s definetly positive whenever large corporations pay attention to the footprint they’re leaving on the planet. We must also remember, though, that one of Wal-Mart’s tactics for creating “efficiencies” has been to force suppliers to produce lower quality products and send there production overseas or lose their Wal-Mart account. Let’s hope thier recent environmental intitiatives are a bit more honest.

  5. EL Sweeney - November 1, 2006

    Wal-Mart’s impact on the green/energy conservation movement may become the tipping point for the movement. Not only through this initiative will Wal-Mart and its vendors become greener but it will make Wal-Mart shoppers more in tune with the green movement and that may be the biggest prize of all. I would guess that presently 80%+ of Wal-Mart shoppers care less about recycling/energy efficiency/green movement. Yet, because of Wal-Mart some of it will rub off on them. They are the real prize!

  6. R Harris - November 1, 2006

    In response to EL Sweeney, I totally agree with you about Wal Mart’s shoppers. That WOULD be the prize!

  7. veektor - November 1, 2006

    -Since China-Mart, er, ah, Wal-Mart does most of its business with suppliers who make things in China, its efforts to reduce carbon from its US operations will probably have a small effect on its carbon production (actually, that should be OUR carbon production since we are China-Mart’s biggest consumers so we are the ones producing the carbon, not China-Mart). If you think that the China-Maret execs are going to enforce carbon production limits on their suppliers, guess again.

  8. Window - November 1, 2006

    It is insane to give Wal-Mart, a company that has driven more companies out of the US than any other source, credit for minor carbon touch ups they’re attempting now. If a shipping container of TVs was made in Boise, or heck northern Mexico, the carbon produced to move it to Kansas City would be exponentially less than that needed to produce it outside Shanghai, in factories powered by some of the dirtiest coal plants in the world, moved to the port, sailed all the way across the pacific in a container vessel burning bunker fuel, which is one grade above tar, the whole way. Then it lands in LA, is either moved on a diesel train across country, or worse by a long haul trucker. Finally that container needs to be repositioned to one of the coasts, often empty.
    But great after remaking the entire world supply chain to be exponentially less carbon efficient, they’re now going to push better light bulbs, made in China of course. Thats not even a band-aid, it’s a joke.

  9. Chad - November 1, 2006

    P.J.: The floodgate has been open for a while. Most major corporations are far more energy efficient than they were a couple of decades ago. Indeed, if individual citizens and small companies were to have made the same level of improvements, we would be far ahead of a Kyoto-treaty pace and in much better position environmentally.
    Big corporations have two major advantages when it comes to being energy efficient. First, as you noted, they have a reputation to protect. Second, they have the resources to hire the engineers that make such transformations possible.
    Output for output, small companies are a lot dirtier – not because they are evil or lazy, but simply because it doesn’t pay for them to hire an engineer at $100,000/year to cut their electricity bills by 10%. For a global corporation, they hire ten.

  10. P.J. Onori - November 1, 2006

    While I want to believe you Chad, I would feel much more inclined to if I saw some numerical evidence on it. My skepticism stems from companies such as GM, Ford, etc. that stubbornly refuse to modify their core fleet of cars to be substantially more fuel efficient. Ironically, this is one major reason for their declining sales.
    KC Compton – you’re right, this will be hitting their pocketbook sooner than later. I am just unsure if they are willing to accept that just yet.

  11. Jarrett - November 1, 2006

    I have a can’t believe that TerraPass is pushing this crud… surely there are other companies and small businesses that are going above and beyond the call of duty to reduce carbon. Why can’t we highlight them?

    No one really cares whether Wal-Mart can pinch another penny or cut another corner.
    Socially speaking, the world would be a much better place without a Wal-Mart every 10 miles.
    Their stores are built at the expense of the tax payer and a large percent of their employees collect welfare…
    Environmentally, they are a mess. They leak tons of chemicals into water supplies, support senseless overpackaging and blind consumerism and encourage their employees to make unhealthy choices.

    They are the kind of business that needs to be regulated, not applauded.

  12. janet - November 2, 2006

    all of you have clearly been following this cause for far longer than i, so take this for what it’s worth. i feel that any step in the right direction is a good one; e.g. i was talking with one of the organic farmers at our local farmer’s market a week or so ago; her husband was upset with her for buying something at trader joe’s, which hovers right on the edge of the organic market; some of their stuff is, some of it, anything but. BUT they do put organics – including some things that can’t be bought routinely at the farmer’s market – within reach of those on limited incomes, such as the elderly and newly-out-of-nesters. is it good publicity for wal-mart? undoubtedly.it also makes a difference. i have heard it said that if every household in the u.s. would switch even one lightbulb for a new compact fluorescent, it would have a major impact on the environment in a positive manner. this takes green products to people who have not had the option to shop green before; i’m all for it. hopefully wal-mart will next begin a slow switch to slightly more expensive but ecologically viable products made in the u.s.; heaven knows we have enough people here who need employment. and if wal-marts wages and benefits are marginal, perhaps they can compensate for this some by offering employee discounts…have gone far afield here, i know, but one thought leads to another.

  13. Chad - November 2, 2006

    P.J.: Dupont, for example, has cut emissions by 72% since 1990. While Dupont is a bit extreme, most other chemical companies are around 50%, including my own. You would be hard pressed to find a Fortune 100 company which is anything less than 30% more energy-efficient than it was in 1990. In the meantime, American emissions are up around 20% or so.
    Also, the stubborness does not lie with Ford in GM – it lies with their customers. Companies produce what their customers ask for. When Americans finally decide to buy gas sippers rather than tanks (or the government slaps on some good ol’ carbon taxes), then and only then will GM and Ford change what they make.

  14. michele - November 2, 2006

    What heros, those Wal-Mart execs! Betcha they require employees to purchase the bulbs above cost.

    Seriously, this is nothing more than an attempt to clean up their image, which has rightfully been taking a beating for the past year. They could easily implement these changes without shouting it out to the world at a conference.

    Do you think the savings in store energy costs will translate into higher pay for employees? No way, considering that they recently decreased their pay scale, yet again.

    No one who truly respects human rights and the environment would ever shop there. Period.

  15. Jessica - November 3, 2006

    I never shop at WalMart – this “news” doesn’t make me any more inclined to do so. I do think, if the products are actually marketed, that it is a good thing to make them accessible to people otherwise unaware/apathetic about the environment. However, we all know that WalMart employees, while it was noted in the article that they feel the negative effect of high energy, are feeling no benefits from these “cost-cutting/image improving” measures. Why don’t they take the money they save in energy costs, etc. to pay their employees decent wages and benefits. As great as it is that lots of people will have access to “green things”, I can’t believe that anyone would actually praise WalMart until the store stopped destroying the communities they monopolize and started treating their employees with the human dignity that the corporation can afford to instill.
    RE Ford and GM – their sales are going DOWN. They are in major financial trouble. If they were actually producing the products that consumers wanted, they wouldn’t be sending business to Toyota and Honda, they would be making more carbon friendly (translated by the average consumer to mean cheaper gas) vehicles.
    Saying that WalMart isn’t perfect is an understatement of monstrous porportions.

  16. JohnRW - November 4, 2006

    I agree mostly with Window (11/1 9am posting), that Wal-Mart has a lot more to do before we should consider their taking positive steps. How about they contribute 5% of their excessive profit to supporting local conservation and renewable energy projects in the communities (all of them) in which they reduce the number of independant, locally owned businesses? How about if they erect solar systems on their store roofs and offer the REC’s and energy produced to the customers in the local communities? In otherwords, there are many other ways in which this phenominally wealthy family/corporate clan could impact the climate they so excessively damage. I still won’t shop at Wal-Mart, until I see a much more obvious change in their business ethics.

  17. MDN - November 8, 2006

    “We see ourselves as an aggregator of carbon”
    grabbing policy.
    Walmart is taking steps to reduce its own direct impacts (good.) and should provide incentives (as a leader) to drive its supply chain to to reduce impacts but SHOULD NOT be trying to grab credits that belong to its suppliers or customers.

  18. Ainslie - November 14, 2006

    A late response: It seems to me the only possible way to move forward at the planetary scale is through keeping our attention on what people and companies ARE doing to move towards sustainability, rather than what they’re not doing. Positive actions should be recognized and encouraged, and then we can ask, “What are you willing to commit to NEXT?” Writing a company or an individual off as wrong, bad, or hopeless doesn’t add anything towards the goal, and in fact diverts attention away from it. So, “thanks, Walmart, this is a step in the right direction, how can we help you do more? e.g. Can Terrapass use Walmart’s huge market in a way that helps Walmart and ultimately the planet?