Wal-Mart,and the environmental upside of being really, really big

Massive entities such as Wal-Mart naturally have a large impact on the environment. There’s a paradoxical benefit to this scale: small efficiencies that wouldn’t be worthwhile for others to undertake become meaningful when blown up to Wal-Mart-sized proportions.

Here’s a fun example. A Wal-Mart business card recently fell into our hands*:

Compare this with a standard business card:

In case there’s any doubt as to why Wal-Mart has teeny business cards, here’s the reverse side:

More substantively, Wal-Mart recently announced a plan to sell 100 million compact fluorescent light bulbs in 2007. They’ll do so through aggressive in-store promotion and employee education.

This is where the company’s scale really comes into play. We’ve all heard the statistic about how if every American replaced one normal lightbulb with a CFL, we’d save so many kajillion watts of electricity every year. But it takes an organization with a lot of consumer reach to turn that statistic from factoid to fact.

If successful, the campaign will spare the emissions of 20 million metric tons of greenhouse gases, the equivalent of taking roughly 700,000 cars off the road.

As we’ve written about earlier, Wal-Mart sees its customer base as the area where it has the greatest leverage to effect positive environmental change. Let’s hope they make good on this strategy.

Update: I was talking to a journalist yesterday about Wal-Mart’s CFL initiative, and one of the issues that came up was how this affects Wal-Mart’s bottom line. I frankly have no idea — CFLs are more expensive than standard incandescent lightbulbs, but they also last far longer. They save money in the long-run due to their lower energy consumption, but of course that doesn’t affect Wal-Mart’s balance sheet.

My sincere hope is that Wal-Mart is making money on the program, or at the very least breaking even. I love green initiatives that actually pay for themselves, because they’re the most likely to be adopted, supported, and imitated.

* If you’re wondering whether we just tipped our hand regarding a future partnership with Wal-Mart: nope. This card was passed along to us by someone who picked it up at some kind of industry function. We’ve never talked to the guy.

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adam

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  1. EW - December 10, 2006

    I just got a teeny tiny Wal-Mart business card the other day too — turned lots of heads, including of people who weren’t at the talk.

    One difference between Wal-Mart’s and Terrapass’ efforts on reducing carbon emissions is that your customers are different, and therefore you have to market to them differently. Any thoughts on how Wal-Mart should be talking to its customers about these issues, and whether you think Terrapass would ever move in the direction of building a client base that doesn’t normally have the environment constantly on its mind? If so, any thoughts on how you’d do that?

  2. orangemenace - December 11, 2006

    While I applaud Walmart’s attempt at ‘greener’ practices, has everyone forgotten about how unsustainable their general business plans are? For instance, how ‘big box’ retailers put so many American business out to pasture? Or how they build a store, then abandon it a few years later for a better location, leaving the building and [asphalt] parking lot to rot? Or how about their labor practices in places like China, where workers are basically slaves to Walmart? The point is, Walmart doesn’t deserve credit for using less paper to make business cards when they have so many business trends that are bad for people. You can’t be an environmentalist if you’re abusing humankind.

  3. Adam Stein - December 12, 2006

    EW — TerraPass is constantly seeking to broaden the base of people we talk to about carbon emissions, which is necessary if are ever to achieve the impact we hope to achieve. We think partnerships like the one we have with Expedia are a great way to reach out to new people. As for Wal-Mart, I think they’re probably right to be emphasizing the “selfish” benefits of conservation, such as lowering your energy bills.
    orangemenace — I’m not really trying to single Wal-Mart out for criticism or for praise, so much as draw attention to the intersection of business and the environment. Love it or (more likely) hate it, Wal-Mart is important to watch because of its sheer size and what its actions say about the future of green practice in the U.S.

  4. DLA - December 13, 2006

    This article is almost a surprise to me. Just last week I heard that the local Wal-Mart recycles plastic bags. I told this to my husband, saying we do not have to buy anything, the bins are right inside their doors. We have avoided Wal-Mart and Sam’s and try to discourage family and friends from shopping there because of the reasons sighted above by “orangemenace”. It is
    great to know Wal-Mart is making an attempt to become green. I just do not trust any motives they may have.

  5. Ted - December 13, 2006

    It seems to me that partnering with Wal-Mart makes great sense. The influence of this retailer is huge. What is wrong with Wal-Mart selling TerraPass at the checkout counter?

    Maybe as more customers purchase carbon offsets like TerraPass they would put pressure on the federal government to make automotive and truck carbon offsets part of the manufacturing and sales process.

    Let’s engage with the Big Box Retailers (including Target, the one that has the “nice” reputation). They all are another market to help the public understand what can be done to reduce CO2.

  6. spm - December 13, 2006

    I am encouraged by any steps that Wal Mart takes in the direction of sustainability. Given the potential impact of their decisions, I hope their CFL promotion is a significant one – not just a small discount. Having just priced CFLs at Wal Mart and other big box home improvement stores, there is almost no price difference.
    Lowe’s, however, currently is offering up to 8 60W equivalent CFL bulbs essentially for FREE with a rebate program through December 21st. This is a great stocking stuffer to raise awareness and reduce energy use at no cost!

  7. Howell Haus - December 13, 2006

    Good, bad or ugly… WalMart is a reality. They can do nothing, a little, or a lot to promote ‘goodness’. I personally steer clear of the title ‘environmentalist’, just as I do ‘religion’ in favor of ‘spiritual’. I prefer ‘Steward’, because it’s a responsibility we all have, but have failed to recognize (we’ve been too busy stuffing our lives with stuff).

    Were we to boil things to basics, we would recognize that what’s really needed is non-subsidized, real-costs for anything consumed. Take away all subsidies for oil, corn, wheat, etc. Add incentives for alternatives and renewables that are decidedly and scientifically proven to benefit and not take away from our food supplies. Buy local, and this goes for WalMart too (reduce the import of many goods by creating a manufacturing stimulus based on small-scale, local production of goods where the resources are most available and require the fewest resources to produce).

    I would work for WalMart as a regional bio-sustainability manufacturer’s liason… provided they develop a program that seeks ways to ensure this country’s future (including jobs, retirement, health, and sustainability in every measure). All my emails end the same…

    “I’d put my money on the sun and solar energy. What a source of power ! I hope we don’t have to wait till oil & coal run out before we tackle that.” – Thomas Edison (1847-1931). When WalMart starts selling services and products like solar energy to their customers, watch out – the sky’s falling !

  8. Anonymous - December 13, 2006

    I applaud any effort toward saving the planet. Even though I try to keep my shopping local – and it takes quite an effort to do so – there are those who don’t bat an eye at going to the big box stores – so if those big boxers can help people to “think green”…. Well, ok then.
    But – I would really prefer if Walmart had not made it so hard to be a “local” consumer.

  9. Chad - December 13, 2006

    Orangemenace, have you ever lived on yams for four months straight? That’s what my Chinese co-worker had to do every winter when he was growing up there in the 1970s. Such poverty has been drastically reduced in China in the last few decades, in large part driven by its industrialization and opening to world markets. Of course, a job at a Wal-Mart supplier in China may pale in comparision to an American job, but on the other hand, it is far better than subsistence farming on a rice paddy.
    Also, on another point, it is not clear that “smaller is better”. First, bigger is almost always more efficient, and this can often more than offset transportation costs. In addition, the consumers transportation costs can be reduced as well. I can make one trip to the mega-mart, or bounce around to five “smaller are more beautiful” boutiques – thereby wasting as much gas hauling myself around as I have saved by buying local.

  10. Rick - December 13, 2006

    Who cares how good this program is to Wal-mart’s bottom line? Selling 100 million CFLs is good for the environment. I will never understand why people criticize any company — whether Wal-mart or the builder donating a house to the “Extreme Makeover: Home Edition” show being filmed just a few miles from me right now in Austin, Texas — for doing good because it boosts profits or free publicity, and that somehow makes the program bad? If a program can benefit the those in need, or the environment, or whatever charitable cause, while benefiting the company at the same time, then that is what we call a win/win!
    Be thankful that the economics are such that a company has a profit incentive to sell more CFLs. That is called a market based solution, and when it provides incentives to benefit the environment, rejoice.

  11. Julie - December 13, 2006

    I’m getting tired of hearing the good things that WalMart is doing to support the environment. Take a look at the whole manufacturing process behind most of their goods…a process that WalMart has forced to occur because of their buying processes that promote manufacturers to head overseas to offset the low prices that WalMart will give them per item or face shut down. (look at how Rubbermaid is doing now). The Big Picture is this: the United States exports cotton and metals to China. Then we import the products that China has so cheaply produced for us. This is all done via massive ships and then trucks. This has got to be the largest waste of fuel and energy conceivable. It’s mind blowing. I won’t shop at WalMart, whether they sell TerraCards, or compact flourescents or otherwise. And I’ll tell my friends and family and some strangers why. This is how grassroots effort begins.

  12. Brook - December 13, 2006

    This argument is always a tough one, but lately boils down for me to the fact that companies like Walmart (in fact, I know of no other company with such decisive market leverage) can create green industries and economies of scale out of what once were just good ideas that were too expensive or impractical to implement. For example, Walmart bought into the concept of porous pavement for their parking lots – a technology that makes for cooler surfaces and allows watersheds to continue flowing along through and under pavement instead of being disrupted and re-routed by it. This has been in the green-thinkers’ book of good ideas for a long time, but remained a small and expensive niche industry until Walmart took it on. Similarly, Walmart made some efficiency gain changes to their truck design, which effectively saved billions of gallons of diesel (and money for Walmart) and is forcing the entire trucking industry to make the same efficiency changes to remain competitive.
    Yes, fundamentally the Walmart business model is not in line with the changes our society needs to make to truly become sustainable, but we cannot afford to have a monoculture mindset about our theories of change – we need grassroots work and we need viable small towns without Walmarts, but we also need to work with Walmart as they really can make industry-changing and emission-slashing decisions far faster than we can organize grassroots campaigns and with far more impact than we as individuals could ever have living low-footprint lives. I still don’t shop at Walmart myself, but I know that a lot of people do and I fully support and promote every ecologically-beneficial decision they make.

  13. Audrey - December 13, 2006

    I’m glad that Walmart is going ahead with this project, but that doesn’t make me want to shop there any more than I used to(which is not at all). I’m not angry that they’re ‘going green’ be it for a marketing scheme or so they can sleep at night. I feel that the only thing that matters right now is that they are offering their existing customers more green options, which their customers might not have been introduced to otherwise. No, I will still not shop at Walmart, but I do realize that some people shop no where else. These are the people that will now have someone telling them the benefits of saving energy with a CFL, instead of just showing them where the 60W lightbulbs are. I’m glad that they will be educating their customers and providing them with more green options. As green consumers, most of us don’t shop at Walmart at all, or vary rarely. I think that this might just make some non-green consumers pick up an item that may help us all breathe a little bit easier.

  14. frank - December 13, 2006

    Wal-Mart will make a lot of money on this program. The article says that customers will save $3 billion in electric costs by switching to CFLs. 145 million Americans shop at WM every week. If they spend a third of the electric savings at WM, WM sales will go up by $1 billion. This is an excellent investment in the sustainability of their customer base. Home Depot, Lowe’s, Target and others should take note. This is a win, win, win situation for WM, their customers and the environment.

    A similarly good move would be for WM to offer large discounts on A/C units. New A/C units are 30% more efficient than units sold 10 years ago. Again, a portion of the $millions in electric saving will be spent at their stores.

  15. Kyle Dansie - December 13, 2006

    So you compliment Wal-Mart for saving a few pennies on a box of business cards and last month you criticized Google for spending thousands of dollars on buying solar panels at the corporate office.
    Does anyone else see a problem with this logic?
    If Wal-Mart really wanted to make a difference they would run all of their trucks on B100 and they would buy wind and solar power for the stores and warehouses. That would make a real difference.
    Adam I will NEVER buy another carbon offset from your company again.

  16. tom - December 13, 2006

    Kyle:

    With a lot of respect, both the “compliment” and “criticize” words you use are a bit strong. We’re quite interested in the diverse actions corporate players are taking to tackle climate change and sustainability. Judging from the breadth of opinions in this comment thread, we’re not the only ones interested in these topics.

    The point of the blog is to get folks talking and share opinions on theses issues. Many readers are struggling how to fight climate change in their personal, community or even corporate lives, and the actions of others can help give perspective. In short, we do not simply aim to criticize or praise, but to blog and discuss.

  17. Adam Stein - December 13, 2006

    For the record, I never criticized Google for installing solar panels. It’s extremely cool that they installed solar panels, and they deserve much credit for doing so. In that post I did attempt to analyze the cost effectiveness of the California solar subsidy, because one of the themes of this blog is environmental economics. This wasn’t a criticism of Google’s action in any way.
    Nor was this post meant as a tribute to Wal-Mart (and it still doesn’t read that way to me now). It’s a look at how mainstream business is approaching green issues, a topic that to me seems pretty important to the long-term health of the planet.
    It would be great if Wal-Mart ran all of their trucks on B100, but, as noted above, customer programs like the CFL initiative are ultimately more important, because they tap into a much bigger pool of potential savings.

  18. Walt - December 20, 2006

    Hmm interesting topic, why is it always SOMEONE elses responsiblity to be green? What have each of you’ve done this past year besides pay someone off to feel good about your own co2 levels? I continue to ride my bike to work when I can, 26 trips this past summer for a total of 988 miles. Still car pool with fellow employees and recently installed 7 Crestline energy efficent windows on my second floor. I’ve always used energy efficent bulbs when I can. Year by year I continue to make small improvements in my lifestyle to invest in saving energy and hell if I need something at Walmart, I go and buy it. At least I’m not jumping on some jet airplane to get someplace warm or do some eco-tour thing. Lets compare carbon scores.
    thanks
    Walt

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