Building Sustainability Networks

Wal-Mart has given a whole new meaning to the term “networking” in its continuing quest to make sustainability the battle cry for the company and its suppliers.

Ever since Wal-Mart emerged from what’s been called the “Bentonville Bubble” in which attention was largely focused on operating efficiency and growth, it has aggressively promoted the idea that environmental stewardship and profitability are not mutually exclusive. This is the overarching message from Sustainability 360 — a corporate manifesto that is impacting every aspect of the chain’s own business and that of suppliers.

The key was the development in 2005 of Sustainable Value Networks (SVN) designed to drive environmental innovation into everyday operations. At present, SVNs are broken down into three major areas — products, direct footprint and supply chain. Under products are SVNs that concentrate on profitable and sustainable solutions for jewelry, seafood, food and agriculture, chemicals, wood and paper, textiles and electronics. Direct footprint consists of SVNs studying climate, buildings and energy, logistics, waste and alternative fuels. The remaining networks, packaging and China, focus on the supply chain.

The networks include a broad cross-section of associates, business entrepreneurs, suppliers, academics, government officials and non-governmental organizations (NGOs). The groups meet regularly to brainstorm on how environmentally friendly products can be produced or purchased.

Each network has its own governance and business plan and hundreds of network members meet with company officials every quarter to report on progress, highlight challenges and opportunities and develop new initiatives.

The networks help Wal-Mart boost its environmental credibility and differentiate it from the competition, but they also create longer-term collaborative relationships with suppliers rather than short-term, price-oriented ones.

Bridges are also being built between suppliers and NGOs. When the Chinese government threatened to shut down dye houses in Beijing before the Olympics, the suppliers were put in touch with a network NGO to help them become more environmentally friendly very quickly, according to a recent article in the Stanford Social Innovation Review.

Among the recent changes brought about by SVNs were improved energy use and efficiency, reduced or recycled waste and increased introductions of environmentally friendly and organic products. For instance, in seafood the chain has partnered with the Marine Stewardship Council (MSC) to ensure products have been caught and processed by sustainable means. In textiles, the chain partnered with the Organic Trade Association and the Organic Exchange to expand its organic cotton business and to promote standards for global processing.

In the supply chain segment, the Sustainable Packaging Value Network consists of about 200 leaders in the global packaging industry whose mandate is to reduce the volume of materials used to deliver products to customers. WalMart has been one of the most aggressive chains in this area, according to many industry observers, embarking this year on a sustainable packaging scorecard for more than 97,000 products from over 6,000 vendors. The scorecard measures suppliers on such things as the amount of CO2 per ton of production, product-to-package ratio, recovery value and use of renewable energy.

On the profit side, the company expects scorecarding to reduce costs $10 billion by 2013, with about two-thirds of the savings going to suppliers and the balance to headquarters. Wal-Mart’s association with the non-profit Green Electronics Council (GEC), another network member, was instrumental in the development of the scorecard for environmentally sustainable electronics products.

In another initiative, Sam’s Club worked with Apple to convert iPod packaging to 100 percent renewable, recyclable and sustainable materials. It also downsized 300 toy boxes in Wal-Mart’s Kid Connection line, saving an estimated 3,400 tons of corrugated materials.

Within the networks that deal with reducing the company’s direct footprint, the chain remains steadfast in its mission to transform itself into a company that runs on 100 percent renewable energy and produces zero waste. Among its goals: making existing stores 20 percent more efficient in seven years and new stores 30 percent more efficient in four years; making the fleet 25 percent more efficient in three years; and reducing solid waste by 25 percent in three years.