Why Walmart Fails at Sustainability


Why Walmart Fails at Sustainability

The key to sustainability is acknowledging and considering the three legs of sustainability: society, environment, and economic.  Walmart fails in at least two of these categories. I will consider giving them economic.  They have a business plan to keep their business running and not go bankrupt…is this green leadership?

While that plan includes opening more stores to increase profits, and forcing manufacturers and suppliers to lower their prices to keep Walmart’s costs down;  it is a plan that has been working for them so far.

Why Walmart Fails at Sustainability
Why Walmart Fails at Sustainability

Defining Eco-Fashion

Then there are the two other important factors to consider: environment and society.  Let’s talk about the social aspect first.  Walmart fails in this leg on all accounts.  They treat their own workers terribly with awful benefits, long hours, and poor wages. They also force their suppliers to treat their employees in the same fashion, by refusing to buy products unless they are at extremely low prices.

Walmart does its best to keep costs down to make their pockets happy and consumers’ pocket’s happy.  They also fail with the social leg because when they open a new store (despite protests) they often run other businesses out.  This causes other people to suffer since they lose their jobs and businesses. Deluded individualism

Financial Impact Of Going Green

What I really want to discuss is how Walmart fails at the environment leg.   Walmart likes to green wash and spout off facts of they will do as a company to become sustainable.   Their three goals are :

  1. To be supplied 100 percent by renewable energy
  2. To create zero waste
  3. To sell products that sustain people and the environment

My biggest issue is number three.  How is this ever going to be possible when they promote sweatshops in China currently.  With them wanting to keep their prices as low as possible, how are they ever going to reach that goal?  Walmart claims they support local farmers, but this support usually means the farmers lose money and Walmart gains.

Remember how they lack in the social leg.  Walmart still thinks they can help fix our food system with their ‘support’ for local farmers and solving the food desert issue.  As usual their food desert solution is making more money off of the urban market, a market they have yet to fully tap into and are so desperate to.

Walmart needs to learn what sustainability actually means and that it is more complicated than partially considering environmental factors.  Sometimes you can be lacking in an area of sustainability as long as the other two parts make up for the loss.  Walmart is lacking in 2.5 of the three part and they are in no way sustainable.

If they want to be sustainable they have a long way to go and massive business plans to be revamped.   In fact, if Walmart actually became a truly sustainable company they would in no way be the same company.

Corporate responsibility infographics

Creating Efficient Rooftop Air Conditioners

As a follow up to Nick’s recent post about NREL and smarter homes, the Department of Energy (DOE) has announced the first rooftop air conditioning unit to meet its Rooftop Unit (RTU) Challenge. Manufacturer Daikin McQuay’s Rebel RTU is the first to meet the specifications outlined in the RTU Challenge.

As noted in the NREL article, air conditioning units are a major contributor to strain on the electric grid. Reducing the demand (since it seems unlikely that use of air conditioners will decrease in the foreseeable future) for electricity that these appliances create appears to be the best route forward.

The RTU Challenge began early last year when the DOE partnered with the Commercial Building Energy Alliance (CBEA) “to release a design specification for 10-ton capacity commercial air conditioners, also known as rooftop units (RTUs).”

With a goal of prodding manufacturers to produce a “cost-effective, energy-saving RTUs that would significantly outperform any models that were currently available,” Daikin McQuay, Carrier, Lennox, 7AC Technologies, and Rheem participated in the challenge.

While Daikin McQuay is the first of the aforementioned manufacturers to produce a unit meeting the specifications, the other companies have until April 1, 2013 to submit their products.

As a result of the improved design, it is anticipated that the RTUs will require half the electricity as compared to current standards. The DOE estimates that businesses could save more than $1 billion annually in terms of energy costs with these more efficient RTUs.

In addition, the DOE reports that big retailers like Target and Walmart, both of which are part of the CBEA, have expressed interest in affordable units that demonstrate these types of efficiencies. Interestingly, the list of participating companies was announced at an event hosted by NREL, the National Renewable Energy Lab. How’s that for symmetry?

More B2C and B2B Revenue From a More Sustainable Brand

Sustainable Handshake
Sustainable Handshake

People buy from companies they trust. More and more, customers prefer to do business with companies that are doing good things and are responsible. The responsible image of the company builds loyalty with customers who identify with the values of the company – their loyalty is more to the company than to its products.

Even when buying green products, consumers may gravitate more towards buying from companies that best walk-the-talk on sustainability at a corporate level.

A sustainable brand makes a difference in the business-to-consumer (B2C) sector. There are many ways a company can improve its image as a responsible corporate citizen. It can lighten its overall climate change-causing carbon footprint by using less energy from fossil fuels.

It can conserve water to ensure the most precious natural resource on the planet available for future generations. It can enforce strict sustainability standards for suppliers. It can be a better steward of its waste. It can “green” its buildings. It can respect employees and support communities.

These are all company-level initiatives. The company is still producing the same products, but the overall company has improved its track record and polished its image as a company that cares about society’s environmental and social challenges. Consumers who share those concerns are more inclined to do business with kindred corporate spirits.

Why Walmart Fails at Sustainability
Why Walmart Fails at Sustainability

Within the last three years, there is increased evidence that a company’s sustainability image is important in the business-to-business (B2B) sector, as well. Wal-Mart’s bellwether 15-question survey of its 100,000 suppliers in 2010 was a clear signal that a company’s track record on sustainability aspects of their operations makes a difference to their corporate customers.

Suppliers can capitalize on this huge B2B market if their operations and products satisfy their business customers’ sustainability criteria, especially if their competitors’ do not. As a company pays attention to the life-cycle footprints of its products and reduces its social and environmental impacts, it earns the right to be retained as a valued member of its current customers’ sustainable supply chains. If competitors are dropped from their customers’ supply chains because they are sustainability laggards, more sustainable companies can pick up that business.

Endorsements from external environmental agencies help generate beneficial “noise” around the company’s brand image and add momentum to the revenue gains. Gaining B2C and B2B revenue from a more responsible brand is the first of three ways that sustainability strategies bolster revenue. In my next blog, we will look at a second way.

As usual, the above slide are from my Master Slide Set

Walmart Green
Walmart Green

Grist just published a story about Walmart’s political contributions that raises my skeptical (more like cynical) eyebrows. The same story is commonplace these days. Walmart, which stayed out of political giving during its founder’s years, has become one of the largest corporate political contributors in recent years. Here is the Grist story in a paragraph.

Walmart talks big about sustainability, but doesn’t put its campaign money anywhere near where its mouth is. Whatever the company may say about the importance of legislative action on climate change or other environmental issues, its money is signaling the opposite, telling lawmakers that it’s perfectly fine to vote against environmental protection.

I have used Walmart as a target of my barbs in the past, but not for this reason. My usual screed aims at the improper use of the word “sustainability” in their programs and public statements. Like virtually all corporations, Walmart fails to grasp the systems nature of sustainability.

They join many others in believing that they can measure the positive contribution they are making to sustainability and can, then, convey that message to their customers. Tree-huggers, no way!

Of course, they can do nothing of the sort. Sustainability is not remotely tied to any single source of perturbations to the natural or human sphere; it emerges from the world when all the relationships that interconnect the myriad of environmental and social processes are working in harmony.

At best, I could attribute their behavior to ignorance and at worst to a deliberate effort to disguise the reality of their business by painting a rosy picture for their customers.

Everything and anything they do in the name of sustainability falls into the category of eco-efficiency, providing equal or greater value to the customer with less environmental impact. This is, again of course, a good move unless they engage in misleading advertising and product labeling. The twin objectives of growth (very strong at Walmart) and reduced negative impact (not so important, it seems) are antagonistic if not downright contradictory.

It may be, as in many large corporations, that one hand (the Washington lobbying office) doesn’t know what the other (home base) is doing. If a company cannot even operate effectively within the complex system that big firms like Walmart comprise, it cannot begin to understand and interact effectively with the much larger and more complex system called Earth. And it is Earth from whence sustainability comes, not Walmart or any single node in the socio-economic systems of the globe.

I doubt that this organizational imperfection is at the root of their behavior. Their hegemonic dreams of being the only show in “town” has harmed communities world-wide. Efficiency (low-cost) cannot substitute for the relationships on which sustainability rests. Similarly, their well-known opposition to unionization—perhaps a strong motivator of the political giving—runs counter to human flourishing, the quality that sustainability wants to sustain.

Walmart and other large corporations

There is no particular difference between Walmart and any other large corporation concerning sustainability. They are larger than most and are narrowly focused on consumption. They are perhaps the most recognized symbol of growth of any other enterprise, save a few in the technology sector. I don’t believe that they are overtly anti-environmental as the way they distribute their money to legislators would indicate:

Its dollars skew heavily in favor of candidates who routinely vote against the environment. Since the company launched its sustainability campaign in 2005, 40 percent of the $3.9 million it has given to members of Congress went to those who have lifetime scores of 20 or less on the League of Conservation Voters’ National Environmental Scorecard — meaning they vote against the environment 80-100 percent of the time. Another 19 percent went to those who vote against the environment 50-79 percent of the time.

Nothing, absolutely nothing, trumps cost cutting at Walmart. Using standard accounting rules, environmental protection usually shows up as a short-term cost no matter how beneficial it might be in the long run. That’s why regulation is essential and why climate change deniers are favorites of companies like Walmart.

I do not expect Walmart voluntarily to do any better or act differently although they occasionally make claims about doing good. They are merely following the rules, which they work hard to influence in their favor, seeking special treatment through the contributions. Quite a vicious circle. Make the rules more favorable; offer cheaper prices; add to unsustainability; repeat the cycle over and over.

I often end my Walmart posts with this line. I will know that they are serious about sustainability when the greeter who stands in the entrance corridor stops every incoming customer ask asks them, “Do you really need to buy anything today?” My children, nor I, won’t live long enough for this to happen.

Finding Methuselah at Walmart

Finding Methuselah at Walmart

What would you think if you came across a scientific study carrying the headline: “Frequent Shopping Prolongs Life, Study Suggests”? Would it be, “I can now persuade my spouse to join me at the Mall?” Or, “Finally George Bush is exonerated for making his famous imprecation to go shopping on the heels of 9/11.” I can think of many other hypothetical responses reinforcing the consumer ethic of today’s society, but would these be justified by this study?

I went to the story of the study to find out. I could only download the abstract without paying $30 for the whole article. It seemed a little steep for a story that didn’t quite bowl me over. Here’s a couple of paragraphs from the abstract. The study was done in Taiwan and is based on a survey of 1841 “representative free-living elderly Taiwanese people.”

Results: Highly frequent shopping compared to never or rarely predicted survival (HR 0.54, 95% CI 0.43 to 0.67) with adjustment for physical function and cognitive function and other covariates HR was 0.73 (95% CI 0.56 to 0.93). Elderly who shopped every day have 27% less risk of death than the least frequent shoppers. Men benefited more from everyday shopping than women with decreased HR 28% versus 23% compared to the least.

Conclusion: Shopping behaviour favourably predicts survival. Highly frequent shopping may favour men more than women. Shopping captures several dimensions of personal well-being, health and security as well as contributing to the community’s cohesiveness and economy and may represent or actually confer increased longevity.

ScienceDaily, which appeared to have had the $30 to buy and read the entire article, added a few more details from the journal article.

The authors acknowledge that shopping could be a surrogate for good health to begin with, but suggest that shopping itself may improve health, by ensuring a good supply of food, to maintain a healthy diet, for example.

Frequent shopping among the elderly may not always be about buying things, but about seeking companionship or taking exercise, which is easier to do than more formal exercise that usually requires motivation, they say.

The conclusion, above, seems shaky given the nature of the study. I am not an epidemiologist, but I have always understood that epidemiological surveys of this type could establish a meaningful correlation, but not reveal the cause of the correlation. The authors waffle in the end by saying that the frequency of shopping “may represent or actually confer increased longevity.”

They want to have it both ways–a surprising conclusion in an article appearing in a scientific journal. I wonder how they accounted for all the confounding factors that would bear on the conclusions: wealth, health history, proximity to markets, genetic make-up, and many others.

Shopping conducive to health?

One of their possible explanations for the correlation was that shopping, as a form of social engagement, is conducive to health. I would agree that a rich social life is a factor in overall health. There is data behind this statement, but I cannot quite believe that shopping is a richer experience than whatever would have been foregone during the time behind a grocery cart or cash register at some boutique.

The real concern I have is the way this study was publicized. I came on it through a message from a group of colleagues running an email listserv on sustainable consumption. The sender noticed an article in Cosmopolitan(not known for its scientific acumen) with the headline: “Why You Should Shop Every Day.”

The trail then led to the ScienceDaily article with the headline shown at the beginning of this blog post. It ended with the article itself from the Journal of Epidemiology and Community Health with the title, “Frequent shopping by men and women increases survival in the older Taiwanese population.”

I can see this misleading, unfounded message showing up in many ads and websites produced without spending the $30 to verify the headline’s implications. In normal times, such a story would probably not turn many heads because people, young and old, would not have time to notice it in the short intervals between their trips to the stores and markets.

In the current downturn, merchants are using every bit of ammunition at hand to bring customers back into the stores. The squib in Cosmopolitan is particularly troublesome as this magazine survives on advertising and epitomizes our consumer and celebrity culture. As I approach my eightieth birthday, I would love to find some magic formula that would lengthen my days still to come, but I can’t imagine that a few more trips to the store is it.