WM Move to Grade Suppliers on Sustainability Affects Other Retailers

by | Jul 15, 2009

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wm-meeting2Wal-Mart is set to announce a new sustainability index that will grade various suppliers and products by a range of environmental and sustainable factors.

The move, to be unveiled at a July 16 meeting in Bentonville, Ark., will lead manufacturers to label their products in such a way that lets consumers easily discern the sustainability of one product over the other, reports The Big Money.

With other retailers involved in the sustainability consortium that Wal-Mart is starting, the movement may become much larger in scope when all is said and done. Wal-Mart is mum on the details for now, but this event page shows a glimmer of what invitees to the meeting can expect. “Join us for a groundbreaking workshop to craft the sustainability index that Wal-Mart buyers will use to evaluate their 60,000 suppliers and the hundreds of thousands of products that end up on store shelves,” writes Matt Kistler, Wal-Mart’s Senior Vice President of Sustainability.

“We are assembling a diverse group of stakeholders to help ensure that we measure the sustainability of products in a way that is credible and highly scalable. You will work with Wal-Mart merchandise leaders, Wal-Mart suppliers, non-governmental organizations, scorecard thought leaders and other sustainability experts,” Kistler continues.

The $406 billion retailer has been building toward this moment for some time. First came its Sustainable Packaging Scorecard, which was unveiled in 2006 and went live in early 2008. As time went on, the goal was for suppliers to reduce the amount of packaging in their products, as well as the energy component and other negative environmental aspects of the packaging’s supply chain. Life-cycle attributes may well be part of the index, too.

For suppliers, the implications of Wal-Mart’s sustainability initiatives are clear – adapt and improve, or get thrown off the shelf. What is different about the July 16 meeting is its scope is so large that it may lead to a set of standards that extend beyond Wal-Mart. Indeed, Wal-Mart has invited Costco, Target and Kroger to join the sustainability consortium that will have a hand in crafting the index.

The consortium will be led by the University of Arkansas and Arizona State University. Additionally, faculty at Duke, Harvard, the University of Michigan, the University of California at Berkeley and Stanford have also been involved in planning the index, reports The Big Money. Among the major suppliers said to be involved are Unilever, Procter & Gamble, Tyson, General Mills and Tyson, among others.

Wal-Mart’s reason for forming the consortium may be because the retailer doesn’t want to be the sole arbiter of what constitutes sustainability in a product, according to the article, which quoted an insider as saying, “They are willing to get the ball rolling, but they want to hand it off to someone else.”

It’s predicted that the sustainability index may fall to a yet-to-be-formed group along the lines of the Marine Stewardship Council or the Forest Stewardship Council. Jon Johnson, who holds the Walton professorship in sustainability at the University of Arkansas, is leading the consortium, along with Jay Golden, an assistant professor in the school of sustainability at Arizona State. Johnson said the the index will be “comprehensive,” adding that, “Unless you look at the entire life cycle of the product, you just can’t measure the environmental impact.” Wal-Mart will provide a live Webcast of the meeting, which is from 9-11 a.m. (CDT), July 16. Click here to view the Webcast.

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