Wal-Mart Taking Lead on Eco-Labels
Wal-Mart
Stores, as most know, takes all this sustainability stuff pretty seriously.
Also, as its support for legislation that would mandate employers provide
health insurance demonstrates, the company likes to get out front and influence
issues before they compromise its competitive position.
Those
factors seem to be behind a decision by a new environmental labeling program
unveiled by the retailer that would require suppliers to calculate the
full costs associated with the manufacture of products. Wal-Mart plans
to take that information and boil it down to a simple rating system that
would be displayed like price tags on the shelves of its stores.
While
Wal-Mart has indicated the development of the program, The Wall Street Journal reports that it will likely take
years before any show up in stores. The program is not likely to get into
full swing mode until 2011 at the earliest.
"I envision the day
that you look at a piece of apparel, you flip a tag over, and learn about
how sustainable it really is," John Fleming, chief merchandising
officer for Wal-Mart, told the Journal.
"It would be like nutritional labeling is today. But there is some standardization
that needs to take place."
Len Sauers, Procter & Gamble’s
global vice president for sustainability, said similar programs in Europe
have not fulfilled their promise "because they have not really provided
the consumer with information that makes sense."
"A lot of suppliers
are scared, but there is an opportunity here for them," said
Michelle Harvey of the Environmental Defense Fund, which is working with
Wal-Mart on the project. "I think the most significant improvement
will come before the consumer ever sees a score."
According
to the Journal, Wal-Mart is making this move as environmental labeling
regulations are being put in place in Europe and Japan. The thinking is
that the U.S. will follow and the retailer can determine the standard for
all others to meet with early action on its own. The retailer disputed
this assertion.
Discussion Question: What
is your take on Wal-Mart’s plans to require suppliers in the future to
provide an accounting of the environmental impact of their products?
If you focus strictly on the eco-labeling initiative, it’s hard to figure out consistent standards for this program. Walmart might be (wisely) trying to set those standards for the rest of the industry, but it’s certainly a less exact science than nutrition labeling and other programs.
The bigger story is Walmart’s overall effort to position itself as a leader rather than laggard on social issues in general. (See today’s other Wall Street Journal article, titled “Retailer’s Image Moves from Demon to Darling.”) Walmart has clearly decided to be proactive on issues like the environment, health care, and so on. Self-interest is at play here, by helping to define parameters of future regulation…but Walmart is interested in repositioning itself as a corporate “good guy,” too.
Another example of how Walmart truly is staying “out front” (to quote Lee Scott) of opportunities that will increasingly matter to consumers. Let others scoff at initial imperfections; Walmart will have it worked out before some feel safe enough to test the waters, further securing its global relevance in the process. I applaud this latest bold move.
On the topic of environmental labeling, I completely agree with Len Sauers, Procter & Gamble’s global vice president for sustainability, that similar programs in Europe have not fulfilled their promise “because they have not really provided the consumer with information that makes sense.”
Everyone with any type of conscience wants to have a clean planet to live on. However, some of the “top line” labeling programs are often unfair, misunderstood, unbalanced, incomplete, and more harmful to consumers and manufacturers than the “box” that the product comes in.
Here’s the deal: in order for some products to arrive to the consumer in a safe, clean and effective manor, boxes, lids and pieces of paper inside to explain the product are often necessary. This is especially true for many
health related products.
The environmental impact of products? What determines this? If it is supposed to be a label like nutritional values of food products, what items does Walmart expect manufacturers to account for?
I think this is a political move to make Walmart look like they care. I don’t believe it will ever amount to anything substantial.
If you look at the European and Canadian models of life-cycle analysis, I doubt there’s a single manufacturer in this country that can calculate the true, full environmental cost of its products. Nice PR gimmick, not a sustainable model.
My favorite sci-fi headline: “Walmart Saves the Planet.”
But seriously, folks, this company has been trying to take a leadership role on certain initiatives, like CFC bulbs, reducing corrugated use, and passive solar lighting in stores, for a few years now.
Assuming for argument’s sake that the Great Wal has no conscience whatsoever about green initiatives, it must then be acting out of self interest.
That’s not so bad, really. It gains a PR advantage and puts its competitors on its heels. A few BTUs of energy get saved, and prices may actually decrease for some greener products.
This eco-labeling initiative will be some time in coming, as nobody–not Walmart, not the EPA, not the enviros–knows exactly what to measure and how. But at least it sets an expectation for consumers who are leading the change from conspicuous consumption to conscientious consumption.
Requiring a label does not solve the problem of different standards, different measures, and different information being communicated to consumers. Unless the industry plans to undertake the standards questions, this project is going to take more time to implement than the RFID mandate.
Pioneers always get arrows. Especially big pioneers, since they’re easier to hit. Whether you hate ’em or love ’em, Walmart’s been out front on a lot of issues, and done a lot of good. Once again, it’s taking the initiative while others sit around and shoot arrows. This will be far from easy, but it’s getting the dialog started. Good for Walmart.
With the release of this story, Wal-Mart’s suppliers were abuzz. Meeting rooms were filled to address this issue and the charge was given to the product managers, engineers, et al…”Find a way we can look sustainable without making real changes in our products.”
We should all keep in mind that Walmart, like most for-profit companies, selects “green” projects at the intersection of environmentally green, and bottom-line green. They aren’t as altruistic as they are sometimes portrayed, nor are they an evil mega-company. These extremes always make for better press, but the truth always lies in the middle.
In the case of sustainability labeling, I tend to believe they are getting out in front of legislation they know is coming. But some of their other efforts, such as switching to renewable fuels and reducing product packaging, are better examples of true “green projects.”
I’m in agreement with Dick Seesel. The story here is Walmart getting out on the leading edge on consumer and workforce issues, such as this and healthcare mandates. In both cases, it puts them in a better position to impact the terms of the debate, and thus the eventual outcome, as well as moderate their reputation for being unreceptive to the impact they have on the broader community.
Walmart appears to be taking a sharp left turn. Much of their recent activism adds costs to their suppliers and havoc to the rest of the industry. (Green initiatives, health care, etc.). At one time I deeply respected Wal-Mart as being a bastion of capitalism. They provided employment to those most of us would not hire and gave opportunity to those who would work and study. Any more I am not sure. While they may garner short-term favor with the current administration, I am not sure they perceive the unintended consequences that lie in wait down the road.
Given the public scrutiny that Walmart operates under, it should come as no surprise that they are taking a pioneering position with respect to sustainability.
Our knee-jerk reaction on all things Walmart is to view them cynically but I think we need to resist that reaction here. If this was something Whole Foods was doing, we’d likely applaud them for it.
I think that regardless of their motivation, Walmart is doing something that will raise the bar for all retailers. If in fact, the consumer adopts this information as a basis upon which they make buying decisions, then the environment is the ultimate beneficiary.
Tesco announced a similar program more than a year ago. I have a sneaking hunch it launched and then quietly died a death. Although I wouldn’t want to swear to this, I hope someone at Wal-Mart HQ checked and found a way to learn lessons. Some of those lessons should relate to how hard retailers are trying with nutrition labels and how much trouble they’re having in actually getting consistent messages across to consumers. It interests me that in both countries (US and UK), the chains trying to be seen to be out front on sustainability issues are the ones with the highest love/hate figures amongst shoppers. (And by the by, just how successful has Wal-Mart been with its plans to require manufacturers to use RFID? Only asking, I don’t know the answer.)
Will WMT’s system be perfect right out of the shoot? Obviously not. Will they set the tone for the industry on yet another key consumer topic? Absolutely. Other, more conservative and perhaps out-of-touch companies will hesitate and scrutinize the program. I think it’s great and responsive to the marketplace demands. In fact, I just “Tweeted” about before I saw it here. Ha! The train is moving…better hop on!
Frankly this startles me. I have invested in Walmart over the years because they have done an excellent job of managing themselves away from issues like Eco-Labels. This is much sound and fury that will warm the hearts of critics who don’t own Walmart stock and don’t shop in Walmart stores. It is frankly a BD diversion from Walmart’s mission. Walmart has no business being a quasi-governmental organization requiring green anything. Walmart should get back to its knitting and not waste resources on puffery such as this.