The Quiet Revolution
Walmart has earned some scorn from the intellectual elite for its employment practices and its willingness to displace local businesses. While the elites consider and debate, Walmart is leading a quiet revolution in environmentally-friendly business practices.
One of the substitute teachers in my business school was an engineer who specialized in designing energy-efficient retail spaces, and Walmart was one of his frequent customers. He would study how to position the building and angle the roof for maximal heat retention in winter and natural cooling in summer, how to place skylights for most beneficial effect, etc. and run projections on the benefit to cost of each choice.
Walmart has learned that improved energy efficiency almost always means improved cost efficiency, and improved cost efficiency is their competitive advantage. Walmart is leading the way in a number of critical green initiatives:
- Use of highly efficient fuel cell generators for emergency backup power
- Use of efficient, long-life LED lighting in its distribution centers
- The simplification of packaging and reduction in packaging waste
- The elimination of potentially dangerous BPA-added plastic from children’s products
- Preferential stocking of Energy Star-compliant electrical and electronic products
The list goes on. These practices are not only good for Walmart, but they’re also good for Walmart’s consumers. Now Walmart is poised to make the biggest leap yet: pressuring its suppliers to adopt similar environmentally-friendly practices. By 2013, Walmart plans to have every vendor scored according to safe and sustainable practices, a “sustainability scorecard” designed to allow both Walmart and consumers to quickly identify the products from companies with good environmental records.
Of course, the benefits are multi-fold for Walmart. Forcing its vendors to adopt environmentally efficient methods will likely reduce production costs in the long run, allowing Walmart to continue to offer low prices. Scoring vendors and presenting that information to consumers will also give it an enviable leg-up over its competitors, who cry foul at its business practices but have made no particular progress with environmentally-friendly sourcing.
And of course, last but not least, consumers will have a wider array of reasonably priced products with less packaging waste and lower environmental impact.