WAL-MART’S SUSTAINABILITY STRATEGY
We’ve come to believe through experience that you really can create environmental progress by leveraging corporate purchasing power. And who’s got more purchasing power than Wal-Mart? ⎯ Gwen Rutta, Director of Corporate Partnerships at Environmental Defense, in a July 2004 article1
INTRODUCTION In October 2005, in an auditorium filled to capacity in Bentonville, Arkansas, Lee Scott, WalMart’s president and CEO, made the first speech in the history of Wal-Mart to be broadcast to the company’s 1.6 million associates (employees) in all of its 6,000-plus stores worldwide and shared with its 60,000+ suppliers. Scott announced that Wal-Mart was launching a sweeping business sustainability strategy to dramatically reduce the company’s impact on the global environment and thus become “the most competitive and innovative company in the world.” He argued that, “being a good steward of the environment and being profitable are not mutually exclusive. They are one and the same.” He also committed Wal-Mart to three aspirational goals: “To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and the environment.”2 In the past, Wal-Mart had dealt with environmental issues defensively, rather than proactively and as a profit opportunity. In 1989, in response to letters from customers about environmental concerns, the company launched a campaign to encourage its suppliers to provide environmentally safe products in recyclable or biodegradable packaging at no additional cost. As Discount Stores News reported, “What Wal-Mart has chosen to do, apart from reaping a large public relations windfall, is to deploy its clout with vendors to influence them to spend more on R&D to develop safer packaging⎯without passing those costs on to Wal-Mart.”3 The company’s CEO at the time, David Glass, denied that the program was meant to be self-serving. “I would encourage you not to view being socially conscious and approaching this environmental issue as a marketing ploy,” he said. “We don’t expect to get rich on this…. Ours is as selfless a campaign as anything I’ve worked on.”4 Lyn Denend prepared this case under the supervision of Professor Erica Plambeck as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2007 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: email@example.com or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate School of Business.
Regardless of the motive, the company did earn some “goodwill among environmentalists [as] the first major retailer to speak out in favor of the environment in 1989.”5 When vendors claimed they had made environmental improvements to products, Wal-Mart began promoting the products to consumers with “green” shelf tags (without measuring or monitoring the improvements themselves). At one point, the company had as many as 300 products with green tags in its stores. However, not all the press received by the company was positive. In response to Wal-Mart’s 1989 campaign, Procter & Gamble labeled a brand of their paper towels as “green” when the inner tube was made of recycled content but the towels themselves were made of unrecycled paper treated with chlorine bleach. When the details behind the product were exposed, both organizations were heavily criticized.6 By 1991, Wal-Mart’s green tags had...