Wal-Mart & Sustainability II

by Erin McCune on July 26, 2006

in Caught My Eye, Change Management, Strategy

A must-read article in this week's FORTUNE Magazine

In an earlier post I shared my astonished reaction to Wal-Mart's sustainability initiative. I had just attended a corporate performance management conference and my impression of Wal-Mart had been turned upside down by a presentation by David Blackwell, Wal-Mart's VP for Global Procurement.

The August 7th edition of FORTUNE Magazine features Wal-Mart in its cover story and opens describing Al Gore (another recent Forte Blog topic) presenting his movie "An Inconvenient Truth" at an all-day employee meeting.

Wal-Mart has already transformed the business practices of a legion of suppliers, can it now dictate green business practices? Fortune is skeptical and indicates that the sustainability initiative may distract Wal-Mart from other concerns, namely a falling stock price and slowing growth. Yet, sustainability may be the best response to Wal-Mart's PR woes.

But if there is any company that can effect wholesale change in business practices, it's Wal-Mart. And they've calculated a compelling return on sustainability:

[excerpted from FORTUNE]

Wal-Mart was defining its responsibility broadly, in a way that
would bring its vast supply chain – where its environmental impact is
greatest – into the picture.

About a dozen people from BluSkye,
CI, and Wal-Mart spent nearly a year measuring the company's impact.
Fairly quickly, the environmentalists spotted waste that Wal-Mart's
legendary cost cutters had overlooked.

On Kid Connection, its
private-label line of toys, for instance, Wal-Mart found that by
eliminating excessive packaging, it could save $2.4 million a year in
shipping costs, 3,800 trees, and one million barrels of oil.

On
its fleet of 7,200 trucks Wal-Mart determined it could save $26 million
a year in fuel costs merely by installing auxiliary power units that
enable the drivers to keep their cabs warm or cool during mandatory
ten-hour breaks from the road. Before that, they'd let the truck engine
idle all night, wasting fuel.

Yet another example: Wal-Mart
installed machines called sandwich balers in its stores to recycle and
sell plastic that it used to throw away. Companywide, the balers have
added $28 million to the bottom line.

"Think about it," Scott
said in his big speech to employees last fall. "If we throw it away, we
had to buy it first. So we pay twice – once to get it, once to have it
taken away. What if we reverse that? What if our suppliers send us
less, and everything they send us has value as a recycled product? No
waste, and we get paid instead."

I encourage you to read the complete FORTUNE article and contemplate the impact of sustainability on your business (before Wal-Mart forces you to).

The Green Machine
FORTUNE Magazine
by Marc Gunther
July 26, 2006

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