We’ve done some good stuff on Wal-Mart’s greening, but Marc Gunther’s cover story in Fortune this week pulls it all together better than any single story I’ve seen, and advances it in some interesting ways.
Particularly in reference to our ongoing debate over morality, listen to Wal-Mart CEO Lee Scott:
To me, there can’t be anything good about putting all these chemicals in the air. There can’t be anything good about the smog you see in cities. There can’t be anything good about putting chemicals in these rivers in Third World countries so that somebody can buy an item for less money in a developed country. Those things are just inherently wrong, whether you are an environmentalist or not.
He later says:
I had an intellectual interest when we started. I have a passion today.
What moved him from intellectual interest to passion? Morality.
I hadn’t realized how big a role a Walton played in the story. This line sounds like the beginning of a joke:
[Sam Walton’s son] Rob Walton, his son Ben, Pearl Jam guitarist Stone Gossard, and conservationist Peter Seligmann were scuba-diving off Coco Island, a lush, uninhabited Costa Rican national park populated by manta rays, dolphins, and sharks.
A chain led from Walton to Scott.
In a drab Bentonville conference room, Scott, Rob Walton, Seligmann and Glenn Prickett of Conservation International, and a friend of Seligmann’s named Jib Ellison, a river-rafting guide turned management consultant, convened a pivotal meeting in June 2004.
Scott started the company researching and talking to some smart people.
"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."
That was talk any Wal-Mart executive could understand, even if few knew it came straight from the pages of Natural Capitalism, an influential book by Paul Hawken, Amory Lovins, and Hunter Lovins that lays out a blueprint for a new green economy in which nothing goes to waste.
Not coincidentally, Lovins and his Rocky Mountain Institute were also hired as consultants by Wal-Mart to study a radical revamp of its trucking fleet.
Scott also insured that the learning would be distributed and ongoing.
Wal-Mart was pulling ideas from everywhere — consultants, NGOs, suppliers, and eco-friendly competitors such as Patagonia and Whole Foods. This open-source approach worked so well that the company decided to form "sustainable value networks" made up of Wal-Mart executives, suppliers, environmental groups, and regulators; they would meet every few months to share ideas, set goals, and monitor progress.
Today there are 14 networks, each with a focus: facilities, internal operations, logistics, alternative fuels, packaging, chemicals, food and agriculture, electronics, textiles, forest products, jewelry, seafood, climate change, and China.
Ironically, the company’s monopsony power — rightly regarded as dangerous by economists — may end up being its most powerful lever for change. Genuinely substantive things are happening.
In February, Wal-Mart announced that over the next three to five years it would purchase all its wild-caught seafood from fisheries that, like Alaska’s salmon fishery, have been certified as sustainable by an independent nonprofit called the Marine Stewardship Council (MSC). [More on the company’s new fish policy here.]
The company’s also becoming a huge purchaser of organic cotton, not to mention organic foods:
Wal-Mart is also increasing the amount of organic food it sells, but some even find fault with this, assuming that it buys only from massive corporate organic farms. Not true. Wal-Mart buys locally in two dozen states, striving to reduce "food miles" to save shipping costs and increase freshness.
This seems to make good on what Amanda reported here:
The produce director is moving toward more local farm purchases in order to save money on truck fuel costs and refrigeration. Moving away from selling monoculture produce at all stores to more diversity in produce based on region … Said the produce director, "Our whole focus is: How can we reduce food miles?" He predicts a big resurgence of locally produced farm products in coming decades (not necessarily family farms, but locally produced nevertheless).
As Gunther appropriately stresses, much of the value-add for Wal-Mart moving this direction is the educational aspect:
This is why Wal-Mart’s eco-initiative is potentially more world-changing than, say, GE’s. GE sells fuel-efficient aircraft engines and billion-dollar power plants to a few customers. Wal-Mart sells organic cotton, laundry soap, and light bulbs to millions. When shoppers see a display promoting "the bulb that pays for itself, again and again and again," they’ll be reminded of their own environmental impact.
Not only does this educate folks, but it has a politically transformative effect.
"The potential here is to democratize the whole sustainability idea–not make it something that just the elites on the coasts do but something that small-town and middle America also embrace," says CI’s Glenn Prickett. "It’s a Nixon-to-China moment."
I’m officially over the lefty orthodox position of principled hatred for Wal-Mart. We’re talking about enormous power being marshaled here, an economy equal to the GDPs of small countries. These are not all the changes we’d like to see. We’d like to see sprawl addressed. We’d like to see C2C certified products. We’d like to see much more enlightened labor relations.
But these are positive changes, and positive changes are what we want for every entity: individual, civic, state, or corporate. To be moving in the right direction. That’s the thing.
The ideal outcome here is that Wal-Mart is so affected by the shower of public acclaim and business it receives in response to these green initiatives that it doubles and redoubles its efforts toward sustainability. Like this:
The environmental campaign that Scott admits started out as a "defensive strategy" was, in his view, "turning out to be precisely the opposite."
Positive reinforcement is not moral compromise.