In our new chapter, called Sustainability in the Supply Chain, we note Wal-Mart’s role in developing a sustainable product index. A leader in making its operations more environmentally sound, Wal-Mart’s impact on global supply chains is the topic of an interview in The Wall Street Journal (April 9, 2014). Here is what CEO Michael Duke has to say:
It’s not about a corporate team. It’s about getting 2 million people who work for Wal-Mart excited all over the world about sustainability. But also our partners that we work together with. How do we create a company that has zero waste? But we’ve established a goal to reduce energy consumption. We want to have a reduction of 20% of energy consumption, kilowatt-hours per square foot.
This past year, we established something for our merchandising. It relates to the sustainability index, which lets us measure the products that we sell related to sustainability, from the footprint all the way through to the consumption and the full life cycle of the product. It causes the merchants then to look at everything that we sell and say, “How do we improve the index?
Working with our suppliers, we went to more concentrated, taking water out of liquid laundry detergent. So the liquid detergent that was this big of a bottle became [a smaller] bottle, but did just as many laundry loads. Recently, we’ve worked with Clorox, and now bleach is that way.
We’ve had a big initiative in other countries to try to raise the bar with factories on how product is manufactured. We kicked off with several hundred suppliers in China to increase energy efficiency, create more sustainable production practices throughout China. We kicked off this past year a big initiative on product made in the U.S. With rising cost of energy and moving product all over the world, it makes more sense in the long-term for more product to be made closer to the consumer.
Classroom discussion questions:
1. Why has the firm made this “green initiative”?
2. What is the sustainability index?
