How a Megacorporation Is Making Money From Sustainability

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It’s been a decade since Walmart adopted sustainability as a company goal. Of course, it’s easy to be cynical about corporate intentions, especially since the 2005 program sounded like a PR-friendly wish list of do-gooder causes.

And yet Walmart says it’s saving money and reducing environmental impact, all the while helping to give sustainability a good name. “We no longer have to knock down doors” to sell the idea, says Nancy Buzby, who leads marketing for the Environmental Defense Fund’s corporate partnerships. EDF has been giving free advice to Walmart since the start of the program.

By last year, Walmart had cut greenhouse gas emissions by 28 million metric tons throughout the company and its supply chain. That’s roughly as much as the average energy consumed by 2.3 million American homes in a year, enough to power Houston. It’s doubled the fuel efficiency of its fleet, saving a cool $1 billion (nearly), lifted renewable energy power to 26 percent of supply (with a goal of 100 percent) and reduced waste headed to landfill by 87.4 percent.

Its biggest source of waste and pollution: the vast chain of suppliers, where the real opportunity lay.

Walmart says it has also learned a few things. “The first and most important lesson is that we have to set big goals,” says Elizabeth Sturcken, of the EDF, who works with Walmart. At the launch, says Sturcken, the effort was stuck on worthy stuff that didn’t have a big impact, like efficient shower heads or an abortive scheme to label eggs to reduce waste. That’s before the company turned its attention to its biggest source of waste and pollution: the vast chain of suppliers, where the real opportunity lay. “There’s a ripple effect that goes upstream,” says Steve Banker, a supply chain and logistics consultant at the ARC Advisory Group.

That led to lesson two. “We can’t create a solution alone,” says Kevin Gardner, spokesperson for Walmart. Walmart is the nation’s biggest grocer, and its number one source of emissions came from excess fertilizer application by suppliers — which led to working with farmers who plant 20 million acres to increase the efficiency of fertilizer application, also reducing their costs. When recycling efforts were stymied by the lack of recycling plants, it joined with other big companies, like Coca-Cola and Unilever, to create the Closed Loop Fund, with $100 million to support municipal facilities.

Of course, Walmart has its severe critics. A number of big European investment funds have sold Walmart shares after objecting to the company’s labor practices. Last year, the Los Angeles–based Food Chain Workers Alliance slammed the company over both its environmental record and labor practices. But overall, Walmart seems to be earning a golden halo for its sustainability efforts. “I don’t think Walmart gets the credit they should,” says Banker.

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