Wal-Mart to develop a global sustainability index

by Allison Sebolt
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BENTONVILLE, ARK. — Wal-Mart Stores, Inc. announced it is developing a global sustainable product index that will establish a single source of data for evaluating the sustainability of consumer goods products.

"Customers want products that are more efficient, that last longer and perform better," said Mike Duke, president and chief executive officer, in a meeting with suppliers, associates and sustainability leaders on July 16. "And increasingly they want information about the entire lifecycle of a product so they can feel good about buying it. They want to know the materials in the product are safe, that it was made well and that it was produced in a responsible way."

The company said the index is necessary because the world’s population is increasing while the world’s natural is increasing while the world’s natural resources are decreasing.

The index will be introduced in three steps, the first of which is a supplier assessment. The company is giving a 15-item questionnaire (below) to 100,000 global suppliers, and questions are divided into four areas, including energy and climate, natural resources, material efficiency, and people and community. The company is asking its top-tier U.S. suppliers to respond by Oct. 1. The company is developing a timetable on a country-by-country basis for suppliers outside the United States to complete the survey.

"These questions aren’t complicated, but we’ve never systematically asked for this kind of information. The survey is a key first step toward establishing real transparency in our supply chain," said John Fleming, chief merchandising officer for Wal-Mart U.S.

The second step of the index will be a lifecycle analysis database. Wal-Mart is creating a consortium of universities that will collaborate with suppliers, retailers, non-governmental organizations and governments to develop a global database of information on the lifecycle of products from raw materials to disposal. The company will provide the initial funding for the index, but it is not the intent of the world’s largest retailer to create or own the index but rather for it to be a collaborative effort. Arizona State University and the University of Arkansas will administer the consortium. In addition, the company plans to partner with one or more technology companies to create an open platform to power the index.

The final step in the implementation of the index is making a simple tool for consumers to recognize and use. The goal is to develop a simple, convenient, easy-to-understand rating system based on all the information available so consumers may make choices and consume products in a sustainable way. Wal-Mart has not yet determined specifically what kind of tool will deliver this information, but it may come in the form of a numeric score, color code or some other type of label. The consortium will help in determining the scoring process.

"It is not our goal to create or own this index," Mr. Duke said. ‘We want to spur the development of a common database that will allow the consortium to collect and analyze the knowledge of the global supply chain. We think this shared database will generate opportunities to be more innovative and to improve the sustainability of products and processes."

Mr. Duke said Wal-Mart cannot do this without its partners and that the project cannot and should not be a Wal-Mart effort alone. In addition, he said it cannot be solely a U.S. effort, as it needs to be global and involve many stakeholders and vital partners. He said the world is continuing to progress in various sustainability efforts, and it is critical for the company and its partners to move faster.

During the presentation, Wal-Mart executives stressed the index will lead to higher-quality products and lower costs at the same time.

"The index will bring about a more transparent supply chain, drive product innovation and ultimately provide consumers with the information they need to assess the sustainability of products," Mr. Duke said. "If we work together, we can create a new retail standard for the 21st century."

Wal-Mart’s 15 questions for suppliers

Energy and climate:

Reducing energy costs and greenhouse gas emissions

1.Have you measured your corporate greenhouse gas emissions?

2.Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project?

3.What is your total annual greenhouse gas emissions reported in the most recent year measured?

4.Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets?

Material efficiency:

Reducing waste and enhancing quality

1.If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Wal-Mart for the most recent year measured.

2.Have you set publicly available solid waste reduction targets? If yes, what are those targets?

3.If measured, please report total water use from facilities that produce your product(s) for Wal-Mart for the most recent year measured.

4.Have you set publicly available water use reduction targets? If yes, what are those targets?

Natural resources:

Producing high quality, responsibly sourced raw materials

1.Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?

2.Have you obtained third-party certifications for any of the products that you sell to Wal-Mart?

People and community:

Ensuring responsible and ethical production

1.Do you know the location of 100% of the facilities that produce your product(s)?

2.Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of and capacity for production?

3.Do you have a process for managing social compliance at the manufacturing level?

4.Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?

5.Do you invest in community development activities in the markets you source from and/or operate within?

This article can also be found in the digital edition of Food Business News, July 21, 2009, starting on Page 1. Click here to search that archive.

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