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IS IT GREEN?: Wal-Mart's Sustainability Index
Green labels abound for seafood, coffee, fair-trade, organic products and more, but we have yet to come across one unifying label that allows us to compare apples to oranges in terms of sustainability. Now it looks like Wal-Mart, may be changing that with the recent announcement of their ‘Sustainability Index.’ Their grand plan could help consumers choose products not only based on their cost and features, but also based on their environmental impact. But is Wal-Mart really turning over a green leaf – and can the benefits of this new system help outweigh the mega-corporation’s questionable environmental reputation as the world’s largest retailer?
To create their sustainability index, Wal-Mart is working with the University of Arkansas and Arizona State University to begin a Sustainability Consortium, which will provide the academic research to back up their efforts. Faculty from Stanford, Duke, Harvard and UC Berkeley are also helping plan the index, but have not joined the consortium quite yet. A number of consumer-goods companies like Proctor & Gamble, Tyson, General Mills, Unilever and more have joined the consortium. Even competing retailers like Costco and Target have been invited to join, which says even more about this Index – if everyone gets involved it will have a far greater impact than if Wal-Mart enforces it alone.
Wal-Mart has no ambitions to own the Sustainability Index or even be in charge of it – they merely want to get the ball rolling. Ideally, the Index will be run by a non-profit organization backed by an army of academics with an all-encompassing board of directors who will ensure that the Index remains fair and accurate. The Index, which has been in development for over a year now, is said to be based on the Life Cycle Assessment tool, which takes account the full environmental impacts of a product from manufacturing, to use and finally to disposal. The index in its current form however, is not meant to rate individual products. At this point, Wal-Mart simply hopes to assess companies and their practices with regards to sustainability.
Wal-Mart has asked 60,000 of its suppliers to answer a set of 15 questions meant to delve deeper into a company’s sustainability practices. The questions, which you can see here, are grouped into 4 categories: energy and climate, material efficiency, natural resources, and people and community. Basically, Wal-Mart is trying to assess what companies are currently doing to monitor and reduce their environmental impact. There is at this point no judgment, endorsements or preference given to any supplier based on their answers – it’s merely a fact finding questionnaire. Wal-Mart’s hope is that this information will help provide the consumer better transparency and knowledge to make better consumer choices. At this stage the questions are very basic – even Wal-Mart staff admit “that this is a “ready-fire-aim” exercise — that the company wanted to get something out there, however imperfect, and improve it as it got real-world use.”
Eventually, the goal of the index is to help the consumer navigate through misleading claims and be able see past greenwashing. Rand Waddoups, Senior Director of Business Strategy & Sustainability at Wal-Mart said recently said, “We understand green-washing. [Our customer] doesn’t. She may not even be aware that it’s going on.” Waddoups also said about the Index, “Imagine one day when every product on the shelf has behind it enough information from a life-cycle-thinking perspective that allows us to be much, much more intelligent about how we’re buying,” he went on. “And really, in the end, eventually, what consumers should be.”
IS IT GREEN?
Yes. Wal-Mart’s sustainability index may be a game changer, and could easily have as much impact as a cap and trade program. With 4,253 retail outlets as of November 2008, the mega-corporation has the power and reach with manufacturers worldwide to get them on board with this program.
This is no small undertaking Wal-Mart has started and we applaud the effort to help consumers make better informed decisions. It can get tough out there wading through all the environmental claims and marketing muck. That being said, this is only the start of the Sustainability Index and it is nowhere close to being the grading systems people are claiming it to be. It will take years of trials, tests, data collection and research to develop a fair, balanced and informative sustainability rating system. The goal is to have a universal eco-labeling system for products based on everything that makes up sustainability, but at its current level of development, the Sustainability Index is yet an infant.
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