Wal-Mart Crosses Traditional Lines in Sustainability

DAVID ORGEL

COLORADO SPRINGS — Wal-Mart Stores is reaching out to many industry sectors and people to develop its newly announced “Sustainability Index” — and it even held a meeting with competitor Kroger Co. on this topic.

“I hope that in working with a very large group of individuals we can as an industry come together and form a standard,” Matt Kistler, senior vice president of sustainability for Wal-Mart Stores, said during a conference panel presentation here last week. “That's what we pledged to do in July as a company. This is simply different. Having Wal-Mart go to a meeting at Kroger's headquarters and talk about the Sustainability Index was a first. And I appreciate that GMA [Grocery Manufacturers Association] helped to make it happen.”

Kistler spoke during a session of the GMA Executive Conference.

Wal-Mart has said its index is intended to help consumers evaluate the environmental impact of its products. The company said it hopes to help lead the industry in the creation of an extensive database that includes product lifecycles. It is creating a consortium of universities to work with sectors such as suppliers, government and non-government agencies to gather information for the database.

“Working with our supply chain is our greatest opportunity in packaging and other areas,” Kistler said. “There's not a silver bullet for sustainability — you need to do it collaboratively.”

In assessing which sustainability oriented products or categories make financial sense for the retailer, Wal-Mart is “looking at total system costs, not just individual product costs,” Kistler added.

“We may pay more for packaging because it ships products better and has recyclable value,” he explained. “So we're thinking in those new ways.”

Gene Kahn, vice president, global sustainability officer, General Mills, said the industry needs to take a big-picture view of sustainability and apply standards.

“We need to look at product claims across a lifecycle so it's not misleading,” he said. “We also need generally accepted sustainability principles, just as accountants have generally accepted accounting principles.”

Dara O'Rourke, CEO, Good Guide, which provides ratings of the environmental and social impacts of products and companies, said consumer and industry attitudes are shifting.

“Health and wellness will increasingly drive the consumer sustainability conversation,” he said. “Consumers will consider how it affects their kids and grandkids, and their own health. They want to live healthier lives.”

He said companies are “switching from viewing sustainability as a cost compliance center to integrating it deeply in everything they do.”

Steven Swartz, associate partner, McKinsey & Co., said companies need to be mindful of the risks of not providing credible information to consumers.

“The science is continuing to evolve, but consumers are caught in the crosshairs,” he said. “It's hard to get credible information and there's so much noise. Eventually, consumers may tune out.”