Wal-Mart, the world's largest retailer, wants to be the greenest as well. President and Chief Executive Officer Lee Scott laid out the corporation's ambitious long-term goals a year ago: to use only renewable energy, to create no waste and to sell products that “sustain our resources and environment.”
He also established specific short-term goals:
increase truck fuel efficiency by 25 percent in three years and 100 percent in 10;
cut store energy consumption by 30 percent and reduce facility greenhouse-gas emissions by 20 percent in seven years;
reduce solid waste at stores by 25 percent in three years;
establish a program within 18 months that gives preference to suppliers that “aggressively” reduce their greenhouse-gas emissions, and
increase sales of organic food and other environmentally friendly products.
“Environmental problems are our problems,” Scott told employees at the company's Bentonville, Ark., headquarters. Solving them is good for humanity, he said, and it's good for business.
During 2005, Wal-Mart opened two experimental stores — in McKinney, Texas, and Aurora, Colo. — to test green technology.
Highly efficient light-emitting diodes — or LEDs — illuminate exterior signs and interior display cases. Heating systems burn cooking oil and motor oil from the stores' restaurants and auto repair shops. Heat is recovered from refrigerators and freezers, and solar collectors and wind turbines supply electricity. Doors were installed on refrigerated cases that usually are left open, and their lights brighten and dim as shoppers open and close the doors. The restrooms have water-conserving sinks, and the men's rooms use waterless urinals. Countertops are made with recycled glass and concrete.
Outside, drought-tolerant vegetation cuts the water needed for irrigation. Food waste is composted and sold. Roads are paved with recycled materials, and concrete is mixed with fly ash from burned coal and slag from steel production.
Some of the innovations were immediate hits, the company reported in a one-year review, while others “still need to be refined.” Some of the earliest successes — the lighting, landscaping, sinks and urinals — will begin showing up in other Wal-Marts in 2007. The company hopes the other innovations will prove themselves over the next two years.
“Due to our size and scope, we are uniquely positioned to have great success and impact in the world, perhaps like no company before us,” Scott said.
Seemingly small changes, when Wal-Mart makes them, can save millions of dollars.
Because its truck fleet travels a billion miles a year, for instance, raising fuel efficiency by just one mile per gallon would save the company more than $52 million annually at current fuel prices, Scott said. Meeting his goal of doubling efficiency by 2015 would jump that savings to $310 million.
If the company could sell one compact fluorescent light bulb to each of the 100-plus million shoppers who walk into Wal-Mart stores every week, those customers' electric bills would drop a collective $3 billion. If the company succeeds in encouraging green practices by its 60,000 suppliers and 1.3 million employees, environmental benefits will ripple around the world.
Known primarily for its low prices, Wal-Mart confronts a stiff challenge in selling green products that often cost more than their non-green counterparts.
“We've seen that if a green product costs the same, it's a runaway success,” Vice President Andrew Ruben says. “If it costs a little more, it can be successful. Above that, we've got to do things in a smarter way” to try to bring the price down. The company's goal is to price organic products no more than 10 percent above their conventional counterparts.
Environmentalists and organic-farming advocates give Wal-Mart's plan mixed reactions.
The company has consulted with the World Wildlife Federation, the Natural Resources Defense Council, Greenpeace and other environmental organizations. Environmental Defense, another Wal-Mart advisor, opened a Bentonville office so it could dispatch a representative to corporate headquarters at a moment's call.
Describing Wal-Mart's impact on the U.S. economy as “almost beyond calculation,” Environmental Defense Executive Vice President David Yarnold said he and his colleagues “really believe that Wal-Mart can create a race to the top for environmental benefits.”
The Sierra Club refused to work with Wal-Mart because of concern about its labor policies, but Executive Director Carl Pope said Wal-Mart managers “deserve the chance to show that their business model is compatible with high standards, not just low prices.”
Nu Wexler, a spokesman for Wal-Mart Watch — which was created to challenge the company's business practices — said his organization is “encouraged by Wal-Mart's new environmental initiatives because they could, if implemented, change the way American businesses approach environmental sustainability.”
The Cornucopia Institute, an advocate for small organic farms, attacked the company for purchasing from “industrial-scale factory farms” and from China. Pressure to cut prices could destroy family farms and reduce some of the environmental benefits of organic farming, said Mark Kastel, Cornucopia's senior farm-policy analyst.
“Food shipped around the world — burning fossil fuels and undercutting our domestic farmers — does not meet the consumer's traditional definition of what is truly organic,” Kastel said.
Ronnie Cummins, national director of the Organic Consumers Association, questioned the authenticity of organic food grown in China, where “organic standards are dubious, and farm-labor exploitation is the norm.”
Wal-Mart replied that it would not compromise organic standards. In addition, a spokesman said, “whenever possible, as with all fresh merchandise, we try to purchase fresh organic products from local suppliers for distribution to stores in their areas. This is good for the surrounding communities and helps to generate savings on distribution costs that we can pass on to our customers.”