Walmart today further strengthened its commitment to a sustainable global supply chain by announcing a series of initiatives to make the company’s supply chain in the United States, China, and around the world more sustainable. At an event in Beijing with government officials, nongovernmental organizations (NGOs), academics, suppliers and company associates, Walmart said the company will use the Sustainability Index to design more sustainable products, make its global supply chain more socially and environmentally accountable and responsible, and incentivize merchants to make sustainability a bigger part of their day-to-day jobs.
“Today I’m proud to announce a series of steps and commitments that will make Walmart’s supply chain, in the United States, here in China, and around the world, more sustainable,” said Mike Duke, President and CEO, Wal-Mart Stores, Inc. “The impact of these commitments will be global and make a difference with products sold around the globe.”
“Walmart and the Chinese Government, along with local NGOs and suppliers, have worked together and independently to find new solutions and models for sustainable growth,” said Gary Locke, U.S. Ambassador to China. “Today’s announcement will help accelerate the good work under way to make affordable and sustainable consumer goods more accessible here in China and around the world.”
The additional initiatives announced at today’s event will build on the broader sustainability goals Walmart set at the China Sustainability Summit in 2008. The commitments outlined today include:
- By the end of 2017, Walmart will buy 70 percent of the goods it sells in U.S. stores and in U.S. Sam’s Clubs only from suppliers in the United States, China, and around the world who use the Index to evaluate and share the sustainability of their products. This change will involve suppliers who produce goods in categories where the Index is available.
- Beginning in 2013, Walmart will use the Sustainability Index to influence the design of its U.S. private brand products.
- Walmart will change the way its key global sourcing merchants are evaluated so that sustainability becomes an even more important part of buyers’ day-to-day jobs. Beginning in 2013, these buyers will join key buyers in Walmart U.S. and Sam’s Club who already have specific sustainability objectives on their annual evaluations.
- The Walmart Foundation will grant $2 million to fund The Sustainability Consortium (TSC) and assist in its efforts in launching TSC in China. TSC is an independent research organization. Using the Walmart Foundation grant, TSC China will engage industries, universities and other experts to form a global network of leaders improving sustainability in consumer goods, and will provide tools and resources to help suppliers become more sustainable and competitive. Walmart will use the results of TSC’s independent work to refine its Sustainability Index for use in China.
“The $2 million grant from the Walmart Foundation will support the Consortium and position us to help bring the best science and research to support the development of the green supply chain here in China and globally,” said Kara Hurst, CEO of The Sustainability Consortium.
At the 2008 Sustainability Summit, Walmart announced ambitious goals to improve sustainability practices in its operations in China that would have benefits throughout the supply chain. Examples of the success of that work include:
- Nearly 95 percent of direct-import factories have received one of the two highest audit ratings for environmental and sourcing practices.
- 195 factories have improved their energy efficiency by 20 percent as of July 2012, and the top 200 factories are expected to improve their energy efficiency by 20 percent or more by the end of 2012.
“We will drive progress faster and scale our work to make factories more socially and environmentally sustainable, reduce energy and water usage, and eliminate harmful emissions into rivers and the air. We will also have deeper insight into how we can make manufacturing more sustainable for people and communities in China,” Duke continued.
Integrating the Sustainability Index into Walmart’s Supply Chain
Walmart set a goal in 2009 to develop a Sustainability Index to improve sustainability across the consumer goods industry. The Sustainability Consortium (TSC) developed a reporting system and measurement tools for Walmart, and other members of The Consortium, to evaluate products and determine supplier sustainability performance.
Walmart has rolled out the Sustainability Index, which measures product sustainability using metrics developed by TSC, to more than 100 categories. Merchandise buyers from Walmart U.S., Sam’s Club, Walmart.com and Walmart Canada are now using the Sustainability Index in regular buying decisions. More than 500 suppliers have participated in the Sustainability Index, representing an average of 70 percent of sales within the categories Walmart is currently evaluating with the Sustainability Index. Walmart expects to expand the use of the Index to an additional 100 product categories by the end of 2012.
How the Index Works
For example, Walmart’s computer buyer used the Sustainability Index and The Sustainability Consortium’s (TSC) research tools to identify opportunities to reduce greenhouse gas emissions and save energy from laptops. Only 30 percent of laptops sold at Walmart were using “advanced power management” – a feature that switches the computer to a lower power state when it’s idle or used at a reduced energy capacity. The industry had a standard for activating “sleep” mode when a computer’s system is in 30 minutes of inactivity. Walmart’s computer buyer asked suppliers, when possible, to shorten the time to 10 minutes of inactivity. Walmart now has a goal for 100 percent of the computers it sells this holiday season to have advanced power management as the default setting. This change will eliminate more than 200,000 tons of greenhouse gas emissions and save customers money on electricity bills.