Walmart is the world’s largest public corporation by revenue and exerts a tremendous impact on US and global economic structures. Any initiative that Walmart undertakes can have significant social and environmental consequences, both positive and negative.
In recent years, Walmart has put significant focus on sustainability in its business operations. Walmart produces an annual social responsibility report, as do many other major multinational companies, but their recent efforts extend far beyond reporting on sustainability performance. Part of this initiative is the construction of a sustainability index. Walmart’s goal is to communicate to customers the safety, quality, and social responsibility of the products they purchase from Walmart.
The first step in developing the sustainability index has been to analyze the impact of their supply chain.
This upstream analysis has involved surveying and scoring suppliers according to a fifteen-question supplier sustainability assessment. These questions are divided into four categories: (1) energy and climate, (2) material efficiency, (3) nature and resources, and (4) people and community. Walmart provided more than one hundred thousand global suppliers with the brief survey to evaluate their own sustainability, and the survey was required to be completed by their top-tier suppliers.
The next steps in their development of a sustainability index are to develop a life cycle analysis database for products and to develop a simple tool to communicate sustainability performance from suppliers to customers. [10]
Walmart Supplier Assessment Survey.
Source: Walmart, Sustainability Supplier Assessment Questions, walmartstores.com/download/4055.pdf.
KEY TAKEAWAYS
• Life cycle management is a philosophy that integrates a comprehensive life cycle approach for organizations in managing their value chain.
• Life cycle thinking considers the impact of a product or service from its “cradle to grave.”
• Carbon and water footprinting are specific applications of life cycle management.
• Supply chain assessment serves as a valuable tool. For many organizations, the life cycle impacts of a product or service are upstream of the organization.
EXERCISES
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1. Go online and find the Walmart Supplier Assessment Survey. Review the questions in the survey. Do you think these questions are sufficient to allow Walmart to assess the sustainability of its suppliers?
Based on the frameworks discussed in this chapter can you highlight any shortcomings to this approach?
2. Visit the GHG Protocol website and review the corporate standard posted at
http://www.ghgprotocol.org/standards/corporate-standard. Identify and discuss three examples of how the standard provides guidance to organizations on how to account for emissions. (An example is employee commuting.)
[1] http://www.unep.fr/shared/publications/pdf/DTIx1208xPA-LifeCycleApproach-Howbusinessusesit.pdf.
[2] Swiss Federal Institute of Technology, Energy Use in the Food Sector: A Data Survey, http://www.infra.kth.se/fms/pdf/energyuse.pdf.
[3] http://www.ghgprotocol.org/files/ghgp/public/ghg-protocol-revised.pdf.
[4] Institute for Water Education, Water Neutral: Reducing and Offsetting the Impacts of Water Footprints, http://www.waterfootprint.org/Reports/Report28-WaterNeutral.pdf.
[5] http://www.thecoca-colacompany.com/presscenter/TCCC_TNC_WaterFootprintAssessments.pdf.
[6] Coca-Cola Company and Nature Conservancy, Product Water Footprint Assessments: Practical Application in Corporate Water Stewardship,
http://www.thecoca-colacompany.com/presscenter/TCCC_TNC_WaterFootprintAssessments.pdf.
[7] “Changing Course: A Global Business Perspective on Development and the Environment,” MIT Press, April 1992.
[8] Louise Story, “Lead Paint Prompts Mattel to Recall 967,000 Toys,” New York Times, August 2, 2007, http://www.nytimes.com/2007/08/02/business/02toy.html.
[9] http://www.walmartstores.com/download/4055.pdf.
[10] “Sustainability Index,” Walmart, http://walmartstores.com/sustainability/9292.aspx.
4.6 Conclusion
Sustainability reporting builds on existing business management tools and concepts and applies them in a broader context in response to a complex and highly interactive social, environmental, and economic environment. It builds on conventional business management techniques—such as key
performance indicators—but applies them with a focus on triple bottom line and life cycle management. It requires a sophisticated approach of integrating nonfinancial, sustainable performance measures into the traditional reporting of an organization.
The challenge of sustainability for business organizations is to extract value from sustainability reporting so that it constructively guides and transforms their business operations. Sustainability reporting without strategic purpose may result in information that is nice to know; costly to obtain;
and of little benefit to the company, the environment, or society.
Sustainability reporting in the hands of a proactive organization that learns, adapts, and
continuously improves can give a competitive advantage in dealing with the challenging environment that businesses face. Sustainability reporting allows companies to identify business risks or “hot spots” that were previously undetected and also to alert management to business opportunities related to new markets, products, and services.
While sustainability reporting is still maturing, there is considerable guidance and expertise available to help guide management in incorporating sustainable practices into their organizations.
The tools, frameworks, and guidelines discussed in this chapter can assist a company in its progression to sustainability.
The resources needed to implement aspects of sustainability reporting can be significant. Therefore many of the concepts in this chapter are most relevant for medium and large businesses and can be particularly challenging to smaller organizations. Many of the tools and processes discussed in this chapter are geared toward small, incremental change as a part of continuous improvement. All businesses, small or large, new or mature, can implement aspects of sustainability reporting into their organization to achieve improved operating results while minimizing negative societal impacts and emphasizing positive societal impacts.