Product Supply Chain Sustainability

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UN SDGs: 2, 8, 12, 14, 15

E S | Published: July 21, 2022

Walmart aims to accelerate progress on the sustainability of our own assortment as well as product supply chains across the retail and consumer goods industry. We focus on environmental and social issues including climate, nature, waste, working conditions, responsible recruitment and economic opportunity for people working in product supply chains, as well as the availability of affordable, safer and healthier food and other products.

Retail supply chains bring quality, affordable products to consumers around the world. Sustainable supply chains create value for companies and for society by increasing supply chain resilience and efficiency, improving product availability and quality, mitigating risk and creating opportunities for workers.

Walmart expects that the products we purchase and sell are made in the right way by suppliers who act ethically and respect the dignity of workers. Walmart’s stakeholders—including our customers—have the same expectations. In addition, companies like Walmart need to be part of the solution to environmental challenges such as climate change and depletion of natural capital in order to maintain our license to operate, uphold supply and create value for business and society through regenerative initiatives that draw on our unique corporate capabilities.

Walmart engages suppliers, customers and NGOs across a wide range of product supply chains in support of climate, waste, nature and people-related objectives. Because of the complexity of global supply chains and the systemic nature of issues, lasting improvement requires collaboration among many stakeholders.

To improve the sustainability of a given product supply chain, we start by listening to our customers and other stakeholders to set aspirations--such as emissions reduction or economic inclusion--and prioritize improvements to the product supply chain system, such as improved farming practices or commodity traceability. We make progress by:

• Setting standards and requirements for Walmart product sourcing
• Engaging Walmart suppliers to spark action, share best practices and tools, and encourage measurement and disclosure
• Leading and contributing to industry consortia and initiatives to accelerate collective action beyond Walmart
• Helping Walmart customers make informed choices through labeling and cause campaigns
• Advocating for public policies that align with sustainable supply chain priorities
• Accelerating systems change beyond Walmart through philanthropic investments

Product Sourcing | Supplier Engagement & Support | Leading Consortia | Customer Engagement | Advocacy | Philanthropy

Walmart's systematic approach to promoting supply chain sustainability begins with setting aspirations relevant to our overall climate/waste/nature/people agenda, aligning on priority outcomes and actions necessary to support those outcomes, and engaging suppliers and stakeholders to promote more sustainable sourcing and system-wide change. The key strategies and progress set forth in this brief are intended to provide an overview of our strategies across product supply chains; for more information about our climate change, waste, nature, and people-related agendas, please see the relevant issue briefs: Climate Change; Waste: Circular Economy; Regeneration of Natural Resources; People in Supply Chains; Safer, Healthier Food & Other Products; Human Rights.

Sourcing requirements and specifications help to set the foundation for more sustainable products.

Requirements: Our expectations for suppliers and supply chains regarding the dignity of workers in the supply chain, environmental protection, food and product safety, and ethics and integrity are outlined in our Standards for Suppliers. In addition, we have several supplier compliance policies, including our Global Forced Labor Prevention Policy, Global Responsible Sourcing Policy, Global Food Safety Policy, and Global Product Safety Policy, that set specific requirements for the products we source and sell. Read more about Walmart’s approach to responsible sourcing: People in Supply Chains.

Specifications: For the products that Walmart carries, our merchants may specify attributes related to sustainability in the following ways:

• Issue-Specific Policies, Guidelines and Position Statements: Walmart has developed sourcing policies, guidelines and position statements for seafood, apparel, plastic packaging, row crops and animal welfare that ask suppliers to provide products to Walmart that meet certain criteria. Read more: Walmart Sustainability Hub and Walmart Policies & Guidance.
• Certifications: Certifications help Walmart and our suppliers by using objective criteria to measure the sustainability attributes of a product; they also communicate to consumers that our suppliers have met the applicable environmental and/or social sustainability standards of the certifying body.  We ask our suppliers to validate that particular commodities, including palm oil, pulp and paper, fresh and frozen seafood, tuna,  coffee and cotton, have been produced or/and harvested to specific certification standards. Read More: Regeneration of Natural Resources.
• Product and Packaging Specifications: We ask our private brand suppliers to work toward and report progress on our goal to use 100% recyclable, reusable or industrially compostable packaging and achieve 17% post-consumer recycled content for our private brand products by 2025. Read More: Waste: Circular Economy.

Special Sourcing Initiatives: We work with suppliers to source certain commodities from place-based efforts that help preserve natural ecosystems and improve livelihoods. For example, Walmart sources Great Value rice and tuna from place-based initiatives in Arkansas and the Republic of the Marshall Islands, respectively, as part of initiatives that holistically further environmental and social objectives. In addition, Walmart aims to advance economic inclusion through programs to source from diverse suppliers and suppliers in emerging markets, such as small producers in India, Mexico and South Africa. Read More: Supplier Opportunity.

Walmart engages and supports suppliers in pursuing ambitious environmental and social initiatives in their product supply chains. Our intention is to inspire action on complex global problems by encouraging and assisting our suppliers to take first steps, disclose their progress, raise their aspirations and expand their impact.

Examples include:

• Project Gigaton^TM: Project Gigaton^TM aims to reduce or avoid one billion metric tons (a gigaton) of greenhouse gases from our global value chain by 2030 by inviting suppliers to take action in six areas: Energy, Waste, Nature, Transportation, Packaging and Product use and design. The Project Gigaton^TM online platform offers resources such as calculators to help set and report on goals within the initiative, workshops on best practices and links to additional resources provided by Walmart or third parties, including, for example, the Gigaton Power Purchase Agreement (PPA), a collective renewable energy contracting initiative that provides suppliers market access to utility-scale PPAs. Since 2017, more than 4,500 suppliers have joined Project Gigaton^TM, more than 3,400 suppliers have set SMART (specific, measurable, achievable, relevant and time limited) goals to avoid or reduce emissions, and more than 2,500 are reporting through the online platform. As of 2021, suppliers report a cumulative total of more than 574 million MT of CO₂e reduced or avoided. Read more: Climate change.
• Packaging: We encourage our suppliers to work toward 100% reusable, recyclable and compostable packaging and provide them with resources to help achieve that goal, including the Circular Connector, the Sustainable Packaging Playbook and working sessions to share best practices to optimize packaging (e.g., our November 2021 Packaging Summit, attended by over 4,000 participants). We ask private brand suppliers to report their progress through our packaging survey. Read more: Waste: Circular economy.
• Nature: We ask suppliers to engage through the Nature pillar of Project Gigaton^TM, including by asking them to set goals and report progress related to grasslands and agriculture, forests, and oceans. We provide resources to support their efforts, including resources on the Sustainability Hub, commodity summits, and connections to place-based and jurisdictional projects. Read more: Regeneration of natural resources: Forests, land, oceans. 
• Responsible Recruitment: We promote the use of responsible recruitment practices and implement the Employer Pays Principle, by providing training resources for suppliers and factories and holding suppliers accountable to these principles through our Standards for Suppliers, audits and case management processes. To engage suppliers in advancing responsible recruitment throughout their supply chains, Walmart launched a Supplier Responsible Recruitment initiative at the March 2022 Walmart Supplier Growth Forum. The initiative invites suppliers (starting with seafood, produce and electronics) to adopt and report on practices related to recruiting, worker empowerment, and transparency that are believed by experts to facilitate responsible recruitment.  We developed these practices in collaboration with Article One and in consultation with more than a dozen external stakeholders, including suppliers and prominent civil society organizations. We also helped develop the Ethical Charter on Responsible Labor Practices, which establishes a common set of principles for how to responsibly produce fresh fruits, vegetables and flowers. Working with ELEVATE and the Equitable Food Initiative, we helped to pilot a program that provides self-guided actions for managers and workers to implement the Charter's principles.
• Sustainable Supply Chain Finance Program (SSCF): Since 2019, HSBC has provided improved financing access and terms for suppliers that reduce GHG emissions in at least one of Project Gigaton^TM's six pillars. In 2021, we expanded the program to allow suppliers who set validated science-based targets and/or receive a certain minimum score through CDP's climate change reporting to approach HSBC for early payment on their invoices approved by Walmart with pricing on the financing linked to the supplier’s CDP scores, targets set, and impact reported. Suppliers setting the highest ambition would be able to take advantage of receiving the lowest pricing. Read more on the CDP website.

In addition, to encourage progress on environmental and social sustainability issues across product lifecycles, we ask our suppliers to report progress on KPIs through Project Gigaton^TM and other measurement platforms, such as CDP for GHG emissions and forests. Approximately 75% of our U.S. net sales were represented by suppliers who reported to one or more sustainability surveys.

To facilitate progress toward addressing complex and systemic sustainability issues across industry supply chains, we collaborate with other organizations in consortia and initiatives. For example, Walmart is:

• A member of the Consumer Goods Forum, which brings together leading retailers and consumer goods manufacturers to address social and environmental issues. Walmart co-leads or is an active member of the following Coalitions of Action established by the Consumer Goods Forum: Plastic Waste; Food Waste; Forest Positive; Global Food Safety Initiative; Human Rights – Working to End Forced Labor; Collaboration for Healthier Lives; and Product Data.  Our work with CGF includes advocating for the adoption of the packaging “golden design rules” to advance plastic reduction efforts and improve recyclability, along with working to advance global principles for Extended Producer Responsibility programs for managing plastic and packaging waste.
• A co-lead of the Retail Race to Zero campaign along with IKEA, H&M, Kingfisher and Best Buy. In 2021, we represented the coalition at COP26 in Glasgow, welcoming several new signatories to the campaign and announcing a new Accelerator program.
• A member of the Clean Energy Buyers Association (CEBA) (formerly the Renewable Energy Buyers Alliance), a collaboration of clean energy buyers, energy providers and service providers that, together with NGO partners, seek a transition to a zero-carbon energy future. The group advocates for policies such as wholesale energy market expansion, flexible financing for renewables, retail access and a federal carbon-free green grid. We advised and endorsed CEBA’s statement on Build Back Better, which emphasized market and policy-based measures to decarbonize the grid.
• A member and co-founder of the Midwest Row Crop Collaborative (MRCC), which develops solutions for removing barriers to widespread adoption of regenerative agricultural practices. It promotes policies that align conservation and farm profitability in Midwest markets. The group also endorsed the bipartisan Growing Climate Solutions Act, which reflects a valuable strategy for increasing carbon sequestration opportunities in the agricultural supply chain. MRCC has helped implement sustainable agriculture practices on over 350,000 acres in the Upper Mississippi River Basin in the last 6 years.
• A supporter of the Ellen MacArthur Foundation, helping to launch and support industry engagement in Plastics Pacts in multiple countries to accelerate progress toward 100% reusable, recyclable and compostable packaging. In FY2021, Walmart also co-founded the Beyond the Bag coalition with Closed Loop Partners and a number of other retailers to develop innovative, industry-wide alternatives to single-use plastic bags. In 2021, the consortium welcomed the nine winners of the Beyond the Bag Challenge into a six-month accelerator, resulting in a multi-retailer pilot for six solutions that took place in Northern California and the metro-New York area. The pilots thus far are just one part of the consortium’s broader work to spur innovation, advance materials recovery, identify best practices for policy, and engage consumers.
• Working with the Leadership Group for Responsible Recruitment, CGF Human Rights Coalition on Forced Labor and the Seafood Task Force to help make responsible recruitment the norm and address forced labor in supply chains.
• A co-founder or member of multiple industry efforts to promote safer working conditions, including through Nirapon, an organization focused on monitoring ongoing safety compliance and maintaining the progress made through the Alliance for Bangladesh Worker Safety; the Life and Building Safety initiative; and the Ethical Charter on Responsible Labor Practices, which established industry principles for respecting human rights in the produce sector.
• A contributor to the U.N. Food Systems Summit, which facilitates best-practice sharing to transform the way the world produces and consumes food and a supporter of the Global Food Safety Initiative (GFSI), which is an important part of our effort to promote food safety among suppliers. Walmart is active in a number of working groups within GFSI and focuses on supporting science-based food safety audits and GFSI in its aim to strengthen its programs. Additionally, Walmart created the Walmart Food Safety Collaboration Center in China, now in its sixth year, which continues to bring together stakeholders across industry, government, academia and trade associations to address the root causes of foodborne illness. The center focuses on three aspects of the food safety system: innovation, education and policy support. Walmart and the Walmart Foundation recently fulfilled a five-year, $25 million philanthropic commitment to food safety in China.

While we seek to improve the sustainability of all products, some customers seek specific attributes in products. To help these customers, we use in-store signage and encourage suppliers to label products. Examples of on-pack labeling:

• Certification Logos: Certified products typically carry the relevant certification logo on pack (e.g., MSC, Fair Trade USA, Rainforest Alliance); in some cases, we use in-store signage to call out products with social or environmental attributes (e.g., sustainable seafood shelf signage for Walmart U.S.).
• Great for You Icon: Over ten years ago, we introduced our Walmart U.S. Great for You icon for private-label products to make it easier for customers to build healthier diets. The icon serves as a guide to help people make incremental changes to their diet by encouraging more nutritious food choices. Items with this label meet rigorous nutrition criteria informed by the latest nutrition science and authoritative guidance from the Dietary Guidelines for Americans (DGA), U.S. Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA) and National Academies of Medicine (formerly the Institute of Medicine). Our Great for You standard has been evaluated by the Robert Wood Johnson Foundation and scored in the top tier of nutritional standards for highest consistency with the DGAs. As of May 3, 2022, approximately 30% of items in fresh produce and food items across the Great Value, Marketside and Parent’s Choice private brands qualify for the Great for You icon. In 2021 we began work to update our Great for You nutrition criteria to match the 2020-2025 USDA's Dietary Guidelines for Americans, and we aim to benchmark our assortment of private label products against the updated standard in 2022.
• Built for Better: In September 2021, we launched online shopping icons to make it easier for customers to identify and shop for products that are built better – for them, for communities and for the planet:
  
  • Products that are eligible for the “Built for Better—For You” icon meet standards (which highlights food options that meet criteria informed by the latest nutrition science & authoritative guidance) or independent standards that recognize products made without materials or ingredients you may not want—like parabens & phthalates.
  • Products that are eligible for the “Built for Better—For Communities” icon are either made, grown or assembled in the U.S., or are sourced from a certified women-owned business or a certified diverse-owned business.
  • Products that are eligible for the “Built for Better—For the Planet” icon meet independent standards that recognize one or more environmental benefits—like products that are responsibly-sourced or products designed for a lesser impact on climate.

Read more about Built for Better here.

• Recycling Labels: We have asked our private-brand suppliers to label our food and consumable product packaging with consumer-friendly recycling information, and we encourage our national-brand suppliers to provide similar label information. Our goal is for 100% of Walmart U.S. private-brand food and consumable packaging to include the How2Recycle® label by 2022; in FY2022 we had achieved 80%. We also have a goal for 100% of Sam's Club U.S. private brand packaging to include the How2Recycle® label; in FY2022 we had achieved 84%.

We advocate for public policies that align with our sustainable supply chain priorities. For example:

• Climate: Walmart is committed to policy advocacy aligned with the Paris Climate Agreement. Our Board-approved Statement on Climate Policy frames our advocacy around achieving 1.5° Celsius-aligned, science-based national and international climate policies that are consistent with achieving net-zero emissions by 2050 and that equitably addresses the needs of all stakeholders. In 2021, we spoke out publicly, engaged lawmakers directly, and joined CEBA in emphasizing the importance and urgency of the climate provisions in the Build Back Better legislation. We also engaged lawmakers to support the Infrastructure Investment and Jobs Act, which includes federal investments in the energy and transportation sectors and to support climate resilience. Read more: Climate Change.
• Waste: Walmart participates in the Plastic Waste Coalition for Action which has released guidance on policy design principles to address problematic plastic packaging and principles for the optimal design of extended producer responsibility programs for managing plastic and packaging waste.
• Nature: In 2021, we recognized bipartisan action on climate and submitted a letter of support to the U.S. Senate regarding the passage of the Growing Climate Solutions Act, which provides technical resources to farmers and ranchers to invest in nature-based climate solutions. We also conveyed support for carbon pricing and technology-neutral approaches to decarbonize sectors like agriculture. And we're also part of the Consumer Goods Forum’s Forest Positive Coalition of Action, which works with governments to support forest-positive policies that focus on Brazil, China, the European Union and Indonesia.
• People in Supply Chains: Walmart has directly discussed with governments in Southeast Asia the need to enforce laws to reduce the prevalence of forced labor in the region, actions governments can take to address root causes of forced labor and ways governments can fill policy gaps relating to forced labor. We are also members of business organizations that engage governments on policy interventions relating to forced labor, including the Leadership Group for Responsible Recruitment and the Consumer Goods Forum. Finally, Walmart is the United States Business representative for the Bali Process Government and Business Forum, where we have worked with global business leaders to present policy recommendations to eliminate modern slavery to ministers of 40 countries in the Asia-Pacific.

Read more: Engagement in Public Policy.

Walmart and the Walmart Foundation’s sustainable supply chain strategies seek to accelerate systems change through philanthropic investments, including grants and in-kind support. For example, in FY2021 and FY2022, Walmart and the Walmart Foundation have complemented Walmart's business initiatives through philanthropy aimed at:

• Supporting the development of place-based and jurisdictional initiatives in the Northern Great Plains, the western and central Pacific Ocean,  Sumatra and the Brazilian Amazon
• Developing tools to support actionable data and transparency in product supply chains, including to organizations working to increase the uptake of credible landscape standards in critical regions and to develop and pilot an open and collaboratively developed agricultural technology platform
• Developing insights into customer recycling patterns and behaviors and improving recycling infrastructure
• Promoting the responsible recruitment of workers by building capacity around the responsible recruitment of H-2A migrant workers through the Mexico/U.S. corridor to U.S. farms, developing worker voice tools and developing a responsible recruitment marketplace
• The Walmart Foundation has awarded grants of more than $67 million to benefit smallholders in Central America, India and Mexico since 2017. These grants are expected to reach over 730,000 smallholder farmers (of whom over 320,000 or 44% are women) through programs aimed at enhancing farmer livelihoods and value chains, encouraging the adoption of sustainable agriculture practices, unlocking access to finance, growing formal market linkages, strengthening Farmer Producer Organizations (FPOs) and empowering women farmers in FPOs

Read more about our philanthropic work to address systemic supply chain issues: Regeneration of Natural Resources: Forests, Land, Oceans, Waste: Circular Economy, People in Supply Chains, and Human Rights. Additionally, information on all Walmart and Walmart Foundation grants of $25,000 and greater is available at Walmart.org.

• Social and environmental challenges in supply chains are complex and are often the result of systemic issues including deeply entrenched economic practices and inconsistent government regulation and enforcement across countries in which products are made. These factors make it challenging for any single organization to have an impact.
• Walmart’s sustainable supply chain aspirations are dependent on the maturity, rigor and efficacy of third-party standards and initiatives, which requires a critical mass of suppliers and retailers to align on common standards and best practices. For certain practices, there currently is no universal set of standards for responsible or sustainable production and/or certification beyond compliance with the law (e.g., responsible recruitment, wage/hour). Furthermore, there are limits to the efficacy of tools used to monitor compliance with expectations.
• The success of sustainable product programs is dependent on suppliers’ capacity and willingness to meet high standards, as well as their performance and ability to scale practices across their own supply chains. Innovation in manufacturing, agriculture and other production technologies is necessary.
• Social and environmental issues in supply chains are often upstream and challenging to reach with traditional retailer oversight and monitoring tools. Lack of reliable data on source/origin of certain commodities and product ingredients and the way they are produced—as well as the blending and commoditization of product inputs and ingredients—complicates matters. For example, the complexity and dynamic nature of end-to-end product supply chains make it nearly impossible to measure the GHG footprint of retail assortments with precision. The use of technology to improve transparency and traceability (e.g., blockchain, electronic vessel monitoring) can help, but adoption takes time and further innovation is necessary to meet these challenges.
• The breadth of Walmart's global product offerings and dispersed geographical reach of supply chains can present challenges for supplier engagement and nature-related risk identification and mitigation. Moreover, certain products can only be obtained from specific regions of the world, limiting options for alternative sources.
• Walmart’s ability to scale more sustainable options is dependent on customer preferences and demand (which can depend on the cost and convenience of such options) and the availability and cost of preferred products, ingredients, commodities and inputs. Growth and/or changes in our business can challenge our ability to meet customer demands consistent with our aspirations.
• The public policy environment in certain countries/regions does not support (and may undermine) more sustainable production at scale and at reasonable cost.
• Pandemics, weather-related events and political/social unrest can create supply/demand volatility and interrupt supply chains.