Making Sustainability Sustainable: Lessons We've Learned

The National Retail Federation

By Leslie Dach

January 15, 2008

Remarks as Prepared for Delivery

Good afternoon. Thank you, Sean for that kind introduction.

I also want to thank the National Retail Federation for bringing us together and for hosting this first ever “green session.” 

Let me say that Walmart is flattered to be a guest here because we don’t view ourselves as a green company. We are working to build a sustainable company in ways that are driven by our business and are good for our business.

I’ve spent large chunks of my career working on environmental issues. And as Sean mentioned, I’ve done it from all sides – from government relations for Environmental Defense to serving on the Audubon board. Now I get to do it on the retail side and you can imagine that Walmart is a very fulfilling place for me to work. Because what we are doing is real and having an impact.

What we are doing is about more than “going green.” It’s about making sustainability sustainable. And at Walmart that means thinking about sustainability like we think about everything we do – through our mission: saving people money so they can live better. 

We expect more than 90 percent of American households will shop at Walmart this year. What that tells us is that we have an enormous opportunity to help influence consumer behavior in a way that also protects our environment.

We know that our core customer doesn’t have the luxury of choice.

She shops at Walmart because it’s where she gets the best value on school clothes for the kids, or supplies for the house or groceries for dinner. And to be quite frank, she’s not buying compact fluorescent light bulbs or concentrated laundry detergent because they are environmentally friendly. She’s buying them because she likes the money she saves on her electric bills, or in the case of detergent, the convenience of a smaller, lighter package.

We don’t believe she should have to choose between products she can afford and products that will help her kids grow up in a cleaner, healthier world.

Hopefully, with all of us working together and sharing our ideas today, we’ll be able to do more for this customer, and the customers of every retailer in this room.

Role and Responsibility of Retailers

There is a big trend at work today that I think has implications for all of us.

Traditionally people around the world have looked to government to solve big problems. But as someone who has worked in politics and business, I can tell you that’s changing.

People are now looking to business to fill the problem-solving vacuum. They see business as more results-oriented and performance-based. We are global in reach – so we’re not confined by national boundaries. We are also more accountable. We don’t just report in every 2 or 4 or 6 years when there is an election. And this is especially true with the retail industry. We are held accountable every time a customer goes to purchase an item at one of our stores.

As retailers, we really are in a unique position. We can drive change in so many ways. We can do it throughout the global supply chain. We can help customers make better decisions for themselves, their families, their communities, and the planet. And we can empower our employees – or associates in Walmart’s case – to live more sustainable lives and help their companies be more sustainable as well.

History of Sustainability at Walmart

At Walmart, Hurricane Katrina really started it all for us. Our company’s response showed us our potential to serve our customers, our associates and our communities by applying our business model to big societal needs. And we knew that if we could be that company all the time and all around the world, we could do a tremendous amount of good. 

Shortly after the Katrina disaster, our CEO, Lee Scott, gave a speech called “21st Century Leadership.” It put sustainability front and center for the company and laid out three goals:

1. To be supplied 100 percent by renewable energy;

2. To create zero waste; and

3. To sell products that sustain our resources and the environment.

When we announced these initial environmental goals, we weren’t sure how we were going to achieve them. They were aspirational. But we knew we needed to be more sustainable. So we started addressing sustainability in a way that is real and works for us. We still have a long way to go, but we are proud of the progress we’ve made during the last two years.

We developed an approach that drives sustainable practices into our supply chain, the products we sell, the lives of our associates, and the communities we operate in and source from. We call this holistic approach “Sustainability 360.”

Our Thinking: 5 Learnings 

I’d like to take a few minutes to tell you how our thinking has evolved over the last two years, and share with you five learnings. I hope you might find some, or all of these relevant to your own business, and that this perhaps starts an even greater dialogue within our industry.

The first learning I want to share is: Incorporate sustainability into your business.

At Walmart, we work hard to make sure sustainability lives inside our business.

We are working to make every aspect of the business – lighting, packaging, shipping, trucking, everything – more efficient. It’s good for the environment. It saves money. And in many cases, it even adds to our bottom line. These cost savings are being integrated into our business, so during the good times and the bad, sustainability will continue to be a part of our company and our culture.

At Walmart, there is no conflict between the business model of everyday low prices and everyday low costs, and being a more sustainable company. And I bet that’s true for the business model of every retailer in this room.

One example of how we are incorporating sustainability into our business is the way we are making our stores more efficient.

In 2005, we opened two experimental stores that serve as living laboratories for more than 50 different energy-saving technologies. Things such as solar and wind power, bio-fuel heating systems, recycled building materials and even waterless urinals.

Some of you may have already visited one of these stores. We’ve made it a priority to reach out to government officials, academics and even competitors to tour the stores and learn from them.

About a year after these stores opened, the concepts and experiments that tested well were used to help create 3 high-efficiency, or H-E-1 stores, throughout the country.

These H-E-1 stores are 20 percent more energy efficient than an already efficient Walmart Supercenter.

Today I’m excited to announce that Walmart will take environmentally friendly stores to the next level. On January 23rd, we will open our first H-E-2 store in Romeoville, Illinois.

This store will incorporate our learnings from the first generation of high-efficiency stores and other technological advances. It’s expected to operate at 25 percent greater-efficiency than the traditional Supercenter. The store uses advancements such as white roofs, low-flow bathroom faucets, LED signage and a secondary loop refrigeration system.

These stores are another solid step toward achieving our environmental commitments. But we know we can’t stop there.

We will continue to find new ways to build stores that have a reduced impact on the environment, save us money, and ultimately reach a day when every new store is 25-30 percent more energy efficient than it was in 2005.

The second learning is: Implement sustainability from the bottom up and across the entire company.

Our CEO and chairman have provided tremendous leadership, but many of our best sustainability ideas have come from associates.

Let me share a story with you. Darrell Meyers, who’s an associate in one of our North Carolina stores, was in his break room and noticed that in each vending machine there was a light bulb glowing around the clock.

He thought about how much electricity was wasted and wondered how much money the company could save by taking the lights out of all the vending machines.

Well, his idea got back to the Home Office, and after we ran the numbers, we learned that our company could save more than $1 million every year by taking out these bulbs. So what did we do? We took out the bulbs and put $1 million back into Everyday Low Prices for our customers.

Becoming a more environmentally friendly company is about game changing ideas—like making one of the largest solar panel purchases, which we have done. But it’s also about the small changes—like removing a light bulb. To generate these ideas across the company, you need a workforce that is excited and energized by sustainability, and we are fortunate to have that at Walmart. 

In fact, according to our research, sustainability is now one of the most talked about topics among our associates and their families.

Third learning…Don’t let the unknown keep you from moving forward.

We know we don’t have all the answers. And we know we’re just at the beginning of building a sustainable company and that the most difficult choices are yet to come. But just because we don’t have the systems perfected or every metric in place doesn’t mean we shouldn’t step out and make progress.

To give you an example, in October of 2006, Walmart and Sam’s Club set a goal to sell a total of 100 million compact fluorescent light bulbs by the end of 2007.

Like our initial environmental goals, at first, we weren’t sure how we were going to achieve this – we were entering a world of the unknown.

But we met our goal three months ahead of schedule…and sold nearly 137 million CFLs. We did it by changing our marketing approach and educating consumers, and in many cases lowering prices.

As a result, our customers will save a total of $4 billion in electricity costs over the life of the bulbs. They will also prevent more than 20 million metric tons of greenhouse gases from entering the atmosphere – which is the equivalent of backing one or two coal-fire power plants off the grid.

This is just one example of the power of retailing to bring about positive change.

We, in retail, can serve as a trusted institution. We can empower individuals to make smarter buying decisions. We can partner with our suppliers to drive innovation. And, we can have a dramatic impact on the environment.

And, by the way, that’s $4 billion in savings back in the economy that all of us in this room can compete for.

4th lesson… Engage suppliers and ask the right questions.

Walmart currently has more than 60,000 suppliers around the world. We have a big opportunity to partner with them in ways that are good for our businesses, our customers and communities.

It’s also an opportunity for our suppliers to run better and more sustainable businesses.

One area where we’ve applied this partnership is in the area of packaging. We’ve set a goal to reduce overall packaging by 5 percent by 2013 throughout our supply chain.

If we achieve this goal, it will remove the equivalent of 213,000 trucks from the road and save 67 million gallons of diesel fuel per year. But that’s just the Walmart supply chain. What if we reached out to all the suppliers in this room? Just think about the power of the multiplier effect. Together, we could do so much more.

To help us reach these goals, we developed a packaging scorecard. It helps us evaluate our suppliers on the sustainability of their packaging and rates them relative to their competitors.

Starting February 1st, our buyers will begin using the scorecard results to inform their purchasing decisions.

One of the interesting things we’ve seen is the power of all of us asking the right questions. We pulled together a summit in Bentonville a few months ago with the top executives at some of our biggest suppliers. It was a great meeting.

There’s real excitement in the supplier community about sustainability. One of the things that we consistently heard – that our CEO heard – was how much they appreciated us just asking questions.

Because when a big customer like us – or any of you – asks a question, they go back to headquarters, they look into it, and start thinking about their own businesses in new ways. They begin questioning why a product is packaged the way it is.

They look at the process of making a product, and ask if there is any non-renewable energy that can be taken out of the supply chain.

They even start to question what goes into a product.

In 2006, Unilever unveiled All Small-and-Mighty, a product that is three-times concentrated and contains enough detergent for the same 32 loads of laundry as a 100-ounce bottle.

Less water, means less packaging. Smaller packages mean we can ship more product for less. And it also means less shelf space.

Last year, here in New York at the Clinton Global Initiative, we made a commitment to sell only concentrated liquid laundry detergent in all of our U.S. stores and clubs by May of this year.

We hope our commitment will help move the industry from standard sized to concentrated liquid detergent bottles. By estimating the annual purchases of all Walmart customers over the next three years, we anticipate our concentrated detergent initiative will save:

  • More than 400 million gallons of water;
  • More than 95 million pounds of plastic resin; and
  • More than 125 million pounds of cardboard.

The potential savings across the entire retail industry are estimated to be four times as much.
Think about it. This is just one product category. What if retailers changed the game across all their products. What kind of effect could that have on climate change? …On productivity and economic growth? If we scale as an industry, we can have a major impact on people’s lives, on communities and on our country.

Together we can really push ourselves to think about unconventional supply chain solutions. Isn’t the theme for this conference: Eat, Sleep and Dream BIG? Sustainability is an opportunity for all of us to THINK big.

The 5th lesson I want to share is: We become better companies by learning from others.

Our 13 environmental sustainable value networks are a great example. They bring together environmental NGOs, suppliers, scholars, government officials and other thought leaders to identify opportunities for our company to lead in sustainability. So much creativity has come out of this structure. We owe a great deal of credit for our progress to the women and men serving in these networks.

We’ve also listened to and worked with some of our most ardent critics. At times, that hasn’t been easy.

For Walmart, it has been very hard to get some groups and individuals to sit down and talk with us. And some still won’t, but its fewer everyday and now some even seek us out. It’s amazing what happens when you say you want to listen and learn and have a conversation. You start finding common ground, and people that never would have worked with you before, now become partners.

A little over two years into this journey, there’s no question sustainability has made Walmart a better business and a better company.

Because of our efforts, we have more efficient stores, stronger relationships with our suppliers, more environmentally friendly products for customers, and prouder associates.

We are also talking with people and groups we never would have been able to engage without our commitment to sustainability.

So what I’d like to leave you with today is this: Sustainability is more than just a responsibility. It is an opportunity for all of us to bring about real and positive change.

Lastly, I know there are leaders and businesses in this room that have been working on sustainability longer than Walmart. Some of you are further down the road, and others might just be getting started. Either way, each of us in this room has tremendous potential to make a difference.

And I hope that as we work on realizing that potential, we don’t do it alone, and continue to share ideas and work together.

Thank you.