Friday, September 25, 2009

Wal-Mart's VP of Sustainability talks at UNC

By Marcie Barnes

This hour plus long talk at UNC's Kenan-Flagler Business School with Wal-Mart's Senior Vice President of Sustainability Matt Kistler and adjunct professor Kellie McElhaney from the Kenan-Flagler Business School at UNC was actually, refreshing. I had my serious skepticism hat on going in, and came out impressed. Below are my notes. This was written in shorthand and highly paraphrased. I have enclosed in quotes a few things that were said verbatim:

A few highlights about Wal-Mart from Dean Jim Dean were:

There are 200 million customers per week worldwide, over 100,000 suppliers, and 2.1 million associates (employees). Their main goals in reference to sustainability are to have zero waste, use 100% renewable energy, and sell products that sustain our resources and the environment.

Matt started his presentation - the highlights of that are here:

- Only 8% of their total footprint is in their control currently, which is why they developed the sustainability index.
- In the past couple years (since he has been in this role) they have achieved 30% more energy efficiency in stores, 25% more efficiency in fleet.
- They are testing alternative fuels/technologies for trucks: hybrids, liquid natural gas, and retrofitted engines that can run on waste grease from stores.
- Less than 1.7% of their supplier base is considered "red" - which would mean issues with their social or environmental goals, if they don't improve within a given time frame, they will be "fired".
- They audit 14,000 suppliers on site each year.
- The sustainability index will include a 'scoring algorithm' developed in conjunction with "well-known software company".
- Reuters article recently posted: Walmart Sustainability Index Means Big Business

Questions directly from
Ms. McElhaney are here (answers very paraphrased):

Q: Why is Wal-Mart doing this?
A: We were receiving and combating a lot of negative press and were working to tell people we're not bad, instead of being proactive and showing "what we can do". "This is not an abstract part of our company." "Green products should not cost more, they should cost less."

Q: What has been your biggest disappointment?
A: Technology and innovation not going fast enough to solve problems.

Q: Are consumers or corporations helping most with the problems?
A: "We're known for being a little cheap" - both have to work together.

Q: Is Wal-Mart leading the U.S. Government?
A: (He admittedly ducked this question, but said he is getting great support from Washington).

Before turning to the audience for questions, said that Wal-Mart sent her a script to follow and she "lost" it. One last question from her:

Q: What's your scariest scenario?
A: Uncertainty about new technologies, making the right choices. Do we choose solar panel A or solar panel B?

Below are the questions from the audience (questions and answers paraphrased):

Q: Is there a goal to phase out less sustainable products?
A: Yes as long as the products are at a price point the consumer wants.

Q: Will Wal-Mart customers really care about the sustainability index?
A: Wal-Mart won't stand the test of time if it is not relevant to the customer. Younger customers want sustainable products. "We are improving quality." See video - The Secret Life of Sour Cream.

Q: (About suppliers' role in this process)
A: Wal-Mart trained suppliers in China on how to be most energy-efficient. "We're not making suppliers more energy efficient, we're buying more from those who are. It's the carrot vs. the stick."

Q: Why not use existing ways to measure sustainability instead of making up your own?
A: Wal-Mart does use best industry standards, funds college and university work and research, etc. in addition to its own index.

Q: Talk about efforts to source local produce
A: Wal-Mart is doing more of this than ever before. For example, they now buy peaches from 18 states instead of just one. His mother was just talking about how bad tomatoes taste, and it's because they are produced to be able to withstand the distribution system and lose their flavor. "Go back to the way it was." "The consumer is boss." The challenge of this is indeed quality standards. They have a goal to be sourcing from one million local farmers in China alone by 2012.

Back to
Ms. McElhaney for a few more questions:

Q: Will you ever do enough?
A: Probably not, not in my lifetime.

Q: What's next for Wal-Mart?
A: A lot of work with greenhouse gases and climate issues. How to develop areas locally to grow and produce products.

Q: What about your personal impact? How has this impacted you?
A: Looks at friends heating systems and recycling habits, notices the light bulbs in his hotel room are not compact fluorescent, etc. He looks at things differently now.