Can Walmart Get Us to Buy Sustainable Products?
We all want to buy the best products we can
find and afford. But what does “best” actually mean? The ones that offer the
best bang for the buck, last the longest, or give us the most pride of
ownership? How about a product that minimizes its environmental impacts or
tries to make the world a better place? Identifying the companies that make
these more “sustainable” products has been nearly impossible… until now.
On Tuesday, the world’s largest retailer took
a major and important step toward helping all of us shop smarter. Walmart’s
ecommerce site is now labeling 3,000 products, made by more
than 100 companies, with a badge that reads “Made by a Sustainability Leader.”
For the first time, a major retailer is giving prominent shelf space — albeit
virtual — to companies operating in a better way.
The story of how this badge came to be, and
the information backing it up, requires some background. In 2009, Walmart was
one of several companies that provided seed funding to start The
Sustainability Consortium (TSC), jointly run by the University
of Arkansas and Arizona State University. TSC has evolved into a collaboration
of more than 100 of the world’s largest retailers, consumer product companies,
and NGO and academic partners. The corporate members include Coca-Cola, PepsiCo, P&G, J&J,
Kellogg’s, L’Oreal, and Unilever.
TSC has been plugging along, doing the hard
work of figuring out what makes certain products more sustainable than others.
The organization now has guidelines and data on over 100 product categories from bread, books, and
computers to clothing, TVs, and toys.
In essence, TSC is a data amalgamator,
gathering the best peer-reviewed science on the lifecycle impacts and
“material” environmental and social issues for a given product category. The
group identifies the “hot spots” in the value chain that create the most risk
and footprint. So for example, in the case of computers, key issues might be
how much energy it consumes during use, or the inclusion of metals in the
design that come from controversial “conflict minerals” in the supply chain.
For other product categories, the largest issues may be things like overall
carbon footprint, water use, resource depletion, or worker health and safety.
TSC boils the analysis down to about 10 to 15
questions that manufacturers and consumer products companies can answer, which
generates a score for each company. The scores are unique for each category, so
a company like Kimberly-Clark could have a different score in diapers (Huggies)
than in “household papers” (Scott). Using this data, Walmart is awarding the
badge to companies in each category that either rank highest or score above 80
(out of 100).
Of course, with any effort of this scale,
there are some caveats and issues to work out.
First, the data and science on the most
material issues for a product are evolving. But we have solid information on
many products’ hot spots now. Second, the answers from the suppliers are
self-reported, not independently verified. But the highest-ranking
sustainability officer at the company has to sign off on the answers. And as
one Walmart exec pointed out, “Yes, it’s self-reported, but it’s reporting to Walmart.”
Meaning, you’d risk alienating your largest sales channel if you fake it.
And third, being best-in-class is not the
same as being sustainable. Rob Kaplan, Director of Sustainability at Walmart,
gave an example of this important difference using electronics. Computers sold
on walmart.com may still have conflict minerals in them, but the TSC questions
help identify the brands that are handling the issue the best.
So what does this all mean to the companies
that have staked a great deal on their environmental and social efforts? As
Unilever’s VP of Sustainable Living, Jonathan Atwood, told me, “the launch of
the Walmart Sustainability Leaders Store is a significant moment for the
industry and shoppers. It’s a major signal that embedding sustainability
into your business can drive growth and help people make more sustainable
choices without making trade-offs between quality, accessibility, and
affordability.” [Full disclosure: I sit on Unilever’s sustainability advisory
board in the U.S.]
On Atwood’s point about trade-offs, what I
think the badge is doing is helping redefine quality to
include environmental and social performance. And it’s giving companies the
opportunity to better identify which kinds of sustainability offerings really
sell. For years, big brands have learned painfully that only a small percentage
of people will pay more for “green.” But, years of surveys (see also here and here)
indicate that a large portion of us will seek out more environmental and socially-aware
products, especially if all else is equal; that is, at the same
price and quality, we will take the more sustainable option.
So think about what Walmart can do now. Given
that the world of ecommerce is a playground for big data, Walmart will build
base of knowledge about how people reallyshop on sustainability
criteria. Will they pay more at times, and for what? Or at the same price, will
the products with the badges fly off the virtual shelves?
But here’s the remarkable thing: Walmart plans
to share its findings, at least with its big suppliers, and perhaps with all
interested parties (I’d love to get my hands on it). And if it works, this kind
of data- and science-driven labeling could be seen in physical stores soon.
Walmart’s Kaplan points out that the last two specialty stores the company
tried, “made in the USA” and “women owned” both started online and moved into
the real world.
Let’s not overstate what any of this means for
the planet or even for Walmart, a company that has its own significant
sustainability challenges around social issues like labor and wages, and is at
the center of a consumption-driven model of business that has enormous
environmental impacts. That said, helping all of us as consumers understand
which companies are managing their environmental and social impacts best is a
good thing. We can, and should, talk about consumption over all, but as we will
still need stuff like detergent and clothes, we should find the most sustainable
options we can – and we should encourage companies, through the power of our
dollars, to do much more.
In the end, the success or failure of this
initiative will depend on us. After years of guessing, and surveys that show
positive eco-intent, we’ll see if we are really willing to put our collective
money where our mouths are.
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