Wal-Mart (WMT), once a favorite target of environmentalists, says that it wants to be the retailer to lead the green revolution. It’s been nearly two years since the chain adopted the slogan “Save Money Live Better”. The world’s largest retailer appears to want to live up to that claim. It hopes that in the near future, shoppers will not only see tags displaying rock-bottom prices, but also information telling them whether the materials are safe, if the product is made well, and if it was produced in a responsible way.
The company took the first step toward its vision recently when it met with 1,500 suppliers and corporate social responsibility (CSR) experts to develop what it calls a Sustainable Product Index (SPI). To this end, the company told suppliers that they must provide CSR-related product details, such as water use, carbons dioxide emissions, and waste generation, by the end of October. This has left some suppliers, who will bear the cost of the new mandate, feeling scared about the potential costs of compliance, which according to Wal-Mart is mandatory.
Large companies are in a better position to meet Wal-Mart’s demands since they are more likely to have financial resources to put toward this project and they are also more likely to have an established sustainability policy in place. Timberland (TBL), for example, has been using a carbon footprint rating system for its shoes for some time. The expense could hit smaller suppliers much harder. Some are worried that their razor-thin profit margins will disappear altogether.
Even with full cooperation, it’s not clear that a rating system such as the one being pushed by Wal-Mart would be effective. Proctor & Gamble (PG), which is a member of Business for Social Responsibility, a global network of firms with an interest in CSR, says that such information would have to be scientifically accurate, yet understandable to consumers. P&G points to similar efforts in Europe that have failed to inform consumers in a meaningful way.
Wal-Mart, however, says it feels confident its goal can be achieved. It imagines presenting the information in a format not unlike nutritional labeling today, but admit some standardization needs to take place, which could take some time. Presumably, Congress would eventually legislate some form of standardization to help companies determine such things as carbon footprint. Initially, though, it will likely be up to consumers to determine a label’s value.