The Challenges and Opportunities of a Sustainability Index


Cleaning the supply chain is one of the challenges of Walmart's sustainability project. Image credit: williamcho/Flickr
This guest post was written by Rand Waddoups, senior director of sustainability at Walmart.

Last July, we announced that we would lead in the creation of a Sustainable Product Index—a tool that will help manufacturers, merchants, customers and other retailers make more sustainable purchasing decisions. During the last 12 months, we have learned this process is going to be extremely difficult, but that the opportunities for change and innovation are even greater than we imagined. In fact, we are already seeing benefits to the supply chain. We began the journey toward the Index because the modern consumer demands transparency in the supply chain and has higher expectations than ever before. As a retailer, we have a responsibility to advocate for our customers. Advocating for transparency requires innovation, and we're using our global scale to help create higher quality, lower cost products for consumers. Ultimately, the Index will provide customers with product information in a simple, easy-to-understand rating, so they can make choices and consume in a more sustainable way. But before we can reach that goal, we need visibility into our own supply chain, which requires the cooperation of networks of suppliers and manufacturers.

Last year, we began asking our suppliers to complete a 15-question survey about factors such as their water use, the amount of waste created by manufacturing a product for our stores and whether they have processes in place to resolve social compliance issues. The results of these surveys are showing us which suppliers are leading on sustainability and are quickly becoming a leading indicator to identify our best strategic partners. However, the Index requires a change in mindset that goes beyond data. We have to understand our supply chain, which means our suppliers have to be willing to ask questions of their own suppliers. Take sliced turkey breast for example. The supplier knows the manufacturing process, but should also know information such as, who supplied the grain that the turkeys ate and whether it was sourced in a sustainable way.

The willingness of our suppliers to partner with us to find new ways to save resources has been tremendous. The biggest challenges that we're working to overcome are dealing with insufficient data, deciding which factors to measure and the lack of a standardized way to measure and compare sustainable practices. To address these issues and to develop the science to put standard sustainability measurements in place, we helped create the Sustainability Consortium—an independent organization of universities that will collaborate with suppliers, other retailers, and government and non-government groups. While we still have an incredible task before us and we're years away from a consumer-facing rating, we're hopeful. For the first time, the retail and consumer product industries are aligning around the need for a standard measurement. Many manufacturing companies and retailers like Best Buy, Safeway, Ahold, and Marks & Spencer have joined the consortium because they agree that consistent, transparent and scientifically supported data on a product's sustainability is needed.

There is still an extensive amount of work to do before the Index is ready, but the initial work is already bearing fruit. For example, we're working with select suppliers to complete a life cycle analysis of products. To improve the sustainability of consumer products, we realize a big opportunity to make a difference comes through our private brands. We piloted this idea on seven of our private brand products so far—sour cream, dish soap, canned tomato sauce, cereal, sliced turkey breast, chocolate syrup and cashews.

By looking into every aspect of a product's life, our suppliers were given insight into their own water and energy use that they've never had before. Through our analysis of the life cycle of Great Value sour cream, for example, we now know that a dairy farm can reduce harmful greenhouse gas by converting into electricity the methane gas emitted from cow manure, saving thousands of dollars each month in energy costs. Additionally, by changing the way milk is processed into sour cream, there are opportunities to save millions of gallons of water. And through this analysis, we identified and eliminated 1,300 miles from the distribution process of Great Value sour cream. This is just one example of how working toward the Index is already paying off in big ways, and we are conducting the same life cycle analysis with even more products.

Meanwhile, we have to understand how to communicate with our customers about sustainability. We want to help consumers make choices that are better for the environment, and we have a responsibility to help them understand the environmental and social impact of an item on our shelves. We haven't determined how the Index ratings will be delivered to customers, but we envision it providing transparency into the quality and history of products that customers don't have today.

A Sustainable Product Index is something that's very important to Walmart and has the potential to affect the face of the retail industry. Although it's very challenging, we are excited by what we have already learned, and we're confident that greater transparency will help make better quality products at better prices and more sustainable products from better supply chains.

Read more about responsible consumerism:
Low Carbon Consumerism: A New Ethical Choice
Wal-Mart's Sustainability Index: The Greenest Thing Ever to Happen to Retail?
Walmart's Sustainability Initiatives Explained

Tags: Carbon Footprint | Consumerism | Corporate Responsibility