Are Walmart's Eco-Efforts Enough? Balancing Sustainability & Social Responsibility at America's Largest Retailer
Walmart has been in the sustainability spotlight over the last few years, both for implementing its own efficiency measures and for raising the bar for industry at large. Some view these initiatives with skepticism because the company has had a less-than-stellar reputation in other areas, like labor rights and disruption of local economies. So for perspective, here's a (long) look at both sides of the issue, which is far from black and white. Let's start with the most recent announcement, the retailer's efforts to promote healthy foods. It includes some impressive and lofty goals: reformulate thousands of packaged foods to contain less sodium, sugar, and trans fats, lower the prices of healthier food choices like fruits and vegetables, create a packaging label with "strong criteria" to help customers identify healthy foods, build stores in underserved communities to combat food deserts, and increase charitable support for nutrition programs.
Undeniably, all of these address what have become urgent issues in this country. But is Walmart's plan made of workable solutions? Some aren't so sure.
One reaction to the front-of-package label is that, by establishing its own criteria, Walmart is trying to stay ahead of the regulatory process. It's not just Walmart—the New York Times reported recently on industry-wide efforts to "influence the F.D.A.'s continuing effort to establish voluntary guidelines for front-of-package labeling." But in that context, a label based on Walmart's own criteria does raise suspicion.
The idea that Walmart is going to do its own front-of-package label to identify those products is particularly annoying. They are doing this just when the Institute of Medicine and FDA are trying to establish research-based criteria for front-of-package labels. So here is one more company trying to preempt FDA regulations.
Michele Simon had this comment on Appetite for Profit:
1) Here's an alternative scenario: Congress holds hearings (you know, in public) on how the entire food industry should be changing its ways with enforceable, meaningful laws that apply to everyone, not just Walmart.
2) Why not wait until Walmart has actually accomplished something to give them credit? Any company can promise something. And we have plenty of examples of other food companies making promises that weren't kept.
The company was reported to be taking a similar approach to chemical formulations of products by establishing its own screening process (self-regulation) rather than relying on a federal agency to take care of the regulatory processes. John has covered this for TreeHugger:
It puts Walmart, its suppliers, a little known software developer, and self-selected NGO confidants - not the Federal government - in the business of 'regulating' formulation choices. Thus, Walmart's program, while very well intended, surely, operates beyond the legally defined mandates of EPA and FDA. It puts EDF and whomever else joins Walmart at the table in the role of oversight body.
Regarding the nutritional improvements Walmart is planning for packaged foods, Marion Nestle added: "a better-for-you processed food is not necessarily a good choice."
As for opening stores in underserved areas, a recent study showing that obesity rates go up when a Walmart comes to town doesn't make the fight against food deserts a real promising goal. Quite the opposite, actually. (Not that it's fair, as the study makes clear, to assume the relationship is one of cause and effect. But the pattern is a valid concern regardless.)
Questions over Walmart's supply chain
Self-regulation seems to be a trend here. An investigation in Bolivia showed a different picture of Walmart's Love, Earth jewelry line than the talk of responsible and sustainable practices promoted by the company. The investigation found that factory workers received low wages, strip searches, were not provided dust masks, and faced pressure to finish their work quickly or lose their jobs.
Walmart responded to the story by conducting an investigation into the conditions described in the article. The investigation, conducted by an internal auditor, was "unable to substantiate the allegations."
Poor labor practices are what Walmart is most notorious for, and the retailer (which would be "China's fifth-largest export market, ahead of Germany and Great Britain," if it were a country, according to Ted C. Fishman in his book on China) has been accused of all of the following, from Jordan to India to Bangladesh to China: forcing people to work overtime, locking bathrooms in factories, paying inadequate wages, requiring workers to take pregnancy tests, denying access to healthcare, and firing (sometimes blacklisting) workers for trying to defend their rights.
The National Labor Committee reports this quote from a Bangladeshi factory owner:
"A few years back, I told Wal-Mart, 'Give me one cents more a piece, one cents. I will use that money for these poor people.' He says, 'No, give us two cents less.'"
Walmart has long been known for being anti-union. Jim Hightower reported several years ago: "'While unions might be appropriate for other companies, they have no place at Wal-Mart,' a spokeswoman told a Texas Observer reporter who was covering an NLRB hearing on the company's manhandling of 11 meat cutters who worked at a Wal-Mart Supercenter in Jacksonville, Texas."
Walmart has also been accused of illegal political activism, sometimes intimidating employees to vote for the political party of its choice (in the last presidential election, that meant against Obama).
And the company has a long history of not treating its in-store employees well—for a long time because it defined full-time as 28 to 34 hours a week, and has been criticized for shifting some full-time employees to part-time status, which limits health insurance coverage. The Washington Post reported, "The new benefit plan for "Peak-Time" workers -- Wal-Mart's name for part-timers -- also shortens the waiting period for part-time employees to obtain coverage to one year from two years. But the plan will be unaffordable for workers who are moved from full-time wages to part-time."
Which brings us to...
Image: Walmart Subsidy Watch
A study by the UC Berkeley Labor Center found: "Wal-Mart workers earn 31 percent less than the average for workers at large retail companies and require 39 percent more in public assistance."
Walmart Subsidy Watch, a project of Good Jobs First, compiles information about Walmart's use of public money, including "more than $1.2 billion in tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments around the country," as well as about the healthcare costs of employees who turn to programs like Medicaid because they don't get health coverage with their jobs. It's worth a look to see subsidies broken down by region, size, or category.
Good Jobs First also has a map allowing you to look up the benefits Walmart has received in each state. For example, in Colorado, where I live, "at least 4 Wal-Mart locations have received subsidies worth about $8.8 million; at least 9 Wal-Mart locations in Colorado have challenged their property tax assessment, recouping about $718,000; many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope; [and] Wal-Mart receives about $3.6 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers."
Walmart has also profited from renewable energy credits without having to touch a solar panel or wind turbine. In 2009, Walmart paid $22.6 million in cash for the right to claim $33.6 million in energy tax credits, yielding a profit of $11 million.
Impact on communities
Controversy is almost inevitable whenever Walmart starts planning to open a new store, from New York City to Fredericksburg, Virginia, where Walmart recently abandoned plans to build a supercenter on a Civil War battlefield.
Debates surface for many reasons: small businesses have a reputation for being crushed when Walmart comes to town, and a study published in Social Science Quarterly found that poverty actually increases in communities that have Walmart stores, or at least hinders individual families' ability to move out of poverty:
After controlling for other factors that influence poverty rates, the study found that U.S. counties that had more Wal-Mart stores in 1987 had a higher poverty rate in 1999 than did counties that started the period with fewer or no Wal-Mart stores. The study also found that counties that added Wal-Mart stores between 1987 and 1998 experienced higher poverty rates and greater usage of food stamps than counties whereWal-Mart did not build, all other things being equal.
Increased crime rates have also been found near Walmart stores. One study of 551 stores found the average rate of reported police incidents for each Walmart was 400 to 1000 percent higher than the rate for the nearest Target, six times higher for serious and violent crime, and that the cost to taxpayers for police responses to incidents near Walmart stores is $77 million annually.
The negative impact on community-owned businesses is one of the most common sources of opposition to Walmart. Individual stores are often driven out of business, and local employment rates generally are affected: one study found that on average, when a Walmart opens, county-level retail employment drops by 150 jobs. In plainer terms, that means that for every new retail job created by Walmart, 1.4 jobs are lost "as existing businesses downsize or close," and the overall health of the local economy takes a hit.
Local property values also tend to drop, and noise and light pollution go up. So does traffic, which means carbon emissions. The store has also been encouraging drive-through shopping, which isn't necessarily a step toward sustainability.
One toy industry blog (nothing to sneeze at: Walmart is reported to sell one out of five toys bought in America) had this to say about the effects of predatory pricing:
forces other retailers to also sell at a loss, OR cancel orders for that promotable product because they cannot compete with the artificially low price that has been set. The end result is that the toys will ultimately sell fewer units because Walmart will be the only game in town selling it. The toy manufacturers and even the inventors suffer.
And on low prices, one of the driving forces of its success: Walmart was found late last year to be raising prices, in some cases by more than 60 percent.
Walmart's sustainability index was announced a few years ago to much fanfare and had ambitious goals, starting with a detailed questionnaire of all suppliers—but we are yet to see at least most of the goals realized (or progress towards them).
Green business writer Joel Makower explains:
Walmart says it is using the answers to better understand suppliers, but it is not creating ratings, rankings, or other comparative measures, even for internal use. To my knowledge, not a single supplier has been dropped because of its answers, or lack thereof, to the questionnaire. There is no evidence that supplier responses have led any of Walmart's buyers to alter their purchasing practices...
The product-level scrutiny has been equally slow-going. Predictably, there's a certain amount of jockeying going on by members to ensure their interests are being addressed -- for example, that the metrics used to judge products favor their companies. There's a sense of frustration among some members that the Consortium, run by academics from the University of Arkansas and Arizona State University, lacks the management skills to herd all of the corporate cats.
Walmart had this to say about PVC, which it originally wanted to eliminate in packaging by 2007:
In 2007, we realized we would not be able to meet our goal to eliminate PVC from our private brand packaging. However, we are making progress by: continuing to look for alternatives to PVC.
Except for meat and metal can sealants, for which they "are unable to find suitable replacements for PVC." They also said they were converting PVC clamshells and windows in packaging to PET.
The really promising thing about Walmart shifting toward more sustainable practices is that it is likely to drive similar changes industrywide. The sheer volume that Walmart sells also means an immediate impact when it comes to things like reduced and greener packaging, increased efficiency in how products on the shelves were produced and transported, etc.
But perhaps because it is such an industry leader, there are certain things it could be aiming a little higher on. Green packaging, for example. Here's Beth Terry, expert on plastic-free living, on the store's efforts to reduce packaging by 5 percent by 2013: "5% is not enough. And switching from PVC to PET is not enough."
Terry also touches on the packaging being recyclable—a word that does a real disservice to sustainability discussions—"Labeling packaging as recyclable is not good enough if there are no markets or recycling facilities to handle the packaging waste."
And for all the talk about green practices, there have also been cases of blatant disregard for the environment, for example when it paid fines for Clean Water Act violations and poor safety practices in 2004. That was long enough ago for the company to be forgiven if it has since cleaned up its act (no comment here one way or another), but it's certainly reason to, at best, look on with caution.
The Good Stuff
None of this is meant to diminish any of the sustainability initiatives that Walmart has taken the lead on in recent years.
The retailer announced an ambitious goal last year, which Mat wrote about for TreeHugger: to reduce "the greenhouse gas emissions from the lifecycle of its products by 20 million metric tons (22 million US tons) by 2015--a figure roughly equal to the company's current annual emissions, and about one and a half times the company's projected carbon footprint growth in the same time period."
The company took the step years ago to work with the Rocky Mountain Institute on improving the efficiency of its truck fleet, which has since adopted a range of trucks from a dual-mode diesel-electric hybrid to reclaimed grease fuel trucks.
Walmart stocks a Home Efficiency Center with CFL and LED lightbulbs, efficient appliances, Energy Star appliances, and dual-flush toilets. The aisle started out in 9 California-based Sam's Clubs in 2008--now it's in all of them.
Despite the earlier criticisms of the steps taken toward green packaging, they're still important steps. Walmart held a design challenge in 2008, which HP won for innovative notebook packaging that eliminated 97 percent of it while conserving fuel and reducing CO2 emissions.
Walmart introduced evaluations for electronics in 2007, a packaging scorecard in 2006 to rate manufacturers on categories such as raw material use, recycled content and greenhouse gas emissions, and in 2009 it promised to reduce, recycle or reuse everything that comes into its 4,100 U.S. stores by 2025. We'll see how serious they get in achieving that goal—but in the meantime, in a country where zero-waste isn't exactly a household term, it's significant that the largest retailer is putting it on the agenda.
Some WalMart stores have captured waste heat from their refrigeration systems and used it for hot water in bathroom and kitchen areas. According to WalMart, "approximately 70 percent of the hot water needs for Walmart Supercenters, Sam's Clubs and Neighborhood Markets are generated this way, saving enough energy to provide hot water for more than 30,000 U.S. homes."
In the last year, they've launched initiatives to boost support of small farmers and local produce and to help food banks go green. And not just 'changing their light bulbs' green—although those will be changed, too. With the Walmart grants, the food banks will also be able to improve their heating and air conditioning equipment and refrigeration appliances—and potentially waste less food in the process.
More on Walmart:
WalMart: 20 Million Tons of Carbon Emissions Down, Many Human Rights To Go..
Wal-Mart: The Next Steps Toward Sustainability
Walmart's Newest Sustainability Initiative Focuses on Local Produce, Small Farmers
Walmart Gives $2 Million to Help Food Banks Go Green
Walmart Announces Plan to Promote Healthy Foods