Photo credit: akeg/Creative Commons
This guest post was written by Ken Lanshe, Walmart vice president of global sourcing.
Energy is vital. No matter what you do, from reading a book to eating dinner, energy is required at some point to make it possible, and the demand for energy is only increasing as technology advances and the global population grows. While energy does so much to make our lives better, there are also unintended consequences with creating and using it, including air pollution, greenhouse gas (GHG) emissions and consumption of natural resources. And at Walmart, we realize that with our size and reach, we have a responsibility as well as an opportunity to help reduce environmental impacts and reduce costs. We have been focused on energy efficiency for decades and we've made great progress, but we can do more. Our stores and trucks account for less than 10 percent of our overall carbon footprint, and the other 90 percent is associated with the manufacturing and shipment of the products we sell.
Two years ago, we took our first steps toward making our supply chain more energy efficient. We hosted a sustainability summit in Beijing, where we announced our global responsible sourcing initiatives. One of the goals we set was to help our suppliers become 20 percent more energy efficient by the end of 2012 in the top 200 factories in China from which we source directly.
We launched a program with about 300 Chinese factories that we have long-term relationships with and began to research the best ways to improve their energy efficiency. Today, about 100 of those factories have already become 20 percent more efficient and another 145 have achieved a 10 percent improvement in efficiency. We've collaborated with energy service companies and non-governmental organizations (NGOs) to look closely at energy consumption and each factory's individual needs to determine the best technologies to implement.
The initial success of this program has saved more than 80 million kilowatt-hours (kwh) of energy and prevented more than 70,000 metric tons of GHG emissions, which translates into savings for our suppliers and ultimately our customers. We're especially excited about the improvements in efficiency because, although we're primarily using solutions that already exist, we've had to overcome significant challenges to get where we are today.
In many factories, energy consumption wasn't being tracked at all, and we had to start at square one to find our baseline or starting point. We've discovered that making changes to lighting, compressed air and optimizing motor and heating and air conditioning system maintenance can make a monumental difference in energy consumption and suppliers' costs. We aren't reinventing the wheel to improve these factories, but we are asking the right questions. We're finding the right technology for the right factory and asking our suppliers to be transparent about their energy bills and production so we can track their progress.
The factories that have reached a 20 percent improvement in energy efficiency are excited and eager to share their solutions and best practices with others—even with competitors. They're seeing an immediate return on investment when their energy bills and GHG emissions go down. For example, the Loftex China Ltd. factory has implemented 177 efficiency programs, saving more than $4 million and reducing water, steam and power equivalent to 20 million kwh. We're now looking for ways to help even more factories participate.
Among the many benefits that we're seeing, we believe the improved efficiency in China can contribute a great deal to our commitment to reduce 20 million metric tons of greenhouse gas from our supply chain by 2015. We hope to expand the program and introduce similar programs in other countries from which we directly source products. The biggest lesson we've learned is that this isn't something we can do alone, and we're grateful to our NGO and energy services partners who are helping us achieve positive change in our supply chain.
We've only scratched the surface but we're learning more every day about how we can improve the traceability of energy consumption. I've never been more excited about a program because suppliers can quickly make changes for good and see an immediate improvement after implementing energy-saving practices.
Our efforts have the potential to reach far beyond Walmart's own 100,000 global suppliers. We hope this work can serve as a blueprint to other suppliers and retailers interested in improving the energy efficiency of their own supply chains. In addition to leading to higher quality, lower cost products, this effort will help ensure consumers can shop knowing they're buying items that were produced in a socially and environmentally responsible way.
Read more about Walmart:
Wal-Mart: The Next Steps Toward Sustainability
Walmart's Sustainability Index: The Greenest Thing Ever to Happen to Retail?
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Walmart's Sustainability Initiatives Explained