For more Wal-Mart related interviews, see our conversation with Andy Ruben and Matt Kissler, or our audience with senior executives on selling solar and playing politics.
TH: Wal-Mart has received considerable attention for its eco-efforts of late, not least on this site. Do they deserve it, and are they for real? DN: Wal-Mart deserves some credit for its efforts, but given its size, the company has only just begun to offset the enormous impact of its business practices on the planet. Selling CFL bulbs is great, but the amount of energy Wal-Mart is using per dollar of revenue generated is not decreasing. It's also difficult to track how well the company is really doing because Wal-Mart is hardly transparent.
The positive attention on Wal-Mart's eco-efforts is not surprising. In the midst of its reputation problems two years ago, one of the company's consulting firms advised it to "take a proactive stance becoming a role model on a significant societal issue." In taking that advice, Wal-Mart invested in an aggressive public relations campaign to highlight its environmental efforts.
We expect Wal-Mart will have to change, if not for the health of the planet, then for the health of its business. We recently conducted a national public opinion survey, which shows consumers are becoming more resistant to shopping at Wal-Mart because of its business practices, including its environmental policies. If Wal-Mart wants to continue its previous success, it will have to listen to its critics and start making some changes.
TH: Is Wal-Mart's business model fundamentally unsustainable, or is there room for reform? If reform is possible, what should be the top priorities for action?
DN: Wal-Mart's current business model will remain fundamentally unsustainable until the company achieves measurable goals, which reduce the environmental impact of its own business practices.
The energy required to run Wal-Mart's stores provides an illustrative example. Wal-Mart hopes to cut CO2 emissions by 2013 via making its existing stores 20% more efficient. However, new stores built in 2007 alone will consume enough electricity to add approximately one million metric tons of CO2 to the atmosphere. At that rate — adding an additional one million metric tons of CO2 per year because of new stores — by 2013, Wal-Mart will be offsetting its goal for a 20% greenhouse-gas footprint reduction at existing stores by adding 28 million metric tons of new emissions through expansion over the same time period.
With the average Wal-Mart supercenter the size of a football stadium and the parking lots often three times the size of the stores, massive amounts of land are consumed to build the supercenters and the parking lots alone contribute to water pollution. Plus, the significant amount of traffic Wal-Mart generates both from its shoppers and its massive truck fleet directly contributes to the problems of air pollution and sprawl.
But, Wal-Mart's sourcing is one of its most critical problems. Wal-Mart imports more than 70% of its products from China and would rank 7th (ahead of the UK, Singapore and Taiwan) on China's top export locations, creating a tremendous carbon footprint. If it chooses to source products from countries with low environmental standards because it reduces cost, then it must aggressively monitor and enforce the environmental standards of the suppliers from which it buys. Asking domestic suppliers to make efforts to reduce their carbon footprints cannot possibly compensate for Wal-Mart's massive global carbon footprint.
Wal-Mart can reform its practices and we are pleased that the company is listening to some of its critics. To become truly sustainable, however, Wal-Mart must do what it has not yet done - set and achieve clear and measurable goals - and begin treating sustainability as corporate responsibility rather than a public relations opportunity.
TH: Wal-Mart's sheer size makes it an obvious target for campaigning organizations such as yourselves. However, it has also lead to high-profile partnerships with the likes of the Rocky Mountain Institute. Are such different strategies diametrically opposed, or mutually beneficial? Are there any words of caution you'd give to organizations partnering with Wal-Mart?
DN: It is progress that Wal-Mart is finally talking to environmental groups. However, it is important to recognize that the dialogue or the conservation efforts would not be happening if Wal-Mart did not feel pressure. It has taken years of pressure on the company to get this far — to the point where Wal-Mart executives are sitting down with groups like the Rocky Mountain Institute. In order for the dialogue to be productive, that pressure must continue.
For example, Wal-Mart received accolades (from TreeHugger and many others) for their modest forest conservation efforts in the U.S., but just a few weeks ago they were discovered to be buying illegal protected Russian timber from a Chinese factory.
Working with Wal-Mart is a good thing and a huge step forward for all groups pressing for positive change, but we all need to continue to hold Wal-Mart accountable to its rhetoric and ensure the changes are substantive and not cosmetic. Any progress is good, but we can and should expect more from the largest, most innovative company in the world.
TH: Environmental concerns are clearly receiving a higher level of concern in corporate boardrooms than ever before. Nevertheless, greenwash and malpractice are still rife. How can environmentalists best effect change in the business world?
DN: There are many excellent environmental organizations and we leave it to them to determine how best to affect the change they want to see in the business world. But we do believe two things are particularly important with Wal-Mart. First, as I said above, it is critical to keep the pressure on and not let up. Some socially responsible investors chose a path of dialogue with Wal-Mart more than ten years ago and many of them are frustrated today. The two tactics, pressure and dialogue, can go together. Wal-Mart needs the environmental community much more than they need it, especially once a group has started working with the company. Wal-Mart's public relations cannot afford to have credible environmental organizations walk out the door.
Second, some environmental critics have raised concerns about other poor business practices such as discrimination, wage and hour lawsuits and lack of health care among others. Raising these issues is particularly helpful in forcing Wal-Mart to make comprehensive change which ultimately will make the company more sustainable.
TH: If you could convince every TreeHugger to do just one thing for a better, greener future, what would that be?
DN: Stay informed. Readers can also join our environmental task force and learn more about Wal-Mart's business practices. The more educated activists and consumers are, the more companies like Wal-Mart will be forced to change their business practices and move in the direction of real sustainability.