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Walmart Announces Green Rating System
By Steve Schueth

Last month, Walmart announced its intention to create a Sustainable Product Index for all of the products it carries.  Considering the fact that Walmart holds the dubious distinction of being both one of the most admired and most reviled retailers in the world as viewed through a social responsibility lens, what should socially conscious consumers and investors make of this development?

Although many question whether Walmart’s efforts are simply a green sheen produced by the PR department, there is a lot of real potential for this ambitious project.  The Walmart Sustainability Index could be an important stride toward separating deep green companies from other shades of green by setting standards around corporate transparency and quantifiable sustainability. 

The Sustainability Index is being developed by the Sustainability Consortium, a group of academics and researchers with the goal of establishing a reliable source of scientific standards to measure the sustainability of consumer products.  The Consortium, led by faculty at the University of Arkansas and Arizona State University, will be comprised of member companies—many of which are major consumer product companies such as Cargill, Clorox, Dial, Earth Friendly Products, General Mills, Henkel, Monsanto, Pepsico, Proctor & Gamble, SC Johnson, Seventh Generation, TetraPak, and Unilever.

“Measurements of sustainability will be holistic and account for both environmental and social imperatives through the entire life cycle of the product including manufacture, distribution, consumer use, and post-use,” the Consortium website explains.  “These measurements will be derived from four areas: energy and climate, material efficiency, natural resources and people and community.”

Although the process is designed to be entirely transparent, there is some merit to the questions raised about companies creating the standards by which their own products will be measured.  However, given the 60-some-thousand suppliers to Walmart, the time and effort needed to create a legitimate ratings system is no doubt going to be vast and will require the support of corporations to provide the capital and information necessary to get the job done.

The timeline for this project is still being developed.  We are not likely to see labels for a couple of years.  Yet with the stopwatch now started, many companies will hopefully make some real change knowing that they are going to be held accountable by big players in the retail space like Walmart.

“A lot of suppliers are scared, but there is an opportunity here for them,” says Michelle Harvey of the Environmental Defense Fund, which has worked with Walmart in the past and is assisting on the project.  “I think the most significant improvement will come before the consumer ever sees a score. 

If Harvey is right, given the size of Walmart’s retail footprint, this is very exciting news for the environment.  However, another question looms large:  Once the facts are available, will they really matter to the average American consumer?  The jury is still out on that one.

Mention of a specific company or security in any First Affirmative publication or blog is not a recommendation to buy or sell that security. 

Steve Schueth, President

steveschueth@firstaffirmative.com

Sara Laks, Assistant to the President

saralaks@firstaffirmative.com

 

Posted: August 31, 2009