Walmart: 2013 Global Responsibility Report Released

Join us today, April 24th at 4pm Central time for a Twitter chat with Walmart on their Global Responsibility Report.

This week, Walmart released its 2013 Global Responsibility Report. At 172 pages, it's a monster to wade through. Other multinational retailers don’t come close: Carrefour’s latest report comes in at 75 pages, while Tesco’s hits 70. The sheer breadth and depth of it (realizing that there is much more that didn’t make it to publication) is a testament to the deep investment and rigorous approach the company is taking to pursue its sustainability strategy.

Highlights include progress in 10 areas: philanthropy, scaling the sustainability index for products, women’s economic empowerment, strengthening sourcing from U.S. manufacturing, renewable energy, hunger relief and healthier food (both topics in line with its mission and consumers’ concerns), veteran employment, workforce diversity (particularly regarding women), and job opportunity creation.

Given that the report is so impressively comprehensive, in what areas might stakeholders like to see more discussion? A fuller accounting of water impacts would have been welcome, both in the GRI index and as a standalone subsection. While the report touches on the area, it would be interesting to see how water is accounted for in the supply chain and how its retail facilities manage water impacts. Furthermore, I would love to know from the upcoming 3p Twitter chat with Walmart what sustainability areas they considered covering in depth but chose not to focus on.

2012 commitments and progress

In the report, Walmart provides an update on its 2012 commitments and progress on key goals: covering waste, products, energy, the women’s economic empowerment initiative, healthier food, and hunger relief. From a traditional business outlook, incentivizing outcome is one of the clearest pronouncements of a company’s sincere commitment to a goal. So, it is good to see Walmart is actively working on tying annual evaluations to sustainability objectives, not just in the U.S. but globally.

The firm exceeded its goal of reducing global plastic shopping bag waste (the goal was 33 percent, actual performance was a 38.1 percent reduction), equivalent to eliminating approximately 10 billion bags. The company is also on track for its reduction goals around reducing landfill waste in stores and reducing food waste in its markets.

The company met its goal of partnering with suppliers to achieve energy efficiency. Over 200 factories that Walmart sources directly from in China achieved the goal of improving energy efficiency by 20 percent during the program period. The company reports that this is equivalent to eliminating 2.1 million metric tons of GHG emissions.

Apparently, not all goals are meant to be met. In 2007, Walmart set an aspirational goal of becoming packaging neutral globally by 2025. This North Star drove Walmart to improve packaging sustainability through its Global Protocol for Packaging Sustainability (GPPS). Today, Walmart feels the audacious goal has served its purpose, and is retiring it in favor of refocusing efforts on other areas of packaging optimization.

Should companies retire aspirational goals once they’ve succeeded in advancing progress? If so, how do you determine when it’s served its purpose by providing directional vision? In the future, it would be interesting to examine how companies manage the retirement of previously publically announced stretch goals.

Progress is being made on several fronts, including the development of a sustainable product index in collaboration with The Sustainability Consortium (TSC). Next year, the index will cover 400 product categories and Walmart will reshape its private brand products based on this index.

Greenhouse gas emissions are at the heart of what is driving climate change, and supply chains constitute the majority of corporate emissions. So it is not trivial that Walmart aimed to eliminate 20 million metric tons (MMT) of GHG emissions from its supply chain by 2015. It is currently on track to reach this goal, according to the 2013 report, through a variety of projects.

Walmart is also on track to double sales of locally sourced produce in the U.S. by 2015, compared with its 2009 baseline. If successful, the locally sourced stream will account for 9 percent of all produce sold. That may not seem like much over a six-year period, but the firm is also confronting increased droughts and early freezes, as weather patterns change.

Ethical sourcing

Ethical sourcing is a major area of the report. In January 2013, Walmart achieved a major ethical sourcing goal: 96 percent of direct import factories earned one of the top ratings for social and environmental audits. The report details some of the many challenges Walmart encountered to achieve this goal. It is very satisfying to see a company discuss its internal struggle towards sustainability in specific terms, and certainly demonstrates a leadership role in guiding the industry. For example, if a factory fails to meet capacity planning, this can lead to extended shifts and unauthorized subcontracting, which Walmart is actively discouraging.

In 2013, Walmart also issued a zero-tolerance policy for unauthorized subcontracting. This is particularly timely in light of the series of horrific fires and loss of life in Bangladeshi garment factories last year, earlier this year, and again this past Wednesday.

“Those suppliers who partner with us in building a responsible supply chain will be the suppliers who will grow with us,” stated Mike Duke, president and CEO of Walmart Stores, in the report.

In 2012, Walmart created a Supply Chain Capacity Building (SCCB) program, which offered new modules and an instructional curriculum to develop the capacity of its supply chain partners. The SCCB program ranges from half-day group training sessions to several months of one-to-one engagement. Factories that don’t meet Walmart’s expectations on audits are invited to attend Violation Correction Training.

It is fascinating and very promising to see how much depth the organization has gone into to develop a robust supply chain initiative. In 2012, almost 2,000 factories and 500 suppliers participated in the Factory Audit Orientation Training, and just under 1,000 factories and 400 suppliers participated in Violation Corrections Training.

In China, in particular, Walmart is partnering with an NGO, the Institute of Public & Environmental Affairs (IPE), to provide training to factory management. In 2012, it was ranked fourth out of 48 international brands and retailers in China for its efforts to improve environmental compliance in the supply chain. To date, Walmart has successfully removed 35 factories previously marked as noncompliant for water and air pollution. But, as the company points out, that it is not just about tallying factories, but more so about the communities the firm touches. Although beyond the purview of the report, it would be fascinating to see more detail on how the communities were impacted and what results they observed.

In 2012, Walmart’s Global Women’s Economic Empowerment Initiative (launched in 2011) began working with 15 factories in India and 15 in Bangladesh, providing training to over 15,000 women. This is a five-year initiative designed to develop a pipeline of skilled female talent in factories using curriculum developed by the humanitarian organization CARE. In 2013, the program will expand to Central America, followed by China in 2014.

It is particularly heartening to see Walmart’s strategic investment in women’s economic empowerment globally. As suggested by multiple reports, including the UN Millennium Development Goals, investing in women is one of the most lasting ways to alleviate poverty and offers manifold benefits to health, education, and their communities, particularly in developing economies.

Environmental responsibility

The three aspirational goals around environmental sustainability are: to source energy solely from renewable sources, generate zero waste, and to sell products that sustain people and the environment.

The report mentions the company’s Sustainable Value Networks (SVN) practical counsels geared towards operationalizing sustainability across the business. In the past year, six council meetings have been held to discuss the most pressing challenges and goals. According to the report, “each of our SVNs has contributed a wealth of innovation and insight, resulting in numerous positive changes to our business operations and the environment.” It would be great to hear Walmart expand on what those innovations were, as a source of best practices.

Perhaps we’ll hear more on the 3p Twitter chat with Walmart on the Global Responsibility Report, April 24 (4pm Central time). TriplePundit will hold a one-hour live Twitter chat in collaboration with CSRwire and Walmart to offer an in-depth discussion about the new report. Visit the Green Room for company updates on sustainability efforts.

(Image credit: Walmart Stores, Inc.)