Counting calories, counting fat grams, counting carbs, and counting the environmental impact of a product—shoppers do the first three on a daily basis, but the Bentonville, AR-based Wal-Mart Stores, Inc. is hoping that counting the environmental costs of a product is beginning to enter the consumer ethos.
On Thursday, July 16, 2009, Mike Duke, Wal-Mart’s chief executive officer and president, announced the company is developing a sustainability index for its products. The index is aimed at giving consumers more information about the environmental impacts of the products they purchase so they can make more informed choices. As he was quoted in Lana F. Flowers’s article in the July 17, 2009 edition of The Morning News, Duke stated “’Customers can make their own choices [on whether or not to purchase standard or more environmentally friendly products],’” but now Wal-Mart will give the customer a bit more information about the product before they do make a choice. To read the Flowers article click here.
Clearly Wal-Mart is banking on the belief that consumers are becoming more environmentally aware, that they want this product information, and that they will use this information to inform their purchasing decisions. However, as the Associated Press reports in an article on the New York Times website, consumers may want the information, but they may not want to pay for it. The AP reports that C. Britt Beemer of America’s Research Group believes consumers are only willing to pay 10 percent more for a product that is eco-friendly. To read the AP story click here. Undeterred, Wal-Mart believes the index will eventually lead to more efficient, environmentally friendly production that will cost less and ultimately save consumers money.
Wal-Mart is working with both the University of Arkansas and Arizona State University, part of a “sustainability consortium,” to conduct the research necessary to develop the sustainability index Wal-Mart’s customers will eventually use. According to the Morning News story, the index will examine the life cycle of a product, from its infancy as raw materials, to its eventual disposal and that of its packaging.
Wal-Mart also hopes to work with technology companies to create a “platform” for a sustainability database that other retailers and other countries could use. However, Duke pointed out that while Wal-Mart is providing the initial funding for this project, they do want it to be a collaborative effort with other suppliers and retailers.
Clare Lindsay of the Office of Resource Conservation and Recovery within the Environmental Protection Agency is paying close attention to Wal-Mart’s efforts. Flowers quotes Lindsay in the Morning News story as stating, “’Developing indices to reliably compare products on their environmental performance, in addition to a open-source database to support this, is a key step in the transition to a green economy.’”
As reported by Andrea Chang in the Los Angeles Times, the green indices, or eco-ratings, may take years to develop, and the first step is a questionnaire. Wal-Mart is asking over 100,000 suppliers questions about their products; questions that range from water consumption and business practices used in the development of the product, to the locations of their factories. The end goal is a green index or eco-rating on the product packages similar to the current nutrition labels used for food products. Chang writes in her article that experts believe Wal-Mart’s actions will cause suppliers to rethink product designs in order to maximize the eco-rating and minimize their environmental impact. To read the Chang story click here.
Is Wal-Mart making a crucial, “key step” towards a green economy that will blaze a trail from other retailers and suppliers to follow, or is the step off a cliff? The retail giant plans carefully, so if the step is off a cliff there is likely a large parachute to provide the company with adequate safety assurances should their domestic and world-wide competitors hesitate to also take the eco-ratings plunge.
Posted: 07/17/09
