Walmart's Sustainable Product Index
Thursday, 23rd July 2009 at 1:30 pm
US retail giant Walmart plans to develop a worldwide Sustainable Product Index after a recent meeting with 1,500 of its suppliers, associates and sustainability leaders at its home office.
The index aims to evaluate every Walmart product’s environmental impact throughout its entire lifecycle, with the final step in the development being a sustainability rating that consumers will see on every price tag.
The move, described as a milestone event in retail, will see Walmart work with multiple outside parties, including universities and NGOs, to develop a transparent, open-platform sustainability index.
According to Wal-Mart’s President and CEO Mike Duke, customers increasingly want information about the entire lifecycle of a product so they can feel good about buying it. Duke says customers want to know that the materials in the product are safe, that it was made well and that it was prepared in a responsible way.
Duke does not see this as a trend that will fade, believing higher customers expectations are a permanent part of the future.
According to online publication ‘The Big Money’s’ Marc Gunther, the plan has the potential to transform retailing by requiring manufacturers of consumer products to dig deep into their supply chains, measure their environmental impact, and compete on those terms for favourable treatment from the world’s most powerful retailer.
Walmart plans to introduce the initiative in three phases, beginning with a survey of its more than 100,000 suppliers around the world. The survey includes 15 questions that will serve as a tool for Walmart’s suppliers to evaluate their own
sustainability efforts. The questions will focus on four areas: energy and climate; material efficiency; natural resources, and; people and community.
According to John Fleming, Walmart U.S. chief merchandising officer, the survey is a key first step toward establishing real transparency in Walmart’s supply chain.
Fleming said the company will ask its top tier U.S. suppliers to complete the survey by Oct. 1. Outside the United States, the company will develop timelines on a country-by-country basis for suppliers to complete the survey.
Walmart will also work with a consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products — from raw materials to disposal. Walmart has provided the initial funding for the Sustainability Index Consortium, and invited all retailers and suppliers to contribute.
Mike Duke says it is not Walmart’s goal to create or own the index, but to spur the development of a common database that will allow the consortium to collect and analyse the knowledge of the global supply chain.
The company will also partner with one or more leading technology companies to create an open platform that will power the index.
The final step in developing the index will be to translate the product information into a simple rating for consumers about the sustainability of products. This will provide customers with the transparency into the quality and history of products that isn’t available today.
Walmart isn’t the first company to attempt this kind of green-branding, however observers believe the unparalleled market share and influence of the giant retailer means that such a move will have a huge effect on the retail sector worldwide.