Wal-Mart goes green

by Antonio Pasolini on June 26, 2010

Guest blog post by Dan Auld

Stuart Woolf

If you want to heap plaudits on Stuart Woolf for going sustainable way before sustainable was cool, go ahead. He just wonders what all the fuss is about.

Woolf owns one of the largest tomato farms in the world. This California Central Valley farmer was recently featured on 60 Minutes talking about water, and a BBC documentary about sustainability.

So when some know-nothing city kid with a notepad shows up at Woolf’s door (that would be me), wanting to know if, like other growers, he is jumping through hoops because Wal-Mart says its suppliers must go green, Woolf is a bit bemused.

“We put in a 1 Megawatt solar project to position ourselves to be more attractive to food companies who wish to service companies like Wal-Mart,” says Woolf. “Given all the subsidies and credits associated with our solar project, it made some, not a great deal, of economic sense for us to invest.”

Farmers, especially a family farmer like Woolf, look at the world a bit differently than the rest of us. We see people who prepare for the next budget year and call them visionaries.

A farmer looks 25 years ahead to make sure his land will still be producing – and that is just business as usual.

“What is funny about this, we’re an integrating farming and food processing business. We’ve made substantial investments in other resource management technologies that have produced tangible results. For example, we’ve spent millions in land leveling, drip irrigation, the latest information systems, etcetera to better manage our limited water supplies. We currently produce a ton of tomatoes with half the amount of water we did 25 years ago. We’ve done this with no financial support from Washington or Sacramento. And yet, such achievements go unrecognized because companies like Wal-Mart choose to focus on other, less sustainable, yet more popular slash visible green initiatives. I find this very interesting.”

Here’s another thing about farmers: They are self-sufficient, i.e. – sustainable to the tenth power. So they don’t really take too kindly to strangers telling them how to do their business.

Even Wal-Mart.

Woolf is known as an industry leader in renewable methods of farming. So he’s been ready for Wal-Mart, Procter and Gamble, and every other green supply -chain expert anyone can throw at him.

Others in the industry, however, have taken more of a wait and see approach. It’s that 25 year perspective thing.

Enter Wal-Mart. Now everything is changed.

Five years ago, Wal-Mart decided it was going green, green, green.

And because Wal-Mart does not really know how to do things on a small scale, the 2 million associates at the 4800 Wal-Mart stores were soon on a mission to reduce energy – and their carbon footprint.

Inside a few months, the company was using 4 billion (with a B) fewer plastic bags. Its trucks were delivering 70 million more boxes, while driving 100 million fewer miles.

Wal-Mart wanted better, lower energy light bulbs for its refrigerators, but none existed to its standards. Wal-Mart told its vendors to invent one. Sure enough, one did.

Wal-Mart is now the largest buyer of organic milk and cotton in the universe.

This is a very long list. Even so, shortly after Wal-Mart started its green initiative with its three goals of 1) 100 percent renewable energy; 2) Zero percent waste; and 3) Sustainable products for customers and the environment, Wal-Mart CEO Mike Duke figured out that most of the action to reduce the embedded energy in Wal-Mart products was in the supply chain. Not the stores.

That is where the savings would be. So that is where Wal-Mart went.

Duke recently told a meeting of Wal-Mart suppliers in China that doing business with Wal-Mart in the future would require a “total transformation.”

“We are expecting more of ourselves at Wal-Mart, and expecting more of our suppliers,” said Duke.

“First, we will require all our suppliers here to clearly demonstrate their compliance with Chinese environmental laws and regulations….Now second, we will partner with our suppliers here in China to help them become more energy efficient and reduce their use of natural resources. “But make no mistake, if, after a period of time, a factory fails to improve, Wal-Mart will move our business to suppliers who do comply and who do improve.”

Earlier this year, Wal-Mart suppliers began filling out questionnaires about their efforts to reduce energy and save money.

“It’s an interesting contrast,” said Tom Rooney, CEO of SPG Solar in Novato, California. “When business people hear about a law to reduce carbon, they hire lobbyists to get around it. When they hear the same thing from Wal-Mart or Procter and Gamble, they hire world class experts to show them how to comply. They want to do it. A lot of them are going solar because Wal-Mart first goal is to become a company that uses 100 percent renewable energy. And solar is the ultimate renewable. A lot of people look at Stuart Woolf as their model.”

SPG Solar installation for Point Loma Nazarene University

Woolf was recently featured on the cover of a Heinz company report on sustainability. Heinz is one of the largest suppliers to Wal-Mart and its products are featured prominently in Wal-Mart television advertisements.

For all of the industry-leading best practices at his farm, Woolf is still a step or two removed from Wal-Mart. No matter: Wal-Mart is going all the way down its supply chain where they are finding some growers who, in the past, were a bit reluctant to squeeze some of the energy out of their operations.

Wal-Mart’s leadership and sustainable initiative has convinced many that the time for waiting is over.

“Vendors in every industry are listening,” said Rooney, “We are seeing renewed and intense interest in industrial- and commercial-scale solar because of Wal-Mart and Procter and Gamble and other companies are showing their suppliers how to change their shipping, packaging, storing, selling, heating, cooling, disposing, recycling and other practices to squeeze energy out of the supply chain and save money. And solar is a big part of that.”

Even so, some still question not just Wal-Mart’s motives, but its ability to make a difference.

Wal-mart convinced the Harvard Business Review.

“Perhaps more than any other company, Wal-Mart has pursued this approach” said the Harvard Business Review of Wal-Mart’s new vision of sustainability. “The payoffs are already showing up: One of the Sustainable Value Networks, tasked with fleet logistics, came up with a transportation strategy that improved efficiency by 38%, saving Wal-Mart more than $200 million annually and cutting its greenhouse gas emissions by 200,000 tons per year.”

Paul Herman, author of the Hip Investor, says 1 in 3 dollars worldwide is associated with a company that does business with Walmart. So, if you shift Walmart and its suppliers, the global economy shifts with it.

Or as the New York Times puts it: “because of its size and power, Wal-Mart usually gets what it wants.”

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