Thank you for inviting me this morning and for giving me an opportunity to share some perspective on our business, the role of clean technology, and the significant opportunities we have ahead of us.
Wal-Mart started as one man’s dream 50 years ago, a courageous vision brought to life as we speak, by more than 2.2 million Associates serving over 200 million customers every week. Sam Walton’s goal was simple, and yet when you think about it, radical: He wanted to help the people living in small towns and rural America enjoy a similar quality of life as those who lived in the big cities. While retailers were rushing to the suburbs, Sam Walton built a business serving these overlooked and under-appreciated customers. He knew intuitively this was right for the country, but also that there was a big business opportunity to provide this kind of value and service. Sam Walton’s dream to serve the under-served changed the world. His method was to go where other businesses feared to go. The other retailers of that time were convinced they wouldn’t make money in small town America. Today, we’re the largest retailer in the world. People expect a lot of us, and they have a right to. Due to our size and scope, we are uniquely positioned to have great success and impact in the world, perhaps like no company before us.
Our CEO, Mike Duke, continues to ask: What if we used our size and resources to make this country and this earth an even better place for all of us: customers, Associates, our children, and generations unborn? Sam Walton had the courage and foresight to take on the hardest tasks in retailing instead of the easiest, and look what we were able to accomplish. I have no reason to believe the same cannot be true of the environment.
We’ve come to appreciate that environmental loss threatens our health and the health of the natural systems we depend on. The challenges include:Increasing greenhouse gases that are contributing to climatic change and weather- related disasters. - Increasing air pollution which is leading to more asthma and other respiratory diseases in our communities. - Water pollution which is increasing while safe fresh water supplies are shrinking; water-borne diseases causes millions of death each year, mostly among children. Destruction of critical habitat, causing unprecedented threat to the diversity of life, the natural world and us. And that’s just to name a few. As one of the largest companies in the world, with an expanding global presence, environmental problems are OUR problems. The supply of natural products (fish, food, water) can only be sustained if the ecosystems that provide them are sustained and protected. There are not two worlds out there, a Wal-Mart world and some other world. Our Associates, customers and suppliers occupy the same towns, our children go to the same schools, and we all breathe the same air. These challenges threaten all of us in the broader sense, but they also represent threats to the continued success of our business.We believe that being a good steward of the environment and in our communities, and being an efficient and profitable business, are not mutually exclusive. In fact they are one and the same.
Our environmental goals at Wal-Mart are simple and straightforward:- To create zero waste. - To sell products that sustain our resources and environment. - To be supplied 100 percent by renewable energy. Fortunately, we have engaged with experts, leaders and NGO partners outside of Walmart, that have been willing to share their expertise. We appreciate their independence, and we value when they push us, especially when they feel we should go faster or bigger. These candid conversations and constructive relationships lead to learning and, ultimately, results.We’ve also learned that when you take on such big goals without knowing exactly how to achieve them, you’re going to hit unexpected bumps along the way. There are times when we don’t get where we want to go fast enough – for our partners or for ourselves – and when we have to adjust our approach.That said, I’m proud of our progress to-date and wanted to share some of our reflections with you.
There is a simple rule about the environment. If there is waste or pollution, someone along the line pays for it.Reduction of waste represents one of our most visible opportunities. Think about it....if we throw it away, we had to buy it first. So we pay twice, once to get it, once to have it taken away. What if we reverse that cycle? What if our suppliers send us less, and everything they send us has value as a recycled product? No waste, and we get paid instead.To do that, we have to address packaging. Have you ever noticed that when you’ve taken the item out of the package you’ve got more packaging than item? We want to ensure that our goods come in the right size package, and we want to ensure that the materials in that packaging are made from renewable or recyclable materials that can make future packages. Pretty simple, really. And it saves us a lot of money.We believe that Wal-Mart can significantly reduce the amount of waste going to landfills in our communities, and reduce costs through increased recycling of the remaining material.Last year, Walmart U.S. crossed a significant threshold by preventing more than 80 percent of its waste from going to landfills. Eliminating unnecessary packaging is another great way to reduce costs. For example, we eliminated 16 percent of the paper fiber used to package our Great Value brand margarine, and, in Canada, we are now shipping Great Value brand spring water in a 100 percent recycled PET plastic bottle
After waste, our second goal is built around the products we sell. Customers should not have to make trade-offs when they purchase products at our stores. You should not need a greater income for access to seafood, cotton, forest or paper products that are safe for your family or produced in a sustainable way.At the end of the last fiscal year, more than three-quarters of our fresh, frozen, farmed and wild seafood suppliers were third-party certified, with an additional 8 percent having developed certification plans.
Now for the reason we are all gathered here at the Cleantech Open. To be supplied by 100% renewable energy.Who better than Wal-Mart to make a kilowatt of electricity go twice as far, or a gallon of diesel take our trucks twice the distance? tiOr three mes? Who better than Wal-Mart to stretch our energy and material dollars farther than anyone ever has, to help lower our energy bills and gas prices for years to come.
Let me put that in perspective:We have one of the largest private fleets in the U.S. At today’s prices, if we improve our fleet fuel mileage by just one mile per gallon, we can save over 52 million dollars a year.Increasing our efficiency in energy not only reduces dependence on oil and saves money; it also avoids GREENHOUSE GAS emissions. And we are continually looking at innovative ways to reduce our greenhouse gas emissions. Climate change doesn’t cause hurricanes, but hot ocean water makes them more powerful. Climate change doesn’t cause rainfall, but it can increase the frequency and severity of heavy flooding. Climate change doesn’t cause droughts, but it makes droughts longer. We believe every company has a responsibility to reduce greenhouse gases as quickly as it can.Wal-Mart can help restore balance to climate systems, reduce greenhouse gases, save money for our customers, and reduce dependence on oil.
As part of our aspirational goal of being supplied by 100 percent renewable energy, we envision a world where people do not have to choose between electricity they can afford and renewable electricity that is good for communities and the planet.As such, Walmart’s renewable energy activities are focused on - Development and installation of new renewable energy projects - Driving down the cost of renewable energy - Building scale - Securing cost-effective, stable energy pricing that meets or beats utility power pricing Additionally, we are committed to experimenting, piloting and scaling a variety of cutting-edge and proven technologies to propel our use of renewable energy around the world.To date, we have more than 180 renewable energy projects in operation or under development across our global portfolio, providing us more than one billion kilowatt hours of renewable electricity annually. That is enough to power 78,000 American homes every year. Added together with the renewable electricity we are supplied by the grid, 22 percent of Walmart’s electricity needs globally are supplied by renewable sources.All of this power generates no greenhouse gas emissions, and is being delivered in a cost-effective manner, demonstrating that a new energy future can contribute to everyday low costs and enable everyday low prices for our customers.
To become powered by 100 percent renewable energy, we recognize it will require investing in different technologies and power generation strategies. Our approach is three-pronged:1. Distributed generation.Walmart is a leader in both testing and scaling onsite renewable energy projects, including solar rooftops, microwind on our parking lots, biodiesel generator sets, and fuel cells. Walmart currently has:- 115 rooftop solar installations in seven countries (Canada, China, Japan, Mexico, Puerto Rico, U.K. and U.S.), delivering 71 million kilowatt hours of electricity annually to our stores, clubs, and distribution centers. In California alone, approximately 75 percent of the Walmart-owned locations will have rooftop solar installed by the end of 2013. In 2012, Walmart China completed its first rooftop solar project, a formidable task given the unique real estate, regulatory and geopolitical challenges in that market. Rooftop solar typically provides up to 30 percent of the store’s annual electricity requirements. - 26 fuel cell installations in the United States, delivering - 65 million kilowatt hours of electricity annually. Fuel cells can be sized to provide a wide range of the store’s annual electric requirements, but to date we’ve sized our systems to provide 40–70 percent of the stores’ annual electric requirements. We are testing onsite microwind, solar water heating, as well as solar thermal in various markets, including Canada, Chile, China, Mexico and U.S. 2. Utility-scale, offsite generation. We changed the way we buy power, extending our contract length, and going directly to the source. Our willingness to sign longer-term power purchase agreements of up to 15 years in some markets, enables large-scale renewable energy developers to secure preferred financing, lowering the cost of utility-scale renewable energy projects. This fits our strategy of procuring renewable energy for prices at or below utility rates and, ultimately, we believe will make clean, renewable energy more affordable for everyone. Walmart currently has five utility-scale offsite wind projects in operation or under development in Mexico (at 348 stores), the U.S. (at 350 stores) and the U.K. (at 14 stores), totaling 470 million kilowatt hours of renewable power annually. Additional details of our large-scale wind projects include:3. Grid-connected and other green power purchases.In many parts of the world, regulatory barriers prevent Walmart from directly purchasing electricity from wind farms, and other barriers make onsite renewables cost-prohibitive. We work with stakeholders across government, nonprofit and multilateral organizations to make the grid as renewable as possible, as fast as possible. In some cases, promoting affordable renewable power may include participating in utilities’ green power purchase programs; in other cases, purchases are made through competitive green power market sources. We have participated in these programs in two markets (Canada and U.S.), resulting in more than 500 million hours of renewable energy annually.
Domestically, we are particularly proud of our efforts in California and Texas. According to the United States EPA’s Green Power Partnership program, our renewable energy projects in these 2 states alone make us:the second-largest purchaser of green power among U.S. retailers the second-largest onsite green power generators in the U.S.the third-largest U.S. green power purchaser in their ranking overall the third-largest green power purchaser in the Fortune 500
Engaging in these renewable efforts and pilots have resulted in some great insights, some of which I would like to share with you.We believe that to drive a higher volume of renewables, the following nine conditions must exist:1. Starting with the obvious one, the Renewable resource (wind, solar, geothermal, etc) must be available. 2. The technologies – and the companies to install and maintain them – must be available to turn the renewable resource into useable energy.3. The market must have banks and financial institutions willing and able to lend to project developers. Often, lenders offer lower cost of capital and other preferred finance terms as a result of Walmart’s low-risk profile as one of the project partners. In some of our markets, unexpected finance risks – like past currency crises – have made lenders unwilling to finance projects in those markets, especially for utility-scale projects.4. In some markets, renewable energy projects are viable without government incentives; however, in many regions, government incentives help make the project viable.5. Highly subsidized grid electricity costs make renewable energy less attractive.For offsite utility scale projects:6. There must be a favorable regulatory framework. For example, it must be legal for Walmart (or other energy consumers) to directly source electricity from project developers. In some of our markets, our ability to drive scale is diminished because we are not able to sign direct power purchase agreements.7. The electricity must be able to reliably transmit from the project site to our stores.For onsite distributed generation projects:8. Installing onsite renewable energy is far more viable when we own the building and have access to the roof, parking lot and other real estate to install systems. Some of our markets lease space in the basement of multistory high-rises, creating both ownership and engineering barriers.9. Many of our attempts to install renewable energy on our roofs, parking lots or land have required significant time working with regulators to manage permitting rules that inadvertently prevent renewable installations.When the right combination of these nine conditions align, Walmart has the opportunity to do what we do best: leverage our scale, our creativity and our willingness to take risks to drive significant new renewable capacity
To close where we began, let me reiterate that we are a large company. For Wal-Mart to be successful and continue to grow, we must operate in a world that is healthy and successful. Of course, we are acutely aware that we have a business to run, and run it we will. At the same time, we believe that these initiatives and many more to come will make us a more competitive and innovative company, and one that is more relevant to our customers.We have an aggressive vision. With courage and commitment to change, we will be at our best and remain true to the legacy of the company Sam Walton founded some 50 years ago. Thank you.
Rahul RajDirector of Sustainability & Merchandising InnovationWalmart.com rwr3peat
To sell products that To be supplied 100%To create zero waste sustain people and by renewable energy the environment
Development & installation of new renewable energy projectsDriving down the costof renewable energy Building scale Securing cost- effective, stable energy pricing thatmeets or beats utility power pricing
Distributed Energy Utility-scale, offsite generation Grid-connected & other green power purchases
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rwr3peat For all types of renewable projects: 1. Renewable resource availability. 2. Mature technologies & providers. 3. Finance capital availability. 4. Government incentives. 5. Cost of electricity. For offsite utility scale projects: 6. Favorable regulatory framework. 7. Grid reliability. For onsite distributed generation projects: 8. Rooftop rights. 9. Permitting & regulatory freedom.