Building sustainability in Supply Chain - Walmart Way
Walmart Sustainable Product organizations, GHG targets, and reportingIndex to CDP. Carbon Disclosure Project hasWalmart, a retail giant and largest become one of the largest platform in the world for the organizations to disclosurecompany in the world by any standards,announced plans to develop a worldwide climate change related information. Thus Walmart urges its suppliers to share theirsustainable product index. It is expected climate change related strategies throughto lead to higher quality, lower costs, andmeasure the sustainability of products. CDP. Scoring is done based on the responses by the organizations onWalmart states that the need for suchindex is due to the increasing pressure on aforementioned fronts. - Natural resources usenatural resource, upcoming environmental Natural resource section stresses onregulations, and impact on supply chainsby climate change will increase the cost of whether suppliers have established sustainable procurement mechanism andthe products in future. Working togetherwith supplier in product design, third party certification of products and systems for sustainability assurance.development, manufacturing, and - Material efficiencytransportation by adopting sustainablepractices can make them future ready. Material efficiency section contains questions on amount of solid wasteSince Walmart is known for selling thehuge range of the product at affordable organization generates and steps taken to reduce it. Also it asks about the waterprices, it is indeed necessary for them to footprint of the organization and how it islook at the sustainable sourcing of theproduct in future. working towards reducing the same. - People and CommunityWalmart has envisaged 3 steps in this This section focuses on social compliances by suppliers, communitydirection. These steps are development activities in the market they1) Supplier Sustainability Assessment operate, and knowledge about their own suppliers.The firs step is reaching out to its 100,000global suppliers and urging them to adopt 2) Life-cycle Analysis Databasesustainable practices in their value chain. Second step is creation of global databaseWalmart will send survey questionnaireannually to evaluate these supplies. The of information on the life-cycle analysis of products - from raw material to disposal.questions will be grouped in -- Energy and Climate This will be achieved through creation of consortium of universities that collaborateThis section contains questions that are with suppliers, retailers, NGOs, people,centered on the GHG footprint of the
and governments to develop this through cost cutting, meeting the growingdatabase. Such database helps in regulatory requirements, offering wideidentifying the environment, social and range of products to its customers, andeconomic impact of the product during is managing suppliers more effectively.lifetime. Information collected through this survey on continual basis helps Walmart3) Simple tool for customers understand how its suppliers are stackedThe final step of the index is to provide up. Survey data can highlight thecustomers with product information in a inefficiencies in supplier’s the system andsimple and convenient way to understand value chain. For example, GHG footprintthe product’s sustainability rating and and energy intensity can show theabout LCA of the product. Walmart is supplier’s energy bills. Now Walmart candeveloping various tools for this purpose. compare the data from two differentCustomer can use these tools to make suppliers who supply similar product andright buying decisions and consume the assess who is more efficient in terms ofproduct in more sustainable way. energy intensity. Walmart can then work with the less efficient supplier to adoptBeyond Sustainability best practices from its peers and invest inThough the sustainability initiatives help energy efficiency, thereby reducing therestore or sustain social, economic, and cost of the product. Same logic can beenvironmental balance, its futile exercise applied in case of waste generation, waterfor a profit making organization unless it usage, packaging, and material efficiency.doesn’t not bring in tangible commercial Eventually Walmart can reduce the wastebenefits or long run intangible benefits in its value chain and thereby reduce thewhich eventually help organization make cost of the product and thus remainmore profits in sustainable way. In long competitive. Also people and communityrun, sustainability initiatives should help engagement earns social goodwill andthe organization consolidate its position in trust.the market, gain goodwill of thestakeholder, assure investors about long Road ahead for the suppliersterm business viability, and help increase Suppliers need to gear up for thisprofits. The initiatives at Walmart are challenge and become more efficientdesigned keeping the same objectives in within the framework set up by Walmart.mind. Ongoing engagement with suppliers There is proposed reward for the suppliersunder sustainability programme helps who have better sustainability index.Walmart sustain the market share in long Besides the reward, here is the businessrun by making products more affordable opportunity for the suppliers to
differentiate their products in the market. MeasureStudy by consulting firm BCG shows that Organization can start measuring their energythe segment of environment conscious intensity, carbon footprint, waste generation,consumers is set to grow in future. These water footprint, and social and environmental impacts. Various standards and proceduresconsumers will fuel the demand for the are available to facilitate the same.products having low carbon footprint,lower environmental and social impact,and consume less energy while in use. AssuranceThereby suppliers having higher product The measured data needs to be assured by third party veriﬁcation. Various certiﬁcationsindex on sustainability can lure this are available for the purpose. Some of themsegment of customers. Adopting the are listed below.sustainability practices leads to cost ISO14064 - Corporate GHG Managementcutting, production innovation, and thus System PAS2050 - GHG over LCA of the productincrease in profits. PAS2060 - Carbon neutralitySupplier’s can follow the steps depicted in SA8000/ISO26000 - Social Accountability andthe schematic to initiative the actions to Responsibility standardrespond to the survey questionnaire and Sustainable Development Reporting - SDR based on GRI frameworkbegin journey towards sustainability in true EN16001 - Energy Management Standardsense. Assess The various standard discussed above can assist the organization to monitor and assess energy efﬁciency, GHG, waste generation, waster footprint, and sustainability. Continual assessment help in eliminate the waste in the system and become more efﬁcient. Disclose Organizations can disclose its progress to various stakeholders such as customer, investors, suppliers, and society at large through various platforms such as CDP.
Agneya Carbon Ventures is a focused Carbon,Renewable Energy, and Sustainability Managementconsulting ﬁrm. We provide services in the widespectrum of carbon management, Renewable Energyprojects, and Sustainability domain helping our clientsidentify and mitigate the risks, exploit the opportunities,and thus tackle the environmental, social, andeconomic challenge.For further details contact us atIndrajeet@agneya.in / +email@example.com / +91-9665407848