Seven years ago, Wal-Mart began to undertake an unexpected transformation. The world’s largest retailer, so often criticized or sued for a variety of its labor and sourcing practices, partnered with some of its onetime critics — environmentalists — and embraced going green. Since then, the company has dramatically reduced its waste, cut down on packaging around the goods its sells, improved the fuel efficiency of its truck fleet and asked its suppliers to track and monitor their products’ carbon footprint.
As author Edward Humes describes it in his new book, Force of Nature: The Unlikely Story Of Wal-Mart’s Green Revolution, the motivation for Wal-Mart’s eco-transformation was pure business. Wal-Mart (WMT) took the plunge into green practices “on a belief that sustainability can be good …for the bottom line,” writes Humes. By installing small generators in its fleet of 7,200 big rig trucks so engines could be turned off while trucks were parked and taking other fuel efficiency measures, Wal-Mart has saved $200 million a year in fuel costs. By shrinking the packaging on everything it sells by 5%, Wal-Mart stands to save $3.4 billion a year, says Humes. And through efforts to increase recycling and reduce its waste, Wal-Mart has shrunk its bill to haul trash to landfills.
Humes spins a compelling tale of how a river guide-turned-sustainability-consultant named Jib Ellison convinced former Wal-Mart CEO Lee Scott to embark on the retailer’s sustainable journey. The result: Wal-Mart management has come to accept that acting in ways that are good for the environment is good business, too. Wal-Mart’s behavior is also reverberating far outside the halls of its Bentonville headquarters. The company partnered with outdoor clothing retailer Patagonia to form what’s called the Apparel Coalition. It has brought together apparel makers and retailers such as Nike, REI and Marks & Spencer to provide transparency on things like the toxicity of materials that go into shoes and clothing, and which dyes might be turning Chinese rivers black.
The lingering question, though, is whether all this will help Wal-Mart achieve what Humes says no other large U.S. retailer has been able to do: maintain its dominance for more than one generation. Part of the reason that Wal-Mart’s U.S. sales and its stock price have been stagnant is Wal-Mart’s image. “Wal-Mart has a generational problem. They are not cool,” Humes told me. “Moms shop at Wal-Mart. Their daughters go to Target.” Wal-Mart is hoping that becoming the leading green, sustainable retailer will, in essence, make it cool. “They want to be the greener choice for the next generation,” explained Humes.
Wal-Mart’s efforts to consume less packaging, less diesel fuel and less energy in its stores all make good common sense. But I wonder whether those steps alone can really make it cool. What do you think?