Walmart’s Sustainability Strategy

Case Summary: Walmart’s Sustainability Strategy

Qingyun Zeng

Walmart is a world famous company.  It is the world's largest company by revenue, as well as the biggest private employer in the world with 2.2 million employees.  After the company grew in size, more and more people began to be concerned about the huge impact that the company brings to our society and to the environment.  For example, every Walmart shopping plaza consumes an average of 1.5 million kWh of electricity per year.  Such a large use of energy had a negative influence on Walmart’s reputation with regard to sustainability.  Therefore, in 2007, Walmart launched a new business strategy to meet three environmental goals set by former CEO Lee Scott: (1) to be supplied 100 percent by renewable energy; (2) to create zero waste; and (3) to sell products that sustain people and the environment as mentioned in the article.

What the article did not mention is that in 2005, Lee Scott invested $5 billion on sustainability projects and put forward the following three goals in an internal meeting: (1) In the next 3 years, Walmart would enhance the efficiency of its transportation fleet by 25%, and double it in 10 years; (2) Reduce the stores’ operational energy consumption by 30%; and (3) Reduce the US stores’ waste by 25% in 3 years.

I believe Scott’s first goal is a very smart and direct strategy to help the company’s overall sustainability.  Since Walmart owns their own fleet, this will make this goal easier to manage.  Secondly, Walmart built large distribution centers and stores that made the cost of transporting their items low.  Thirdly, I think it is important for Walmart to optimize its routes for transport by using the traffic management system to determine the best route.  The nearest way may not be the best way, and sometimes a longer road route is a better choice.  Walmart also leased their fleet to some third-party companies, so that the fleet would not return empty.  And vehicle communication can help the company track their assets, and ensure that drivers travel on designated routes.  Fourth, the Walmart fleet used mixed fuel and electricity instead of fossil fuels.  By doing these things, Walmart has basically completed the first goal.  

Concerning the supply chain aspect, Walmart changed its own selling items to achieve and enhance its sustainability.  Specifically, changes were made in many areas such as seafood, fluorescent light bulbs and electrical equipment – these were mentioned in the article.  By doing this, the change that Walmart can create through its own products is huge.  It promotes the change of the product structure in market.  Walmart could also influence the manufacturing industry to produce sustainability items because of its powerful buyer market.

Walmart’s sustainability strategy not only happens on its own, but it also happens in the way it chooses the suppliers.  With its 15 questions to suppliers, Walmart can evaluate the sustainability situation, and choose the best supplier.  Because the company is powerful, it will not worry that some suppliers will not cooperate.  Experience also proves that suppliers who drive sustainability also tend to be the same suppliers who are bringing the most innovative products.  Walmart enforces its sustainability strategy by choosing the right supplier, and textiles are a good example to consider.  Instead of buying organic cotton directly from farmers, Walmart delegated relationships management with the farmers to its suppliers, and focused on selling sustainable finished merchandise.