Wal-Mart (WMT) will force its suppliers to provide detailed information about the environmental impact of each product it sells in the coming years.
The story was first reported by The Big Money yesterday and has since been written about all over.
The program will force suppliers to look at greenhouse gases emitted at each step along the way of producing a product. Wal-Mart will be sending out questionaires to its suppliers next month, to assess the difficulty of the program. Then, in the next two to three years, labels about the “sustainability” of products will appear on Wal-Mart goods. The preliminary reports indicate that the extra cost of figuring out all this data will be passed along to the consumer.
We’re a little puzzled by the move. Is it possible Wal-Mart is doing this out of the goodness of its heart?
The Big Money says Wal-Mart wants to help consumers wade through all the “green washing.” Basically, Wal-Mart is being a Samaritan, helping customers figure out when a company is lying about the environment.
That’s certainly going to be the overt message that will be passed along–Wal-Mart, concerned about the environment!– but there is also a subtext that Wal-Mart probably thinks its suppliers are inefficient.
Reuters has the press release announcing the news. In it, Wal-Mart says labelling the products will show “how measuring sustainability can drive innovation in the supply chain and in products consumers purchase.” Wal-Mart has been successful improving its efficiency. Presumably, getting suppliers to assess their own practices will have a similar affect.
Maybe it’s a combination of those two, or this could just be a big head fake from Wal-Mart. Keith Johnson at Environmental Capital notes Wal-Mart’s persistent growth means its emissions are growing, despite its environmental initiatives. To be fair, emissions per sale are falling. Still, environmentalists aren’t typically big Wal-Mart boosters, this move could change that.
One other possibility thrown out by the Journal is Wal-Mart wants to get ahead of any potential government mandate to disclose emissions. By setting up the system now, Wal-Mart won’t be under the thumb of government when new regulations roll around.
Regardless of the reason, it’s an big move by a powerful company. And it will change the supply chain and customer’s perspectives.
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