Wal-Mart Unveils Supplier Sustainability Index

Wall Street Journal (7/17, Bustillo) – Wal-Mart Stores Inc. unveiled an environmental labeling program for the products it carries, in a step that could redefine the design and makeup of consumer goods sold around the globe but also boost costs for suppliers and customers. Wal-Mart Thursday will tell suppliers they must calculate and disclose the full environmental costs of making their products, then allow Wal-Mart to distill the information into a rating system that shoppers will see alongside prices for everything from T-shirts to televisions… The company's goal is to build what it terms a comprehensive sustainability index that measures the environmental impact of each product Wal-Mart sells. For example, an index might flag how much each contributes to global warming and if it contains wood harvested in ways that deplete natural stocks.

Consumers are not likely to see the first labels for years. The company estimated it could take a half decade or longer, although outside experts involved in the project said it could start sooner, perhaps as early as 2011…Wal-Mart insisted there will be no exemptions. Asked what relationship Wal-Mart would maintain with suppliers that don't supply the data, Chief Merchandising Officer John Fleming said bluntly, "We probably don't have one."

New York Times (7/16, Rosenbloom) – Procter & Gamble said sharing the new sustainability index across the industry was important. “The last thing a supplier really wants is when you’re doing a separate index for every retailer,” said Tim Marrin, associate director of external relations for Procter & Gamble. “Wal-Mart has invited the Targets, the Costcos, the Tescos of the world,” he said, “to come up with a solution so that there are not 5, 10, 15, 20 different standards that retailers are implementing in their markets.”

But creating a single set of measurements for the entire retailing industry will be complicated. For one thing, some suppliers have concerns about their proprietary information. And environmentally sustainable production and distribution methods will not necessarily be cheap. “The first question is always, ‘It’s going to cost more,’ ” John E. Fleming, Wal-Mart’s chief merchandising officer, said in an interview this week. “But you know, I think we’ve demonstrated time and time again, if you reduce packaging, if you reduce energy, the costs go down.”

For more information, go to: Wal-Mart Sustainability Announcement & Questions for Suppliers

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