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Corporate Social Responsibility (CSR) is an idea that corporations have to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all
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green@work : Magazine : Back Issues : May/June 2007 : Cover Story

Cover Story

Stocking Sustainable Shelves
As retail giants such as Wal-Mart and consumer product companies like Coca-Cola make strides in reducing their environmental footprints, they—and many others—are finding payoff and customer satisfaction is growing.

by Dennis Walsh

For some people, it is asking a lot to believe in a future that seems to hold so little promise. Al Gore’s movie on global warming, “An Inconvenient Truth,” leads us to believe that we can expect more storms like Hurricane Katrina because of our greenhouse-warmed world. Gore’s dire predictions of death and destruction might lead some of us to wonder if it is too late to read the labels; to do good even when it is not expected. His apocalyptic vision of smoggy skylines, gridlocked traffic and smokestacks are interspersed with crashing glaciers and storm-ravaged cities.

Most retailers are ready to paint their stores green. They know that green is good for business; it is the “right” thing to do. In order for retailers to sell green, they must buy green. Suppliers must be ready to manufacture sustainable product lines.

A growing number of companies see the interests of investors and those of the environment as closely aligned. Most of today’s environmental initiatives are not just public relations campaigns intended to fool consumers. Instead, many corporations are going green because they’ve recognized the gigantic profit opportunities in doing so—and the competitive danger of lagging behind.

Multi-billion-dollar retail giant Wal-Mart has launched an aggressive program to encourage “sustainability” of the world’s fisheries, forests and farmlands; to slash energy use and reduce waste; to push its 60,000 suppliers to produce goods that don’t harm the environment; and to urge consumers to buy green. Wal-Mart’s real environmental impact is expected to come through influencing its supply chain. Its influence will also be passed forward to its customers. Wal-Mart has direct, personal relationships with millions and millions of ordinary Americans, putting the retailer in a prime position to educate them about eco-friendly products.

A few months ago, Wal-Mart President and CEO Lee Scott unveiled “Sustainability 360”—a company-wide emphasis on sustainability extending beyond Wal-Mart’s direct environmental footprint to engage associates, suppliers, communities and customers. In describing this initiative, Scott said, “Sustainability 360 takes in our entire company — our customer base, our supplier base, our associates, the products on our shelves, the communities we serve. And we believe every business can look at sustainability in this way. In fact, in light of current environmental trends, we believe they will, and soon.”

As an example of this way of working, Scott also announced the company’s intention to introduce “global innovation projects”—one of which is a challenge for Wal-Mart associates and suppliers to start thinking about how to remove non-renewable energy from the products the company sells.

This admirable effort is not entirely altruistic. Business eco-makeovers need not be an act of altruism. Reducing waste—wasted energy, wasted packaging and wasted time—is the very essence of good management. Wal-Mart knows it can make money by selling environmentally friendly products. Wal-Mart pushes GE compact fluorescent light bulbs, and consumers are beginning to catch on. Sales across the industry are up, while sales of traditional incandescent bulbs have fallen. Spurred on by that kind of success, Wal-Mart has formed 14 sustainable value networks made up of employees, suppliers and environmentalists. These groups get together regularly to brainstorm how products that do not hurt the environment can be made or bought.

The result: Wal-Mart has become the world’s largest buyer of organic cotton. It introduced fair-trade coffee at its Sam’s Clubs. It began selling some organic foods in the spring, and will introduce others this fall. And it is pushing suppliers to use smaller packages to cut waste. From now on, if you are a manufacturer selling to Wal-Mart, you had better be thinking about smaller packaging, less packaging and recyclable packaging.

Coca-Cola, for one, has made a commitment to minimizing the ecological impact of packaging. It is described as its 3E—efficiency, effectiveness and eco-innovation—approach to design. Coca-Cola is improving packaging efficiency through eliminating raw material use, and ensuring that the materials used are safe and resourceful over their entire life. Coca-Cola designers strive to develop new environmental technologies that enable responsible packaging innovation. Perhaps nowhere has this work been more pronounced than in its efforts in plastic bottle packaging, wherein technologies continue to advance, including production of “recycling-friendly” caps, labels, inks, adhesives and bottle colors.

Downsizing a product’s package can be tricky. Packaging provides a vehicle for brand communication. It is a way to protect products from damage and contamination, and include important safety and usage information. The problem is, although the contribution of packaging to the total waste stream is small by weight, it represents a higher proportion of household waste by volume. Products are sold on store shelves by volume. Bigger packages get more shelf space and can catch consumers’ eyes better. That was the problem when Wal-Mart pushed Unilever to downsize its laundry detergents. Naturally, Unilever was reluctant to lose shelf space.

Incidentally, Unilever practices the life-cycle assessment to evaluate the potential effects of products on the environment. The company is using the knowledge gained to find additional ways to reduce overall impact from packaging and distribution across its product categories.

Wal-Mart is mapping whole product lines to find out where there may be potential for negative environmental impact along the way. Wal-Mart has developed a “Packaging Scorecard” program to gauge the progress vendors are making in reducing packaging waste and assisting in the protection of natural resources and the environment. This program is part of Wal-Mart’s initiative to reduce vendor packaging by five percent by 2013.

Subsequently, Unilever’s priorities include developing an overall strategy, mapping its packaging footprint and progressing the sustainability issues around the materials used. As these issues affect the whole consumer goods industry, Unilever works in partnership with industry and stakeholder groups like the Sustainable Packaging Coalition, a group of more than 50 companies including packaging producers, users and retailers, to explore joint action. The Sustainable Packaging Coalition is a project of GreenBlue, a nonprofit organization that provides technical, administrative and mission support to the Coalition.

GreenBlue began as a nexus of projects at McDonough Braungart Design Chemistry (MBDC), the private sustainable product and process design consultancy co-founded by American architect William McDonough and German chemist Michael Braungart in 1995. The institute stimulates the creative redesign of industry by focusing the expertise of professional communities to create practical solutions, resources and opportunities for implementing sustainability. GreenBlue uses design as a leverage point for effective action.

There is more to these corporate efforts than just being good corporate citizens and courting public approval by taking on a top-of-mind issue. There are huge cost savings as well. Being an efficient and profitable business goes hand-in-hand with being a good steward of the environment. Wal-Mart’s environmental enterprises are paying off much like the rest of its business model—in economies of scale, long-term profits and industry influence.

Retailers from specialty to chain to department store seem enthusiastic about sustainable products. Environmental impact is starting to effect consumer spending, and many marketing executives are paying attention.

Starbucks is another major corporation that has shown real leadership by demonstrating how its supply chain can be a powerful tool for conservation and sustainable livelihoods. Starbucks defines sustainability as an economically viable model that addresses the social and environmental needs of all the participants in the supply chain, from farmer to consumer. By expanding purchases through its C.A.F.E (Coffee and Farmer Equity) Practices program and paying premium prices, Starbucks is providing farmers with an important incentive to grow coffee in an environmentally friendly manner.

C.A.F.E. Practices are used to evaluate, recognize and reward producers of high-quality, sustainably grown coffee, and were developed in collaboration with Scientific Certification Systems (SCS), a third-party evaluation and certification firm. SCS has positioned itself for the coming wave of interest in sustainability through its launch of the SCS Sustainable Choice brand, the first certification program that recognizes comprehensive sustainability achievements.

Identifying standards and sustainable practices for the textile supply chain is one of many initiatives that reflect Wal-Mart’s commitment to leadership in business sustainability. The scope and scale of the company’s business presents great potential to effect positive change. Through its business sustainability program, Wal-Mart takes advantage of and creates opportunities both to influence its own operations and to lead change in the business world at large.

Wal-Mart’s efforts cast a long shadow. Corporations increasingly understand that their purchasing decisions can either enhance or detract from their socio-environmental responsibility profile. For such clients, “off the shelf” certification programs may not be the best fit, due to product availability, supplier compliance or program complexity. A new sustainability certification program for carpets and rugs introduced just two months ago is already building significant momentum, indicative of a growing drive in the green building sector to address social responsibility issues alongside environmental improvements and product performance.

The plan is to expand the SCS Sustainable Choice brand into other building industry product categories. “In every industry sector, purchasers, specifiers and consumers are increasingly demanding full accountability for the sustainability of the products they use,” said Linda Brown, SCS executive vice president. “And product manufacturers are taking notice.” Brown cited an October 2006 Financial Times magazine article that reported that more than two-thirds of chief executives of mid-sized to large companies surveyed “believe that sustainability is vital to their profitability, and more than two-thirds say it will remain a high priority.”

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