Guardian US Live Chat Recap: EDF, Walmart and Marc Gunther Evaluate the Sustainability Index

Last week, EDF Managing Director Elizabeth Sturcken joined Jeff Rice, Walmart’s director of sustainability, and Marc Gunther for a live chat broadcast on the Guardian US Sustainable Business Blog.

The discussion focused on Walmart’s Sustainability Index, which aims to set a sustainability standard for products by evaluating the company’s suppliers. With over 100,000 suppliers across the globe, this is quite the massive undertaking for the world’s largest retailer.

EDF’s Elizabeth Sturcken, who has spent seven years driving such sustainability initiatives within Walmart, offered her praise for the Index’s potential, commented on some progressive initiatives already underway and challenged Walmart to make specific improvements to the index, such as increased transparency. Some of the most interesting bits of dialogue are pasted below. The full transcript is available here.

DEFINING EDF’S WORK WITH WALMART

Marc Gunther:

Thanks for joining us. I'm joined by Elizabeth Sturcken of Environmental Defense Fund. Elizabeth, tell us, please, about the work EDF is doing with Walmart and its suppliers and why?

Elizabeth Sturcken:

Thanks Marc. I'm really excited to be a part of this conversation.

Environmental Defense Fund is a leading national non-profit that partners with businesses to create solutions to environmental challenges. We have a 25-year track record of changing the way business does business by proving that good environmental strategy is good business. EDF partners with leading companies to find the "win-win" for the environment and business.

We've been working with Walmart for seven years. Bottom line is that we steer Walmart toward a sustainable supply chain and healthier products.

EVALUATING WALMART’S SUSTAINABILITY INDEX

Marc Gunther:

Elizabeth, in your estimation, how is Walmart doing? Start by telling us where they've made progress. Then we can talk about the work still to be done.

Elizabeth Sturcken:

I'd like to point out that EDF sees very clearly the power of influencing a world-wide supply chain by working with the number one retailer. It's why we're the only environmental group that has an office in Bentonville, AR, where Walmart is headquartered.

Marc Gunther:

Cool, but what gains have you seen?

Elizabeth Sturcken:

Well the Sustainability Index is a massive undertaking. It's the mechanism for Walmart to drive sustainability into the business. And because of that, it will take time to drive the transformational change we'd like to see.

But I'm hopeful on a number of fronts.

Elizabeth Sturcken:

So, some context: Beginning this year, Walmart is using The Sustainability Index to influence the design of its U.S. private brand products and requiring its buyers to set specific sustainability objectives that will be tied to their annual reviews.

Walmart is the first retailer to do so.

As I understand it, by the end of 2017, Walmart will buy 70 percent of the goods it sells in U.S. stores and U.S. Sam’s Clubs from suppliers who use The Sustainability Index to evaluate and share the sustainability of products.

Elizabeth Sturcken:

One example: We did some analysis, thanks to The Sustainability Consortium, that fertilizer use is responsible for nearly half of Walmart’s carbon footprint in its supply chain. And because Walmart is the largest grocer in the US, agriculture presents massive opportunity for the company to advance sustainability.

Because of this opportunity that fertilizer presents in terms of lower greenhouse gases and water quality, EDF has spent years working with farmers to optimize fertilizer use on farms, saving the farmer money and reducing environmental impacts.

At Walmart’s Milestone meeting last month, they announced commitments from 15 suppliers to encourage better fertilizer use in their supply chain. These changes will touch more than 30 percent of food and beverage sales in North America. That’s huge.

We estimate that this effort could avoid seven million metric tons of greenhouse gases by the agriculture initiatives discussed today, in addition to improving waterways and soil health.

Marc Gunther:

That's a big deal–thanks, Elizabeth. Now I have a tough question for you.

Elizabeth Sturcken:

Ok good!

SUGGESTING AREAS FOR IMPROVEMENT

Marc Gunther:

I'm going to challenge you to prove your independence! Where is Walmart's work with the index falling short? Jeff, you'll have a chance to respond.

Elizabeth Sturcken:

Yes, while The Sustainability Index has powerful potential to drive change across Walmart's business, there are some things that I'd like to see change:

We want to see Walmart take it to the next level on this work and we believe that the way to get there is transparency so the questions that suppliers are asked and the results are clear to anyone.

Also, it's not clear how suppliers are going to be rewarded for efforts on sustainability or if there are any repercussions for them doing nothing or very little.

I think transparency would help with concerns that I have about the measurability of the Index. There is no baseline and it is not measurable in a big-picture way right now. The data is from suppliers and is not independently verified.

Finally — and this is critical Marc — without big goals, like Walmart’s 20MMT greenhouse gas goal, there is no way to hold Walmart accountable. We won't know if the metrics meaningful. Are the KPIs the right ones and will they drive what we want to see? We need a way to get a number of different buyers across the business all working toward driving a change that's bigger than their product category alone.

Marc Gunther:

Elizabeth, those are great observations. And I think you have ably demonstrated that EDF is willing to ask tough questions!

Elizabeth Sturcken:

Sorry for the long post. While I think the Index is a powerful tool, to reach its potential, I think we have to keep at it and keep working to improve it.

Marc Gunther:

Jeff, when you have a chance, please respond to the question about transparency. Can Walmart be more public about what it is hearing from suppliers–creating a friendly competition between leaders and laggards that we can all follow?

Jeff Rice:

Hi Mark – our customers have increasing expectations for transparency, as do many of our other stakeholders. We believe engaging customers with this information will allow us to highlight and reward sustainability leaders and increase engagement and accelerate progress in our supply chain.

Marc Gunther:

So, Jeff, are you saying that Walmart hopes to be more open and share the information it is getting from suppliers? Or am I misreading your answer?

Jeff Rice:

Over time, yes. We are still in the process of rolling the Index out to all of our product categories internally, which is the first step. And as Elizabeth said, we need to find efficient ways to assure quality of the responses and the data.

EXPLORING WALMART’S WASTE REDUCTION INITIATIVES

Marc Gunther:

Thanks, Elizabeth. I've got a broader question for both of you. US consumers are cycling through an ever larger volume of clothing, electronics, appliances, etc., creating significant upstream and downstream pollution. This is good for Walmart sales but not good for the planet. Should the company push its suppliers to make more durable products?

Elizabeth Sturcken:

In one sense, you're pointing to the Achilles heel of Walmart's business model, which requires selling more stuff every year. One way to get to sustainability is to sell more durable goods. But another is to loop those goods back into the cycle of production at the end of their life in a way that is net-environmentally positive.

Walmart is working on just this with some pilots from its Zero Waste team and the recycled content announcement for packaging made at its recent Milestone Meeting.

It's a small but important start to this big issue.

Marc Gunther:

Elizabeth, if you can, elaborate on what Walmart is doing regarding  Zero Waste or recycled content for packaging. I know our readers are very interested in the notion of the "circular economy."

Elizabeth Sturcken:

Walmart has gotten 81% of the way to its Zero Waste goal. It is now looking at innovative technologies (that don't involve waste-to-energy) for the remaining bit. It's pushing the edge of the envelope in this area and now we need to get it implemented and scaled.

Jeff Rice:

Yes, we are increasing durability. One way to begin to address that is to ensure more products are reused and recycled. We're working to make our products and packaging easier to recycle. Two great examples are our work on recycled plastic and our cell phone trade-in program, which was launched last month.

Marc Gunther:

OK, Elizabeth, you're talking about Zero Waste in Walmart stores–which is important.

Do you see any signs that the company is working on reducing waste from the products it sells? The cell phone take-back program that Jeff mentioned is one example. Any others?

Elizabeth Sturcken:

On the recycled content announcement, I'm pleased to see that they are taking a "systems approach" asking suppliers to increase the postconsumer recycled content of their packaging while also minimizing materials that can't be easily recycled.

At the same time they are trying to address infrastructure issues by working with municipalities.

There's a lot of work to be done, but it's an exciting possible way to a circular system.

Elizabeth Sturcken:

I think it's made sense for Walmart to start with its own operations, but you're right, the big opportunity is with suppliers. I think they've made good progress on the packaging front, but I think the next step is products themselves.

Jeff Rice:

Sure Mark. We’re seeing a lot of innovations in our products and packaging.

One great example is Sparkle Girls Dolls in our toy business. Our supplier came up with an innovative cone package that reduced product cost by over 16% and eliminated 15.7 tons of plastic and over 4 tons of cardboard.

And there are a lot of packaging innovations like that. But we’re also working on a broad program to increase recycled plastic in our products and packaging. In this program, we’re first working to increase the amount of recycled plastic available. We’re working with suppliers to improve the recyclability of our packaging and partnering with cities to increase collection of materials.

We’re also increasing the use of recycled plastic in our supply chain. By working to increase supply of material and ensuring there is a market for that material by increasing demand, we can help optimize the system and bring down the cost of recycled plastic across the industry.

CLOSING THOUGHTS

Marc Gunther:

Thanks, Jeff and Elizabeth. I'm sorry to say that we are just about out of time. I will explore ways to keep this conversation going–maybe on the Guardian Sustainable Business website. Do each of you want to offer a brief closing thought?

Jeff Rice:

Thanks Marc, it's been great to share our progress with the Index. As we've always said, we can't do this without great partnerships and collaborations. Everyone has a role to play in building sustainability into the way they do business. Working with organizations like EDF, collaborating with partners through The Sustainability Consortium and engaging our broad network of suppliers, we're making a difference together.

Elizabeth Sturcken:

Thanks Marc. It's good to "talk" to you!

We've worked hard with Walmart for seven years and have seen some great results. But, there's a lot more work to be done to truly achieve a sustainable world. We believe there's no more powerful way to do that than by working with the world's largest corporation. Asking tough questions like these help us continue to strive to make progress.