The Verdant 360 Blog

It’s hard not dwell on the importance of Walmart’s announcement this week. I have not previously devoted three straight posts to the same topic, but I do feel that it is potentially the most significant approach to sustainable business practices we have seen to date. Walmart’s global reach and purchasing clout are unparallelled in the retail space. It has over 100,000 suppliers. For this reason alone any announcement around sustainability is important, but when you combine it with an actionable request (albeit voluntary) to complete a survey by a target date (in this case, October for U.S. based suppliers) and all of a sudden it forces a whole bunch of people to evaluate their sustainability positions.

Broken into four sections, the survey appears simple at first glance and some of the questions are fairly opened ended, but the sum of the survey, is that it requires an examination of sustainability practices and will allow for comparisons that were not previously possible. In this blog post  I will list the questions by section. In subsequent posts I will examine the survey on a section by section basis.

Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions
1. Have you measured your corporate greenhouse gas emissions?
2. Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?
3. What is your total annual greenhouse gas emissions reported in the most recent year measured?
4. Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets?

Material Efficiency: Reducing Waste and Enhancing Quality
1. If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Walmart for the most recent year measured.
2. Have you set publicly available solid waste reduction targets? If yes, what are those targets?
3. If measured, please report total water use from facilities that produce your product(s) for Walmart for the most recent year measured.
4. Have you set publicly available water use reduction targets? If yes, what are those targets?

Natural Resources: Producing High Quality, Responsibly Sourced Raw Materials

1. Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?

2. Have you obtained 3rd party certifications for any of the products that you sell to Walmart?
People and Community: Ensuring Responsible and Ethical Production
1. Do you know the location of 100 percent of the facilities that produce your product(s)?
2. Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of, and capacity for, production?
3. Do you have a process for managing social compliance at the manufacturing level?
4. Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?
5. Do you invest in community development activities in the markets you source from and/or operate within?

15 questions, simple enough, but when we dive into them by section in subsequent posts, you will see the answers may not be that simple.

-FR

Corporate Social Responsibility, Supply Chain, Sustainability, Uncategorized GHG's, Sustainability, Sustainable business practices, Wal-mart, Walmart, Walmart's Sustainability Index

Leave it to Walmart to up the ante. Today the world’s largest retailer released a statement that should catch everyone’s attention. They have announced plans to create a product sustainability index that will eventually (they believe) be included on all products that are sold in Walmart stores. According to Walmart the index will give consumers a single source of data for the evaluation and comparison of a product’s sustainability. It reinforces Walmart’s commitment to leadership in the area’s of both sustainability and corporate social responsibility.

According to Mike Duke, Walmart’s President and CEO:

Customers want products that are more efficient, that last longer and perform better. And increasingly they want information about the entire lifecycle of a product so they can feel good about buying it. They want to know that the materials in the product are safe, that it was made well and that it was produced in a responsible way.

We do not see this as a trend that will fade. Higher customer expectations are a permanent part of the future.

At Walmart, we’re working to make sustainability sustainable, so that it’s a priority in good times and in the tough times. An important part of that is developing the tools to help enable sustainable consumption.

The Walmart plan calls for a 3 phase approach to the development and implementation of the index. The first step is creation of a survey (sounds a little like the Verdant 360) that will ask questions around 4 areas.

1. Energy and Climate
2. Material Efficiency
3. Natural Resources
4. People and Community

Walmart will be asking it’s over 100,000 suppliers to respond to the survey. It is asking it’s U.S. base suppliers to respond by October of this year.

The second phase will be to create a consortium of universities to collaborate with suppliers, retailers, NGO’s and governments to create a global database of information of the cradle to grave impact of the products that are sold in Walmart stores. They intend to engage a software company create an open platform to power the index.

The Third and final phase will be to translate the data captured in phase two into a standard that informs consumers about the sustainability of products.

This is how the statement was reported in bloomberg.com today,

Wal-Mart’s unilateral decision to put its purchasing and communication power behind going green also shows that a single company using its unique clout can accelerate public action to reduce greenhouse gases and reverse climate change. By rolling out an environmental labeling program disclosing to consumers the environmental costs of making products sold at Wal-Mart, the $401 billion retail behemoth has transformed green standards from nice-to-have to must-have.

We will be discussing this for some time to come.

-Fred

Corporate Social Responsibility, Supply Chain, Sustainability Add new tag, Corporate Social Responsibility, supply chain sustainability, Walmart

The question of the ROI of sustainability is often talked about but not examined nearly as closely as it should be. Yesterday I was at a lunch seminar put on by Corporate Responsibility Officer (CRO) Magazine, Responsible & Sustainable Communications in the Age of Brand Risks. CRO Publisher Jay Whitehead moderated a very informative discussion between Mark Comolli of the Rainforest Alliance and Guy Boucher VP Sustainability at Domtar Paper. The discussion centered around Domtar’s efforts to effectively position their brand as a market leader in the development of sustainable paper sourcing through chain of custody certifications, primarily FSC Certification and Rainforest Alliance certification. In particular it focused on the collaboration between two organization that at first to have divergent interests

A lively discussion took place when the question of ROI was brought up during the question and answer period, and it is clear that ROI is on every-one’s mind. As company’s weigh the costs and associated benefits from the implementation of an effective sustainability strategy, I sense there is still feeling among many that sustainability is high cost low reward scenario. That may be changing, and it should be changing. The challenge is in demonstrating that there are direct ROI benefits from an effectively implemented sustainability strategy.

Interestingly, yesterday morning I received via my RSS feed the following report from the Aberdeen Group, The ROI of Sustainability: Making the Business Case. I highly recommend that you read it. Their research based on interviews with of 200 enterprises came up will the following conclusions.

Using six key performance indicators to distinguish Best-In-Class companies they found that those BIC companies achieved a 6% to 10% reduction in costs while making strides in in retaining customers.

Best-in Class-Performance

• 9% reduction in carbon footprint
• 6% reduction in energy costs
• 7% reduction in facilities costs
• 7% reduction in transportation/logistics costs
• 16% increase in customer retention

The survey showed that the companies identified as Best-In-Class shared the following characteristics:

Competitive Maturity Assessment

• The Best in Class are 52% more likely to incorporate sustainability metrics into value chain performance management
• 74& of the Best-In-Class have an organization wide sustainability policy compared to 58% of all others

The report also highlighted the need d to track, measure and communicate sustainability progress, successes, challenges and areas of opportunity.

-FR

Carbon Footprint, Corporate Social Responsibility, Supply Chain, Sustainability, Uncategorized Carbon Footprint, Chain of Custody, FSC Certification, Sustainability, The Rainforest Alliance

One of the challenges in creating and implementing an effective sustainability plan, is the question of metrics. Sustainability, indeed the whole concept of corporate social responsibility, is becoming increasingly important to businesses. From the standpoint of shareholder interest, customer perception and even into HR area areas such as employee satisfaction and recruiting, more and more companies are investing in their corporate social responsibility efforts.

There are few ways of measuring, quantifying and reporting, in a meaningful way, sustainability or corporate social responsibility data. This is changing, as we now have effective carbon and environmental footprint calculators that effectively track and measure footprint data inside and organization and along it’s supply chain as well. Measuring, quantifying and reporting more intangible aspects such as employee community participation, employee environmental awareness, and corporate environmental governance can be more challenging.

A good place to start is the GRI (Global Reporting Initiative), which has developed a framework for reporting that can be used by organizations regardless of size, location or sector. The GRI is a multi-stakeholder governed institution collaborating to provide the gobal standards in sustainability reporting. It was conceived by the Boston-based non-profit CERES in 1997, the UNEP (United Nations Environmental Programme joined as a partner in 1999. In 2001 the GRI became a sperate institution. It released it’s first guidelines in 2000, in 2006 it released the 3rd revision of the guidlines. The following is directly from the GRI website:

Sustainability reports based on the GRI framework can be used to benchmark organizational performance with respect to laws, norms, codes, performance standards and voluntary initiatives; demonstrate organizational commitment to sustainable development; and compare organizational performance over time.

By utilizing guidelines such as the GRI, companies and their stakeholders can have a useful comparative tool that can allow them to better monitor, measure and communicate their position. If we are going to effectively transition to a sustainable economy based on accountability, accuracy and transparency ,tools such as these will be a necessary component.

-FR

Corporate Social Responsibility, Sustainability Carbon Footprint, CERES, Corporate Social Responsibility, GRI, Sustainability, UNEP

I attended the Clinton Global Initiative event, Global Challenges Corporate Solutions: Creating Value for Business and Society, this past Monday. Co-hosted by The Economist  the event was held at the Sheraton Conference Center in New York City. The event opened with a Plenary Session, at which the 42nd President, Bill Clinton spoke as well as participated in a panel discussion on the importance of cross-sector engagement in addressing global financial, social and environmental challenges.  The discussion was centered on the role that corporations and foundations can play in addressing these challenges given the new realities of the economic crisis. One thing that was clear from the discussion was that sustainability is fundamentally important to both the industrial and developing world, and that is critically important that we look at a sustainable future that addresses the needs on the world’s entire population.  To that end corporate social responsibility must address the needs all it’s stakeholders from an economic, environmental and social standpoint. Speaking specifically of climate change President Clinton stated,

“We are not going to win the climate change battle till we prove it is economically feasible to do so.”-President Bill Clinton

The rest of the panel, moderated by The Economist’s New York Bureau Chief Mathew Bishop, Richard Kaufamn CEO of Good Energy, and included John Podesta Co-Chairman of the Obama transition team, Judith Rodin President of The Rockefeller Foundation, and Reggie Van Lee SVP of Booz Allen Hamilton focused on their organizations efforts in conjunction with the Clinton Global Initiative to bring about positive social and environmental change.  John Podesta spoke of the need to develop partnerships as we transition from a high-carbon to a low-carbon economy.  He felt very strongly that the Obama administration was committed to developing theses sorts of partnerships.  Mr. Van Lee felt that because the global issues were so interdependent and complex there was a necessity to create a new taxonomy that could optimize the outcome as opposed to maximizing the outcome.

In closing his introductory remarks President Clinton spoke to the need for engagement and  accountability, if we are to survive the current economic crisis and build the kind of world we all believe is possible.

We have to have a world of shared opportunities and shared responsibilities-President Bill Clinton

-FR

Corporate Social Responsibility, Sustainability Bill Clinton, climate change, corpororate social responsibility, Sustainability, The Clinton Global Initiative

…according to Mindy Lubber, President of Ceres, who was speaking about sustainability at MIT’s Sustainability Summit last week. Ms. Lubber was a member of a panel entitled “How do we progress towards sustainability during  a recession.” It was clear from her point of view as well as the other members of the panel, Michael Wise, Partner at A.T. Kearney  and Wayne Balta Vice President of Corporate Environmental Affairs at IBM that sustainability is an imperative even given the current economic climate. Discussing the impact of global warming to the governments and businesses Lubber stated, ” The costs of ignoring climate change will make sub-prime look like child’s play.”

The cost of ignoring climate change will make sub-prime look like child’s play.

The conference held at M.I.T’s Sloan School of Business, brought together students, engineers, business leaders, academics, environmental activists, and public servants and focused on real world challenges we face in moving to a sustainable world. Discussions ranged from corporate social responsibility to climate change at the macro level, to the most effective way to interact with local government officials  and historic preservation as a sustainable business practice on the local level.

The other members of her panel were as emphatic as Lubber in their points of view that business cannot afford to let the current business climate prevent them form implementing sustainable business plans. Mr. Wise who was one of the authors of the “Green Winners” report (cited in my February 11th post) spoke to the driver for implementing an effective sustainability plans which include competitive advantage, innovation and risk management. He said that the pace of environmentally related business change has accelerated to a degree that many top corporations are running scenario analysis’ and war games to identify the risk potential  environmental issues may place to their businesses.

Wayne Balta, who rounded out the panel spoke to IBM’s “Smarter Planet” campaign and he clearly believes that IBM has embarked on an initiative which converges traditional IT infrastructure and applications with sustainable business practices. He stated that because of the following factors there is an opportunity for technology to bring about change in the environmental and corporate social responsibility arenas. The factors he listed were:

• Devices are becoming vastly instrumented
• They are becoming interconnected
• Because of this they are becoming more intelligent.

These intelligent devices allow businesses to better measure the environmental footprint of their businesses. Mirroring what Mindy Lubber said earlier in the program. “What can be measured, can be managed.”

-FR

Corporate Social Responsibility, Sustainability climate change, Corporate Social Responsibility, green winners, M.I.T., Mindy Lubber, Sloan School of Business, Sustainability