The Intersection: Jun 2011

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Sustainability: The Wal-Mart and GE Model

Six years ago, former Wal-Mart CEO H. Lee Scott Jr. launched a massive environmental sustainability campaign with two main goals: improve Wal-Mart’s bottom line and enhance its reputation. Scott was quoted in an interview as saying, “It wasn’t a matter of telling our story better. We had to create a better story.”

You have to give Wal-Mart credit. Since 2006, it has created a better story that resonates with the American public. Five years ago, Wal-Mart was under fire from multiple environmental groups. A McKinsey & Company report published in 2004 found that between two and eight percent of Wal-Mart’s customers had stopped going to their local Supercenter because of the negative press they had heard about the chain.

Contrast that negative portrait with Wal-Mart’s corporate sustainability image in 2011. Today, Wal-Mart works with leading environmental nonprofits like the Environmental Defense Fund. This organization has set up shop at the company’s headquarters in Bentonville, Arkansas to help Wal-Mart launch several environmental commitments, including a goal to eliminate 20 million metric tons of greenhouse gas emissions from its global supply chain. Wal-Mart has also joined with First Lady Michelle Obama to sell fresh produce and healthy foods in its stores.

While Wal-Mart has effectively used sustainability to enhance its corporate reputation, its impressive results have also enabled the company to cut costs and increase sales, as well as maintain its leadership in an extremely competitive retail environment.

  • Since 2007, Wal-Mart has reduced plastic bag waste globally by nearly 50 million pounds, approximately 3.5 billion plastic bags.
  • In 2006, Wal-Mart made a commitment to sell 100 million compact fluorescent light bulbs by the end of 2007. The company sold 137 million bulbs during this time, and to date has sold more than 466 million.
  • As part of its vehicle fleet efficiency efforts in 2010, Wal-Mart delivered 57 million more cases of products while driving 49 million fewer miles. This figure equates to avoiding almost 40,000 metric tons of CO2 emissions, the equivalent of taking 7,600 cars off the road.

    While Wal-Mart does not share specific cost-savings information associated with its environmental sustainability efforts, this figure is estimated to exceed several hundred million dollars.

    Wal-Mart is certainly not the only company that views sustainability as a revenue driver. GE’s Ecomagination initiative is more than just those warm, fuzzy, inspirational ads you see on TV; it’s a core business strategy for GE. In 2010 Ecomagination products, such as smart meters and electric car charging stations, rang up revenues of $18 billion for the company. According to GE Chairman and CEO Jeff Immelt, “Ecomagination is a competitive force for growth across GE’s businesses.”

    Sustainability efforts from companies like Wal-Mart and GE have already paid dividends today, and are likely to have an even greater impact on future growth as corporations prepare for rising oil prices and commodity scarcities. Though not every company has the size, reach and resources that Wal-Mart and GE have at their disposal to support large-scale environmental sustainability efforts, all companies need to consider their sustainability initiatives. A commitment to environmental sustainability can help companies reduce costs, drive profits, enhance corporate reputations, and provide a competitive advantage.

    For more information about how VOX helps companies develop and communicate sustainable business practices, check out the recently-launched VOX Elements of Sustainability chart on our website.

    Alex Hahn

    Senior Partner

    \ [email protected].com