I was invited to speak at the Forbes Ethisphere Conference in New York last week – an intimate “roundtable” style conference hosted by Steve Forbes and Forbes Magazine. The event was focused on business ethics, CSR and sustainability and attracted CEOs and senior executives from a wide array of companies ranging from Waste Management and Kelloggs to Pepsi and Mattel. I spoke about sustainable supply chains, and in particular the trends we’re witnessing around large enterprises using their leverage to enforce compliance, ethical and social responsibility standards upstream to their suppliers.
During Q&A following my session a number of the questions and comments involved Wal Mart. It dawned on me that this has been happening a lot lately. I have spent much of the last six weeks on the road and it seems wherever I go people ask me what I think about Wal Mart and their efforts in the sustainability arena. It’s interesting — people and companies seem simultaneously inspired by Wal Mart and strangely made anxious by them. Why is that?
After pondering Wal Mart’s role for a bit (I’ve had plenty of time on planes) I’ve concluded three things:
1) The sheer breadth Wal Mart’s efforts is capturing people’s attention. I think what fascinates people about Wal Mart is the sheer number of initiatives they are not just working on, but taking the lead on. Off the top of my head I can count the following initiatives: green buildings, trucking/fuel conservation/logistics optimization, carbon footprinting, sustainable packaging, sustainable agriculture, recycling, ethical sourcing, waste management, sustainable seafood, and employee sustainability education. That is pretty impressive by any standard, particularly given most of the initiatives are voluntary rather than regulated, and there are many more initiatives I am missing.
2) The notion that Wal Mart will require certain standards and enforce compliance around sustainability practices and policies is often daunting to firms in their supply chain. The firm’s leverage with suppliers is legendary, and the notion that this leverage might be employed to enforce sustainability standards upstream is potentially world-changing. And while Wal Mart’s suppliers do include small firms, it’s the big companies that stand to be the most impacted. When Wal Mart begins mandating standards upstream to firms like Anheuser Busch, Clorox, Unilever, and Kraft there is serious potential change afoot. But that change can breed uncertainty as well, and this can be daunting or intimidating to suppliers.
3) Wal Mart makes competitors anxious. If you are Target, Sears, K-Mart, or Costco you are probably watching Wal Mart these days and wondering if all of their investment in sustainability efforts, not to mention their marketing of those efforts, will result in increased market share and further competitive advantage. This causes some anxiety as competitors consider whether to wait and see what happens, to be fast followers, or to strike out on their own course. What is certain however is that most retailers today are engaged in the sustainability discussion and either acting or planning action. I give Wal Mart big credit for a lot of that “forward motion.”
So there you have it…I think these are the three main reasons people are so intrigued by Wal Mart, and why I keep getting asked “So….what about Wal Mart?” In a nutshell the answer is summed up by one word: leadership. Leaders by their very nature push the envelope and show a willingness to experiment with a wide variety of initiatives and strategies in the search for those that truly work. The breadth of Wal Mart’s efforts on sustainability shows that they understand that this risk taking mentality is an implicit characteristic of leadership, and from my purview they do seem to be “walking the walk.”