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November 19, 2007
Wal-Mart's First Sustainability Report: Just a Gesture or a Just Account?
by Anne Moore Odell
Many call the biggest retailer's sustainability report a good first step on a long road.
SocialFunds.com --
When Wal-Mart (ticker: WMT) talks,
people listen, whether they agree with the message or not. Two years after Wal-Mart CEO Lee Scott
announced the company's environmental goals in his "Twenty-First Century Leadership" speech, last
week Wal-Mart released a report of its progress, "Sustainability Progress to date, 2007-2008." Full
of figures and charts, it covers many sustainability issues from health care coverage and green
products to Wal-Mart's giving in local communities to supply chain safety.
 Wal-Mart set three ambitious goals as announced in
Scott's speech: to be supplied 100% by renewable energy; to create zero waste; and to sell products
that sustain natural resources and the environment.
David Tovar, Wal-Mart Stores' Director
of Media Relations, explained to Socialfunds.com: "We look at this report as an important first
step to make our sustainability efforts known. Our efforts have been extensive and we are committed
to reaching our goals."
"We view our sustainability work as a journey that provides value
to our consumers. We know there are challenges that remain, but we are committed to transparency
and making this information available to the public as we work toward our goals," Tovar added.
The report traces Wal-Mart's commitment to sustainability, from consumer to employee, from
manufacturer to storefront. The report reads: "We have found that there is no conflict between our
business model of everyday low costs and everyday low prices and being a more sustainable business.
To make sustainability sustainable at Wal-Mart, we've made it live inside our business. Many of our
environmental sustainability efforts, for example, mean cost savings for us, our suppliers and our
customers."
Wal-Mart's Tovar explained that Wal-Mart plans to keep stakeholders updated on
sustainability with additions to Wal-Mart's web site. No future sustainability report is in the
works currently. Wal-Mart will continue, however, to publish its annual "Report on Ethical Sourcing," which it
has made available for the past three years.
Here are some of the numbers the report
supplies: In 14 worldwide markets, Wal-Mart has 7,022 stores with 1,900,000 employees. It reports
$344,992,000,000 in revenues for 2006-2007. In the US, the average full-time hourly wage in
2006-2007 was $10.76. Almost nine thousand factories were audited during this period, with 40% of
the factories receiving high-risk violations. During 2006-2007, $500 million was invested annually
to help meet sustainability goals.
One area highlighted in the employee section of the
report is Wal-Mart's commitment to extend health care to all its Associates (i.e., employees).
Wal-Mart reports that healthcare is available to all its employees, full and part time and their
children, with more than 90% of its workers having health care (albeit not all covered by Wal-Mart
plans).
Of the employees that have Wal-Mart health care for the first time, 53% had no
health care before, 27% said they couldn't afford health care coverage and 7.8% said that they were
on Medicaid.
The report notes: "The fact remains that 9.6 percent of Associates say they
do not have any coverage at all. That's too many. So perhaps one of our greatest challenges is to
better understand why this 9.6 percent decline coverage and what we can do to encourage them to
choose it."
The response to the Wal-Mart report has been mixed. Most groups applaud
Wal-Mart for a step in the right direction and ask it to continue working toward its goals.
"As the only environmental group with an office in Bentonville, Environmental Defense knows
that Wal-Mart is serious about its sustainability program," said Gwen Ruta, Director of Corporate
Partnerships at Environmental
Defense, a non-profit environmental rights group which helped review drafts of the report. "The
company is moving in the right direction, and learning as it goes," she added.
The Big Box Collaborative, a coalition of
shareholder activists, environmental, and labor right groups that works to transform large
retailers, in particular Wal-Mart, was more cutting in its response to the report: "Wal-Mart
continues to give anecdotes with few facts about their systemic change and impact," said Trina
Tocco, Coordinator for the Big Box Collaborative.
"It is disturbing to think that even
all of changes Wal-Mart purports, they still aren't able to decrease their impact overall because
of their unsustainable growth model. This report covers quite a bit of info, but yet doesn't
provide enough in depth detail," Tocco continued.
The Interfaith Center on Corporate
Responsibility (ICCR) released a statement on
the sustainability report. The ICCR has filed a shareholder resolution at Wal-Mart for the past
three years requesting Wal-Mart issue a public sustainability report.
"We welcome
Wal-Mart's Report as a first step. It demonstrates a commitment by the Company to both develop
internal mechanisms for implementation and to be transparent with respect to its sustainability
initiatives," ICCR's statement reads.
"It is clear that this first Report demonstrates
progress particularly toward the environmental goals that President and CEO Lee Scott articulated
two years ago. We recognize that collecting information on key indicators for environmental goals
is less difficult than attending to social performance indicators, but without social indicators,
the Report pales," ICCR's statement continues.
Environmental Defense offers some specific
examples of how they would like Wal-Mart to provide "more transparency, context and a more
systematic assessment of progress relative to environmental goals." Environmental Defense suggests
Wal-Mart offer more data to help the reader verify all the information in the report.
"Because everything is happening so fast," Tovar explained, "we are going to post
sustainability information as it is available. We are being as transparent as possible."
The report is a first stab at creating a sustainability report that sheds light on the largest
retailer in the world. And just like Wal-Mart starting to offer florescent light bulbs, even the
small changes at Wal-Mart can have a profound rippling effect through its vast supply chain and the
economy. Wal-Mart now needs to continue its journey into sustainability, continuing its commitment
to its consumers, shareholders and other stakeholders to create a safe supply chain and meet its
environmental and social goals.
Editor's note: Bill Baue, a frequent writer for
SocialFunds.com, contributed to the writing of the Wal-Mart sustainability report.
©
SRI World Group, Inc. All Rights Reserved.
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