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Supply Chain News: Walmart to Pressure Suppliers to Reduce CO2 Emissions by a Gigaton by 2030


Latest Move in Effort that Started with Sustainability Index for Suppliers in 2009

April 25, 2017
SCDigest Editorial Staff

Walmart has made significant progress in reducing its own CO2 emissions, but says to really have an impact it must drive more change in its extended supply chain.

That means putting pressure on thousands of suppliers - from the largest consumer goods companies potentially down to almost mom and pop operations - to reduce their CO2 emissions too.

Supply Chain Digest Says...

Many of Walmart's vendors, such as Procter & Gamble, Unilever and many others, already have their own aggressive CO2 reduction programs, so how those will reconciled remains to be seen.

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"We've made progress in our own operations, but this is taking us deeper into our supply chain,” Laura Phillips, Walmart's senior vice president for sustainability, told Bloomberg last week. "We need our top suppliers to take more action.”

Walmart is calling the initiative Project Gigaton because that's how many metric tons of CO2 it wants eliminate from its total supply chain by 2030. A gigaton is equal to one billion metric tons. If achieved, that would be equivalent to taking more than 211 million passenger vehicles off the road for a year, Walmart said.

Hitting that gigaton reduction target would be quite an achievement indeed. The entire global carbon emissions from fossil fuel use in 2014 was 9.75 gigatons, or only about 10 times Walmart's reduction goal.

The gigaton target represents quite an advance from Walmart's previous goal to eliminate 20 million metric tons of emissions by the end of 2015, which it surpassed.

Walmart has identified six areas where suppliers can focus their clean energy efforts: agriculture, waste, packaging, deforestation, and product use and design. At an event last week at Walmart's Bentonville, AR headquarters, HP unveiled a printer that uses 30% less energy while in sleep mode, and cereal maker Kellogg Co. said it could save $30 million by reducing waste 15% by 2020.

Walmart is telling suppliers they will save money as they reduce their CO2 emissions.

Of course, in 2009 Walmart released what is called its Sustainability Index, in which suppliers and products - mostly through self-grading - are scored on their sustainability, based on a framework tailored for different product categories. The approach was developed in conjunction with an organization called The Sustainability Consortium, which led the creation of the category-specific assessment systems.

Some 1300 Walmart suppliers are said to be subject to the index, and over the years Walmart has put systems in place to better ensure its buyers are considering index scores when making procurement decisions.

In 2015, Walmart began highlighting companies that scored on the index as "sustainability leaders," dedicating a new section of its website to explaining the designation. More than 3,000 products are marked with the "Sustainability Leaders" badge on the Walmart site, though the company has not shared much information on how if at all that impacts consumer buying behavior.

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So how does this new program change things?

"What's new is that we are convening our partners in a way that's going to create a great moment of accountability and action. We've been working on pieces of this, but we haven't packaged it all together into one program that made it easy for others to interact with us, and we haven't shared it all," Phillips said.

As part of this new program, Walmart is launching an on-line toolkit for suppliers to help them consider ways to reduce the environmental impact of their operations and products. As an example of Walmart's thinking, it suggested apparel vendors might come up with ways to make their goods washable in cold water.

Walmart is describing the toolkit as a "a digital resource center” with array of materials, videos and other information that Walmart has been developing for almost a decade, all finally put in one place. They are designed to help suppliers really just getting started, as well as sharing how Walmart overcame different sustainability challenges for more advanced vendors, with materials for everyone in-between.

"We are initially working with 250 of our top global suppliers, working across multiple product categories like food, personal care products, toys, electronics and apparel," Phillips told the web site, adding that "Our goal is to have as many suppliers as want to join in. This is a big tent and there is a part for everyone to play."

Walmart expects its vendors to voluntarily join its Project Gigaton efforts. How will vendors that don't jump in the boat be handled? That isn't yet clear, but SCDigest assumes there will be consequences.

Of course, many of Walmart's vendors, such as Procter & Gamble, Unilever and many others, already have their own aggressive CO2 reduction programs, so how those will reconciled remains to be seen.

What do you think of Project Gigaton? Let us know your thoughts at the Feedback section below.


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