Sustainability Index reshaping the future at Walmart

Walmart held another one of its Global Sustainability Milestone Meetings on Thursday and shed new light on priorities and initiatives that promise to have far-reaching implications on suppliers as well as competitors.

The highlight of the meeting was an update on the company’s Sustainability Index which has been rolled out to 200 product categories and 1,000 suppliers with a total of 300 categories and 5,000 suppliers expected by year end, according to the company.

“We’ve reached an acceleration point where we are moving from measurement to results. We’re starting to really drive progress with the Index,” Walmart president and CEO Mike Duke said. “This is about trust and value. Using less energy, greener chemicals, fewer fertilizers and more recycled materials – all of this – is the right thing to do for the planet and it’s right for our customers and our business.”

The Sustainability Index is a measurement system Walmart created to track the environmental impact of products. Since the Index rolled out broadly to Walmart product categories in August 2012, it has shown a consistent trend of improved product sustainability, according to the company. For example, Walmart’s general merchandise department has improved its Index product sustainability score by an average of 20%, the grocery department by an average of 12% and and consumables and health and wellness by an average of 6%.

“With the Sustainability Index, Walmart is applying the science and research that we’ve developed to create a more sustainable supply chain globally,” said Kara Hurst, CEO of The Sustainability Consortium. “We’re excited about the significant progress Walmart and its suppliers are making and value their partnership with us to address big issues and drive real social and environmental change.”

As part of the progress update at the meeting, the company share details on five major initiatives underway:

•Increasing the Use of Recycled Materials. More than 29 million tons of valuable plastics are sent to landfills every year in the U.S. at a cost of about $6.6 billion annually. Walmart said it aims to grow both the supply and demand for recycled plastics so they can be diverted from landfill and get a second life. The company is working with cities to increase plastic recycling and with suppliers to increase the use of recycled content and make packaging more recyclable. Changes in packaging are already being implemented in product categories such as beverage, over-the-counter drugs, dairy creamers and berry containers.

•Offering Products with Greener Chemicals. Walmart provided an overview of its new Consumables Chemicals initiative, describing how it is working with suppliers to reduce or eliminate the use of priority chemicals used in consumables products in favor of greener alternatives. It will begin with household cleaning, personal care, beauty and cosmetic products, asking suppliers to transition to greener substitutes for priority chemicals.

•Reducing Fertilizer Use in Agriculture. Walmart is requiring suppliers who use commodity grains, such as corn, wheat and soy in their products, to develop a fertilizer optimization plan that outlines clear goals to improve performance based on Index research. Through this program, the company estimated along with its suppliers the potential exists to reduce fertilizer use on 14 million acres of farmland in the U.S. by 2020.

•Expanding the Sustainability Index to International Markets. Walmart said it will expand the Sustainability Index and measurement to international markets with the goal of improving product sustainability at the global level. Walmart Chile and Walmart Mexico will launch the Index in their respective markets in 2014. In addition, South Africa’s Massmart has begun to include key Index questions in its supplier sustainability surveys.

•Improving Energy Efficiency. The Index has uncovered the importance of energy efficiency in several product categories, such as televisions, plastic toys, small appliances and greeting cards. By working with suppliers to improve energy efficiency through the supply chain of these products, Index energy scores have already improved 23% in general merchandise categories. Walmart said it is now providing tools for suppliers to help track and reduce the energy used to produce these products.