Wal-Mart’s Sustainability Milestone Meeting

It caught me off guard, even though I should have expected it. Seated in the front row of the Sam Walton auditorium, Lee Scott pacing in front of the room with a cordless microphone, dressed in grays and blacks, mock turtleneck, frequently adjusting his glasses, he waves everyone in the room to their feet. I may have been the only one in the room that didn’t know the cheer. My momentary anxiety relieved when I realized that it was pretty easy to learn! I didn’t know that the Sam’s Club cheer always follows the Wal-Mart cheer.

The quarterly Milestone meeting is the public place that punctuates the progress of Wal-Marts sustainability initiative. The turn out for Wal-Mart associates was low, seats were empty. Lee noticed. The senior management team was out in full force. From the infamous Susan Chambers, to the Doug McMillan, President of Sam’s Club, the CFO, and the head of Global Purchasing.

From cynics to cautious fans

Later that night at the hotel bar with a collection of mostly former Wal-Mart haters, turned to cautious fans, from Adam Werback, former Sierra Club President, Greenpeace International Board member and now President of Act Now, a Wal-Mart service provider, to Gene Kahn, founder of Cascadian Farms, now Vice President Sustainable Development at General Mills, veteran sustainability insider Jim Hartzfield, from Interface carpet, representatives from Environmental Defense, As You So, and the Environmental Health Coalition and lastly fellow SVN member, Wal-Mart supplier and the person mostly responsible for my first meeting with Lee Scott – Aaron Lamstein from Worldwise – pet products. We had gathered to watch the mid-term election returns, but the bar was to noisy to hear much and all I could see was Fox news that had decided to turn their election coverage to a sporting event drawing football like diagrams that seems to suggest that it was all just a game.

I was exuberated. Not only was I at the center of the most interesting convergence of business, the environment, corporate responsibility, labor, health care and god knows what else, but the improbable Jolly Green Giant (Wal-Mart) was gaining traction, and sending shivers into it’s supply chain as it collected fans from those who had probably sworn never to step foot into a Wal-Mart store, let alone their world headquarters.

When people ask me what I’m doing there I pause trying to find a way to explain my presence. I am not a supplier, I am not a paid consultant, I do not represent an NGO. But I am a friend, informal advisor, critique, occasional cheerleader and bridge between the belly of the beast and it’s most adamant disbeliveers.

A year ago I entertained audiences by encouraging fellow cynics to join the fight against the best and biggest example of bad business. The best, most successful, worlds largest corporation that had figured out how to brilliantly escape responsibility for it’s devastating impact on people, communities, small businesses and the environment.

I no longer lead that cheer. Yesterday, viewing some organic cotton running shirts sold at Wal-Mart for $11.99, I contemplated a shopping trip. In the end I resisted. I guess I’m not quite ready for one of to final steps into the belly of the beast – becoming a customer, and a supplier.

Back at the ranch

Halfway into the Milestone meeting a middle-aged woman, from a family of 16, many of whom were Wal-Mart employees, told the story of how she was inspired to take responsibility for her own health and the health of the planet with very simple steps. There was a spirit of hope and possibility I had not expected to find.

Asked by the President of Sam’s club what management needed to do better to support her, she said she had a long list. He politely suggested she would need to choose only one thing. But he couldn’t really stop her. Turns out that she was hired by Sam Walton, and encouraged into the Wal-Mart family as a path to lifelong career development. Aside from mentioning that she was overworked and underpaid, she asked him why Sam’s Club employees could purchase in the employee cafeteria a gigantic slice of pizza and a soda larger than you bladder could hold for $2.60, while a salad and bottle of water costs $5.00. For me that was the best moment of the day. He said he didn’t know, but would look into it.

I understand he did that very day and prices were lowered on salads and water nationwide in time for lunch the following day. I also heard that in a private conversation following the presentation she challenged management on the salary caps that prevented her from ever making more money. Sam would never have done that! She even asked if management had caps on their salaries – knowing full well that they did not.

That level of candor, self-reflection and criticism was not what I expected to find. It is an essential and positive part of a culture that needs to build upon these basics to create the next generation of Wal-Mart associates, associates who can not only understand company strategy well enough to ensure they ate carrying it out, but to build upon it, improve it and add value to it. That is a tall order, one that requires a process that has yet to begin.

Well, back to Lee. Sales are not good; in fact they are pretty terrible. Lee discusses how in the past that means they would have sent store associates home before 11:00am to save money. “We don’t do that anymore.”

Lee believes Wal-Mart can deliver sustainability with out a premium price for their customers. “Better quality at the same price. Less cost, less returns. Even if business is not good, we will not cut back on out sustainability efforts because they are good for business. We are ahead of where I hoped we would be on our sustainability efforts, even though most people have done nothing, we have been propelled forward by the great efforts of a few.” Doug McMillan adds that “sustainability can make Wal-Mart a cool place.”

Knowing just how bad business has been, I am impressed! Bill Ford walked away from his environmental commitments in the face of less pressure. Many business still see sustainability as a “nice” thing to do, Lee see it as essential to his corporate strategy.

The details

Compact fluorescent light bulbs are symbolic of sustainability’s dual promise of environmental responsibility and economic benefits. By the end of 2007 Wal-Mart aims to sell 100 million bulbs, that will generate $3 billion in electricity savings for their customers, avoid the consumption of 22 billion bounds of coal and eliminate 45 billion pounds of green house gasses. They are selling these bulbs with an impress in-store display that educates their customers on the products benefits. You can even go on-line and link in to their interactive energy saving calculator.

The structure of the rest of the four-hour meeting brings each of 14 sustainability teams or “networks” as they are called into an imaginary five-minute elevator ride with a Wal-Mart senior manager. Each team is challenged with telling their story and asking for specific additional management support. The teams are inconsistent in their presentations. With out coaching for their uneven performance it’s not surprising. With out any clear mandate from management that specifies process and expectations the results range from exciting to unclear.

So what are they up to? The Global Greenhouse Network has determined Wal-Mart’s carbon footprint to be 19 million metric tons. The Global Logistics & Supply Chain Network will save $29 million in 06 and $33 million in 07 from efficiency initiatives. The CFO wants to know what that means in earnings per share. The Waste, Operations & Internal Procurement Network has found more money; $60 million in reduced 06 waste disposal costs. The Textiles Network will sell $90 million in “alternative” fibers; these include organic cotton, bamboo and others. But they echo a common complaint – there’s not enough support from marketing to communicate the product benefits to customers.

It not just about organics

The Food & Agriculture Network tells the audience it’s not all about organics. That’s good since Wal-Marts organic sales have not met expectations. It’s about local, supply chain efficiencies and less waste. But what about just getting customers to eat healthier. Gene Kahn, founder of Cascadian Farms, now head of Sustainability at Kellogg had offered a different critique of organics that evening. At less than 1% of all food consumed it will take a long time till organics impact the diet of most Americans and even longer till than can afford it. We need to focus he said on producing healthier food and educating Americans on the benefits of healthier choices. I think about Hannaford’s nutritional rating system and hope that it’s on Wal-Marts radar screen.

The Pulp & Paper Network disappoints me. They highlight how they soon won’t be selling multi-packs of paper towels in individually wrapped rolls. Wow, why would anyone even do that? They talk about high sheet counts after having supported the industries move to less and less sheets per roll. No mention of recycled content! No mention of chlorine bleaching!

I’m impressed with the Jewelry Network. They are tapped into issues of traceability and sustainable mining. They are networking with the industry from Tiffany to Zayles.

The Chemical Intensive Products Network – to include household cleaners and pesticides proudly announces that they are looking at phasing out three chemicals (Propoxur, Permethrin and NPEs (Nonyl Phenol Ethoxylates) from the products they sell. The problem is why did they select these three. In a press release the previous week they failed to explain the process or criteria that led to the selection of these three. They may be great choices, even though they wouldn’t be at the top of my list. With out greater transparency on the process I worried where this is all headed.

In conclusion
Linda Dilman, the new Executive Vice President of Sustainability, Health and Wellness announces that sustainability initiatives will begin to appear on everyone’s evaluation! Good move. Jim Ellis, of Blue Sky Consulting and the architect of much of Wal-Mart’s sustainability efforts challenges every one by ending with “you’re not thinking big enough,” and we need to move away “from compartmentalizing social issues” away from thinking about sustainability.”

Lee reminds everyone “sustainability is a business initiative and a business imperative. Sustainability will provide you with the leadership and cross functional experience critical to the future of Wal-Mart leaders.”

I am exhilarated. I am witnessing the Jolly Green Giant bend down and pick daisies rather than run blindly across the field crushing frogs. I am hopeful, glad to have come and ready to provide any and all with advice.