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Are Larger Changes Cheaper than Small Steps?

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At the Clinton Global Initiative (CGI), Wal-Mart announced its latest environmental goal: a one-third reduction in plastic bag waste by 2013. The company estimates that it will keep 9.5 billion plastic shopping bags out of the waste stream. As with all things Wal-Mart, the scale is impressive.

I was at the event and watched Matt Kistler, Wal-Mart's sustainability exec, make the announcement, one of a number of "commitments" at CGI. (That's the way CGI works -- you make a sizable commitment to a sustainability goal, take a picture with Bill, then report back a year or so later on progress -- while corny at times, it's the most effective approach I've seen at conferences aimed at getting real action.)

President Clinton is generally impressed with what Wal-Mart is doing and made one observation so interesting I jotted it down: "Wal-Mart is a genius at taking bite-sized chunks of problems so that it adds up to breathtaking changes."

I would agree that Wal-Mart has done more than almost any company in terms of plugging away at sustainability. Constant goals and pressure on suppliers and internal line managers have kept sustainability metrics moving in the right direction. But to play devil's advocate for a minute, is it all enough?

When the very significant dust settles from the financial meltdown and recession, most of the environmental pressures we all face will still be there. So are we moving fast enough? More importantly, are incremental changes actually the best route? I'm generally a fan of doing something now and getting moving. But I found myself thinking at the Wal-Mart announcement about much larger goals. Instead of targeting one-third of plastic waste by 2013, why not eliminate all plastic bags by then, or eliminate half by next year? It's been done before. IKEA put a small charge (a nickel) on bags and then eliminated them in one year in multiple countries.

In many cases, a much larger goal may actually cost less. I'm riffing on the idea from Natural Capitalism (Lovins, Lovins, and Hawken) of "tunneling through the cost barrier." The example they often use is designing a house for cooling and heating - if you use the triple-paned windows, position the building right, over-insulate, and so on, you may spend more on each of those items. But, if the holistic design keeps the building at a constant temperature and you don't need a giant heating and cooling system, then the total cost of building and operating may drop substantially.

In the case of bags, Wal-Mart and other retailers are setting up recycling programs in stores. The efforts strike me as a bit onerous and expensive. It seems possible that going for a much larger change - through, for example, an IKEA-like charge to signal to customers the behavior change desired, or a Whole-Foods-like rebate for bringing your own bag - may actually save a ton of money and effort. It may be counterintuitive that a larger initiative could be cheaper, but it's worth pursuing. Of course charging customers has some downsides, but Wal-Mart could make the shift more palatable by funneling proceeds to good causes in the community. And it's not like Wal-Mart is shy about very large initiatives (see my last piece on the company's new China mandates).

All that said, given what's going on in the world, incremental approaches have their merits. They let you experiment and see what's working. And at least they keep things moving. In this economic climate, every company will be questioning every initiative and investment, so if biting off a smaller chunk makes it more palatable, so be it. When the economy recovers and resource prices and constraints become problematic again, the leanest companies who have made green progress during the slowdown will do very well. But even in tight times it's important to remember that a systematic approach, while scarier at times (we're going to charge customers for bags?!), could be a better strategic, operational, and financial choice.

This post first appeared at Harvard Business Online.

Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.

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