Why is Walmart a sustainability leader?

12/14/2017 10:52 am ET Updated Dec 18, 2017

It’s been almost 13 years since Walmart set out on its quest to become a leader in sustainability. After a long journey, the retail powerhouse’s sustainability initiatives are having a real impact today. The company has strategically used its scale to its advantage to enact change within as well as outside the organization.

I recently had the pleasure to talk to Katherine Neebe, Director of Sustainability at Walmart. Katherine and I chatted about various interesting topics including her career at Walmart, the fight against climate change, consumers’ preferences, project Gigaton etc.

Read on to better understand why is Walmart leading in sustainability today.

1. What inspired you to work in sustainability at Walmart?

I’ve been working in sustainability for about 18 years. I got my start back in 2000 when people were still debating what sustainability meant, and when a company that was a vanguard of sustainability was doing something like lighting retrofits. It was just the dawn of corporate social responsibility. I remember walking into the grocery store and seeing the “Will Walmart save the world?” magazine cover when Lee Scott announced Walmart’s next generation of sustainability work way back in 2005, and I thought “yes, exactly, this is all I am trying to do with my life.” And it was a beacon of hope for me.

About four and a half years ago, an opportunity opened up at Walmart. Philosophically, the chance to work at scale is how you can have a tremendous impact on the world, and I just jumped at the opportunity.

2. Walmart is known for low prices. Now, the company is being recognized as a leader on the fight against climate change. Are these two things “philosophically” compatible?

Yes, and more to the point, they have to be compatible. Our mission at Walmart is to save people money so that they can live better. The live better piece of that equation is really sentimental to our value proposition. I think we feel collectively that climate change is an urgent challenge and there is some potential risk to our business, to our customers, to our associates, to the value chain. So, taking action on climate change goes hand in hand with good business. And it has to be good for the customer and good for the bottom line.

There are two points that I talk about when it comes to “why is sustainability and action on climate change really important, and how can it be good for business?” From a brass tack standpoint, the efficiency gains that you get through programs like energy efficiency and operating a smarter, better system, result in some real financial savings. I also think there’s something about innovation – all of us collectively are trying to solve these really hairy problems, and we need to think critically and innovate to figure out how we can start to address and solve them. It brings a new way of thinking about your business, how you’re reaching your customers, how you’re working with your associates, how you’re working across your value chain – it just really brings a new way of thinking.

What I would say specifically on climate, and our work on renewables for example, is that we certainly benefit from our size and scale in that we can create some really interesting renewable energy deals. We’ve been able to source renewable energy at or below traditional brown power prices. In our recent work to double fleet efficiency, which was a 2015 achievement, we not only doubled our fleet’s fuel efficiency, but we saved a billion dollars. That’s real money. And we also pulled about 650,000 metrics tons of CO2 out of the atmosphere. Those to me are great examples of where we’re really able to take action on climate change, but also work to meet the needs of the business today.

3. Where can Walmart have the biggest impact as a corporation?

What I like about that question is that in my mind, it’s a bit of a broader question. Before I joined Walmart, I was at the World Wildlife Fund, and I ran a big partnership with Coca-Cola. The two questions that WWF always liked to ask any new corporations (and it’s a philosophy that I’ve brought into Walmart and I would suggest to any practitioner) are 1.) What is the company big to, and 2.) What is big to the company?

I will say the advantage for Walmart is that we're one of the largest companies in the world and our supply chain, and more broadly the value chain and the value chain ecosystem that we operate in, is enormous. The opportunity for us to work throughout the value chain and have an impact is tremendous. We’re also the world’s largest grocer, so for us, focusing in on food makes a lot of sense. We look at food loss and waste throughout the supply chain – today, one out of every three food calories doesn’t make it to consumption throughout the supply chain and that to me is an inefficiency that suggests there is a cost and a value that we’re losing throughout the system. From a Walmart standpoint, there’s an opportunity to address food loss and waste in a way that delivers value to our business and also addresses some fundamental challenges in the world, such as hunger, including domestic hunger, another area of opportunity for us.

4. Are you seeing an increased demand for products with social and environmental impact from your consumers?

It's a bit of a mixed bag. What I’ll say is that yes, customers want to buy products that they can feel really good about. The language that they use to talk about products that they feel good about typically includes words like “safe” and “healthy,” and they want to shop at stores that they trust. I think that within those words – safe, healthy, trust – that’s where environmental sustainability comes into play. But as a sustainability community, we’ve “geeked out” a bit with our terminology. I think there is an opportunity to rethink and reframe our work to address some of these challenges while meeting the needs of the consumer using language that resonates with them. I think that’s really critical.

The other thing that I’ll say, which is a little philosophical, is that we at Walmart feel really strongly that a customer shouldn’t have to choose between a “good product” and a “bad product.” Everything that they buy is good. So it’s this idea of democratizing sustainability so that anyone can go into a Walmart, buy a product, and feel good about that purchase. And we’re up against some real challenges. We all know that the value chain and supply chain can be problematic in areas, so we need to work through improvements and work through the top areas of risk – to drive continuous improvement, to halt bad practices and to encourage better practices. And the tool that we’ve used to help bring some rigor to bear on the challenge is something called the Sustainability Index. This is an outgrowth of some of the work that Environmental Defense Fund did along with the Sustainability Consortium, to identify areas of opportunity in the value chain, and for us to work hand in hand with our suppliers to address and unwind.

5. Walmart has teamed with the Environmental Defense Fund on Project Gigaton, which will reduce a gigaton of greenhouse gas emissions from your supply chain by 2030. Can you tell us a bit more about this project?

Minor point of clarification – Project Gigaton has more than one NGO involved, including the World Wildlife Fund, TSE, Sustainability Consortium, CDP, who we’ve worked with to shape the program.

Two years ago, I was in Paris for the discussions that led to the Paris Agreement, in which we announced our intention to set a science based target for greenhouse gases emissions reduction. Last November, our CEO Doug clarified what those ambitions were and what we were driving towards in terms of the science based target, which was an 18% absolute reduction for scope 1 and 2 by 2025, and a gigaton of greenhouse gas out of the supply chain by 2030. What excites me about this work is that we have had UNFCCC say “this is the kind of ambition at scale that the whole world – governments, individuals, the private sector – need to be aiming towards to alleviate the worst impacts of climate change.” At Walmart, we are a very big company, trying to do a lot of work within our own operations, but we also know that a lot of the impact of our business is in the value chain. What is exciting to me about our work on Project Gigaton and science based targets more broadly is that we have signed up for what scientists have told us is necessary – we’re doing our part to address climate change, but we’re also focusing on trying to inspire action throughout the value chain. Not only from some of the big players out there that have been working on climate for many years, but also some of the other folks in the value chain who may just be at the beginning of their journey and for whom the first step is sometimes the most critical.

One of the other things that I’m excited about is that there is a focus within Project Gigaton on energy and emissions, but we really opened the door for a lot of different actions by other suppliers. It’s not only energy and emissions, but also waste, packaging, deforestation and products – for example, “what can a customer put in their home that is more energy efficient?” We’re giving a landing pad for a lot of different companies and organizations to sign up and take action on climate change.

6. When you look back at Walmart’s accomplishments, what are you most proud of?

It’s a tricky question for me because I tend to take a macro view of the world and quite honestly, we’re expecting 9 billion people on the planet by 2050 and we’re in a climate change world. I know weather is not the same thing as climate change, but we’ve had a particularly terrible year from a natural disasters standpoint. I think that the work we’re doing is critically important. I will be really proud when we start to see the fruition of things like Project Gigaton, and Midwest Crop Collaborative, which are really oriented around goals that scientists are setting around what is required to see an impact on the planet and on people’s lives. I think that we all collectively – not just Walmart or industry more broadly, but civil society and the political community – have a lot of challenges ahead and we must work together to address what those challenges are, identify what the solutions are, and work together to start to unwind them.

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