Thursday, March 13, 2008

Retail Memo: Wal-Mart CEO Lee Scott to Conference Attendees: 'We Are Not Green'

Wal-Mart CEO Lee Scott, who has spent a great deal of his executive time the last few years touting the Bentonville, Arkansas-based mega-retailer's environmental initiatives, policies and commitments, told a group of people this morning at the ECO:nomics conference in Goleta, California that "We (Wal-Mart) are not green."

Scott, in response to a question by a conference participant, who asked the Wal-Mart chief how he could reconcile why the international retailer's carbon emissions were continuing to grow despite his stated commitment to reduce the chain's carbon footprint, declared flatly: "Wal-Mart is trying (to reduce it's carbon footprint), but we also need to grow at the same time." Scott further added: "I haven't a clue," when asked when he thought Wal-Mart would meet his goal of having zero waste and 100% renewable energy-powered stores and other operations over time.

Scott didn't elaborate on or further define what he means when he says "We (Wal-Mart) are not green. But we accept him at his word that the retailer is not a "green" retailer, despite the fact that much of its policy initiatives and environmental activity over the past few years seemed to indicate that was the message the world's largest company and retailer was attempting to convey to the investing, selling and consuming world.

But, to Scott's credit in terms of consistency, we've heard him make similar statements at more than one conference in the last two years. We have never heard Scott claim Wal-Mart is "green." Rather, we have heard him say it's his goal to be a better company from an environmental perspective. But, again, the green retailing implication has always been there in the company's initiatives and public relations activities--so Scott's words and Wal-Mart's corporate green policy and messaging are somewhat in conflict in our analysis.

At this morning's conference, Scott did say he believes Wal-Mart is making great strides to be a "greener" company and retailer. (Maybe that's why he says Wal-Mart isn't green? Rather, maybe he believes it's a work in progress? That is more honest. It's also safer of course. Perhaps all of the company's PR materials should carry CEO Scott's "We are not green" statement as a disclaimer from now on?)

Scott talked about the company's green packaging vendor initiative designed to reduce the amounts of plastic and cardboard in the products Wal-Mart buys from its thousands of suppliers. The retailer has introduced an environmental packaging scorecard in which its vendors will have to eventually reduce the amount of plastics and cardboard in the products they sell to Wal-Mart by at least 25%. Scott also said the retailer is looking particularly hard at ways to reduce the amount of plastic that goes into producing a bottle of bottled water.

Towards the end of Scott's talk he gave a clearer idea as to what he meant by his "We (Wal-Mart) are not green" statement. He told the conference attendees the primary motivation behind all of the retailer's environmental initiatives "isn't just to please environmentalists, but more to save money."

"It really is about how you take cost out, which is waste. The (cost) savings by taking out wasted material helps keep prices low for Wal-Mart customers, many who live paycheck to paycheck," Scott added.

He said contrary to what some people might think, the current economic downturn in the United States is actually serving as an incentive which is prodding Wal-Mart to accelerate its waste reduction program and similar environmental initiatives designed to cut waste and thus take costs out of the system.

Some conference participants and journalists were surprised by Scott's candid statement that We are not green," along with his flatly-stated premise that the bottom line is the bottom line.

We aren't surprised however. We have suggested all along in piece after piece here at Natural~Specialty Foods Memo that Scott's, and thus Wal-Mart's, bottom line in terms of its green retailing initiatives and policies has been just that: the company's bottom line. That's what public companies in a free-market economy do; they try to maximize profit and attempt to keep all of their stakeholders as happy as they can.

We have further argued we would much rather have Wal-Mart aggressively pursuing positive environmental initiatives as part of its corporate bottom line than not. Further, we argue the retailer has a major responsibility to do so as the world's (and United States') largest corporation and retailer. And, if you do a search on the blog, you will see we have been extremely critical of Wal-Mart at times.

We've also been positive in the main about the retailer's environmental initiatives, although we have called for (and continue to do so) Wal-Mart to lead more, which they started doing last year. We've also suggested strongly there is no going back in terms of green issues for the retailer.

We believe it's imperative though that Wal-Mart better figure out a way to reduce its carbon footprint as it continues to grow. CEO Scott knows very well achieving both goals are not mutually exclusive, despite eluding a bit to such a false dichotomy in one of his answers this morning at the environment and economics conference.

So, Lee Scott's "We are not green" and corporate bottom line primacy statements neither surprise us nor do they make us think the retailer is merely engaging in greenwashing. We do strongly suggest though that a failure to keep walking the green walk after having come this far--and rather relying on public relations to carry the day from here on out--will likely result in a serious backlash against Wal-Mart from many of its stakeholders.

Not only would that be sad from an environmental perspective--it also would have a negative impact on the mega-retailer's corporate bottom line. Being green is now a line item on every corporate CEO's P&L statement, which is something Lee Scott knows. Right Mr. Scott?

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