Wal-Mart’s Greening the Supply Chain, Why?

There was a lot of news a week ago based on Wal-Mart’s announcement of Global Responsible Sourcing.  Here is Wal-Mart’s press release.

Wal-Mart Announces Global Responsible Sourcing Initiative at China Summit

Company sets new goals and greater expectations for environmental and social compliance, transparency and accountability

Beijing, China – Oct. 22, 2008 – Today, Wal-Mart Stores, Inc. (NYSE: WMT) took the next step in its sustainability journey by hosting an unprecedented gathering of more than 1,000 leading suppliers, Chinese officials and NGOs in Beijing, China. The company outlined a series of aggressive goals and expectations to build a more environmentally and socially responsible global supply chain.

"Sustainability is about building a better business. We think it is essential to our future success as a retailer -- and to meeting the expectations of customers," said Lee Scott, president and CEO of Wal-Mart Stores, Inc. "Maintaining the trust of our customers -- today and in the future -- is tied hand-in-hand with improving the quality of our supplier factories and their products."

The company will focus on areas aimed at meeting or exceeding social and environmental standards, driving innovation and efficiency and building stronger partnerships with suppliers, government and NGOs.

Wal-Mart makes a point of labor and ethics.

Scott continued, "I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and chemicals in our rivers, that does not pay its taxes or honor its contracts -- will ultimately cheat on the quality of its products. And cheating on the quality of products is the same as cheating on customers. We will not tolerate that at Wal-Mart."

And discusses the Green aspect.

Wal-Mart also announced a major effort to make Wal-Mart China a leader in sustainability in China by committing to make its stores more sustainable. The company will design and open a new store prototype that uses 40 percent less energy and will reduce energy use at existing stores by 30 percent by 2010. In addition, during the next two years, Wal-Mart China will aim to cut water use in all of its stores in half by investing in new hardware and systems and developing best practices that will help its associates and stores use water more efficiently.

The company also pledged to bring more environmentally sustainable products to its store shelves.

Outlining the steps Wal-Mart will take to become the most environmentally responsible retailer in China, Wal-Mart China President and CEO Ed Chan addressed the need for collaboration between Wal-Mart, the company’s suppliers and the Chinese government. "Few challenges in our world today are more pressing than protecting the environment and, in China, Wal-Mart has a unique opportunity to lead," said Chan. "With the world’s largest population, and a robust manufacturing industry, no market presents a greater opportunity for environmental sustainability to take hold than China."

Newsweek covers with a blog post.

Wal-Mart's New Push to Green China

Mary Hennock

As the world economy sags, the world's largest retailer is looking for new ways of reducing both costs and environmental impact—and arguing that the two can go hand-in-hand. At its "Sustainability Summit" in Beijing Wednesday, Wal-Mart announced the launch of a new set of stringent environmental standards, energy reduction targets and ethical compliance procedures that will apply initially to its thousands of suppliers in China and eventually to all suppliers. The company kicked off the day-long summit, attended by more than 600 of its suppliers, by spelling out ambitious targets that, if implemented, have the potential to make a significant impact. The goal is to set new standards for responsible sourcing in its global supply chain and create a model of best practice in China. The main points:
Environmental efficiency: The top 200 factories that supply Wal-Mart must improve energy efficiency by 20 percent by 2012, while China's 113 Wal-Mart stores must cut energy use by 30 percent and halve water use in all stores by 2010, and get suppliers to reduce packaging by five percent by 2013.
Stricter enforcement of ethical standards: All new suppliers must pledge to comply with local labor and environmental laws (existing suppliers already face an audit that checks such things). By 2012 direct suppliers must source 95 percent of their production from factories with high social and environmental audit scores.

But why?

Is it all financial as WSJ says?

“Some people’s primary concern will be what will this do to cost?” Mr. Scott said. “But when we rolled out our sustainability initiative at Wal-Mart we found that eliminating waste, downsizing packaging and improving transportation fuel efficiency led to a whole lot of savings.”

Then a friend who works with ISO, mentioned ISO 26000. I know most of your are not familiar with ISO 26000 as it is in working draft, but I believe this is going to be big, and so does ISO management.  Here is executive summary.

Sustainable business for organizations means not only providing products and services that satisfy the customer, and doing so without jeopardizing the environment, but also operating in a socially responsible manner. Pressure to do so comes from customers, consumers, governments, associations and the public at large. At the same time, far-sighted organizational leaders recognize that lasting success must be built on credible business practices and the prevention of such activities as fraudulent accounting and labour exploitation.

ISO 26000 is targeted at Wal-Mart’s past, but if Wal-Mart can change fast enough to be a Socially Responsible Retailer it has a competitive advantage. And, it has the purchasing power to drive a standard like ISO 26000.  ISO 26000 principles have a lot in common with Wal-Mart’s press announcement.

Why is this important for a Green Data Center? Because ISO 26000 will help set a standard of what is a Green/Socially Responsible Data Center around the world.

You can count on Wal-Mart changing their data centers to be socially responsible abiding by ISO 26000 guidelines. They are changing their stores, physical and on-line.