isramart llc: Walmart prods suppliers to cut carbon

www.isra-mart.com

The largest retailer in the US has provided details on how it hopes to cut 20m tonnes of CO2 emissions from its supply chain in five years

Walmart has published a 54-page document with guidance for its 100,000 suppliers on how to quantify carbon in the lifecycles of their products and submit proposals for sustainability projects.

This follows its announcement in February of a target to cut 20m tonnes of carbon emissions from its supply chain by 2015. The amount is roughly equal to its entire direct carbon footprint for 2008.

Walmart said that in making the document public it hopes to share best practice with other companies and attract constructive criticism.

Its supply chain strategy is the result of its collaboration with the non-profit organisation Environmental Defense Fund (EDF) and consultancies ClearCarbon and PriceWaterhouseCoopers. All three organisations will continue to assist, especially in the task of assuring carbon reduction claims.

EDF’s managing director of corporate partnerships Elizabeth Sturcken described the scheme as “the missing link in Walmart’s sustainability agenda”.

In order for a supplier’s project to qualify as part of the scheme to cut emissions, they have to demonstrate a potential carbon reduction at any stage in a product’s lifecycle. This includes the sourcing of raw materials, manufacturing, packaging, distribution, customer use and end-of-life disposal.

As well as comparing the potential savings with a business-as-usual projection, suppliers must show that the project would not have come about without Walmart’s influence. This will enable Walmart to claim that any savings are attributable in some measure to its own actions.

A central aim of the scheme is to prioritise the biggest opportunities for carbon reduction. Initial work will focus on a list of 20 high impact product categories, which include frozen food, vegetables, fruit, animal feed and meat.

The product categories were selected by researchers at the Applied Sustainability Centre at the University of Arkansas on the basis of their carbon intensity and volume of sales. Some products, such as bread, clothing and pork, were chosen not because they emit a lot of carbon but because they sell in large enough quantities to add up to a big difference.

Walmart already researches its supply chain through its Supplier Sustainability Assessment, a questionnaire it sends to all suppliers. It is also working with the Sustainability Consortium on a Sustainable Product Index, a global database of information on the lifecycles of products that it will use as the basis for customer-facing tools such as carbon labelling.

Walmart has expressed a belief that the resultant cost savings will provide the impetus for it to meet its target. When it was announced, Jim Stanway, Walmart’s senior director of global supplier initiatives, said: “We’re certainly not going to be asking suppliers to do anything other than reduce those emissions and also reduce the costs … so it’s a rational economic discussion at the end of the day.”

Paul Simpson, chief operating office at Carbon Disclosure Project (CDP), said Walmart’s supply chain emissions are likely to be around 80% of the chain’s entire carbon footprint.

Large companies’ growing interest in their supply chains is demonstrated by the membership of the CDP Supply Chain Program, which is currently at 50. It provides a reporting tool for companies to track their suppliers’ progress in becoming more sustainable.

The CDP Supply Chain Report 2010 was based on the responses of 1,402 suppliers, representing a 51% response rate. Simpson said: “Big companies are trying to evaluate suppliers on their (sustainability) performance and over time that will become a criteria on which they choose which suppliers to buy from”.

Although Walmart’s plans do not mention any disadvantage to suppliers who do not strive to reduce emissions, Simpson believes there is already a strong business case for suppliers to take heed.

In the latest survey of CDP Supply Chain members, 56% said they expect to deselect suppliers in the future for failing to meet formal carbon management criteria, compared with just 6% today.