The Truth Behind Wal-Mart's Green Makeover

Last October, Wal-Mart CEO H. Lee Scott Jr. gave a remarkable speech to his employees. He pledged to transform Wal-Mart -- the world's largest retailer, No. 2 on the Fortune 500 -- into a company that runs entirely on renewable energy and produces zero net waste.

It was an outrageously bold promise, and a bit disorienting.

Wal-Mart's green-tinted, come-to-Jesus moment presents political progressives with at least two dilemmas. First, do we believe Scott has taken the green gospel to heart? And second, does this mean its okay to cheer Wal-Mart?

All the talk in the progressive community these days is about building a broad, holistic movement to replace the desiccated collection of interest-group silos that is the post-Southern-realignment left. "Checklist liberalism," as one wag called it, is supposed to be on its way out.

Then along comes Wal-Mart, checking the "green" box, but conspicuously failing to check the "labor" box, and … well, what?

It's too early to tell for sure, but Wal-Mart's environmental initiatives do appear substantive. Scott's commitments go well beyond what would be necessary for a successful greenwashing campaign. (Hell, BP pulled one of those off with little more than a name change.)

The holy trinity of genuine business transformation is: 1) public goals and timetables, 2) buy-in at every level of the company, and c) transparent reporting.

Wal-Mart has hit two of the three: Scott announced specific goals, and by all accounts Wal-Mart associates are invigorated by the challenge and the sense of moral mission.

As for transparent reporting, time will tell, but with all the scrutiny the announcements have drawn, it would be extraordinarily difficult to back out quietly. The company has already set up more than a dozen "sustainable value networks," each focused on a particular area like packaging or facilities, each made up of Wal-Mart managers and outside educators, regulators, and environmentalists. A lot of people are involved who wouldn't hesitate to call foul if Wal-Mart stalled or backed out.

In close consultation with Amory Lovins' Rocky Mountain Institute, Scott pledged to double the efficiency of Wal-Mart's enormous truck fleet by 2015 and reduce greenhouse-gas emissions from its existing stores and warehouses by 20 percent over the same stretch. By 2008, Wal-Mart will have a store design that uses 30 percent less energy and produces 30 percent fewer GHG emissions, developed out of the experimental green stores in McKinney, Texas, and Aurora, Colorado. It will reduce solid waste from its stores and clubs by 25 percent in three years.

The company also plans to reduce overall packaging, move heavily into organic products (textiles and food), and even -- if you believe the chatter -- buy more local food.

Wal-Mart's notorious monopsony powers force suppliers to bend to its will or suffer. Normally this is a lamentable state of affairs, but if such power is wielded on behalf of the environment, the ramifications could be astounding. By Scott's own reckoning, 90 percent of Wal-Mart's environmental impact will come through influence on its supply chain.

For example, the company is ordering wild-caught seafood from fisheries certified by the Marine Stewardship Council. It's developing a sustainable certification system for gold. In areas where Wal-Mart is the biggest retailer -- and those are legion -- its demands could transform whole industries.

Influence will also pass forward into the enormous customer base. More than other greening companies like GE and Goldman Sachs, Wal-Mart has direct, personal relationships with millions and millions of ordinary Americans of every class and color. It can educate them about eco-friendly products and behaviors; indeed, in its ubiquity it cannot help but educate them. The company is also a cultural icon, the very emblem of Middle America. By embracing green thinking, Wal-Mart could drain it of its poisonous ideological connotations and enshrine it instead as common sense. Ecology could be removed from the culture wars.

And finally, influence will move out laterally, as a signal to other businesses that green is smart. Environmentalists have been saying for years that business eco-makeover need not be an act of altruism. Reducing waste -- wasted energy, wasted packaging, wasted time -- is the very essence of good management. Despite Scott's moral gloss, Wal-Mart would not be undertaking these reforms if they weren't going to pay off in the bottom line.

In his October speech, Scott asked rhetorically, "What if we used our size and resources to make this country and this earth an even better place for all of us: customers, associates, our children, and generations unborn? … Is this consistent with our business model?"

Is it? The dilemma for progressives is that Wal-Mart seems to have answered, "yes and no." Yes, its business model is consistent with a strong environmental ethic, but no, it has no room for higher wages or better health care for its employees. In contrast to the environmental promises, the sections of Scott's speech devoted to wages and health care are wan. "Even slight overall adjustments to wages eliminate our thin profit margin," he said with frank resignation.

That Wal-Mart is a particularly evil employer is taken as gospel in some quarters, but it's worth noting that neither Wal-Mart's wages nor its benefits are at the bottom of the American economy, or even the retail sector. There is at least some debate in progressive circles whether Wal-Mart's rock-bottom prices increase the purchasing power of the working class enough to offset its low wages and minimal health care coverage.

Laying those debates aside, the simple fact is that Wal-Mart is a creature of our time: late-stage U.S. corporate capitalism and uninterested in repairing the tattered New Deal social safety net.

Since Reagan, labor laws have become progressively more anti-union. Middle-class wages have stagnated. The minimum wage hasn't been raised in almost a decade, and is at its lowest relative value in 50 years.

And of course, the elephant in the room is America's grossly dysfunctional health care system. It could be argued that activists are making a tactical error by focusing on Wal-Mart on this issue. The ideal outcome would not be improved health care benefits at one corporation. The ideal would be universal, publicly-funded health care, so that every American business could free itself of the administrative and financial burdens of covering its employees, and every working class American could be confident in his or her access to care.

For better or worse, repairing the social safety net will be a matter for good government, not the hoped-for altruistic impulses of a publicly-held corporation. If progressive activists want to change the circumstances of Wal-Mart's employees, they could aim to change the system in which the company operates. Even Scott seems to agree; he won't raise wages higher than his retail competitors, but he has called for a rise in the minimum wage.

No one will argue any time soon that Wal-Mart deserves uncritical embrace. Its borderline-illegal treatment of unions, women, and part-time workers are rightly deplored. Its massive stores swallow undeveloped and agricultural land at a stomach-turning pace. Its arrival heralds doom for smaller local businesses.

Progressives should continue to push for government reform of health care, labor law, and the minimum wage. They should lobby for an end to the vast web of friendly regulations, tax breaks, and subsidies that bias the market in favor of big-box retail. They should continue to put public pressure on Wal-Mart. And given Scott's disarming desire to make Wal-Mart a force for good, they should partner with the company at every opportunity to accelerate and expand its recent initiatives.

The fight is never over, and life offers few unqualified victories. But the largest retailer in the world has publicly and sincerely committed itself to sustainability. For that, we can lay down our swords for a round of applause.

But only for a moment.

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