Today at Balaton I heard from Hunter Lovins about WalMart’s sustainability efforts. It’s tempting to question their motives and the likely outcome, but there’s enough going on that EDF is creating a presence in Bentonville. As of today, sustainability features prominently on WalMart’s home page. It’s hard to get excited about their Love, Earth jewelry line, but some of their other activities could have a significant impact. They have some very interesting initiatives, like product labeling for green content based on life cycle analysis (learning from Patagonia).
A few quick reflections:
WalMart’s traditional focus has been cost-saving efficiencies. That can take place through two paths: genuine innovation (good) and pushing costs off on society as externalities (pollution, social consequences of labor policy, etc. – bad). If WalMart’s sustainability efforts represent calling off the latter, that’s a good thing. However, as long as institutions and consumer preferences don’t support verification of such efforts in general, it makes WalMart susceptible to competitors with fewer scruples.
Historically, WalMart’s efforts to outrun its competitors and squeeze value out of its supply chain reduce diversity and enhance its market power. That means we have fewer experiments (and resources) with which to explore ideas – a classic case of optimization of a complex system for a single purpose that inadvertently makes it fragile in changing conditions.
It’s easy to see how dematerializing the supply chain is helpful. As material constraints increasingly become important, the same efficiencies that currently are frequently consumed by rebound effects could become a vehicle for the delivery of greater good per scarce megawatt, TonC, or bushel. However, there’s a second key component of greening the world, which is simply consuming less. It’s easy to see how a cutting edge company can make money selling greener products. It’s not so easy for me to see how a company is going to make money from people trading fewer goods and services for more leisure time or other non-market activity.
This suggests three priorities:
- Encourage propagation of this idea, so that brown suppliers dumped by WalMart aren’t simply scooped up by Kmart.
- Help chains to think more deeply about supply chain diversity and how procurement and social practices contribute to resilience.
- Keep working on the underlying drivers of consumption growth.