{"id":23341,"date":"2017-11-15T00:44:01","date_gmt":"2017-11-15T05:44:01","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/wal-mart-doing-right-by-the-planet\/"},"modified":"2017-11-15T00:44:01","modified_gmt":"2017-11-15T05:44:01","slug":"wal-mart-doing-right-by-the-planet","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/wal-mart-doing-right-by-the-planet\/","title":{"rendered":"Wal-Mart: Doing Right by the Planet?"},"content":{"rendered":"

Climate change and its impact on Wal-Mart <\/strong><\/p>\n

Many might not have expected Wal-Mart, a discount retailer, to be a first mover in addressing climate change. However, the most compelling business case for Wal-Mart to act on climate change is precisely the ability to keep prices low in the long term. As government policies try to price or limit carbon emissions, fossil fuel prices could rise, along with cost of energy and transportation[1<\/a>]. Erratic rainfall, declining freshwater availability, and salinization of cropland from sea level rise could reduce crop yields and drive up food prices[2<\/a>]. These effects directly impact Wal-Mart\u2019s ability to keep costs low. On the demand side, extreme weather events caused by climate change disrupt not only supply chains, but also communities and customers\u2019 purchasing power. Having been among the first to restore operations and provide relief after Hurricane Katrina, Wal-Mart began to consider the long-term implications of climate change and the role it could play in its communities[3<\/a>].<\/p>\n

Given its scale, Wal-Mart can meaningfully mitigate not only its own impact on climate change, but also that of its suppliers. It is the world\u2019s biggest retailer with nearly 12,000 stores in 28 countries, annual revenues of $485.9 billion[4<\/a>], and a network of 60,000+ suppliers[5<\/a>]. It is also the largest consumer of electricity in the U.S.[6<\/a>].<\/p>\n

Reducing emissions: Increasing focus on suppliers <\/strong><\/p>\n

Since 2005, Wal-Mart has doubled its own truck fleet efficiency and shifted its energy mix to 25% in renewable energy[7<\/a>]. It aims to double its renewable energy mix and decrease power consumption by 20% by 2020, which will save the company $1 billion per year[8<\/a>]. Despite progress in its own operations, however, 90% of the emissions reduction potential lies in its supply chain[9<\/a>]. Indeed, most of its 28.2 million metric tons of emissions reduction from 2010-2015 resulted from asking food suppliers to work with farmers to improve fertilizer use[10<\/a>]. However, influencing suppliers is no easy task, as most don\u2019t even measure their own GHG emissions. As such, Wal-Mart began collaborating with the Carbon Disclosure Project (CDP) in 2007 to help suppliers measure and manage their carbon emissions. As a large customer for many small- and medium-sized suppliers, Wal-Mart can use its size to encourage compliance[11<\/a>]; as of 2011, thousands of suppliers have signed on to the CDP.<\/p>\n

Project Gigaton <\/strong><\/p>\n

In 2017, Wal-Mart announced an even more ambitious effort to remove emissions from its supply chain. Project Gigaton aims to reduce 1 billion metric tons of emissions by 2030 (equivalent to taking 211M passenger vehicles off the road for a year), mostly through its suppliers[12<\/a>]. To help its suppliers achieve these targets, Wal-Mart has teamed up with NGOs like Environmental Defense Fund to provide supports such as an emissions reduction toolkit. The toolkit articulates both the business case to reduce emissions (increase efficiency and innovation while reducing costs), and emission mitigation strategies in six areas: agriculture, waste, packaging, deforestation, and product use and design[13<\/a>].<\/p>\n

What more can Wal-Mart do? <\/strong><\/p>\n

Project Gigaton is ambitious, aiming for more than a 10x increase in emissions reduction than its previous target (adjusted for time). To ensure the success of Project Gigaton, management should expand its support to suppliers and move systemic levers like policy and industry standards:<\/p>\n