Wal-Mart Goes Greener With Eco-Labels

Thursday, July 16, 2009

Wal-Mart (WMT) decided to evaluate its suppliers based on whether they were polluters almost before it became fashionable.

Going Green is a description used broadly in the business community as a badge of honor, however irrelevant. Creating products with materials that do not sustain the environment or pollute has become an unpopular and image-damaging way to do business. Wal-Mart is careful, being one of the world’s largest corporations with over one million workers and tens of millions of customers, to put on the best face it can for the green-minded.
Reuters reports that Wal-Mart will announce the “development of an index that will be used to measure the social and environmental impact of the products it sells in its discount stores.” This will probably give customers the opportunity to decide whether they want to choose products that are environmentally friendly over those that are not.

It seems cynical to question what may be very pure motives, but Wal-Mart does stand to benefit from its green credentials, and, provided that they are not too expensive to come by, at the very least they burnish the firm’s image which has taken some shelling due to perceptions that it underpays its workforce and sources too few products from the US and too many from China.

Green is excellent PR. GE (GE) has been the master of this art with its “Ecomagination” programs which it describes as “solving the world’s biggest environment challenges while driving profitable growth for GE.” It may be a matter of semantics and corporate communications skills, but GE makes a very large portion of its money by selling infrastructure solutions and it would hardly be wise for the company to be marketing major governments and corporations products and services which rank high on the polluter scale. That would be bad for business.

Wal-Mart needs to have its shareholders, the US government, and customers see that it can be counted upon to be well-behaved at the environmental table. The fact that the world’s largest retailer does so much business in China already deeply troubles some of the “green crowd.” Many Chinese manufacturing facilities cannot be counted upon to properly dispose of waste. The air in many Chinese cities is so bad that the denizens might as well move to the country and smoke four packs of cigarettes a day. Wal-Mart walks its credentials around to environmentalists while doing business with partners that have not the slightest interest in air or water quality. Wal-Mart has to hope that the world will believe that the Emperor does have clothes.

Chinese companies do not seek approval from Chinese environmentalists because they can be ignored. Wal-Mart is pandering to environmental groups in the US with clever marketing which includes its new process of evaluating its products based on their environmental impact. Wal-Mart knows that such measurements will never be precise. It may not matter if the public ever knows if Wal-Mart puts it finger on the scales of those measurements in any way that might make the company look better.
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