Imagine if your company could come up with plan to save customers up to $6 billion year on their power bills. And what if this proposal would also save one billion barrels of oil year? That is equivalent to taking two million cars’ worth of greenhouse gas emissions out of our atmosphere. Plus it would stop billion incandescent light bulbs going to landfill every 12 months.
America’s biggest retailer, Wal-Mart, is using these numbers to illustrate the potential impact of adopting sustainable practices in the United States.
And it is leading an almost overnight switch to sustainable procurement on grand scale.
Wal-Mart buys globally from 6800 suppliers and sells to more than 138 million customers week at 6200 stores. It has one of the largest private transport fleets in the world and if it achieves its aim of reducing emissions by 25 percent in just this one area, it will keep 26 billion pounds of CO2 out of the air – target some nations aspire to.
Meanwhile its decision to sell organic cotton products will make Wal-Mart the largest global purchaser of organic cotton. Over the next three years, it also plans to make its stores 25 percent more energy efficient, reduce solid waste by 25 percent and have 20 percent of its suppliers aligned so it can sell products “that sustain our resources and environment”.
You could say that Wal-Mart has seen the green light.
It has joined the World Business Council for Sustainable Development and, from chief executive down, has understood the need to adopt “swim upstream mentality” and look for the opportunities inherent in serving world population, rising from 6.1 to eight billion during the next 19 years.
It simply asks – how best to serve that number of people without overusing scarce resources or contributing to climate change?
Wal-Mart may appear to be the antithesis of sustainable consumption. But if the retailer can build model sustainable store in Texas using revolutionary materials, technology and processes to reduce energy and natural resources required, it is doing it with an expectation that its suppliers will deliver. Overnight, sustainability has become core business in the US – and if the US catches cold, we can expect the rest of us will soon be sneezing into tissues made from recycled or sustainable fibre.
Wal-Mart is taking this approach because it makes good commercial sense – and also because it’s the right thing to do. In New Zealand we have many examples of companies demonstrating product stewardship, like the voluntary Packaging Accord and various industry take-back systems for mobile phones, whiteware, computers, paint and used oil.
We now need concerted central and local government effort to help boost change through their procurement policies. Each year they can influence decisions on more than $5 billion in spending on goods.
For the past 10 years the Government has been accrediting companies with the Environmental Choice, Forest or Marine Stewardship Certification, Energy Star or other independent verification programmes. These have been described to industry as effectively ‘tickets to entry’.
However, suppliers who don’t have ticket are still allowed into the game. What government buyers now need to look at is the ‘whole of life’ costs of product or service – not just its day-one cost. This whole-of-life assessment – with environmental and other sustainability issues driven into the tender documents – will inevitably lead to better long-term outcomes.
In Europe, for example, where “green procurement” is well advanced by central and local governments, research shows the installation of intelligent road and street lighting across Europe would lead to 40 to 70 percent fall in energy use and increase public safety. If all public authorities were to require more energy efficient computers, 830,000 fewer tonnes of CO2 would go into the air. If they opt to put efficient toilets and taps in all their buildings they would cut water consumption by 200 million tonnes (equivalent to 0.6 percent of all household consumption in Europe).
So we need to change the culture and practice here – to stop rewarding government buyers for doing the best day-one price deals, when in fact they could be the most costly long term.
Like Wal-Mart, I’m sure local business leaders can latch onto opportunities that not only make their companies more sustainable but more profitable at the same time as they do the right thing by the environment, suppliers and customers’ quality of life.
One thing is for certain: the world’s biggest retailer and most of Europe’s government buyers won’t be interested in buying from you if you don’t.
Peter Neilson is chief executive of the New Zealand Business Council for Sustainable Development.
