Wal-Mart to Create a Sustainable Product Index
Mike Duke, president and CEO of Wal-Mart Stores Inc., announced the creation of a Sustainable Product Index at a meeting with 1,500 of the company's suppliers, associates and sustainability leaders on July 16, 2009. The index is expected to bring about a more transparent supply chain, drive product innovation and, ultimately, provide consumers the information they need to assess the sustainability of products.
The company will roll out the index in three main steps. Some of the work will start right away. The rest is expected to happen over the next five years.
As the first step, Wal-Mart will ask all of its suppliers to answer 15 questions on the sustainable practices of their companies. In the United States, it will ask its top tier suppliers to answer quickly. And internationally, each country will work with its suppliers on developing timelines.
"Like our customers, we now expect more of ourselves and our more than 100,000 suppliers around the world. So as a first step in moving forward with the Index, our buyers will provide every supplier with a tool to assess their own sustainability," Duke added.
The questions will be asked around four areas:
1. Energy and Climate
2. Material Efficiency
3. Natural Resources
4. People and Community
Duke also announced as a second step that Wal-Mart is helping to create a consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products -- from raw materials to disposal.
Wal-Mart has provided the initial funding for this Sustainability Index Consortium, and invites all retailers and suppliers to contribute. The company will also partner with one or more leading technology companies to create an open platform that will power the Index.
"It is not our goal to create or own this Index. We want to spur the development of a common database that will allow the consortium to collect and analyze the knowledge of the global supply chain," Duke said.
The third and ultimate step of the Index is to translate the information stored in the database into a simple tool that informs consumers about the sustainability of products.
The company will roll out the index in three main steps. Some of the work will start right away. The rest is expected to happen over the next five years.
As the first step, Wal-Mart will ask all of its suppliers to answer 15 questions on the sustainable practices of their companies. In the United States, it will ask its top tier suppliers to answer quickly. And internationally, each country will work with its suppliers on developing timelines.
"Like our customers, we now expect more of ourselves and our more than 100,000 suppliers around the world. So as a first step in moving forward with the Index, our buyers will provide every supplier with a tool to assess their own sustainability," Duke added.
The questions will be asked around four areas:
1. Energy and Climate
2. Material Efficiency
3. Natural Resources
4. People and Community
Duke also announced as a second step that Wal-Mart is helping to create a consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products -- from raw materials to disposal.
Wal-Mart has provided the initial funding for this Sustainability Index Consortium, and invites all retailers and suppliers to contribute. The company will also partner with one or more leading technology companies to create an open platform that will power the Index.
"It is not our goal to create or own this Index. We want to spur the development of a common database that will allow the consortium to collect and analyze the knowledge of the global supply chain," Duke said.
The third and ultimate step of the Index is to translate the information stored in the database into a simple tool that informs consumers about the sustainability of products.
Read "Wal-Mart's Newest Venture: Supplier Friend or Foe?" for more information and analysts' commentary on this story.