Lee Scott, the president and CEO of Wal-Mart Stores, Inc. announced the move at an unprecedented gathering of more than 1,000 leading suppliers, officials and NGOs in Beijing, China. “Sustainability is about building a better business. We think it is essential to our future success as a retailer – and to meeting the expectations of customers,” said Scott, “Maintaining the trust of our customers – today and in the future – is tied hand-in-hand with improving the quality of our supplier factories and their products.”
The company will focus on areas aimed at meeting or exceeding social and environmental standards, driving innovation and efficiency and building stronger partnerships with suppliers, government and NGOs.
As part of a series of new requirements for its suppliers, Wal-Mart is taking a number of steps to further strengthen and enforce supplier compliance with environmental and social standards, including the creation of a new supplier agreement that will require factories to certify compliance with laws and regulations where they operate – as well as rigorous social and environmental standards. The agreement will be phased in beginning with suppliers in China in January 2009 and expanding to suppliers around the world by 2011.
The company has pledged to bring more environmentally sustainable products to its store shelves and says it will partner with suppliers to improve energy efficiency in the top 200 factories it sources from directly in China by 20% by 2012. The company will share information and best practices with all of the factories it sources from as well as its competitors.
In terms of supply chain transparency, by 2009, Wal-Mart will require all direct import suppliers plus all suppliers of private label and non-branded products to provide the name and location of every factory they use to make the products it sells. The company will also have all suppliers it buys from directly to source 95% of their production from factories that receive the highest ratings on environmental and social practices by 2012.
Wal-Mart also announced a major effort to make Wal-Mart China a leader in sustainability in China by committing to make its stores more sustainable. The company will design and open a new store prototype that uses 40% less energy and will reduce energy use at existing stores by 30% by 2010. In addition, during the next two years, Wal-Mart China will aim to cut water use in all of its stores in half by investing in new hardware and systems and developing best practices that will help its associates and stores use water more efficiently.
Scott also sent out a strong socially responsible message to the Chinese manufacturing community: “I firmly believe that a company that cheats on overtime and on the age of its labour, that dumps its scraps and chemicals in our rivers, that does not pay its taxes or honour its contracts – will ultimately cheat on the quality of its products. And cheating on the quality of products is the same as cheating on customers. We will not tolerate that at Wal-Mart.”
The announcements build on Lee Scott‘s ‘Company of the Future’ speech to Wal-Mart store managers in January, 2008 where he pledged to make the company’s operations in China more sustainable and our build a more environmentally and socially responsible global supply.