Wal-Mart’s “Company of the Future”: Energy

lee_scott_-_-the_company_of_the_future-_speech.JPGIn October 2005, Wal-Mart CEO Lee Scott gave a speech entitled “Twenty-First Century Leadership.” Part idealistic vision, part concrete blueprint, the speech made all of us in the green community stand up and take another look at the company. Regardless of one’s thoughts about Wal-Mart as a corporate citizen, all had to admit that Scott set bold long-term goals for the company: powering itself on 100% renewable energy, creating zero waste, and selling “products that sustain our resources and our environment.”

Last night, at the company’s Year-Beginning Meeting in Kansas City, Scott gave another speech, titled “The Company of the Future,” that returned to the themes of corporate leadership, social responsibility, and sustainability. Like its predecessor, this speech combined vision with practical goals. I’d originally planned to write one post giving a broad overview of the speech, but given Wal-Mart’s position as the world’s largest retailer, and the breadth of the ideas presented, a series seemed more appropriate.

Energy savings have already played into the company’s attempts to transform itself (and, admittedly, its image). From a business perspective, this makes sense: energy’s an expense. Scott’s focus in this speech, though, wasn’t so much on the company using energy more efficiently itself, but on helping customers save energy:

Let me ask you this: What if we extended our mission of saving people money so they can live better — to saving people money on energy? We believe we can do this. Wal-Mart can help our customers use less energy and spend less on energy.

How would Wal-Mart do this? Scott outlined a couple of initiatives:

Our goal is to work with suppliers to make the most energy intensive products in our stores, anywhere in the world, 25% more energy efficient within three years. We do not know exactly how we will get there. We do not even know if our supplier can make items like hair dryers use 25% less energy. But we do know that our approach works – to partner with suppliers, to help customers make better decisions, and to use our business model to drive out waste. …

Today we are announcing initial steps that we hope to achieve by 2010: every air conditioner that we sell in the U.S. will be Energy Star rated; and all our flat-panel televisions will be 30% more energy efficient. The energy savings on televisions alone would be enough to power over 53,000 single family homes for an entire year.

In addition, Scott noted that the company would be “rolling back” prices on items like 3M Allergen Air Filters, and aiming to double the sale of items like weather stripping.

These more concrete proposals (and, clearly, there were plenty of qualifiers on all of them) were partnered with some more visionary ideas, such as “[providing] eco-friendly energy to our customers”:

Imagine your customers pulling into your parking lot, and seeing wind turbines and solar panels, and being able to charge their cars while they shop. I think that would make them feel good about shopping at your stores. It would also make them feel good if they could save money in the process. What if we fed the power generated by those wind turbines and solar powers back into the electrical grid? Just imagine the impact of our customers being able to buy eco-friendly energy at the unbeatable Wal-Mart price.

Scott even noted that he’d reached out to auto makers to see if there was a role the company could play in the hybrid/plug-in hybrid market (while admitting that such a role may not exist).

The vision for energy saving presented in last night’s speech was compelling, and the audience of store managers and executives was obviously receptive. Some may argue that the vision outweighs the actual steps being taken here, and that’s probably fair. At the same time, I was very intrigued by the notion of expanding Wal-Mart’s “Save Money. Live Better.” mantra into the area of energy itself. As I noted to a commenter on another post the other day (who’d made a very valid point about “green” products often not being an option for people at the bottom of the socioeconomic ladder), energy efficiency can be a way for these folks to “green” their lives while meeting their most immediate needs in a manner they can afford. They don’t even need to think of it as “greening their lives”: if they see the connection between efficiency and money saved, that’s a win. If Wal-Mart can successfully convey this story to their shoppers, more power to them.

I’m very interested to hear your responses to these concepts. At this point, it doesn’t look like the major organizations critical of Wal-Mart have responded to Scott’s speech, but I’ll keep an eye out. The entire text of the speech is available, as is a video of Scott giving the speech.

Disclosure: While the lion’s share of the funding for this trip came from Green Options and my own pocket, Wal-Mart Corporate Communications did pick up the tab for dinner last night.

Next part: Wal-Mart’s vision for global product sourcing

Update: Wal-Mart Watch has published a response to the environmental initiatives in Lee Scott’s speech here. So far, Wake-Up Wal-Mart has responded only to the portions of the speech focused on health care issues.

  1. Jason Phillip

    I view Wal-Mart’s green initiatives to be primarily driven by the company’s hunger for profits. Lee Scott has seen the handwriting on wall, and he understands that the day is coming when his customers will demand products that address global warming somehow. He wants to get out in front of that wave and develop a credible presence there now. That’s smart business, but it’s not what I consider corporate social responsibility.

    If Wal-Mart were serious about “sustainability” in the broader sense of the word, the company would stop the union-busting, worker-exploiting tactics that earned it such a terrible reputation in the first place. It would start to figure out how to source its products domestically (or even locally). Until it makes moves in these directions, Wal-Mart’s talk of energy efficiency is really just about cutting waste from its own operations and polishing its image with the American public.

    While Wal-Mart may help move the market in the direction of energy efficiency (a positive development for sure), communities with Wal-Marts in them will still be paying the high costs of low prices. The cannibal eating with an Energy Star fork is still a cannibal.

  2. Joel Bittle

    So many things to be conflicted about here… When a company as large as Wal-Mart makes overtures to be greener and sell greener, it’s bound to have a positive impact both on the environment and public awareness of the green movement in general. But an important aspect of the green movement is support of local goods and services, something that Wal-Mart has been systematically destroying across the country.

    I don’t know many people who are interested in being green but could care less about social issues like giving workers a living wage, fair benefits, and the ability to unionize. It would be hard for me to turn a blind eye to several sins for the sake of one virtue.

  3. Kyle Cherrick

    What about the issue of plastic bags? Seems like if Wal-Mart were serious about sustainability this would be low-hanging fruit. Visit my blog REpreneur – One entrepreneurship student’s adventures in renewable energy, green building, and sustainability – in order to read my post entitled “Convenience Vs. Sustainability – The battle over plastic bags.


  4. Jeff McIntire-Strasburg

    I appreciate all of your comments!

    Jason and Joel: I understand what you’re saying, and respect it… I’m going to discuss some of the conflicts I felt, also, at this event in a subsequent post (some of which tie directly into environmental sustainability, and some that deal with the broader issues you address). To borrow from your language, Jason, I think we have to continue to argue the points you and Joel bring up in the language of “smart business”… and those arguments exist. I also think we do have to give the company credit for the positive changes it has made, though, and recognize that it’s uniquely placed to transform the retail sector (which, in general, has problems in terms of labor relations and product sourcing). It’s possible that I’m being overly-optimistic, and perhaps even naive… but I am hopeful simply because the company is now participating in these kinds of conversations.

    Ulrik — I appreciate your bringing this concept up… I hope I’m not seeing joining in just to link to your site, though…

    Kyle — I’d love to see the company take a step like Whole Foods did recently, and set a date for phasing out plastic bags. They have starting selling canvas shopping bags for $1… I can’t say, though, whether this is widely known among customers, or whether the company is promoting this product as aggressively as it might… I’ll take a look.

  5. Joel

    Phasing out paper bags would make a great difference too. Having just moved to the US (from the UK) I have no experienced the choice before of plastic or paper. The dilemma is which is better, or are neither any good? If canvas isn’t available, which do you choose?

    I like to be optimistic about these things, almost all companies are driven by profit, otherwise they wouldn’t be in business or even not-for-profits would like to make more to invest more. Sure, there’s a long way to go before wind turbines appear in Wal-Mart parking lots, but a lot of companies are doing nothing, and if big companies start leading by example maybe some of it will rub off.

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