With the majority of a company’s real environmental impact sitting, not within its direct operations, but along its supply chain, helping suppliers to improve their sustainability performance is key if a business is to show true leadership.
Few companies have grasped the mantle in helping supplier companies better than the US retail giant, Walmart, a company whose indirect Scope 2 and Scope 3 emissions account for almost 90% of the retailer’s entire carbon footprint.
The success of its Sustainability Index, which gathers and analyzes information across a product’s life cycle – from sourcing, manufacturing and transporting, to selling, customer usage and end of use – has been well documented. It is a mechanism that has created a race to the top among suppliers, keen to up their game in reducing their impacts to support the wider commitments made by Walmart.
The Index was launched back in 2009, and then in 2012, the company made a commitment to buying 70% of the goods sold in its US stores from suppliers who participated in the Index – a goal that was achieved last year. In fact, more than 1,300 suppliers were involved in the Index in 2017 and another 3,000 more have registered.
But it is another of the company’s supply chain projects that has really caught the imagination.
It has been a year since the launch of Project Gigaton, an ambitious program to help suppliers cut greenhouse gas emissions by one billion tons by 2030 – the equivalent to taking more than 211 million passenger vehicles off of US roads for a whole year. Add this to Walmart’s own commitment to reducing its Scope 1 and 2 emissions by 18% in absolute terms by 2025, and it adds up to a big positive impact.
The 400 companies that have so far signed up to the initiative, backed by WWF and the Environmental Defense Fund, are given an emissions reduction toolkit to help suppliers find ways of reducing impacts associated with manufacturing, materials and use of products. The energy, agriculture, waste, packaging, deforestation, and product use and design are the real target areas for cutting Scope 3 emissions, with participating suppliers encouraged to focus their commitment on one or more of these issues.
“Supply chains are the new frontier of sustainability. The journey products take from source to shelf will collectively shape our planet’s future,” says Carter Roberts, president and CEO of WWF.
For Walmart, it’s an approach that marries up to its philosophy of integrating sustainable practices into operations to boost business performance, spur innovation and improve brand loyalty. “Our suppliers recognize the opportunity to realize those same benefits in their businesses,” says Laura Phillips, the company’s senior VP for sustainability.
Inevitably, suppliers that have signed up to the scheme have devised new emissions-reduction projects or refreshed existing efforts. Some have even developed science-based emissions targets to emulate that of Walmart.
However, speaking at a GreenBiz 18 event earlier this year, Phillips suggested the business has a long way to go to win over far more suppliers to get them involved. Right now, the scheme is not mandatory so the retailer is spending lots of time outlining the business benefits for suppliers to make cost reductions and improve efficiency and customer loyalty. “We are seeing that brands that invest in this, that talk about this, are the ones that experience high growth. That’s how we can sustain this,” she says.