Can Walmart Get Us to Buy Sustainable Products?

We all want to buy the best products we can find and afford. But what does “best” actually mean? The ones that offer the best bang for the buck, last the longest, or give us the most pride of ownership? How about a product that minimizes its environmental impacts or tries to make the world a better place? Identifying the companies that make these more “sustainable” products has been nearly impossible… until now.

On Tuesday, the world’s largest retailer took a major and important step toward helping all of us shop smarter. Walmart’s ecommerce site is now labeling 3,000 products, made by more than 100 companies, with a badge that reads “Made by a Sustainability Leader.” For the first time, a major retailer is giving prominent shelf space — albeit virtual — to companies operating in a better way.

The story of how this badge came to be, and the information backing it up, requires some background. In 2009, Walmart was one of several companies that provided seed funding to start The Sustainability Consortium (TSC), jointly run by the University of Arkansas and Arizona State University. TSC has evolved into a collaboration of more than 100 of the world’s largest retailers, consumer product companies, and NGO and academic partners. The corporate members include Coca-Cola, PepsiCo, P&G, J&J, Kellogg’s, L’Oreal, and Unilever.

TSC has been plugging along, doing the hard work of figuring out what makes certain products more sustainable than others. The organization now has guidelines and data on over 100 product categories from bread, books, and computers to clothing, TVs, and toys.

In essence, TSC is a data amalgamator, gathering the best peer-reviewed science on the lifecycle impacts and “material” environmental and social issues for a given product category. The group identifies the “hot spots” in the value chain that create the most risk and footprint. So for example, in the case of computers, key issues might be how much energy it consumes during use, or the inclusion of metals in the design that come from controversial “conflict minerals” in the supply chain. For other product categories, the largest issues may be things like overall carbon footprint, water use, resource depletion, or worker health and safety.

TSC boils the analysis down to about 10 to 15 questions that manufacturers and consumer products companies can answer, which generates a score for each company. The scores are unique for each category, so a company like Kimberly-Clark could have a different score in diapers (Huggies) than in “household papers” (Scott). Using this data, Walmart is awarding the badge to companies in each category that either rank highest or score above 80 (out of 100).

Of course, with any effort of this scale, there are some caveats and issues to work out.

First, the data and science on the most material issues for a product are evolving. But we have solid information on many products’ hot spots now. Second, the answers from the suppliers are self-reported, not independently verified. But the highest-ranking sustainability officer at the company has to sign off on the answers. And as one Walmart exec pointed out, “Yes, it’s self-reported, but it’s reporting to Walmart.” Meaning, you’d risk alienating your largest sales channel if you fake it.

And third, being best-in-class is not the same as being sustainable. Rob Kaplan, Director of Sustainability at Walmart, gave an example of this important difference using electronics. Computers sold on walmart.com may still have conflict minerals in them, but the TSC questions help identify the brands that are handling the issue the best.

So what does this all mean to the companies that have staked a great deal on their environmental and social efforts? As Unilever’s VP of Sustainable Living, Jonathan Atwood, told me, “the launch of the Walmart Sustainability Leaders Store is a significant moment for the industry and shoppers.  It’s a major signal that embedding sustainability into your business can drive growth and help people make more sustainable choices without making trade-offs between quality, accessibility, and affordability.” [Full disclosure: I sit on Unilever’s sustainability advisory board in the U.S.]

On Atwood’s point about trade-offs, what I think the badge is doing is helping redefine quality to include environmental and social performance. And it’s giving companies the opportunity to better identify which kinds of sustainability offerings really sell. For years, big brands have learned painfully that only a small percentage of people will pay more for “green.” But, years of surveys (see also here and here) indicate that a large portion of us will seek out more environmental and socially-aware products, especially if all else is equal; that is, at the same price and quality, we will take the more sustainable option.

So think about what Walmart can do now. Given that the world of ecommerce is a playground for big data, Walmart will build base of knowledge about how people reallyshop on sustainability criteria. Will they pay more at times, and for what? Or at the same price, will the products with the badges fly off the virtual shelves?

But here’s the remarkable thing: Walmart plans to share its findings, at least with its big suppliers, and perhaps with all interested parties (I’d love to get my hands on it). And if it works, this kind of data- and science-driven labeling could be seen in physical stores soon. Walmart’s Kaplan points out that the last two specialty stores the company tried, “made in the USA” and “women owned” both started online and moved into the real world.

Let’s not overstate what any of this means for the planet or even for Walmart, a company that has its own significant sustainability challenges around social issues like labor and wages, and is at the center of a consumption-driven model of business that has enormous environmental impacts. That said, helping all of us as consumers understand which companies are managing their environmental and social impacts best is a good thing. We can, and should, talk about consumption over all, but as we will still need stuff like detergent and clothes, we should find the most sustainable options we can – and we should encourage companies, through the power of our dollars, to do much more.

In the end, the success or failure of this initiative will depend on us. After years of guessing, and surveys that show positive eco-intent, we’ll see if we are really willing to put our collective money where our mouths are.