Story URL: http://news.medill.northwestern.edu/washington/news.aspx?id=37199
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Companies going green may create environmental domino affect

by Katherine Ling
May 29, 2007


WASHINGTON—It seems a month does not pass without Wal-Mart announcing another environmentally friendly initiative.

This month the giant retailer declared it will offer compact fluorescent light bulbs made with 33 percent less mercury. The energy efficient, 10-year lifespan bulbs are more environmentally benign and could help Wal-Mart sell its goal of 100 million compact fluorescent bulbs by 2008.

Over the past year, Wal-Mart has announced the purchase of solar generating projects, sustainable seafood and produce, and the creation of a packaging scorecard that tracks suppliers’ products for recycled material and emissions. The scorecard will influence Wal-Mart’s purchasing decisions starting in 2008.

These environmental actions are typical of a second-generation of corporate greening. Companies like Wal-Mart, FedEx, Home Depot and Office Depot are flexing their corporate environmental power, extending their green policies beyond their own operations to impact suppliers and consumers.

“If you look at the (greenhouse gas) footprint of (Wal-Mart’s) value chain…the bigger part is going into making, packaging, shipping and using the products that they sell. They have a unique leverage through their purchasing clout,” said Gwen Ruta, director of corporate partnerships at Environmental Defense, an organization that works with companies for environmental solutions. 

Private industry’s “unique leverage” has the ability to make a difference for the environment in the near term more than the government or individual consumers.

Experts and companies agree that the U.S. government needs to enact legislation to deal with harmful environmental problems, like greenhouse gas emissions. Politics, uncertainty and the slow-moving bureaucracy are proving too great a barrier for lawmakers to quickly compromise on environmental and energy legislation.

Private industry is no longer waiting for policymakers to take the lead.

And individual consumers’ purchasing habits have proven slow and difficult to change.

“It takes a lot of effort to educate and motivate a hundred million consumers. Not because people don’t want to do the right thing, but they may not know what to do, or are confused about what to do,” Ruta said.

 According to Wal-Mart’s Live Better Index, 43 percent of Americans want to be “extremely green” in the next five years, but only 11 percent would classify themselves as such today.

Private industry, on the other hand, has enormous purchasing power and is easier to educate.

“There are a lot of people who buy trucks, but not 30,000 at a time,” Ruta said, referencing FedEx’s on-going initiative to develop and create a demand for commercial hybrid delivery trucks. It already has a fleet of 18-hybrid trucks across the nation and is preparing to add more.

FedEx has decided to work with Environmental Defense on the commercial hybrid truck project because of the impact it could have on the industry, said Mitch Jackson, head of the environmental program at FedEx.

“One of the premises of the project is it is not just for us. We wanted wide dissemination of the technology” creating a greater demand for the trucks, which would also bring the purchasing cost down. Since FedEx has proven commercial hybrid vehicles reduce fuel usage and emissions, Jackson said other companies have shown interest in them, including utility companies.

Wal-Mart also has been eager to spread its environmental knowledge as it works with its suppliers to trim packaging.

 “From our side we are certainly sharing everything we are learning,” said Kevin Thornton, a spokesman for Wal-Mart. “We certainly see this as working hand and hand in the business.”

Sharing information and techniques is an important and integral part of second-wave corporate greening—and a departure from traditional business proprietary concerns.

“Businesses have come to realize that engagement with suppliers on environmental performance in a collaborative way actually produces benefits for everyone participating,” said Justin Ward, vice president of business practices at Conservation International, an environmental coalition that promotes conservation around the world.

Although there may be some financial advantage to being more energy efficient than a competitor, in the end sharing technology and experience will create greater demand and innovation in the burgeoning environmental technology market, and drive costs down.

“This is way more than social responsibility, it is business strategy,” said Daniel Esty, co-author of “Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage” and director of the Yale Center for Environmental Law and Policy. “Frankly (companies) are way behind if they are still thinking about it in that context.”

In fact the U.S. push for environmental technology innovation and alternative energy may lag or thrive depending on demand, pressure and leadership from private industry consumption. 

Experts warn that without a major distributor like Wal-Mart agreeing to purchase corn ethanol, the country may soon be facing an overabundance of the fuel, which is currently almost exclusively used as a 10 percent additive to gasoline.

Big oil companies state there is no reason to make $2,000 to $20,000 changes to fuel pumps to carry ethanol because there are not enough cars demanding the fuel, and car companies state they will not build more flex-fuel vehicles if there is no place for people to fill-up their cars with E-85, an 85 percent blend of ethanol with gasoline.

But Wal-Mart can purchase long-term contracts, keeping the price of ethanol low, and has other incentives to draw people to the store besides the fuel, something gas stations do not have.

“If you want to change America, you have to change corporate America,” Ruta said.