Wal-Mart to go far and wide?

On Monday the Financial Times topped with a story on Wal-Mart, which is starting a pilot with thirty companies in seven product categories to get them “to measure and report their green house gas emissions, in the biggest move to disclose emission from businesses.” Wal-Mart wants to be able to compare suppliers based on their emissions efficiency, and they draw a direct line from reducing emissions, to reducing energy use and thus cost among their suppliers. Eventually the retailer wants to role out the program to 68,000 suppliers.

It seems that the main supply chain initiatives fall into one of two categories: either they go far down the value chain of a product, from the base of the pyramid to the top, completely disclosing on a product; or they go wide, casting a wide net and engaging many direct suppliers of the company and dispersing the initiative across more suppliers, but not as deep.

The article is interesting because it lists efforts by Coca-Cola (also part of Wal-Mart’s pilot),Cadbury Schweppes and Kimberly-Clark trying to do the former, measuring the carbon footprint of certain products, whereas the Wal-Mart initiative and currently also the GRI/GTZ “Transparency in the supply chain” project do the latter, engaging first tier suppliers.

Looking at this division, it is interesting to see that brand name companies are looking to make certain identifiable products stand out as completely transparent, whereas retailers lean more towards being “generally responsible” and engage with their direct suppliers, which, of course, are quite often said brand name companies.

Regardless of preference or relative incentives, however, it is important to choose the right approach for what you want to measure. As far as emissions go, it makes sense to go as far down the supply chain as possible: the big emissions are usually at the bottom of the value chain! EarthNews’s Michael Burnham rightly remarks that “To reduce its indirect emissions of carbon dioxide and other Earth-warming gases, Wal-Mart may have to influence companies several layers deep into its supply chain.”

You can start by going far or wide but to really measure emissions in a significant way it will be relevant to end up doing both.

Foodmiles taking off

The Dutch newspaper Trouw ran an article today stating that the French supermarket company Casino will start informing its customers about the foodmiles (or kilometers) of their house brand through labels (Trouw, September 4th 2007). The labels will be color coded and the recyclability of the packaging will be stated as well. They expect to have all of their 3000 products labeled by end of 2008 and have already taken action on some products: a cod filet that traveled 27.000 (!) kilometers before arriving at the store was taken out of the range. I haven’t been able to find any confirmation of this initiative in other news sources.

Several other supermarket chains and retailers are exploring similar schemes, Tesco announced an initiative to start reporting the carbon footprint of the 70.000 products they carry back in January (The Guardian January 29th 2007), but have not implemented it yet due to the complexity of the measurement. Another illustration:Timberland, the US shoe brand, has looked into reporting the carbon footprint of their products. The difficulty they encountered was that they’d have to measure all the way down to the cows, which the real base of their supply chain and the largest contributor to the carbon footprint (Environmental Leader, March 28^th 2007). One advantage Casino has is that they own their own distributor, Easydis.

With these labeling initiatives care should be taken to distinguish between foodmiles, being the distance a product (including all the separate components) traveled and the carbon footprint, which takes into account emissions of a particular mode of transport as well as the bulk and weight of the product. Laudable as they are in providing some much need transparency for consumers, the way in which such a label is implemented and what it will cover will be something to keep a sharp eye on once the system is in place.

These initiatives are a sure sign that green consumption is on the rise and major players see it as having great market potential, with Tesco accompanying their January 19^th announcement with a £ 500 million (€ 740 million) pledge to turn “the fringe green lobby into a mass consumer movement” (The Independent, January 19^th). And, coincidentally, today is the annual Dutch “Sustainable Tuesday”, a reference to the 3^rd Tuesday in September when the cabinet budget for the year is traditionally announced. The theme? Putting Sustainable Consumption on the Menu.