Sustainable Sourcing: How does Walmart measure up?

“A best practice that is foundational to Walmart’s sustainability initiative is measurement,” the company’s director of sustainability, Jeff Rice, told Triple Pundit blog recently. Hardly headline-grabbing, but not to be taken lightly – it’s key to a green agenda.

And let’s be honest, it’s important that the company is measuring intently, how else would it know that it’s falling short of its stated aim to reduce carbon emissions in stores, clubs and distribution centres by 20% by 2012? According to its 2011 Global Responsibility Report, it’s a little behind on that goal, but has still made some huge leaps towards its sustainable targets.

But I’d argue that if you only take into account the failure to hit several targets, you miss the point.

“Identifying key sustainability metrics and setting aggressive targets to improve has unlocked the creativity of our associates to find creative solutions to sustainability and business opportunities,” said Rice.

It’s a familiar tactic of an ambitious project to set high expectations and indeed, when you look at the report, it’s clearly been a catalyst for innovation and efficiency programs.

But if it sounds simple to say, I’d argue that it’s not. One of Walmart’s victories was to improve truck fleet efficiency by 65% between 2005 and 2010. Considering the scale of the company, that’s a hefty achievement and one which came through a close and potentially painful examination of the data from the existing fleet and investment in technologies and practices that lead to efficiency.

So, not only is this kind of detailed measurement about highlighting progress to consumers and concerned investors, it highlights where the company is making gains and where there’s room for improvement.

In Walmart’s case, the company discovered that separating the engine and the generator to run the air conditioning was a good idea – shutting down the engine while the driver slept at night on long distances, they saved $25m per year on fuel costs.

That figure will mean something to CFOs and shareholders alike. But beyond that it’s a credible vindication of a scheme that is working, something worth shouting about.

The message is being heard – the majority of Fortune 500 companies issue a CSR report and the number of companies reporting to the Carbon Disclosure Project have increased tenfold in seven years.

But effective measurement does more than that, even. It possibly makes you more appealing to customers who want to know all about your supply chain and your energy usage. If giants like Walmart are able to put the investment into projects such as their fleet management schemes, there’s plenty to share with suppliers that know that are able to work with them on it.

“Through SEEP [Supplier Energy Efficiency Programme], we help provide an energy audit based on knowledge we have from making our operations more efficient. And we share best practices on things like lighting technology that we know will cut both their green house gas emissions footprint and their electric bill,” notes Rice.

So maybe falling short of an aggressive target isn’t that bad. If it’s justified through effective and comprehensive measurement, it underlines the areas that need addressing, shows where there’s opportunities for collaboration and innovation and adds credibility to what a company has achieved.

Businesses and procurement functions that are slow to work out how they can and should be tracking these kinds of figures may be missing out more than they think.