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Walmart to Create a Worldwide Sustainable Product Index

A recent press release from Walmart Stores, the company ranked at the top of the Fortune 500 List, announced plans to develop a worldwide sustainable product index. The index, which was previously announced at a meeting between Walmart and 1,500 of its suppliers, associates and sustainability leaders, is designed to be a single source of data for evaluating the sustainability of products.

In a recession, people are more concerned about getting the most for their money. This does not always mean the cheapest item, but rather the best priced item based on value. “Customers want products that are more efficient, that last longer and perform better,” said Mike Duke, Walmart’s president and CEO. “And increasingly they want information about the entire lifecycle of a product so they can feel good about buying it. They want to know that the materials in the product are safe, that it was made well and that it was produced in a responsible way.”

The index will be created as part of a three phase study. First, Walmart will evaluate the sustainability efforts of its 100,000 plus suppliers around the world with a 15 question survey. This survey will focus on four major areas:

energy and climate

material efficiency

natural resources

people and community

“The survey will include simple but powerful questions covering familiar territory, such as the location of our suppliers’ factories, along with new areas like water use and solid waste,” said John Fleming, chief merchandising officer, Walmart U.S. “The questions aren’t complicated but we’ve never before systematically asked for this kind of information. The survey is a key first step toward establishing real transparency in our supply chain.”

The second step of the project is for Walmart to create a consortium of universities, including the University of Arkansas and Arizona State University, to analyze the data. They will collaborate with suppliers, retailers, NGOs, and the government to create a global database on the life cycle of products, from raw materials to disposal. The Company has already provided the initial funding for the Sustainability Index Consortium. In creating the database, Walmart is looking to partner with leading technology companies to create an open platform to power the index.

The third and final step will be to make this information user-friendly. Walmart plans to develop a simple rating system for the product information that consumers can easily use.

The first results are expected by early October, when top tier U.S. suppliers to Walmart Stores have been asked to complete the survey.

“It is not our goal to create or own this index,” said Mike Duke. “We want to spur the development of a common database that will allow the consortium to collect and analyze the knowledge of the global supply chain. We think this shared database will generate opportunities to be more innovative and to improve the sustainability of products and processes.”

Duke sees this as a lasting trend: “Higher customer expectations are a permanent part of the future.” The index is part of Walmart's plan to make sustainability a priority through both times of feast and famine. Walmart believes that the way to do this is by developing tools that will enable sustainable consumption.

Questions on the sustainability survey include:

Energy and climate: reducing energy costs and greenhouse gas emissions

1 Have you measured your corporate greenhouse gas emissions?

2 Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?

3 What is your total annual greenhouse gas emissions reported in the most recent year measured?

4 Have you set publicly available greenhouse gas reduction targets?

If yes, what are those targets?

Material efficiency: reducing waste and enhancing quality

1 If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Wal-Mart for the most recent year measured.

2 Have you set publicly available solid waste reduction targets? If yes, what are those targets?

3 If measured, please report total water use from facilities that produce your product(s) for Wal-Mart for the most recent year measured.

4 Have you set publicly available water use reduction targets? If yes, what are those targets?

Natural resources: producing high quality, responsibly sourced raw materials

1 Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?

2 Have you obtained third-party certifications for any of the products that you sell to Wal-Mart?

People and community: ensuring responsible and ethical production

1 Do you know the location of 100 percent of the facilities that produce your product(s)?

2 Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of, and capacity for, production?

3 Do you have a process for managing social compliance at the manufacturing level?

4 Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?

5 Do you invest in community development activities in the markets you source from and/or operate within?

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