Change of Heart

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Why is Wal-Mart going green? To save money—and because it's afraid of teenage girls. Author Ed Humes explains.

By Matthew Budman ¦ Photos by Andreas Larsson

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MATTHEW BUDMAN is editor-in-chief of The Conference Board Review.

Wal-Mart keeps you guessing.

Sure, we’re talking about the same union-busting steamroller that still bends entire national economies to its will and dictates the agenda for thousands of suppliers the world over. Its low-price-no-matter-what business model hasn’t changed a bit.

But over the last several years, everything has changed for Wal-Mart—at least when it comes to environmental issues. And the ramifications are enormous: The world’s largest retailer is looking toward the next generation of shoppers through green-tinted glasses, making sustainability a cornerstone of the company’s future. And Wal-Mart, with its mammoth size and influence, is aggressively driving everyone to follow suit. “This company with such scale and power and reach, a company able to move markets and direct suppliers to do its will—for the first time that power is being used to do something other than crush local businesses or gain an advantage in a way that can be perceived as negative,” Ed Humes remarks. “The company is using its power to advance the cause of sustainability.”

Humes had written nonfiction books on a variety of topics, most recently Eco Barons: The Dreamers, Schemers, and Millionaires Who Are Saving Our Planet, and never expected to be sucked into the world of big business. But the story of Wal-Mart’s turnabout was too compelling to pass up, and the result is Force of Nature: The Unlikely Story of Wal-Mart’s Green Revolution (HarperBusiness), which lays out both the company’s short-term business case for sustainability, based on efficiency and waste reduction, and the long-term case: namely, addressing the problem that today’s socially conscious teenage girls—tomorrow’s key consumers—currently shop at Target.

Humes spoke from his home in Orange County, Calif.

Before you got immersed in this story, how often did you shop at Wal-Mart?

Not often. I had my first newspaper job pretty much right out of college, in Arkansas, where I worked for the Pine Bluff Commercial, a little daily newspaper. One of the few places to shop in town for non-grocery items was Wal-Mart, which was then still pretty much a regional business. And then I lived in parts of the country where Wal-Mart wasn’t really much of a factor. I had not been in one in many years. In undertaking this project, I had to reacquaint myself with the stores and the company.

How have your friends and family reacted when you’ve said nice things about Wal-Mart?

The initial reaction was skepticism. There’s a wonderful independent bookstore that has always been supportive and has had me in a number of times, and they said, “Ed, we love your work, but there’s no way we’re having an event where somebody says something positive about Wal-Mart—it ain’t going to happen.”

But you don’t shy from exploring at length all the reasons why so many people have long had a visceral reaction against the store.

It was critical not to have this book come off as an ode to Wal-Mart; I personally think that if you hate the company you need to know about this story even more. It’s ironic that a company that has so long been targeted by progressives and environmentalists is now the counterweight to a lot of the rhetoric that’s coming out of Washington: Green is bad for the economy, it’s a job-killer, we can’t pay attention to climate change and to renewable energy because they’re going to drag us down. Here’s Wal-Mart saying, “That’s crazy talk.” This is the ultimate red-state company, and it’s giving environmentalists ammunition against the anti-green rhetoric: “Wal-Mart says it’s good for business.” If I were running the Sierra Club, I’d be all over that.

You note that a key motivation for the sustainability initiative was to improve the company’s reputation after all these years of bashing. And it certainly has done so within the corporate-social-responsibility movement. But what about for everyone else? Does the sustainability work cancel out everything else Wal-Mart does?

No, of course not. But it’s hard to criticize a company for using its power to achieve what’s widely perceived to be a social good. If you’re a Wal-Mart critic, it leaves you between a rock and a hard place. What a lot have done is say, grudgingly, Well, on sustainability maybe they have it right. You have people like Jeff Hollender, formerly of Seventh Generation, and Yvon Chouinard of Patagonia saying, “Over my dead body, I’ll work with Wal-Mart” . . . and then working with Wal-Mart. They say, “You know what, this is for real, and Wal-Mart can certainly move a lot more widgets than Patagonia can—why wouldn’t I want to work with them?”

Adam Werbach, president of the Sierra Club, consulted with the company, and his environmentalist colleagues were aghast: You’re sleeping with the enemy! What has gotten into you? And he said, “Yes, I called them the devil; yes, I said Wal-Mart is a new breed of toxic; but then they came to me and asked me to take charge of instructing a million of their employees in what it means to be green. How could I say no to that? I’ve been trying to reach these people for their entire careers, and now the company is underwriting it. They’re coming to me and wanting to learn about being sustainable. Of course I’m going to do it.”

Were you surprised to learn, the deeper you got into the story, just how far Wal-Mart has gone in this direction?

Some things were very surprising. I’m old enough to remember the first Earth Day and the feeling that big business was the environmental problem. And so one of the things that surprised me was Wal-Mart’s 2005 announcement of aspirational goals. Management said that the environment is Hurricane Katrina in slow motion and that the company needs to respond to it in the same way that it sent water and food and relief to the Katrina victims. But then they set concrete goals—zero waste, 100 percent renewable energy—that were so far away from where the company was that they were mocked as greenwashing. Well, surprise: Wal-Mart in California has reduced its waste to landfill by 81 percent.

Oh, my!

Yeah—oh, my. Could you do it? Could I do it? Could I cut to a fifth the size of the stuff I put by the curb? And not only has Wal-Mart made significant progress toward that zero-waste goal—the company is taking the program worldwide now—but it’s making money by repurposing waste. It’s making dog beds out of plastic bottles and compost out of organic waste and donating to food banks epic amounts of food that previously would have been trashed.

Wal-Mart’s U.S. stores have had some tough times in this tough economy, and now they make $100 million a year from selling waste. They used to pay people to haul the stuff away. You know how much stuff they have to sell, with their margins, to make $100 million? They pulled that off in five years.

With the first packaging changes, which saved millions of dollars and turned waste into revenue, people at Wal-Mart asked, “Why didn’t we do this years ago?” Why do you think they didn’t? It seems like very low-hanging fruit, especially in a discounting environment, in which people are trying to root out every last stray dollar.

Well, they needed a catalyst, and that’s where the story of river guide and consultant Jib Ellison comes in. Jib didn’t invent the idea that sustainability is good for business, but he has a way of presenting it to the CEOs of big companies in a way that academics and environmentalists haven’t been able to do. He’s been nicknamed “the CEO whisperer” for getting the lords of big corporations to consider these ideas seriously. Anyway, Jib met with Wal-Mart CEO Lee Scott, and Scott got it right away.

They're saving a lot of money, they're saving a lot of trees, and they're saving a lot of space in landfills. It's a win across the board.

Timing was a factor, right?

Jib came along at the right time. Wal-Mart needed to repair its image and was fishing around for a way to do that, and his message resonated. So he persuaded the company to start looking at things differently. People began asking, Why are we doing these things? and oftentimes there wasn’t a good answer for it. One guy asked, Why are we getting wax-coated chicken boxes that can’t be recycled and we’re sending to the landfill by the ton, when for years the chickens have been put in plastic bags before being put into the wax boxes? So now they get millions of chickens—nobody sells more of them—in regular cardboard boxes that can be recycled. They’re saving a lot of money, they’re saving a lot of trees, and they’re saving a lot of space in landfills. It’s a win across the board.

But to get to that point, people had to start asking a new kind of question. In the United Kingdom, somebody asked, Why do toothpaste tubes come in boxes? The tubes are structurally stronger than the cardboard boxes they come in. It’s a 50 percent waste of packaging. So Wal-Mart is getting rid of those toothpaste boxes in their U.K. stores. Of course, this is apparently too radical for the U.S. market. But eventually they’ll say, OK, it’s safe to get rid of the toothpaste box here in America.

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The Conference Board Review is the quarterly magazine of The Conference Board, the world's preeminent business membership and research organization. Founded in 1976, TCB Review is a magazine of ideas and opinion that raises tough questions about leading-edge issues at the intersection of business and society.