Wal-Mart

Well, you never know what to expect next from Wal-Mart. Today, they announced a new “Live Better Index” in an e-mail:

Yesterday, the Financial Times reported on a community of Benedictine nuns based in Texas who were stunned to find themselves on a list compiled by Wal-Mart of the biggest threats to the company. The nuns have called on Wal-Mart to explain how they came to appear on the list.

It’s sad to see one of the greatest “potential” forces for a more sustainable planet continue to undermine itself. Wal-Mart is on a dangerous see saw. One day, there’s good news, and the next it’s bad. This is a characteristic of too many large companies (BP and Merrill Lynch to name a few others) as they confine their sustainability and responsible business initiatives to a limited number of highly compartmentalized efforts.

These “non-system” activities create as much reputational risk as they do opportunity. Until any company looks at its entire business and develops a “whole” effort to manage all aspects of its activities with an integrated point of view there is little or no chance of sustained success. This is about changing the way we think, how we think, and what we think about.

This week’s New Yorker magazine (4/2/07) features a long negative story about Wal-Mart’s effort to “co-opt liberals.” This is another in the series of good news/bad news stories that both helps and plagues the company. After nearly a year of this endless seesaw, one wonders when they will get the message that systemic change is the answer. As I have often said about many other companies, without a systemic approach that engages the whole culture, the good work done by the right hand is almost immediately undone by the left hand. Compartmentalized initiatives do not work when it comes to managing risk, reputation and moving towards sustainability.

A few of the article’s highlights:

• According to one source, Wal-Mart has been paying Edelman Communications roughly ten million dollars annually to renovate its reputation. Edelman specalizes in helping industries with image problems; another important client is the American Petroleum Institute
• Ron Galloway, the maker of a recent pro-Wal-Mart documentary, "Why Wal-Mart Works and Why That Makes Some People Crazy," has turned against the company. Galloway told me that he now considers Wal-Mart to be a "heartless" employer.
• The chief spokeswoman for the company, a former A.T.&T. executive named Mona Williams, keeps on a shelf a filmed cover of a 2003 issue of Business Week featuring a story titled "Is Wal-Mart Too Powerful?" The story asked tough questions about Wal-Mart's influence on the American economy. "I keep that there to remind me never to trust reporters," she said, without smiling.
• Lee Scott, Wal-Mart's president and C.E.O., who last year earned $15.7 million in salary and bonuses. Early this month, the company announced that it was granting him an additional twenty-two million dollars in stock. In the past year, Scott earned roughly two thousand times the salary of the average Wal-Mart worker.

Greenbiz posted an excellent excerpt this week from a new report from Innovest that looks at the forces reshaping various industries whose products either consist of or depend on synthetic chemicals.

The gist is that government regulations (especially in the European Union) and consumer concerns about chemicals are inspiring all kinds of companies to phase-out the big bad toxins they use and replace them with safer alternatives. And in a global marketplace, the decision to ban something one place often ripples out to other places as companies simply decide to reformulate their products to meet the strictest standards they face rather than deal with selling different formulas in different markets.

Even more extraordinary (given the history here) is the fact that many companies are voluntarily making changes and launching their own chemical phase-outs because they think they see some handwriting on the wall and they want to avoid what the report calls “toxic lockouts,” i.e. having their products shut out of a market because they contain newly banned substances.”

I’m just getting back from a busy couple of weeks. One of the biggest things I did during my time away was head down to Arkansas to attend Wal-Mart’s Sustainability Milestone Meeting in mid-November. It was an interesting experience to say the least, and a largely positive one at that. Here’s my diary from the trip…

It catches me off guard, even though I should have expected it. I’m seated in the front row of the Sam Walton auditorium. Lee Scott, Wal-Mart CEO is pacing in front of the room with a cordless microphone, dressed in grays and blacks, mock turtleneck, frequently adjusting his glasses. He waves everyone in the room to their feet. I may be the only one in the room that doesn’t know the cheer. My momentary anxiety is relieved when I realize that it’s pretty easy to learn! I didn’t know that the Sam’s Club cheer always follows the Wal-Mart cheer.

I’m at the quarterly Milestone meeting, the public place that punctuates the progress of Wal-Mart’s sustainability initiative. The turn-out for Wal-Mart associates is low, seats are empty. Lee notices. The senior management team was out in full force. From the infamous Susan Chambers and Doug McMillan, President of Sam’s Club to the CFO and the head of Global Purchasing.

No, but…

Business Week’s cover story on The Organic Myth continues to stir up a debate that first appeared in the mainstream press when Michael Pollan (an excellent writer who went to the same grade school as I did at the same time!) wrote a terrific book, and an excellent article, and provoked a debate of sorts in the New York Times.

He was among the first to challenge the impact of Wal-Mart’s entry into the organic food market and ask whether it’s better to buy local than organic and what benefits organic food really brings to the table when it’s being shipped half way around the world.

Business Week reveals more information about the industry that I, for one, find troubling. “Sometime soon a portion of the milk used to make that organic yogurt may be taken from a chemical-free cow in New Zealand, powdered, and then shipped to the U.S. True, Stony field still cleaves to its organic heritage. For Chairman and CEO Gary Hirschberg, though, shipping milk powder 9,000 miles across the planet is the price you pay to conquer the supermarket dairy aisle. ‘It would be great to get all of our food within a 10-mile radius of our house,’ he says. ‘But once you're in organic, you have to source globally.’"

This debate is complex but important. The Business Week cover story is a sad statement about the media’s need to get attention to sell magazines. Organic, for all the challenges it faces is no myth. In fact, the USDA certification program is a rare regulatory success at a time when the current White House administration is dismantling decades of hugely important environmental legislation.

My advice? Buy locally grown food when ever possible, and when local isn’t available buy organic, but ask where it came from first!

There’s more at Grist.

Over the weekend, someone at the office pointed out to me that Philip Slater, a columnist at the political blog the Huffington Post, had written an article in which, as part of a larger argument, he said our decision not to sell our products to Wal-Mart was evidence that I was practicing “prissy puritanism.”

Our Wal-Mart decision didn’t come easy. There was a lot of soul-searching and a lot of debate, and as I feel quite strongly about the position those deliberations led to, I felt equally strongly that a reply to Mr. Slater was in order. It took me a few days to get to it, but here’s the comment I left on the Huffington Post this morning …

I got to spend some time during the week hanging out with Andy Stern, the visionary President of the Service Employees International Union, the biggest, fastest-growing union in North America. I have often joked that “unions” are like a bad brand. Either someone needs to reinvent them or they will continue to die. Well Andy Stern is the man.

He thinks systemically about whole solutions that benefit all stakeholders. He knows than unions can’t thrive if they put companies out of business and that redesigning our health care system (we spend twice as much as the UK and we’re half as healthy) is perhaps the most critical change we need to make to ensure we can continue to create an environment that allows America to compete in the global marketplace. Wal-Mart Watch is also his brain child and while controversial, he deserves lots of credit for getting Wal-Mart headed in the right direction. His new book is just out,
A Country that Works – Getting America Back on Track. I can’t wait to read it! In the meantime, I’ve been checking out his blog entries
at the Huffington Post

My recent post about Wal-Mart's professed desire to go green generated some valuable feedback from reader Valerie who commented, "When I read that you declined to have your products in Wal-Mart I was completely shocked for many reasons."

First, I want say thanks, Valerie, for your thoughtful critique of our decision not to sell to Wal-Mart. This is without question one of the most complicated business and ethical questions we face. And it's well worth adding a few additional thoughts to my previous post.

On July 26th Fortune Magazine published a cover story on Wal-Mart under the banner “Wal-Mart Saves the Planet, Well Not Quite…”

Something is going on here that I’m not quite sure we understand.

Whether you believe Wal-Mart is the devil incarnate or are a cheerleader for what they are doing, the truth lies somewhere else.

Call me crazy – but I believe this is a bigger, more significant, pattern changing event. We can’t understand it by looking back – we need to understand it as a new possibility that is rushing toward us. The future in the making.

Think, the end of the cold war, the Berlin wall coming down, our first trip to the moon.

That is not to say it’s all good, but here are 7 things to ponder...