Wal-Mart promises to accelerate sustainability effort

The incoming CEO of US retail giant Wal-Mart has reiterated the firm's commitment to sustainability, pledging to reduce packaging and environmentally-damaging detergents – but many of its critics remain to be convinced.

Mike Duke, who takes over from Lee Scott on 1 February, said at the firm's sustainability meeting on Monday: “We want to accelerate our efforts in sustainability. We want to broaden our efforts.”

Two targets were announced at the meeting – a 70% reduction in the use of phosphates in detergents by 2011 and a 5% reduction in packaging by 2013. Both apply to the Americas region, although already in the US it only sells phosphate-free detergents.

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In a message to the firm's 2 million workers, Duke said: “The leaders that get ahead in Wal-Mart will be ones that demonstrate their commitment to sustainability. You won't be able, in the future, to really be viewed in the same way if you put this on the back burner.”

Outgoing CEO Scott had a Damascene conversion to the sustainability cause after Hurricane Katrina in 2005, which affected more than 100 of the firm's stores. Scott committed the firm to source 100% of its power from renewables, to create zero waste and to sell products that sustain resources and the environment.

Progress has been made in several areas; for example, 360 of its 2,000 stores are now supplied with wind energy.

However, the company is still heavily criticised, according to Antoine Mach at ethical ratings consultancy Covalence, based in Geneva, which tracks how multinationals are perceived in the social and environmental fields.

Wal-Mart has performed better in recent years, but is currently ranked 14th out of 35 retailers, Mach said. “They are in the first half of the group and, on certain topics, they have become a leader. But on others, such as labour rights, they need to improve.”

Wal-Mart's sustainability performance has largely failed to convince investment analysts. It has, for example, never appeared in the Dow Jones Sustainability Indexes, a leading index series compiled by researchers at Zurich-based SAM Group and widely used by sustainable asset managers.

Meanwhile, Wal-Mart has not made a formal report on progress towards its sustainability goals since late 2007.

Wal-Mart has set comprehensive and ambitious environmental targets, said Linda-Eling Lee, a New York-based senior analyst covering the global retail sector for Innovest Strategic Value Advisors, a specialist environmental, social, and governance research company.

She said she had only just begun to delve into their performance against the targets, but noted: “They are so big that anything they do, from a world resources point-of-view, adds up to a lot.”