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Inside Walmart's Sustainability Consortium
When Walmart made its much-ballyhooed announcement last month that it would launch a Sustainability Index, one key part of that announcement got short shrift. The retail giant also announced the creation of a Sustainability Consortium, a group of academics and others with the ambitious agenda of "establishing the scientific standards to measure the sustainability of consumer products."
With Walmart and the Index at least temporarily out of the spotlight, I decided to look into the Consortium to understand what it was all about. My interest in doing so was piqued by inquiries from sustainability executives at several large companies who wanted my take on the Consortium and whether they should join.
An initial look at the Consortium raised a number of questions. For starters, I was intrigued that major consumer product companies were paying to join a consortium whose principal purpose was to set the standards by which these companies' products would be judged. Was this some kind of fox-and-henhouse charade? Moreover, membership isn't cheap. The Consortium is asking "founding members" to pay between $50,000 and $250,000 a year for three years, with lower membership levels at $25,000 for smaller firms with fewer than 500 employees and $10,000 for government and nongovernmental organizations — each with a three-year commitment. Each membership category offers its own combination of benefits, all contained the group's a membership application (Download - PDF).
So, what's really going on here? What do companies get for their money?
To find out, I interviewed the Consortium's co-directors, Dr. Jay S. Golden, from School of Sustainability at Arizona State University, and Dr. Jon Johnson, from the Sam M. Walton College of Business at the University of Arkansas. Their two schools are co-conveners of the Consortium.
Johnson and Golden started with a little history. The Consortium idea emerged about a year ago as Walmart gathered groups of experts to help further its own sustainability goals. "The idea of quantifying sustainability of products arose," explained Golden. "We were thinking about what kind of body could make that come to life. It became very clear to us that no one researcher, no one institution, could do that because you're dealing with geographies around the world and with various sciences — physical, life, and engineering — and that required a multidisciplinary approach. So we outlined a proposal to Walmart to develop a consortium of academic researchers from institutions to think through the process and try to bring it to life based on the best available sound science and engineering principles available."
It's important to note that the 15-question supplier assessment that Walmart recently introduced to evaluate companies is not part of the Consortium's work. Rather, the Consortium's mandate is to focus on how to evaluate products, which Walmart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores. (The company has suggested the product ratings might hit store shelves in about five years, but it's become clear to me that no one really has a firm grip on a reliable timeline.) Walmart has stated that it is hoping other retailers will adopt the standards, and that the eventual standards be "owned" independently, at an appropriate nonprofit, university, or other entity.
To create the product standards, the Consortium is relying on lifecycle modeling, a complex and heretofore costly methodology that, as I recently wrote, seems to be undergoing a renaissance. Creating the full complement of lifecycle-based standards that address the mind-boggling array of products that Walmart and other retailers carry — apparel, baby products, electronics, groceries, jewelry, pharmaceuticals, toys, and much more — is the Herculean task the Consortium is undertaking. Accomplishing this will require a vast number of people ... and vast sums of money.
Which is where membership comes in. Already, more than a dozen companies have ponied up, including Cargill, Clorox, Dial, Earth Friendly Products, General Mills, Henkel, Monsanto, Pepsico, Procter & Gamble, SC Johnson, Seventh Generation, TetraPak, Tyson, Unilever, Walmart, and Waste Management.
Jay Golden explained the core of the group's activities. First, there's the foundational research. "We're trying to put the right science, the right data, and the right metrics in there," and then place the data into an open-source system for all to use. "Think of it almost as Linux," he said. The group is developing a tool called Earthster, a sophisticated open platform for making lifecycle assessment easier, faster, and cheaper, in part by pooling existing databases and models, then tapping the larger community to share data, research, and results.Another facet of the Consortium's work involves understanding consumers and how to effectively communicate to them information about the sustainability attributes of a wide range of products and sectors. "How do you bring coherence and harmonization to these different efforts?" asks Golden.
So, will Consortium members get special access to the lifecycle databases and consumer research? No, the Consortium's work will be open to all. Johnson and Golden repeatedly emphasized that the Consortium will be fully transparent about its activities. (You already can find every presentation, white paper, and meeting summary to date on the group's website.) Says Johnson: "Transparent is a word that Jay and I use probably fifty times a day these days."
What, then, does membership in the Sustainability Consortium offer?
The best case Johnson and Golden could make was that participating companies will gain a great deal of knowledge by being at the table where the hard work of developing standards is being done. "I think it is safe to say that a company that is engaged in the process and is sponsoring research that explores lifecycles that are relevant to that company — they are probably in a better position to learn from the process," explained Johnson. "There's a lot of benefit to being in the room and being involved in the research that goes beyond the published results." As such, he explained, participating companies will be better able to put the information and systems to use, "whereas companies that are waiting on the sidelines to see what happens are going to be on their heels."
What about some of the other membership benefits being offered, such as seats on advisory councils and sector working committees, invitations to various workshops and meetings, updates via newsletters and publications? Will nonmembers be deprived of such things?
Not really. Everything will be public, though Golden and Johnson suggested that paying members will get guaranteed slots or preferential seating at meetings, while nonmembers will have to queue up on a space-available basis.
Having delved into all this, I'm still not entirely sure I understand the real value proposition of membership in the Sustainability Consortium. The part about the learnings one might derive from being at the table is certainly valid, and that could well be worth the membership fees for some companies. Beyond that, membership seems to be primarily about supporting the Consortium's important work — in a word: philanthropy.
And that brings us back to the question of propriety. While I don't doubt for a second the sincerity or integrity of Johnson, Golden, and their colleagues, and their stated intention of avoiding conflicts and pursuing transparency, I'm concerned about the optics of it all: the perception that major manufacturers are helping to create the methodologies or otherwise set the rules of rating products, presumably to their advantage. And I worry that this perception could undermine the reputation of the work the group will undertake.
The one thing I learned for certain about the Consortium — and, for that matter, about all of the sustainability rating initiatives Walmart has put into play — is that they are as amorphous as they are ambitious. That is, their design and execution, not to mention their timetables, remain very fluid. One hopes that as these initiatives take shape and gain traction, their leaders will take exceptional care to ensure that their work will be unassailable. Anything less, I'm afraid, will be seen by the public as unacceptable, or worse.
August 16, 2009 | Permalink
Comments
I agree the consortium gives off a feeling of trepidation. I'm all for the private sector leading on such issues but this does raise the issues of ownership and motives.
The move is probably more than mere philanthropy in a similar way Google.org is more than just a philanthropic endeavour (but at least they openly brand it as theirs!).
I'd like to remain optimistic but Walmart's track record across other agendas will keep me on my guard.
Posted by: David Connor | Aug 16, 2009 10:42:33 PM
Joel, thanks for some real inside information on the Consortium. I am certain some of the corporate participants feel compelled to join either because they are so closely tied to Walmart or because they are anxious about what might emerge form this undertaking. Because of the heft of Walmart, it is undoubtedly going to be very influential in terms of product ratings, regardless of the scope. Given how tight budgets are at the moment, I am actually a little surprised how many companies were able to step up and join. While I applaud Professor Golden's desire for transparency, what strikes me as more important is stakeholder input and not merely visibility into the process. The Consortium should take a cue from the WRI's stakeholder processes.
Posted by: Bruce K | Aug 17, 2009 8:36:23 AM
Joel - Green Tick Certification from New Zealand has already developed a totally independent and scientifically sound set of life-cycle based sustainability standards for any product or service anywhere.
Products that pass an independent Green Tick audit get to use the Green Tick brand on their packaging - a powerful green symbol that everybody understands instantly.
We undertook a 5 year research project 2000-2005 in Australia and New Zealand to develop the standards, published peer reviewed scientific and marketing papers in an independent journal (www.emeraldinsight.com), and presented our system to the UK and EU Govts at the 2005 International Sustainability Conference in Switzerland.
Our certification system, and our status as a government-approved certification authority has been accepted by the Australian and NZ Governments. Approval by the US Govt is pending, with applications soon underway with UK and EU Govts.
The first company to get Green Tick Certification on their products enjoyed sales increases of 52%. And we are the only certification agency that publishes our audit reports for free on-line at www.greentick.com.
So, it's all been done already by the same people (Kiwis) who split the atom first (Ernest Rutherford), and climbed Mount Everest first (Ed Hillary)!
And Green Tick solves the credibility issue for consumers - we have no financial connection to any industry, government, or NGO, so consumers can be assured that Green Tick is completely independent and totally transparent.
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Posted by: Ted | Aug 19, 2009 2:28:53 AM
This sounds similar to the US Climate Action Partnership, in which major energy-related companies (Duke, General Electric) are pushing for cap and trade regulation--just to make sure they can be at the table when the details of this regulation are nailed out. These details can be structured to favor one company's practices and history over another, and can result in millions of $$ in savings or profits.
The Sustainability Consortium's planners might honestly claim transparency by keeping stakeholders informed of decisions made. But a quick glance at the membership structure shows that the companies that can pay more have more say in WHAT decisions are made. Tellingly, NGOs are not even allowed to participate in any decision-making processes.
Another thing: why remake the wheel? If the US government is reviweing the Green Tick standards (and the Arkansas professors would be fools if they weren't aware of this), there must be some other benefit....
Posted by: Maura Nunez | Aug 20, 2009 5:15:49 AM
Thanks for your careful work on unpacking this, Joel. I'd like to assume best (if naive) intentions behind this, but optics _do_ matter. Selling seats at the table - or even appearing to do so - for something of such potentially large importance doesn't only raise questions of propriety; it raises the question of whether the requisite variety of experience and insight _will_ make its way to the table.
Posted by: Gil Friend | Aug 24, 2009 8:26:04 PM
Dear Joel:
Thank you for your informative update on the Wal-Mart Sustainability Consortium.
Like many of your readers. I depend on you for timely information on developing stories. This is certainly one of them.
While I applaud Wal-Mart's leadership in pursuing the issue of product labeling, the implicit exclusivity of the stakeholder group and the cost of entry is troubling. Asking a supplier, especially in this economy, to commit $75,000.00 (three-year commitment at $25,000.00 per year) or an NGO to commit $30,000.00, is effectively a nonstarter for many would-be players. It's a 'pay-to-play" scheme.
Also of concern is the likely lack of participation by established groups, among them some well-recognized NGOs that could move the agenda forward with their knowledge and experience from years of work in this area. Both here in the US and internationally, groups like Green Seal have committed time and energy to developing protocols for product labeling. The criteria and protocol have been developed by multi-disciplined stakeholder groups.
As you have implied, developing comprehensive LCA-based labeling for thousands of products is daunting at the very least. Might it not be more appropriate to start with what is likely one of the most pressing issues, like the carbon footprint? There are schemes involving for carbon footprinting of products that could be the basis of the Wal-Mart program. These could be built on and expanded to include more comprehensive criteria over time such as the hydrological footprint, virtual water contained, and social equity and governance issues related to the supplier. Carbon footprinting alone would be difficult enough, but to start with it and build upon it might get information that is most important to the consumer in a much more timely manner. It would also provide for a less steep learning curve.
There are other benefits that a simple carbon footprinting scheme might allow, such as the building a platform for complementary supporting policies and potential "sustainable" funding strategies for the entire endeavor. Without embedding a structure that would allow complementary policy to institutionalize the effort beyond the gates of Wal-Mart and a funding strategy, to ensure its long-term viability, the effort may become an unfunded mandate or aspiration - another project or program. Since the funding in its current form (philanthropy) is subject to the discretion and self-interest of the philanthropist, what happens if the players back away from the table?
Importantly, the scale and the scope of this initiative will likely overshadow or displace other potential initiatives. If it does not succeed, the time lost may hobble other sincere efforts and threaten the pursuit of future initiatives. There's a lot at stake here.
Thank you for the opportunity to share some thoughts....
JohnPaul Kusz, FIDSA,FRSA
Associate Director
Center for Sustainable Enterprise
IIT Stuart Graduate School of Business
Chicago, Illinois 60661
www.stuart.iit.edu/cse
jpkusz@stuart.iit.edu
Posted by: JohnPaul Kusz | Aug 28, 2009 11:12:15 AM
This group smacks of conflict-of-interest, corporate-centric policy manipulating/maneuvering to ensure the rules-of-the-road favor the members.
Or, probably more likely, an effort to impress WMT category managers that they are big enough to sit at the grown-up’s dinner table.
Can you imagine the consequences if the big automakers had formed a group to define safety, fuel-economy, and smog-standards in the 1960s and 1970s, or tobacco companies had defined cigarette label warnings and ad-spending restrictions? Somehow I think L.A. would still be choked with smog, and cartoon camels would be entertaining my teenage kids.
I’m unimpressed.
Posted by: Roger | Oct 7, 2009 7:44:14 AM
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