Walmart Chile and the Sustainability Consortium

Walmart Chile, as member of the global Walmart family, are leading charge on sustainability. Fundación Chile and Edge Environment have been working with Walmart Chile and the Sustainability Consortium since 2010 to prepare the ground for a leading product sustainability programme.

Walmart Chile leading charge on sustainability

On July 16, 2009, Walmart – a leading retailer that serves more than 200 million customers per week out of 8,466 retail stores in 15 different countries – publicly announced their plans to develop a worldwide sustainability index in order to measure the sustainability of their products. The envisioned end results will help suppliers produce higher quality at a lower cost and for consumers to live better in the 21st century.

Walmart Chile, as a member of the global Walmart family, are in many areas leading the charge towards sustainability in partnership with Fundación Chile and Australian consultancy Edge Environment.

The need for action

The general public around the globe are showing growing concern to protect the environment in their purchasing decisions, their investment decisions and the way they vote. As a result, retailers, manufacturers, suppliers, governments and NGOs are under increasing pressure to reduce the environmental and social impacts. All are important stakeholders in improving the sustainability of global product production and use.

Consumers may boycott brands that have poor environmental or social record or image and show loyalty to retailers that convey ethics of environmental responsibility and sustainable stewardship.

Perhaps the most potent signal of a retailer’s commitment to consumers might take the form of environmentally labelled products, helping to inform consumer choice. Food brands with improved environmental performance may achieve premium prices and this will promote competition and innovation in the food sector to produce lower impact food products.

The consumer will associate this ethic with retailers that carry the food label, reinforcing customer loyalty.

Giving consumers choice

In store labelling of leading products in terms of low impact on the environment is anticipated to be the most visible outcome of the partnership. Environmental labels and declarations are at the crossroads of environment concerns and commerce. Voluntary ecological labelling (eco-labelling) is the result of a business approach which aims to take advantage of market forces to influence the informed consumer. It’s about giving the consumer the opportunity “to put his/her money where their mouth is”, and purchase environmentally friendly goods so as to pressure firms to mend their ways say Edge Environment Director Jonas Bengtsson.

No green wash

Often consumers are overwhelmed with claims such as “eco-friendly”, “environmentally safe”, “recyclable”, “biodegradable”, “carbon neutral”, “natural”, etc. Differentiating fact from fiction and meaningful from irrelevant is difficult in our day-to-day purchases. Additionally, often highlighting single issues has proved to be too simplistic often resulting in perverse outcomes that are more rather than less damaging to the environment. Single issues have also been conveniently used by companies to paint a deceptive green picture of the environmentally friendliness of their products.

A proper assessment of products and materials, needs to use Life Cycle Assessment (LCA).

This entails assessing a comprehensive range of environmental impacts that takes account of the whole supply chain of the products over their full life, from the extraction of raw materials, agricultural production, through all stages of production and transport, consumption and disposal of waste and packaging. But LCA can go wrong too, if it is not conducted on a sound “level playing field” basis between alternative competing materials and products.

A corner stone for long terms success and credibility of product comparisons for Walmart Chile is the specific product assessment methodology, adapted for Chilean conditions and aligned with international best practice. Broadly speaking, it has always been and continues to be the intent of this project to build on the existing body of LCA work and to place emphasis on practical communication of relevant data. It is likewise important that the initiative is able to capture the unique data and insights that are relevant to the Chilean market, while also ensuring alignment with the global activities of the parent company. This methodology will make sure that product assessment results are independent of value choices by the experts conducting the research, says Cristian Emhart of Fundación Chile.

Walmart is not alone in setting out these types of measures

There is considerable work underway internationally and growing interest in the concept of sustainability related labelling of all goods and services. According to cataloguer there are currently over 350 eco-labels in 25 industry sectors globally. Many overseas retailers are committing and progressing labelling as a potent signal to consumers of its social and environmental responsibility in the supply chains of the products they sell. Walmart is not alone in setting out these types of measures:

  • In the UK, Marcs and Spencer have set up a sustainability plan consisting of 180 commitments, which are solely focused around suppliers’ performance on a range of environmental criterion.
  • Pão de Açucar’s Caras do Brasil product label promote shelf food and handcraft products made by groups or associations that preserve the environment and address social problems.
  • The “Grenelle de l’Environnement” within the French government are taking legislative measure that will make environmental disclosure on consumer products mandatory.
  • Sweden is developing standards to help consumers make conscious choices about the impact of their decisions on global warming. Products with at least 25% greenhouse gas savings will be marked in each food category, starting with plant production, dairy and fish products.
  • Japan is to carry carbon footprint labels on food packaging and other products in an ambitious scheme to persuade companies and consumers to reduce their greenhouse gas emissions. They will provide detailed breakdowns of each product’s carbon footprint under a government-approved calculation and labelling system now being discussed by the trade ministry and around 30 firms.

International Coordination

Individual retailers and brand owners cannot address these issues without their peers calling into question the validity and robustness of the retailers claims – a common eco-label developed collectively by the industry is.

The two main international initiatives attempting the sustainability assessment of consumer goods are the European Food Sustainable Consumption and Production Round Table, and the US Walmart inspired Sustainability Consortium.

The Sustainability Consortium is an independent organisation, launched in July 2009 and currently has over 60 member organisations from a diverse range of stakeholders, including brand owners, retailers, NGOs, consultants, tool developers, and government departments. Membership includes major industrial organisations, NGOs and Associations, including Walmart, Alcoa, McDonalds, L’Oreal, Procter & Gamble, Unilever, WWF and Fundación Chile.

The consortium’s objective is to build a scientific foundation that drives innovation to improve consumer product sustainability through all stages of a product’s life cycle. The Consortium is jointly administered by the University of Arkansas and Arizona State University in the USA.

The European Food SCP Round Table is an initiative that is co-chaired by the European Commission and food supply chain partners and supported by the UN Environment Programme (UNEP) and European Environment Agency. There are 24 member organisations representing the European food supply chain. Participation is open to consumer representative organisations and environmental/nature conservation NGOs.

A vibrant partnership

Fundación Chile and Edge Environment have been working with Walmart Chile and the Sustainability Consortium since October 2010 to prepare the ground for a world leading product sustainability programme. With Fundación Chile’s eagerness to move the boundary of business as usual through the retail supply chain, Edge Environment’s broad international experience and expertise in LCA and product labelling, and Walmart’s appetite for innovation, we’ve been moving fast over the last half year to provide ground breaking research into the environmental performance of Chilean consumer goods. This is a challenging but exciting partnership where we at times have to run ahead of international consensus through the Sustainability Consortium and innovate to meet the needs for Walmart and Chile says Cristian Emhart and Jonas Bengtsson.

Read more in Fundación Chile’s newsletter: Consumidores Chilenos tienen ahora el poder de reducir su huella ambiental de consumo (in Spanish)

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