Walmart (WMT) has already announced a number of initiatives to reduce its greenhouse-gas emissions, and it will now expand those efforts to the companies that make up its huge supply chain.
Walmart said in a webcast on its corporate website that it plans to cut 20 million metric tons of greenhouse-gas emissions from its supply operations by 2015. The world's largest retailer claims that's "150% of our company's estimated global carbon footprint growth over the next five years." Walmart likened the amount of greenhouse gasses that its plan will eliminate to the annual emissions of 3.8 million cars.The plan was created through a collaboration with the Environmental Defense Fund, an association that works on environmental problems through the application of science and economic incentives and was founded in 1967.
To accomplish its goal, Walmart says it will focus on three areas: product categories that have the highest amount of embedded carbon; "the sourcing of raw materials, manufacturing, transportation, customer use or end-of-life disposal;" and a program under which PricewaterhouseCoopers will monitor claims of carbon emission reduction.
A lot can happen in five years in both the evolution of green technology and the willingness of Walmart suppliers to go along with the plan. And as much of the business world, and many national governments, work to improve environmental standards, Walmart's initiative should become more attainable.
But many of Walmart's suppliers are outside the U.S., particularly in China, which is widely viewed as the world's greatest single polluting nation. It's questionable whether Walmart can force its programs on suppliers inside the People's Republic both because of their value to the company as low-cost providers, and because the Chinese government has not been very open to substantially reducing carbon emissions. Doing so could slow its industrial machine and make it more expensive to operate factories and other production facilities. Still, five years is a long time
Why do investors make the decisions that they do?View Course »