Conference Call w/ Wal-Mart's Senior Dir. of Sustainability

While visiting Patagonia an interesting discussion came up regarding Patagonia working with Wal-Mart in helping to further develop its corporate sustainability efforts. This reminded me of a conference call I was able to listen in on with the Senior Director of Corporate Strategy and Sustainability at Wal-Mart. From these discussions I figured it would be best of me to share my cliff notes with everyone. This call was free and set up through Net Impact (I believe the recording is on the Net Impact web site). Regardless of what each of us may think of Wal-Mart as a company, I’m sure many of us know that to have them buy fully into CSR would be a huge push for both worker and environmental rights.

The call lasted about 1 hour and there was some time for questions at the end. It was very informative and well worth the time on a Friday morning. I strongly encourage others to listen in on these calls as well (I believe there is one with Sierra Nevada Brewing Company in a few weeks).

-Tony Laurino

Introduction:

Marc Gunther, Senior Writer at Fortune Magazine interviewed Rand Waddoups, Senior Director of Corporate Strategy and Sustainability at Wal-Mart Stores, Inc. As part of a small team dedicated to building sustainability into every part of Wal-Mart's global business strategy and culture. Rand is helping drive progress by delivering on 3 goals:
to have zero waste
to use 100% renewable energy
to bring sustainable product to their customers

History:

8 years with Wal-Mart
Started as a buyer in Merchandising for a number of years at Wal-Mart first
Was tapped b/c he knew the supply chain better so he could better apply sustainability into this area.
Been doing this for 2 years now
MBA from the Univ. of Arkansas

Working on:

Oct 22nd: Meeting in Beijing w/ 1,000 suppliers on responsible sourcing
Sharing the future of sustainability at Wal-Mart w/ this group
Message: environment matters, lays out expectations they have going forward

Waste initiatives:
working toward zero waste
new ways to access recyclables
new ideas to work w/ organizations on combusting and/or use products that will be compostable
TLE- tire-lube express- getting very excited over finding ways to make them zero waste
oil bottle shredders (not recyclable), tiers, oil filter, air filters, used oil, worked w/ organizations in creating pilot stores so that only thing left going into the trash is pieces that can't be thrown away after vacuuming out the customers car.

Working w/ local and national partners to create a composting effort.
America's Second Harvest- started a partnership of giving almost out of date food products that couldn't be sold to customers but was still consumable (standard industry practice)

Biggest Frustrations:

Win you set goals and can't always measure them as you expect when future comes to reality
Hard to measure what you've done w/ sustainability
This has to be decentralized, hard to develop a centralized system to measure all of this
making it owned by the business leaders


Future Excitements:

Both business and environment impact

P&L of Trash in 2006 would have been a huge expense
now in 2007 TRASH became an INCOME source!
Wal-Mart Makes money on its trash (10's of millions of dollars on this)

Hardest part of composting is the transportation. Highest cost factor for this.

Now is the BEST time to apply sustainability.

This remains in line w/ the everyday low price philosophy.

Easy for the company to grab onto this 3 yrs ago b/c it fit perfectly in w/ the company culture.

Wal-Mart worked to create transparency of their supply-chain.

Philosophy for capital expenditure:

If coming up w/ ideas for sustainability and not in line w/ the financials then the job is to go back to the drawing board and figure out a smarter way of doing it.

Sustainability isn't about Wal-Mart alone everything they learn they share, Wal-Mart wants to move the market place and not go it alone.

Example is solar panels in certain test stores...need to go back and find cheaper and easier ways to actually do this.

Want to be the pioneer in the places where they should be and can do it right. Other ways want to help the market to create it and then ride along w/ it.

Close to 21 stores are fully installed w/ solar panels. And obtain up to 1 megawatt power out of them which is A LOT!

Where is the packaging area at? :

Some areas Wal-Mart has worked with manufacturers to reduce packaging are:

Square milk cartons in all Sam's Clubs currently.
Works well w/ high distribution there
Packing for lamp shade and lamp bases
Tricycles-no longer sold in boxes, folds in half now becomes compact able and is able to be transported.




Future of CSR at Wal-Mart:

½ million associates in the US have embraced sustainability and have committed to personal sustainability projects (include stopping smoking, health related, riding bike to work, eating organic, working to reduce carbon footprints by 25%, cleaning up wetlands)

How do the buyers accept PSP's that go against the product they are working with? :

Learning that not all buyers should be growing profits
realizing that some buyers need to think creatively about making product better
Coming up w/ ways to make money but improve the environment aspect (not becoming victims out of this)

No business is 100% sustainable. More sustainable Wal-Mart is the highest quality goods w/ the most efficient process used to maintain price advantage and be part of the community that allows the store to be the right place to shop.

Group initially was created out of strategy but wear a lot of hats b/c touch on every role in the company.

Advertising isn't about how great Wal-Mart is doing but rather what YOU the customer can do to be more sustainable!

***The recorded message of the call is also on the Net Impact website/blog for all members to listen too. I strongly encourage it (it’s about 1 hour), regardless of your feelings in regards to Wal-Mart as a company it was very informative to hear how a major company is working to embrace many of the things that we find so important and how their involvement can and will radically change the marketplace for CSR. ***

Company Visit Recap: Patagonia

On Friday, October 24th eighteen members of Pepperdine's Net Impact chapter were given the opportunity to visit clothing company Patagonia's campus in Ventura, CA and speak with CEO Casey Sheahan.

Upon arrival to the campus, it became apparent that this would not be a tour of a typical global company. Employees were dressed comfortably in outdoor apparel including fleece, tee shirts, work pants and climbing shoes. The facilities reminded me of the great outdoors rather than the headquarters of a company with over 1300 employees.

We were greeted by our eventual tour guide of the facility and former 11x frisbee world champ, Chipper Bro. From there we grabbed a quick bite to eat in the dining facility (a Sunrise breakfast sandwich and Honest Tea did it for me) and headed up to the company lecture room. Here we spoke with Director of Material Development and Advanced Concepts and Pepperdine Executive MBA, Tetsuya O'Hara. Mr. O'Hara gave us a quick overview of the company and the buidling in which we were located and introduced us to President and CEO, Casey Sheahan.

At this point I had little idea of what to expect. Our group barely filled the the first row of seats and Mr. Sheahan sat informally in front of us with two large powerpoint screens behind him and clicker in hand. He casually explained the goals of Patagonia through the company's mission statement:

Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.

Build the Best Product:

We began our discussion of how Patagonia accomplishes these goals with the state of the current economy and its affect on Patagonia and the clothing industry. Mr. Sheahan likened the current economic crisis to the Great Yellowstone Fire of 1988. During that time people were afraid that Yellowstone would not be able to recover, however the forest ended up growing back stronger than it was previously. The fire actually had a cleansing affect. More specifically, Mr Sheahan views the current state of the economy as an opportunity for smaller, strong companies to gain market share through offering the best product. Patagonia continues to grow through caplitalizing on the multi-channel growth of its wholsale, retail and internet businesses.

Cause no unnecessary harm:

The roots of Patagonia's goal to cause no unnecessary harm can be traced back to founder Yvon Chouniard's 1972 push for "Clean Climbing." The Chouinard Catalog called for climbers to discontinue their practice of hammering into rock in favor of using a solution that did not damage the face of the mountain. A timeline of Patagonia's major developments in this area is as follows:

1993 - Introduction of the use of Synchilla in clothing.
1996 - Organic Cotton is used in clothing.
2004 - Common Threads Garment Recycling Program
2005 - Recycled Polyester is used in clothing.
2006 - Development of the Regulator Wetsuit
2007 - Recycled Nylon 6 is used in clothing.

One of the key aspects of Patagonia's goal is that the company realizes that not all harm can be eliminated in the process of manufacturing apparel. Therefore, Patagonia strives to be as transparent as possible in the production process of its clothing. This lead to the Footprint Chronicles in which consumers can trace the clothing back to its original sources and catalog the environmental impact of products they consume, both good and bad.

Beyond informational campaigns, Patagonia has made significant investments in research and development and making sure its processes are inline with its mission statement. For example, the Reno Distribution facility is a LEED certified Building.

Implement solutions to the environmental crisis:

Apart from internal implementation, Patagonia also seeks to help its consumers do their part in addressing the environmental crisis. This is done primarily through the Patagonia website and the development of environmental campaigns. Currently, Patagonia is under the "Freedom to Roam" campaign which seeks to designate clear paths for wildlife to migrate.

Use business to inspire:

This aspect of Patagonia's mission statement is not one that can necessarily be highlighted in a Powerpoint. However, I believe it is a feeling that came over our entire group of MBA students that through business we have the power to create positive change. Through Patagonia's example we understand that the problems we will face as business leaders in the future will be immense, but by understanding our values and remaining "committed to the core" it is possible that we can make a difference.

-Frankie Warren

first year & Net Impact member

This Week in Numbers: The Company Report

Baxter - to donate $5 million to Chicago Public Schools

Dell - renewable energy purchase up 870% since 2004 and latest desktops are 80% more energy efficient

GE cuts energy use by 29% by switching out lights in a 1950s warehouse

GE Ecomagination - revenue to hit $17 billion in 2008

Nestle Waters - published first Corporate Citizenship Report - one goal announced is to develop a "next generation bottle" made of 100% recycled materials or renewable resources by 2020

Morgan Stanley - plans to build off-grid datacenter powered by tidal energy

Patagonia - new campaign "Vote the Environment" rocks!

Sears, Target, OfficeMax, General Mills, P&G - increasing cause marketing efforts despite current economic crisis

Wal-Mart- outlines goals for socially responsible global supply chain in China

Registration for the Patagonia Company Visit is now open

Email erica.lutzker@pepperdine.edu to register.

Registration is now open to PAYING MEMBERS ONLY. (If you're not yet a paying member, here's what you need to do: how to register)

 NON-PAYING MEMBERS may register beginning Friday at 12:01pm GT.

 As there are only 20 slots for this site visit, it will be first come, first serve (provided you register properly according to the above).

 We will also create a wait list. And if you don't make the cut for this, there are lots more exciting NI events planned throughout the year!

_____________________

 Event Details:

PATAGONIA SITE VISIT

Friday, October 24th, 8:30am - 11:30 am

CEO Casey Sheahan will speak for 45 minutes, followed by a 15 minute Q&A, and then a company tour!

Make sure to read Patagonia founder Yvon Chouinard's book, "Let My People Go Surfing" and visit these sites before the our visit ::

http://patagonia.com

http://www.patagonia.com/usa/tinshed/index.jsp

(Please note that this is also the date of the VCLL Case Competition. This visit also conflicts with the NAWMBA conference. In fairness to your colleagues, please do not register for this event if you are planning on attending either of those.)