The Financial Times reported that the retailer has announced an initiative to eliminate 20 million metric tons of CO2 emissions from its supply chain over the next 5 years. All but 10% of the reductions will come from Walmart suppliers rather than direct Walmart operations. The article stated that:
Mike Duke, chief executive repeated Walmart’s view that its efforts would ultimately lower prices for its customers, chiefly through resulting savings in energy use.
The company is in the process of developing GHG emissions/reduction quantification standards. What remains to be seen is the extent to which the methodology will align with existing – and regulatory – calculation standards.
Clearly, suppliers will be expected to pass emissions-related cost savings on to Walmart, while concurrently addressing the additional administrative requirements related to the sustainability/emissions reduction programs. The company has stated that vendor sustainability will become incorporated into its buying decisions.
As we mentioned in an earlier post, some suppliers may choose not to take on the additional efforts and costs associated with implementing Walmart’ sustainability and CO2 emissions requirements. But before making such a decision, suppliers should conduct a thorough assessment of it environmental profile to identify where the opportunities and risks lie. This information will assist in making more informed decisions, especially in the context of being a supplier to the largest retailer in the world.
The Financial Times recently reported that
Markit, a financial information company, will this summer launch an index based on the Carbon Disclosure Project (“CDP”) results for the 2008 survey. “There is an increasing market both from a retail and institutional perspective for products and exposure to companies who have a good environmental management strategies, and we’re certainly getting that message from many of the institutional investors who are signatories to CDP,” Ms Joanna Lee of CDP said.
The Markit information will apparently also reflect physical risk faced by a company’s EHS management activities. US companies have historically focused their HSE risk control efforts on compliance-oriented matters or remediation activities. Now there may be a direct shareholder-based driver to assess the risks on a broader basis.
Two articles in the June 26, 2009 edition of the Wall Street Journal highlighted two interesting items of potential concern to US companies who are planning their carbon or GHG strategies. The articles (links posted below) discuss
– new regulatory uncertainties of an emerging US GHG cap and trade mechanism. A new round of technical backlash is arising from respected scientists around the world concerning the previously-touted scientific consensus on GHG emissions contribution to global climate change.
– Financial institution concerns about the trading controls included in the current version of the American Clean Energy and Security Act.
There continues to be the need for US-companies to conduct a thorough business risk assessment of potential GHG trading plans and strategies.