Wal-Mart chief executive Lee Scott surprised observers by embracing sustainability in a speech to staff in October, announcing ambitious initiatives on “all the issues that we’ve been dealing with historically from a defensive posture”. The initiatives were widely seen as a response to what Scott had called “one of the most organised, most sophisticated, most expensive corporate campaigns ever launched against a single company”. Scott said Wal-Mart, the largest retailer in the world, aims to eventually derive all of its energy from renewable resources, wants to create zero waste, and sell products that sustain resources and the environment. Specific measures include plans to increase fuel efficiency of its fleet by 25% within three years; to invest at least $500m a year in technologies and innovations to reduce greenhouse gases by 20% in seven years; and to cut solid waste by 25% over three years.
The company also plans to pursue regulatory and policy changes that will provide incentives for utilities to invest in energy efficiency and low or no greenhouse gas sources of electricity. In China, Wal-Mart plans to assist and support the development of a green company programme, and initiate a programme in the US whereby it shows preference to those suppliers who set their own goals and reduce their own emissions. Scott also said the US minimum wage of $5.15 was outdated: “We can see first-hand at Wal-Mart how many of our customers are struggling to get by.” The campaign against Wal-Mart has appeared to have taken its toll. A public opinion survey in December by Zogby International found that 38% of Americans have a negative opinion of the retailer and 55% have formed a less favourable opinion of it “based on what they have recently seen, heard or read”.http://www.walmartfacts.com
Editorial Comment
Back in April, we wrote how ‘Wal-Mart is coming’, after the behemoth ran a series of advertorials in the US press promising to get fully involved in the CSR debate. So Lee Scott’s proclamations come as no surprise. Scott has been finding it increasingly difficult to keep investors happy. Wal-Mart stock is down nearly 20% from its April 2004 peak, as sales growth shows sign of slowing and shareholders cut their exposure to the perceived ‘headline risk’ of the ongoing class-action lawsuit, whereby women workers allege the company discriminated against them. There is one reason more than any why Wal-Mart appears to be finally ‘getting’ CSR. To continue to be the world’s most successful retailer, it must extend its customer base beyond low-income consumers to the growing middle classes. Christine Augustine, an analyst at investment bank Bear Stearns says these low-income consumers have seen their disposable incomes eroded by factors such as rising energy prices. To convince middle-income shoppers, who traditionally buy groceries at the store, but go elsewhere for clothing and electronics, Wal-Mart needs a radical facelift. What better than conversions to a caring, sharing firm, with commitments on climate change, better healthcare, organic products and waterless urinals (at the experimentation phase)? Zogby’s poll shows the extent of the damage. No matter what economic benefits a company provides – and Wal-Mart has based a lot of its traditionally “defensive posture” on the ‘economic good’ of its operations – it means little without a positive reputation. The documentary Wal-Mart: The High Cost of Low Price portrays this dilemma, charting an instance in which the well-off, predominantly black Los Angeles neighbourhood of Inglewood slammed the door on Wal-Mart, voting down a proposal to build a superstore in their community despite a lengthy and costly corporate campaign. For Wal-Mart to convince us that it is ‘doing CSR’, it must step out of its secretive Bentonville citadel (where it has reportedly set up a war room with PR firm Edelman) and produce the numbers to prove it. Otherwise it will be back to square one – the “Beast of Bentonville” versus the campaign groups.
CR drives competitiveness
Responsible business practice is becoming an increasingly important driver of national and regional competitiveness, according to a report by consultancy and think tank AccountAbility. Responsible Competitiveness: Reshaping Global Markets Through Responsible Business Practices estimates the statistical relationship between the state of corporate responsibility and the competitiveness of nations. Nordic countries dominate the top of the list, suggesting they are achieving sustainable economic growth based on responsible business practices. In compiling its Responsible Competitiveness Index (RCI), AccountAbility assessed the state of corporate responsibility in over 80 nations around the world by examining criteria including corruption, civic freedom, environmental management and corporate governance in each country. The results of this research were then combined with the World Economic Forum’s (WEF) Global Competitiveness Index to produce the Responsible Competitiveness Index.
Simon Zadek, chief executive of AccountAbility and one of the report’s authors, said the findings have huge implications for Europe and especially for its ambitions to become the world’s most successful knowledge-driven economy, as espoused in the Lisbon agenda. “Europe has the potential to develop its own brand of competitiveness based on corporate responsibility and social partnership. The Responsible Competitiveness Index indicates that these factors, far from being a drag on competitiveness, can in fact drive it”. Contact Mark McKenzie AccountAbility 020 7549 0400 http://www.accountability.org.uk
New economy gains respect
The Financial Times released in December its World’s Most Respected Companies survey, revealing Microsoft beat GE to the number one spot after GE had won for seven consecutive years. Microsoft was described by one chief executive as “innovative, fulfilling the needs of society with their products and ability to grow” and another as “a very innovative company (that) touches almost everything in our lives”. A further comment was that “the company is the first and best in the world. They have a strong base and employee satisfaction”. US companies once again dominated the rankings, with 24 of the businesses in the top 50. Germany was second with six constituents and the UK moved above Japan into third place with four. BP, ranked seventh, was the first UK company to make it into the top 10. In the list compiled only from the votes of NGOs, Wal-Mart was ranked at number two in terms of community commitment, while BP and Royal Dutch/Shell ranked at fifth and ninth respectively. Contact Joanna Manning-Cooper, FT 020 7873 4447 http://www.ft.com
The United States Chamber of Commerce Center for Corporate Citizenship has awarded General Electric a Corporate Citizenship Award in the category of Corporate Stewardship, Large Business. The award acknowledges businesses and chambers of commerce that have demonstrated ethical leadership and corporate stewardship and have made a difference in their communities. Contact United States Chamber of Commerce 00 1 202 659 6000 http://www.uschamber.com
Pearson’sFinancial Times, in association with the International Finance Corporation, announced in November the launch of the annual FT Sustainable Banking Awards. A special FT website accompanies the awards: http://www.ft.com/sustainablebanking. The winners will be announced at a gala awards ceremony at the FT offices in London on June 6, 2006. Contact Joanna Manning-Cooper, FT 020 7873 4447 http://www.ft.com
Corporate Citizenship Briefing, issue no: 85 – January, 2006