20 Years On: Walmart's Pioneering Sustainability Pledge

Two decades after Walmart's CEO delivered a landmark speech on sustainability, the retail giant's progress presents a mixed picture of soaring ambition and steady achievement.

On 23 October 2005, Lee Scott, then CEO of Walmart, stood before an audience at the firm's Arkansas HQ and committed his company to three environmental goals:

• Using renewable energy to power 100% of its operations
• Creating zero waste
• Selling products that both sustain the planet's resources and environment

In 2005 these targets were quite radical – especially in the world of business. This was a decade before the Paris Agreement, one year before Al Gore's 'An Inconvenient Truth', and the very same year that the Kyoto Protocol came into force.

"These goals are both ambitious and aspirational, and I'm not sure how to achieve them, at least not yet," Lee explained back then, speaking to the nascent state of organised sustainability at the time.

In the intervening years Walmart has changed CEO twice taken but each of Lee's successors have continued down the course he set in 2005, taking some huge steps towards realising the company's vision of sustainability.

Progress and shortfalls

The company's latest ESG report shows that 48.5% of Walmart's global electricity needs now come from renewable sources. Its Scope 1 and 2 emissions have also fallen 18.1% below the 2015 baseline, which suggests that progress towards Lee's first goal is well underway, even if the finish line is a long way away.

Walmart has made substantial progress on Lee's second target, though. Today, the firm diverts 83.5% of its waste globally.

Nevertheless, the retailer's critics argue that Walmart could be making better progress when it comes to sustainability, especially considering that Walmart's inflation-adjusted global revenue has grown 44% to US$681bn since 2015.

Jon Johnson, a professor at the University of Arkansas's Walton College of Business, gives a frank assessment of the company's performance, particularly with regards to Walmart's progress against the third goal from Lee's 2005 pledge.

"I would give them an A or A-minus on their waste and energy goals. I give them a C on their product goals, and that would be a generous C," he says.

The product sustainability challenge

The third goal – selling more sustainable products – has proved the most elusive. Jon co-founded The Sustainability Consortium in 2009 to develop metrics for assessing product impacts throughout supply chains.

"Walmart never used that information to make procurement decisions at any scale that had the effect we were hoping it would," he says.

Matt Kistler, Walmart's second CSO, acknowledged the strategic misstep.

"We probably looked at every product as an opportunity to make it better," he said.

"And there's some products where the juice was not worth the squeeze. We should have been more focused."

Walmart's influential approach

Despite incomplete progress on its own goals, Walmart's sustainability push has catalysed broader industry change.

Elizabeth Sturcken, VP for Net Zero Ambition and Action at the Environmental Defense Fund, cited the retailer's 2017 chemical footprint goal as particularly influential.

"You got very real ripple effects throughout the entire industry," she said, noting that Target and Dollar General followed with similar commitments.

Environmental Working Group president Ken Cook described how his organisation's 2014 campaign led Walmart to require suppliers to limit priority chemicals in household and personal care products.

"EWG is not interested in things that don't make landscape-level changes," he said. "This is what Walmart has provided."

The ongoing criticism of Walmart's results

The company continues to face scrutiny over low wages that can increase reliance on public assistance programmes, weak supply chain traceability for deforestation and packaging goals that depend on voluntary supplier actions.

Scope 3 emissions – those from the supply chain – have increased approximately 4% over the past two years.

Current CSO Kathleen McLaughlin defends the company's approach.

"We're not a perfect company," she says . "One of the things that is pretty deep at Walmart, though, is really listening to everybody, to critics and to stakeholders.

"The easier things have been tackled. We're now in the throes of true system transformation, and that's hard work."

Lee's legacy and the lessons learned

Before Lee's speech in 2005, Walmart had been "a pariah" on environmental issues, according to Elizabeth.

Andy Ruben, the company's first CSO, recalls that sustainability efforts were limited to defensive measures like "stop legislation that was warranted about runoff on parking lots from fertiliser".

Twenty years later, though, the speech's influence extends beyond Walmart's own operations.

"These past 20 years of work that Walmart has done on sustainability has transformed a generation of business," Elizabeth says. "They prioritised and democratised sustainability."

Yet she added a crucial caveat.

"Walmart is not a sustainable company. They're falling behind in their operational goals. And they've always had a big challenge and needed to do so much more on product sustainability and their supply chain."

Regardless of their progress, though, Walmart's leadership team is thankful for the direction that Lee charted two decades ago. 

"He challenged us to think differently about leadership and to use our influence and resources to make this country and the planet an even better place for everyone," says current Walmart CEO, Doug McMillon.

"His courage and vision set Walmart on a path that continues to shape how we serve today."