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Wal-Mart: the new jolly green giant.

What happens when the world's leading retailing colossus gets "touchy-feely"? To find out, the American Forest & Paper Association invited Tyler Elm, senior director, corporate strategy and business sustainability, Wal-Mart Stores Inc., to address its Packaging General Session at the recent Paper Week meeting in New York.

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In his presentation, "Business Sustainability: A Competitive Strategy for the 21st Century," Elm explained how Wal-Mart is beginning to focus intently on business sustainability in general--and packaging in particular--as one of its key areas of interest. "Sustainability is the largest and most significant current initiative for the company," he said. "We have to be able to understand the exponential function of what it will take to care for 8 billion people on the planet by 2025, up from 6.3 billion today."

Corporations have enormous power and also enormous responsibility for dealing with sustainability issues, said Elm. Of the world's 100 largest economic entities, 42 are corporations, not countries. Based on its economic activity, Wal-Mart would be the 19th-largest country in the world, and its employees, in total, would represent the fifth-largest city in the United States.

Today, Wal-Mart is focused on developing integrated, sustainable business models. "We want to look at how we use resources. Our goal is to produce sustainable economic benefits derived from improved environmental and social outcomes."

The Wal-Mart sustainability initiative focuses on three core areas: climate, waste, and products. The company's ultimate goals are to be supplied 100% by renewable energy, to create no waste, and to sell products that sustain resources and the environment. To that end, Wal-Mart hopes to make its stores 25% more efficient in seven years, develop a trucking fleet that is 25% more efficient in three years, achieve a 25% reduction in solid waste in three years, and to have 20% of its supply base aligned with sustainable products in three years.

Wal-Mart has identified 13 "sustainable value networks" and is "proactively developing them around key areas of the business," said Elm. Of these initiatives, two directly concern the pulp and paper industry and many others will involve input from the industry. One of the two "waste" value networks concerns packaging (the other is operations and internal procurement). One of the eight "product" value networks focuses on forest and paper. The three "climate" value networks focus on Wal-Mart's global greenhouse gas strategy; energy, design construction, and maintenance; and global logistics. "Our goal," said Elm, "is to develop a sensing organization that is aware of the external business environment and is able to incorporate this perspective into business decisions to create long-term value where business benefits are derived from improved environmental and social outcomes."

In the packaging area, Wal-Mart is focused on removing, reducing and reusing packaging as well as sourcing packaging that is both renewable and recyclable.

As part of this process, Wal-Mart is sponsoring events such as the Packaging Sustainability Summit, which is focused on identifying and incorporating innovations that enhance sustainability. For example, the company was purchasing chicken in waxed corrugated boxes, which are notable for their inability to be recycled with other boxes because of the external wax layer. At the Packaging Sustainability Summit, Wal-Mart realized that since it had changed to individually wrapped chicken that did not need to be packed in ice, it was able to eliminate 2.5 million wax boxes per year and replace them with recyclable corrugated boxes. In another example, Wal-Mart buyers recommended reducing the size of a toy tea set packaging, which produced major savings in corrugated packaging materials.

Elm closed his presentation with a quote from Peter Drucker: "Every single pressing social and global issue of our time is a business opportunity." That idea makes sense for Wal-Mart and its many suppliers, who increasingly live in the "valley of the jolly green giant." As Wal-Mart changes to meet its lofty sustainability goals, its suppliers--including pulp and paper companies--will have to change with it.

ALAN ROOKS

Editorial Director

Contact Alan at +1 847 998-8093, or by e-mail at: arooks@tappi.org
COPYRIGHT 2006 Paper Industry Management Association
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Title Annotation:VIEWPOINT
Author:Rooks, Alan
Publication:Solutions - for People, Processes and Paper
Geographic Code:1USA
Date:Jun 1, 2006
Words:669
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