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FINDING PRACTICALITY IN SUSTAINABILITY

November 21, 2017

Harvard Business Review

Doug McMillon is the CEO of Walmart. The company employs 2.3 million associates and operates more than 11,600 stores in 28 countries. In April 2017, Walmart launched a program to work with suppliers to reduce greenhouse gas emissions.

McMillon talked with HBR about his company’s sustainability efforts as part of The Future Economy Project, an HBR initiative that shares real-world lessons on sustainability leadership for all.

HBR: What was the moment you decided that climate issues were going to be part of your portfolio of concerns as an executive?


MCMILLON: This shift in thinking goes back to Hurricane Katrina in 2005. When Hurricane Katrina struck the Gulf Coast, our CEO, Lee Scott, challenged us to step up in a big way, and we did. Walmart was an unexpected early responder there, providing more than 2,400 truckloads of supplies and 100 truckloads of donated goods while pitching in to help coordinate relief efforts on the ground. As that happened, a sense of pride emerged and we saw how our size and scale (we were still getting used to being a big company) could be used for good. Lee asked us, “What if we could be that kind of company all the time?” That set us on a new course.
We started listening to our critics rather than being defensive. We started learning about social and environmental sustainability, and we began to see an overlap between doing good and succeeding financially. We set some big goals: to be powered by 100% renewable energy, create zero waste, and sell products that sustain people and the environment.

Was there anything in particular that shaped your thinking?


Back when we first began our sustainability journey, we partnered with Jib Ellison of Blu Skye, a consultancy. He took us on experiential field trips (one of my memorable trips was to a landfill in Georgia), and he gave us a steady diet of books to read about sustainability (The Ecology of Commerceby Paul Hawken and Green to Gold by Daniel Esty and Andrew Winston were two of the more memorable ones). A core group of Walmart leaders got really excited about what we were learning and what we could do. We also talked to lots of environmental leaders who were often pretty direct about what areas needed improvement.

Which stakeholders have been most resistant to your sustainability agenda? 


In the early days of our work, not everyone in the company agreed with working on sustainability or even knew what the term meant. It took some work to demonstrate the benefits of sustainability for customers and for the business, and to translate it into practical efforts such as improving fleet efficiency or reducing energy usage.

How have you brought them on board?


The doubters got on board quickly when they saw that our P&L could benefit while we were doing good work for the environment. A constant theme for us in engaging our associates and stakeholders has been shared value: the need to integrate sustainability into business, not treat it as a separate effort, and to ensure we deliver business value as well as value for the environment and society.

Voluntary carbon reductions are unlikely to achieve the scale needed to solve climate change — we also need policy. What obligation do businesses have to engage in civil society and lobby for action?


We seek to cooperatively and constructively work with local, state, federal, and international NGOs in this effort. Renewable energy and efficiency investments both in our own operations and with suppliers have enabled us to support jobs, reduce impact on the environment, and save money. Therefore, we will continue to share these insights with the public sector and continue to advocate on these issues.

You’ve pledged to remove 1 billion tons of greenhouse gas emissions from your supply chain by 2030. That will require partnering with thousands of companies with which you do business. What have you learned about working with suppliers and other partners on sustainability? 


Achieving this goal will require the collective effort of our suppliers, customers, associates, and other stakeholders. To encourage suppliers’ participation, Walmart is sharing the business case for why suppliers should pursue reducing emissions — increasing competitive advantage, spurring technological innovation, inspiring brand loyalty, and increasing employee engagement.
We are also helping suppliers set and achieve emissions-reduction plans with a comprehensive tool kit. The tool kit is a manual for suppliers to use as they set their emissions reduction targets, track their progress, and report their savings.

Walmart has taken a journey when it comes to sustainability, from target of criticism to a leader among retailers. What have you learned?


Through our journey, our eyes have been opened to a few key trends that have contributed to some of our sustainability success.
To begin with, we quickly discovered that we can’t create a solution on our own. Driving meaningful change requires collaboration, from convening environmental NGO partners to working with suppliers on creating more-efficient supply chains to even joining forces with competitors to create solutions to shared problems. To make a true systems change, we all must work together to identify the roots of major problems.

Additionally, we have found that sustainability makes good business sense. Walmart has been able to incorporate technologies and developments within our supply chain — from energy efficiency to reducing food waste — that not only have reduced our environmental impact but also have saved us money as a company.

And lastly, and perhaps most important, customers want to buy products they feel good about. In embarking on our sustainability journey, we quickly came to realize that people want to feel good about the products they purchase.



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