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The "greening of Wal-Mart"

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Tuesday, Sep 11, 2007

Yesterday’s FT had an article about Wal-Mart’s recent environmental commitments and whether the company should be lauded or criticized as not going far enough. The gist is that they can function the way the state of California does with auto-related legislation—if the state mandates changes, the automakers must accommodate to preserve access to the largest vehicle market in America. Likewise, if Wal-Mart insists that its suppliers avoid using certain chemicals in its products, they have to change their ways. (Wal-Mart has already ruffled the feathers of the Vinyl Institute with its intention to stop buying products made with PVC.) If Wal-Mart orders a huge amount of concentrated laundry detergent (saves water) or fluorescent lightbulbs, then the price and production of these items are affected accordingly. And Wal-Mart, as one of the nation’s biggest commercial real-estate owners, can have a big impact if it makes all of its sites energy-efficient, as it plans to.


So what could be wrong with all of that—with the world’s largest company using its leverage to force changes for the better. It seems rather straightforward but there are a few wrinkles. First, these environmental changes, laudable as they may be, may be part of a smokescreen distracting Wal-Mart’s critics from its dubious labor practices. By being on the green forefront, Wal-Mart can divide and sap the power of the various groups that had aligned against it and begun to lobby for regulation and state intervention into its practices. It also doesn’t address the fundamental problem of its business model, which is to prevent the lowest possible prices, labor and environment be damned. Generally speaking, Wal-Mart off-shores miserable labor conditions so that it can present its goods at rock-bottom prices with relatively clean hands. And then it can point to its sales figures as a kind of pseudo-democratic endorsement of its methods—see? the people love it! And the low prices are seen as extending more power to poor consumers, who get more bang for their buck. But low prices are a product of failing to internalize the true cost of cheap goods, of the wastefulness of shoddy, disposable products. The blight of consumerism may be considered a kind of moral pollution that can’t be adjudicated economically. Were Wal-Mart truly committed to change, it might make an effort to have prices reflect the true costs (if they could somehow be determined outside of market forces) of its wares, or it might make efforts to attract consumers with some other lure than low prices, though when it tried an upscale move last year, it lost market share (and who is to say an upscale move is any more laudable than a commitment to cheapness; that replaces disposability with a climate of status envy). From this point of view, Wal-Mart’s low prices offer cosumers a Faustian bargain of purchasing power at the expense of political power.


But the main reason that critics need to continue to gripe about Wal-Mart is that its recent gestures toward sustainability and environmental concern are essentially marketing gimmicks, a product of the pressure already put on them by critics—it’s all basically a PR move necessitated by the volume of complaining. Basically, nothing Wal-Mart can do should stop the bad PR, since the bad PR is arguably all that has been demonstrated to motivate the company to change. Otherwise it might revert to being guided by ruthlessly seeking effiency and wrenching out all it can from its supply chain by any means necessary. Currently, Wal-Mart seems to be seeking a middle ground, pursuing green initiatives that are also economically efficient, that won’t be in danger of alienating not-so-green shareholders. Until Wal-Mart makes bottom-line concessions in the name of environmentalism, compromising profits in some explicit way, there’s no reason for critics to temper their criticism. The vehemence of that criticism is what’s pricing the value of Wal-Mart’s moves.

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