Sustainability Wins Because of the Market, Not Regulation

I'll be the first to admit that I'm not an expert on how certain trends or rallying cries such as sustainable supply chain practices become the rule, not the exception. Perhaps Malcom Gladwell's The Tipping Point is a good place to start if you're looking for a highly readable theoretical analysis about how trends become standard practice. But what I do know is that sustainability in the supply chain feels like it's about to reach the tipping point not just of investment, but also marketability and understanding among a much broader audience than just procurement and operations practitioners. What reminded me of this just recently was a recent press release from Wal-Mart highlighting, among other touchy-feely initiatives, "ethical sourcing".

Now, to see Wal-Mart talk about sourcing at all is fascinating in and of itself. The retailing giant is just as notoriously close-lipped as its domestic rival, Target, about what it's up to. As a solution provider, just try getting a reference out of Wal-Mart, let alone a press release. But when it comes to sustainability, Wal-Mart is more than ready to go on the record about what it's up to. In fact, they want to call attention to their activities. Lee Scott, Wal-Mart's President and CEO, is almost missionary in his call for action. "It is important for all of us to understand that there are a number of issues facing the world that will profoundly affect our lives and our company ... I am talking to you about issues like international trade, climate change, water shortages, social and economic inequities, infrastructure and foreign oil."

How does this translate to global sourcing practices? In the same announcement, Scott notes that Wal-Mart "will focus on requiring suppliers to meet specific environmental, social and quality standards; certifying and ensuring supplier compliance with social and environmental standards; and favoring -- and in some cases even paying more -- to suppliers that meet the company's standards and share its commitment to quality and sustainability."

Now, none of this is news to those who follow Wal-Mart's sourcing practices closely. We've known about these initiatives for some time. However, for Wal-Mart to put them front and center in such a public announcement not only shows that the company is paying more than lip service to sustainability, but also that they're banking on the marketability of green and sustainability. Indeed, Wal-Mart is attempting to brand themselves -- if you read between the lines of the announcement -- as the store which shoppers can feel good about going to because Wal-Mart's social and environmentally responsible practices extend into their supply chain. Personally, I will have a hard time "feeling good" about Wal-Mart's commitment to sustainable practices given that the last store I went to had a number of staff members missing teeth who I suspect, based on a Wal-Mart salary and benefits package, could not afford to go to the dentist. Still, I suspect this almost evangelical marketing commitment to sustainablility is a step in the right direction which Wal-Mart's competitors will be forced to emulate.

- Jason Busch

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