Seven years ago, Walmart launched a sustainability effort that included working toward 100-percent renewable energy, creating zero waste and selling products that sustain people and the environment. Now, researchers at the University of Arkansas and the University of South Carolina are performing case studies to examine the issues Walmart experienced in implementing its broad sustainability strategy.
“Companies have to think about sustainability as a systems problem – a problem not generally well understood,” David Hyatt, clinical assistant professor in the Sam M. Walton College of Business at the University of Arkansas, told EHS Today. “While most managers want to know what works so they can replicate and exploit returns, the real question is about when, where and under what conditions green strategies are profitable, especially given firms’ different competitive and regulatory environments, and their different respective capabilities.”
To address these complexities, Hyatt suggested following Walmart’s lead. “They [Walmart] did not engage in a process of discovery by hiring an analytical consultant to provide the ‘answers.’ Neither did they demand the strategy department produce the answers. Instead, they endogenized the process of searching for the business case into the strategy itself. In short, before hoping for the exploitation of firm benefits once the successful positioning was found, they instead structured an exploratory process about those conditions to discern where environmental and business goals overlap,” said Hyatt.
“Thus more generally, sustainability is a search, not a destination,” he added.
Hyatt and Andrew Spicer, associate professor at the University of South Carolina, are lead contacts for the Walmart Sustainability Case Project, a collaborative effort to develop teaching case studies based on challenges Walmart encountered through the various stages of implementing its sustainability strategy. The project is unique, Hyatt said, because the series of cases focus on one topic and one organization over a specific period of time.
The Sustainability Journey
The first case study, “Lee Scott’s Founding Vision,” which details Walmart’s history and relates former Walmart CEO Lee Scott’s approaches to corporate sustainability, acknowledges that “public controversies involving wages, gender discrimination issues, unions, and site placement created increasingly vocal challenges to Walmart’s reputation and community standing” over the years.
The report references challenges the company faced in terms of community resistance and worker abuse allegations, and adds that “....Walmart’s escalating legal and social issues were increasingly seen as a direct threat to its ability to continue to grow. It became apparent that the company had to do more than maintain everyday low prices.”
Walmart sought to overcome these problems and also embed sustainability into its operations. In 2005, the company’s emergency response efforts following Hurricane Katrina garnered praise and proved influential in shaping Walmart’s new path.
“While activists frequently pointed out the retailer’s mistakes and errors, Katrina illustrated how Walmart could use its power and expertise to exert a positive impact on the broader society in which it operated,” the case study stated. “Scott argued that Walmart could not defend itself from its critics by trying to construct a wall to separate its business and societal obligations. Instead, it needed to embrace a new vision of its leadership role in making ‘this country and this earth an even better place for all of us: customers, associates, our children, and generations unborn.’”
Scott publicly announced his sustainability goals in an Oct. 24, 2005, speech that balanced the importance of both profitability and sustainability. He also acknowledged that Walmart’s influence as one the nation’s largest retailers could be significant in the sustainability arena:
“If we were a country, we would be the 20th largest in the world. If Wal-Mart were a city, we would be the fifth largest in America. People expect a lot of us, and they have a right to. Due to our size and scope, we are uniquely positioned to have great success and impact in the world, perhaps like no company before us,” he said. “...[T]he time has come to speak, to better define who we are in the world and what leadership means for Wal-Mart in the 21st century.”
According to Hyatt, the case studies suggest that sustainability must embedded in the business instead of being relegated to the domain of a corporate office, and leadership must establish mechanisms for changing people’s mindsets about the company and its role in sustainability.
Additional case studies in the project focus on Walmart’s design of strategic goals and processes; sustainability strategies related to specific products, such as seafood and bottled water; defining sustainable products; installing LED lights in stores; environmentally friendly shopping bags; and more. The case studies are based on interviews with key company employees. Walmart assisted in setting up the interviews, and the company reviewed many of the case studies for factual accuracy. The universities funded the studies, and researchers maintained full editorial control.
Visit http://sustainabilitycases.kenexcloud.org/cases to learn more and access the free case studies.