We Are Now!

To all those who caught yesterday’s spelling error (since corrected) – thank you. You are my heroes and heroines.

WMT

My friend Hunter Lovins, of Natural Capitalism Solutions, paid a call on Wal-Mart. Here‘s the encouraging account of the meeting. I still own the stock. (And, perhaps more important, I still live on the planet.)

If Wal-Mart were a country, it would be the 20th biggest in the world. Previously one of the most reviled companies; it has become the poster child example of a company in profound transformation.

Hunter was invited, in part because there is a bit of a culture clash between the ‘old’ Wal-Mart culture of hunters and fisherfolk, who like to drive pick-up trucks, and who built the company; and the ‘new’ Wal-Mart of Ivy-league MBA’s, environmental consultants and left coast change agents. Some Wal-Mart insiders thought that Hunter might offer a bridge.

With NCS Operations Director, Jeff Hohensee, Hunter flew to Bentonville, Arkansas. Professor Jon Johnson of the Walton School of Business invited the NCS team to advise the interdisciplinary group at the University of Arkansas, charged with creating a Center for Sustainability. Hunter also met with University of Arkansas students and joined an evening panel with Jib Ellison of Blu Skye consultants, facilitator of Wal-Mart’s sustainability efforts, and her old friend Adam Werbach of Act Now Productions. Adam, the youngest-ever elected President of Sierra Club, has been hired to teach Wal-Mart managers about sustainability. He figures that by the time he has finished, he and his team will have spoken with 1% of the U.S. workforce. Talk about leverage. The three shared their perspectives about how Wal-Mart could use its market power to drive change.

The next morning, the group joined Wal-Mart’s senior management, their major suppliers and non-profit partners in the huge auditorium at the Home Office. Hunter followed her old friend, Jim Woolsey, ex-head of the CIA to the podium. Jim warned the standing-room audience of the perils to the country of failing to get off imported oil. He spoke of the national security reasons to shift the economy to renewable energy and energy efficiency, drawing on the work he and Hunter presented in their 1981 book, Brittle Power.

Hunter was equally challenging, raising the social issues that Wal-Mart critics have used to hammer the company. She asked, ‘What would a truly sustainable Wal-Mart business model be?’ She continued, ‘Fair enough, it’s great that Wal-Mart is putting solar panels up and selling organic underwear. But if you roam the planet exploiting people in developing countries and communities in America so that people like me can throw away more junk . . . this is not sustainable.’

She then posed what the company might do differently: work with communities to create business ecologies, in which Wal-Mart partners with local sustainable businesses who might co-locate and piggyback off Wal-Mart’s strengths. Urban Wal-Marts could partner with local community groups and suppliers to implement sustainability programs. Or the company could bring sustainability to communities in developing countries. . . .

Hunter described the business case for behaving more sustainably, and how the elements of NCS’ Integrated Bottom Line can reduce cost, increase profits, reduce risk, preserve a company’s franchise to operate, increase labor productivity, attract and retain the best talent, reduce the cost of distrust, differentiate a brand and drive innovation.

After she spoke, a senior Vice President came up and thanked her for bringing the missing conversation into the room.

Is the Wal-Mart commitment authentic; is it cherry-picking or just very well presented PR? Hunter and Jeff sat beside Lee Scott for an entire morning, listening in some amazement to a litany of speeches that could have been presented by Hunter’s students at Presidio or by such business sustainability leaders as Ray Anderson (who has been advising Wal-Mart for some time). At one point, as Scott was speaking, he turned to his head of sustainability and asked where the company was ‘on getting that chemical out of the plastics in children’s toys….? Are we on top of that?’

The executive jumped up and said ‘We are now!!!’

The air filled with the whir of fingers on “Crackberries,” as the roughly 2/3rds of the room of a thousand people who were major Wal-Mart suppliers scurried to text home offices that they were going have to get phthalates out of plastic. Over a decade ago, Dr. Theo Colburn fell on her sword, sacrificing her career to expose the dangers of endocrine disruptors. Now a throwaway line from the CEO of the world’s largest company might just get the job started.

As senior executives unfurled chart after chart demonstrating why sustainability is just good business, charts that looked eerily like the sorts that environmentalists have used for decades to argue that this is not an issue of environment versus business, Jeff turned to Hunter and said ‘We really are on a different planet.’

Then the Wal-Mart marketing folk got up to say how they have studied the Wal-Mart demographic (and you’ve got to believe that they have. . .) There turns out, they reported, to be a very significant correlation especially between their female shoppers, the dominant demographic, and a desire for sustainability. Lee Scott stood up to state that: ‘Working class people should not have to choose between affordability and sustainability.’ Wal-Mart will re-brand itself as ‘affordable sustainability.’

As these marketers spoke, one of the company’s change-agents knelt beside Hunter. Did she realize, he asked, just how historic a moment this was. . . .? In all prior meetings, he explained, the marketers have said of Wal-Mart’s sustainability commitment, ‘Yeah, whatever. . .’

This was apparently the first of the senior management meetings at which that whole segment of the company had gotten on board. With them acknowledging the business case for sustainability, the entire company was committed.

The meeting over, Hunter raced for a plane to arrive in the waning moments of a Presidio open house that evening in San Francisco. When Presidio’s Director of Marketing, Rebecca Bell, asked her where she’d spent the day, Hunter told these stories, concluding with what a profoundly disorienting experience it was to be at such a meeting.

Again, it is hard to overstate the magnitude of this transformation. Wal-Mart has moved the debate from whether there is a business case for sustainability to how to integrate the social issues, and just how fast can you implement everything that Natural Capitalism teaches. As Wal-Mart begins to send their environmental scorecard out to their 90,000 suppliers, the entire field of sustainability had better grab a whole new gear. Gives a whole new twist to Pogo’s observation that ‘We have met the enemy and he is us.’

And, Hunter added, this is an even stronger reason to enroll in Presidio. ‘As I was leaving, a senior Vice President approached me and asked whether Wal-Mart could hire Presidio graduates.’

Wal-Mart certainly has a lot of work to do. Hunter’s questions to the audience in Bentonville remain unanswered. Hunter and Jeff will begin discussions soon with Wal-Mart executives charged with sorting out the company’s relationships with communities around the world. It was clear from being at the Home Office that the corporate commitment to make compact fluorescent lights affordable to all customers could start at home: employee productivity at the ‘Cube Farm,’ the company’s windowless, warehouse-sized concrete box of a World Headquarters, would soar if they day lighted their roof, as they once did in their first experimental green building. (Retail sales went up 40% in the day lit sections and all the employees wanted to work there.)

But the lever has begun to pry: As Hunter and Jeff returned to Colorado, they were contacted by a Wal-Mart supplier asking whether NCS could help them design a sustainability program that would not only meet Wal-Mart’s scorecard, but position this company as a leader in their industry. Jeff has already been to Chicago this week to meet with the company.

Hunter has long stated that a commitment to sustainability enhances every aspect of shareholder value, and that the companies that get it right will be first to the future-the billionaires of tomorrow. Every one of Wal-Mart’s suppliers now faces the challenge of proving that they are green enough to get shelf space. . . .