Nation & World

Wal-Mart says ‘waste not’

7 min read

Exec brings green message to Business School

Andrew Ruben’s business card is tiny: 2 11/16 inches by 1 5/16 inches, or about half the normal size. It’s also made of 100 percent post-consumer recycled paper.

Both facts reflect Ruben’s obsession of the last two years: sustainability, and doing business in a way that supports the environment.

But there’s nothing tiny about the company he works for. Ruben is Wal-Mart’s vice president for strategy and sustainability. The company, with 1.8 million employees and 5,000 stores worldwide, is No. 20 among world economies, nations included. In the United States, its sales account for 2 percent of the gross national product. Out of every $100 spent on U.S. retail, almost $9 is spent at Wal-Mart.

In October 2005, Wal-Mart added some big environmental goals to its big size: zero waste, 100 percent renewable energy, and a shift to products that are better for the environment, including organic produce.

“In the past two years, I’ve had a personal journey,” said Ruben, who spoke at Harvard Business School on Tuesday (March 27). “The company has had a similar journey.”

Since 2005, his inspirations have been green-business guru Ray C. Anderson, CEO of Interface Inc., and Paul Hawken’s “The Ecology of Commerce” (1993), a call to industry to help restore the natural world.

Ruben, who started his career as a business strategist with Ernst and Young, was keynote speaker during HBS’s third annual Green Week. This five-day series of lectures, demonstrations, tours, and evening movies is intended to raise environmental awareness. It’s co-sponsored by the Student Association, HBS Operations, Restaurant Associates, and the HBS Business and Environment Club.

Green Week organizer Mark Jacobs M.B.A. ’07 acknowledged to an audience of 150 at Burden Hall that Wal-Mart — under fire for years for its labor, health care, and land use practices — does not conjure images of environmental leadership. “But what they are doing is very real, and genuine, and big,” he said of the company’s recent entry into the world of corporate sustainability.

Ruben titled his one-hour talk “Is Wal-Mart Sustainable?”

At present, the answer is no, both for Wal-Mart and big corporations like it. “The world these businesses exist within is unsustainable,” said Ruben, who was on his third visit to Harvard. (The first two visits were private; he’s been consulting with HBS faculty on sustainability issues.)

With PowerPoint lists and graphs on a screen behind him, Ruben gave a brisk summary of the state of our unsustainable world.

It’s a world in which most corporations still follow a “take-and-waste” model of business. Example: Every one liter of soda made costs 140 liters of fresh water. And every laptop manufactured requires 20,000 pounds of raw materials.

It’s also a world in which global trade connections are “increasing at an increasing rate,” said Ruben, but whose modes of conflict and governance are not as modern or as peaceful as trade practices.

And it’s a world whose population will boom to 8.3 billion people by 2030, with most of this growth occurring asymmetrically — that is, within regions with the least wealth.

Ruben showed a 30-second clip showing world population growth over time, marked in lights on a world map. By the late 19th century, the dots of light exploded worldwide. “I’m still shocked every time I see it,” he said.

In the meantime, over 50 of the world’s 100 largest economies are companies now — not nations, said Ruben. That puts the burden on corporations, at least in part, to show the way to better environmental practices.

At Wal-Mart, “sustainability is a business strategy,” said Ruben, and step-wise progress is under way. The company’s U.S. fleet (7,200 trucks) is now equipped with auxiliary power units. These small efficient engines supply power to the vehicle when it would normally be idling. Savings so far from that employee idea, said Ruben, add up to $25.5 million in fuel costs — representing 10 million gallons of diesel that did not have to be burned.

Wal-Mart’s environmental goals “started top-down,” said Ruben, “but really that energy came bottom up, from the people in the company who got engaged … [in identifying] the business opportunities in all of this.”

Wal-Mart’s energy goals are being tested out at demonstration stores, where efficient LED lighting saves half the power costs of fluorescent lighting, and where heating and cooling units use 20 percent less energy because of computer controls.

“Efficiency is the sweet spot in business,” said Ruben. All Wal-Mart stores will be 20 percent more energy-efficient by 2012, he said, and truck fleet fuel efficiency will double by 2015.

Products and packaging are changing too, said Ruben — who hopes that environmental lessons will reverberate up the supply chain, and that materials recycling of cardboard, shrink-wrap and other materials will create “a supply chain in reverse.”

Several months ago, Wal-Mart gave 60,000 suppliers new directives to save waste on packaging. And concentrate detergents, based on a European model, are taking off in stores, he said. Concentrates represent savings in water, plastic resin, shelf space, and fuel for shipping. As for standard detergents, said Rubin, “We don’t want to ship water halfway around the country.”

Other steps are smaller. Wal-Mart stores have started using register tape that prints receipts on both sides of the paper, “so you get to use that ribbon twice as long,” said Ruben.

While changing its own energy footprint and educating suppliers, noted Ruben, Wal-Mart is also taking subtle steps to educate its customers. At eye-level in the lighting aisle at Wal-Mart, a shopper sees high-efficiency Compact Fluorescent Light (CFL) bulbs, which use two-thirds less energy than standard incandescent bulbs and last 10 times longer.

CFL bulbs account for 5 percent of light bulb sales, said Ruben, but at Wal-Mart stores they command as much as 30 percent of premium shelf space in the lighting aisle.

The company is committed to selling 100 million CFL bulbs, said Ruben — a step that would save $3 billion in U.S. power bills, he estimated, along with 22 billion pounds of coal: the energy-savings equivalent of getting 1 million cars off the road.

Ruben urged his HBS audience to check out, a Web site that tracks U.S. sales of CFL bulbs since Jan. 1, 2007, and ranks cities and states on green “enlightenment.” (Cambridge ranks 356th among cities, by the way, with Casper, Wyo., coming in an improbable first. Among states, Massachusetts ranks 48th out of 50 states. And Arkansas comes in first for per-capita CFL sales.)

Ruben keeps his own enlightenment in perspective. “Light bulbs are not going to make Wal-Mart sustainable,” he said, “are not going to make our world sustainable.”

But it’s taking the steps that are exciting right now, said Ruben — the process of being environmentally engaged “simply as a way of doing business.”

He touted Wal-Mart’s “aspirational goals” as a way of “getting people out of their silos,” and buying into the imagination and innovation required to meet sustainability targets.

At the tip of the sustainability spear at Wal-Mart, Ruben sees power in small size, like the power of the message behind his tiny business card. He leads a tight, small strategy team of four, himself included — all “people who live in the business,” said Ruben.

One of the joys of the last two years, he said, “is that we get to make decisions,” and have license to “go back up the supply chain to learn more.”

One Wal-Mart buyer is helping fish suppliers — 15 so far — transition to strict standards of sustainable fishing established by the London-based Marine Stewardship Council.

In another case of learning from the supply chain, Ruben told the story of the Wal-Mart strategist who was observing an assembly line in Japan. She noticed that one stream of laptops — manufactured with fewer heavy metals — was going to Europe, and another, with more, was going to the United States.

The result, said Ruben, was that Wal-Mart started ordering laptops from Toshiba and other manufacturers that are RoHS-compliant. (The European Union’s 2006 RoHS Directive is short for “the restriction of the use of certain hazardous substances,” and places limits on lead, cadmium, mercury, and other toxic materials in new electronics.)

Wal-Mart’s sustainability goals have driven a lot of innovation but the path to corporate sustainability is a long one, said Ruben. “It’s a journey.”