Save Money, Live Sustainably?

From US News, Published on 30 March 2015

American consumers have begun to care more about sustainability and to express their concerns as they shop. Increasingly, consumers want to know how the stuff they buy affects the planet and how it affects the people who produce it and sell it.

This emerging change in consumer behavior prompts retailers to give consumers better information. The giant retailer Target rolled out a " Sustainable Product Index " in 2013. A few weeks ago, Wal-Mart rolled out a major new program, called " Sustainability Leaders ," designed to shine a favorable (green) light on suppliers who design and market more sustainable products. Wal-Mart’s new program is a welcome step forward, and it might help them catch up with competition. But it reminds us how hard it is to create genuinely useful, honest and objective sustainability ratings.

The first challenge with ratings is that everyone defines sustainability a little bit differently. Any company setting out to rate products and companies on sustainability must decide what to emphasize: Is climate change the most important criterion? Labor conditions in the factory producing the product? Or other environmental impacts, such as the use of toxic materials or consumption of irreplaceable rain forests? Wal-Mart has rolled out several different programs; in addition to environmental sustainability, it boasts programs that focus on protection of U.S. jobs, global sourcing practices and women’s economic empowerment.

Once the priorities are established, a rater must decide whether it is going to actually inspect the products and practices of the companies it rates, or allow companies to rate themselves. Self-reporting is popular because it can easily be gamed. With self-reporting, companies can win a good rating without necessarily deserving it. Unfortunately, third-party review is expensive, and most companies being rated don’t want to subject their proprietary technology to outside review. Without government policy that requires inspections and testing, as, for example, the Food and Drug Administration does with pharmaceuticals, it’s going to be hard for us to get beyond self-reporting.

Even if we accept the constraints of self-reporting, we can ask companies to provide specific information that allows for a meaningful rating. For example, companies could be asked to provide specific information on the carbon footprint of particular products, or the pollutants released in manufacturing a particular product. But Wal-Mart appears not to go even this far. They ask questions that deal with process, effort and goals. These things matter, but not nearly as much as results.

Wal-Mart has worked with a group of companies and other stakeholders called the Sustainability Consortium to develop questionnaires that they ask their suppliers to complete for each product. The details are proprietary, but a sample question suggests that the approach is not too specific. For example, suppliers are asked , “Does your company have goals for reducing the greenhouse gas emissions released during the manufacture of your…products?” Clearly, a supplier could answer “yes” to this without in fact having made any actual progress towards reducing greenhouse gas emissions. Worse, a company could potentially answer “yes” even if its products were among the worst in the industry for greenhouse gas emissions.

Even under ideal circumstances, ratings are challenging to implement and interpret. The sustainability of a product can vary depending where and when a product is purchased and consumed. A pint of blueberries can have a low carbon footprint if you live in Michigan and you’re getting your blueberries in season from the local farm stand. That same pint of blueberries has a very different carbon footprint if you are air-freighting them in from Chile in February.

Wal-Mart deserves props for what it is attempting to do with its Sustainability Leaders program, even though the current version of the program is limited, and even if it turns out to be partly greenwashing, as critics have argued with respect to Wal-Mart’s other sustainability programs. The Sustainability Leaders program appears to be based on a sound cross-section of expertise; Wal-Mart and other founders of the Sustainability Consortium have brought leading environmental advocates to the table, including Natural Resources Defense Council, Environmental Defense Fund, the World Wildlife Federation and the United States Environmental Protection Agency. And in the past, Wal-Mart has brought meaningful pressure on suppliers to take steps that boost sustainability while cutting costs.

By scoring products and suppliers on sustainability, Wal-Mart and other companies lend credibility to the principle that sustainability matters. This encourages consumers to take sustainability into account. It certainly helps. But we have a long way to go before consumers have truly meaningful information that they can use to shop with sustainability in mind.

For additional reading regarding sustainability, please refer to the following links:
Top 3 Corporate Sustainability Champions for 2015
Lessons from 2014’s Sustainability Initiatives
Go for Green: Aiming for Sustainability Indices