Wal-Mart sets an agenda of social change

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Wal-Mart pledged to cut the energy used by many of its products 25%, to force the chain’s suppliers to meet stricter ethical standards, and to apply its cost-cutting skills to help other companies deliver health care for their employees.

In a lofty address to store managers that at times resembled a campaign speech, the chief executive of Wal-Mart Stores, H Lee Scott Jr, said, “We live in a time when people are losing confidence in the ability of government to solve problems.” But Wal-Mart, he said, “does not wait for someone else to solve problems.” He laid out sweeping plans for the company on several health and environmental issues, and he hinted that even more ambitious goals might be on the horizon. Scott said, for instance, that Wal-Mart was talking to leaders of the automobile industry about selling electric or hybrid cars—and might install windmills in its parking lots so that customers could recharge their cars with renewable electricity.

With the new commitments, Wal-Mart is trying to cement its reputation as a leader in areas where it was once known as a laggard. The initiatives are the most visible sign to date that Wal-Mart, which spent much of the past decade defending itself against criticism of its business practices, has gone on the offensive. Since 2005, it has committed itself to a dizzying number of reforms, and some of its critics concede it has begun to make good on the promises. For instance, Scott said Wal-Mart had sold 145 million compact fluorescent light bulbs, which he said had saved enough electricity to forestall the need for three coal-fired power plants.

Several experts applauded the new goals, saying they would have an effect beyond Wal-Mart, given the chain’s influence over companies that supply Wal-Mart and other retailers. “When Wal-Mart asks, suppliers jump,” said Noah Horowitz, a senior scientist at the Natural Resources Defense Council. “There are positive ripple effects throughout the supply chain.”

On health care, Scott said Wal-Mart would begin working with major employers to help them manage and pay prescription drug claims, a costly task now handled by other companies. He estimated Wal-Mart could save employers $100 million in 2008. That is a relatively small sum in the nation’s $275 billion annual drug bill, but Wal-Mart has a history of refashioning nearly every business it tackles.