Wal-Mart sets an agenda of social change

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Monday , January 28, 2008 at 0045 hrs 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.

In the address to store managers, Scott said Wal-Mart would try to fill eight million electronic prescriptions in 2008, four times the number filled last year. Such prescriptions are considered safer than traditional handwritten doctors’ notes, which can be misread by pharmacists, leading to medical errors, experts said. And the chain said it would provide electronic health records to all of its US employees and their family members by the end of 2010. These are intended to give doctors a full survey of a patient’s medical history.

On energy, Scott said Wal-Mart would work with suppliers of televisions, air conditioners and microwave ovens with the goal of making them 25% more energy efficient within three years. “We do not know exactly how we will get there,” Scott conceded.

Finally, he committed Wal-Mart to creating a more socially and environmentally conscious network of suppliers. He called on other major retailers to join a global network of retailers and consumer goods companies, led by a Paris organisation known by the initials CIES, which is developing socially conscious manufacturing standards.