From Greening to Greenback: How Walmart’s Sustainable Food Initiative Can Increase Profits

Posted on by Luana Tung

Walmart has launched a new green initiative “to create a more sustainable food system,” which it seeks to implement through “four key pillars”:1

  • Reduce “True Cost” of Food: Walmart not only pledges to “provid[e] everyday low costs for customers.”2 Furthermore, it aims to reduce the “environmental impact of agricultural practices” by working with and promoting sustainable practices among suppliers and others.3
  • Increase Access to Food: Walmart has increased its home delivery services and collection points for customers.4 Moreover, it has donated over 1.58 billion pounds of food together with Sam’s Club, and plans to “provide 4 billion healthier meals to those who need them in the U.S. over the next five years.”5
  • Facilitate Healthy Eating: Walmart has reduced the level of sodium and sugar in its food brands by 13% and 10% respectively.6 It is helping customers identify healthier options with a “Great for You” icon and plans to educate 4 million U.S. households about nutrition.7
  • Provide Food Safety Information: “Walmart will work to provide more transparency and information” about the origin, production methods, and ingredient labels of its products.8

Walmart launched its first green strategy in 2005. Then Chief Executive Lee Scott announced that the company would strive for three environmental goals: using 100% renewable energy, producing no waste, and “sell[ing] products that sustain our resources and environment.”9 Scott pointed out that achieving these measures would enhance Walmart’s profitability. For instance, in his estimation, recycling plastic that Walmart’s stores and clubs had been discarding would bring in $28 million, while enhancing its truck fleet’s fuel mileage by one mile per gallon could save over $52 million a year. In its 2012 annual meeting for investors, Walmart reported that it would “add $150 million in benefits to its bottom line from sustainability initiatives such as solar and wind energy projects, fuel cell installations, and its zero waste program in fiscal year 2013.”10 Walmart has been clear that its green initiatives are “driven by the bottom line.”11 As Kimberly Sentovich, senior vice president of Walmart’s Pacific Division, expressed, “We think it’s good business . . . We don’t only want to do things that are good for the environment.”12 Accordingly, Walmart’s global renewable energy usage fell to 3% in 2013 when “Walmart U.S. was unable to renegotiate an expiring contract [for renewable power] with competitive pricing.”13

How would Walmart’s recently announced sustainable food initiative square with its bottom line approach? As the largest grocer in the U.S., Walmart has “enormous clout” to encourage its food suppliers and processors to adopt more sustainable practices.14 Judging from Walmart’s own experiences, the resulting sustainable measures can potentially reduce the suppliers’ and processors’ operation costs. These savings can translate into lower purchase price for Walmart. Moreover, Walmart’s decision to educate households about nutrition and provide healthier food options can help the company reap more benefits from its organic food segment, which “has been growing faster than its main grocery business.”15 According to a survey that Walmart conducted among its shoppers, 91% of respondents indicated that they “would consider purchasing affordable organic products.”16 Starting from April this year, Walmart has begun introducing a “new in-house line” of around 100 products in partnership with Wild Oats.17 Organic items in the line include “kitchen cupboard staples like olive oil and black beans” that are priced approximately 25% less than Walmart’s competitors.18 By promoting a culture of healthy eating among its customers while offering organic choices at more attractive prices, Walmart can further increase demand for its organic products and raise profits.

  1. Walmart Announces New Commitment to a Sustainable Food System at Global Milestone Meeting, Walmart (Oct. 6, 2014), http://news.walmart.com/news-archive/2014/10/06/walmart-announces-new-commitment-to-a-sustainable-food-system-at-global-milestone-meeting ↩

  2.  ↩

  3. Id. ↩

  4.  ↩

  5. Id. ↩

  6.  ↩

  7. Id. ↩

  8.  ↩

  9. Lee Scott, Twenty First Century Leadership, Walmart (Oct. 23, 2005), http://news.walmart.com/executive-viewpoints/twenty-first-century-leadership. ↩

  10. Walmart to Save $150m with Sustainability Initiatives in FY13, Envtl. Leader (Oct. 12, 2012), http://www.environmentalleader.com/2012/10/12/walmart-to-save-150m-with-sustainability-initiatives-in-fy13/. ↩

  11. Tiffany Hsu, Wal-Mart’s Motive Is No Secret: Going Green Saves It Money, L.A. Times (June 4, 2011), http://articles.latimes.com/2011/jun/04/business/la-fi-walmart-green-20110604. ↩

  12. Id. ↩

  13. Walmart, 2013 Global Responsibility Report 54 (2013). ↩

  14. Stephanie Storm, Walmart Aims to Go Greener on Food, N.Y. Times (Oct 6, 2014), http://www.nytimes.com/2014/10/07/business/new-walmart-program-aims-to-enhance-food-sustainability.html?_r=0. ↩

  15. Clare O’Connor, Watch Out Whole Foods? Walmart Aims to Drive Down Organic Prices with New Cheaper Line, Forbes (Apr. 10, 2014, 3:25 AM), http://www.forbes.com/sites/clareoconnor/2014/04/10/watch-out-whole-foods-walmart-aims-to-drive-down-organic-prices-with-new-cheaper-line/. ↩

  16. Id. ↩

  17. Id. ↩

  18. Id. ↩

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