The Ecology of Walmart
By Saleem H. Ali
Introduction
Corporations have often been described in organismic terms because of their capacity for impact on the environment and some of their behavioral attributes such as resource consumption, waste generation and growth. Corporate unions or mergers are frequently described in metaphors of matrimony. Occasionally, corporations may even exhibit a kind of amoebic procreation such as the “Baby Bells” that emerged from Ma-Ma At&T in 1984.
In their landmark book Organizational Ecology, Michael Hannan and John Freeman first expounded on this framing of corporate behavior. There was a Darwinian tone in their analysis that harkens back to competitive markets being akin to natural selection processes. While many corporations may fit some aspects of this model, the growth of the mega-consumer-store, as exemplified by Walmart challenges this model. When globalization and economies of scale allow for consolidation of retail under one roof, the prospect for constructive competition can arguably be stifled. However, the concentration of consumer merchandise under a dominant retailer opens some remarkable opportunities for efficient environmental action.
Policy analysts have discovered that normative issues with future benefits such as environmental initiatives are usually most easily implemented through focusing on producers and service providers. Consumers are too capricious and often not adequately informed to even respond to basic market incentives in this regard. Furthermore, the speed of consumer response to technical information or prices might not be able to keep up with ecological stresses. High income consumers who usually take on a very large share of product consumption might have highly inelastic demand patterns which would not respond to price fluctuations. How then might we spur positive change? Where in the food chain of material consumption might we get the biggest bang for the buck?
Introduction
Corporations have often been described in organismic terms because of their capacity for impact on the environment and some of their behavioral attributes such as resource consumption, waste generation and growth. Corporate unions or mergers are frequently described in metaphors of matrimony. Occasionally, corporations may even exhibit a kind of amoebic procreation such as the “Baby Bells” that emerged from Ma-Ma At&T in 1984.
In their landmark book Organizational Ecology, Michael Hannan and John Freeman first expounded on this framing of corporate behavior. There was a Darwinian tone in their analysis that harkens back to competitive markets being akin to natural selection processes. While many corporations may fit some aspects of this model, the growth of the mega-consumer-store, as exemplified by Walmart challenges this model. When globalization and economies of scale allow for consolidation of retail under one roof, the prospect for constructive competition can arguably be stifled. However, the concentration of consumer merchandise under a dominant retailer opens some remarkable opportunities for efficient environmental action.
Policy analysts have discovered that normative issues with future benefits such as environmental initiatives are usually most easily implemented through focusing on producers and service providers. Consumers are too capricious and often not adequately informed to even respond to basic market incentives in this regard. Furthermore, the speed of consumer response to technical information or prices might not be able to keep up with ecological stresses. High income consumers who usually take on a very large share of product consumption might have highly inelastic demand patterns which would not respond to price fluctuations. How then might we spur positive change? Where in the food chain of material consumption might we get the biggest bang for the buck?
Planetary Predator?
The usual response to spur producers to improve environmental performance has been regulation. Usually, such action is generated by litigation and or serious confrontation. However such action becomes increasingly onerous when the antagonist has market capitalization to rival several countries in the world.
Consider the power that could be exercised by a company that accounts for 10% of China’s entire exports and where 82% of American households have shopped at least once per year. Imagine the trickle-down to consumers and the trickle-back to suppliers if a company like Walmart were to consider themselves as agents of environmental action.
While Walmart has often been criticized for predatory pricing that decimates the fabled “mom” and “pop” shops, there is a surprising environmental case to be made for a mega-store. Finding all consumer products under one roof reduces the need to travel to various destinations and also consolidates energy and resource usage more efficiently.
However, the sourcing of the products is where diversification and allowance for local and varied production needs to be captured. While Walmart has kept prices low by buying in bulk along product lines, if we start to account for environmental costs the accounting may work out more favorably for local suppliers in some cases.
This is not to say that imports from China or other developing countries would disappear. Indeed, they should remain an important part of the consumer mix in developed countries to allow for wealth transfer to those most in need. However, account for environmental performance will assuage conditions in producing countries and who is more well-suited to do exercise influence than such a huge buyer of products. The leverage which a large corporation may have if it acts responsibly is also enormous. As one documentary for the Discovery channel recently noted, approximately 10% of China’s entire exports by value go to Walmart – the amount of influence which the company can thus exert is astounding.
The usual response to spur producers to improve environmental performance has been regulation. Usually, such action is generated by litigation and or serious confrontation. However such action becomes increasingly onerous when the antagonist has market capitalization to rival several countries in the world.
Consider the power that could be exercised by a company that accounts for 10% of China’s entire exports and where 82% of American households have shopped at least once per year. Imagine the trickle-down to consumers and the trickle-back to suppliers if a company like Walmart were to consider themselves as agents of environmental action.
While Walmart has often been criticized for predatory pricing that decimates the fabled “mom” and “pop” shops, there is a surprising environmental case to be made for a mega-store. Finding all consumer products under one roof reduces the need to travel to various destinations and also consolidates energy and resource usage more efficiently.
However, the sourcing of the products is where diversification and allowance for local and varied production needs to be captured. While Walmart has kept prices low by buying in bulk along product lines, if we start to account for environmental costs the accounting may work out more favorably for local suppliers in some cases.
This is not to say that imports from China or other developing countries would disappear. Indeed, they should remain an important part of the consumer mix in developed countries to allow for wealth transfer to those most in need. However, account for environmental performance will assuage conditions in producing countries and who is more well-suited to do exercise influence than such a huge buyer of products. The leverage which a large corporation may have if it acts responsibly is also enormous. As one documentary for the Discovery channel recently noted, approximately 10% of China’s entire exports by value go to Walmart – the amount of influence which the company can thus exert is astounding.
Electric Influence: A sign at a Walmart Store
Apart from influencing developing countries in their product development, Walmart can also have a tremendous influence on companies manufacturing particular kind of products. Consider the lowly electric lightbulb. The technology for more energy efficient bulbs(compact fluorescent lights or CFL) has existed for decades and Phillips introduced the first such bulb to fit in conventional sockets in 1979. However, the manufacturing companies were not provided an incentive to produce more of these because the sellers thought they would be too expensive for the average consumer. Indeed, the incandescent light-bulb was several-fold less expensive and until adequate regulator pressure and subsidies were not provided a market for CFLs seemed illusory.
In December 2005, Walmart organized a meeting with General Electric Execuitives and invited Professor Steven Hamburg of Brown University to join in the effort in making an ecological and economic case for CFLs. While initially the bubl manufacturers were reluctant, they eventually agreed to invest in this area because of Walmart’s tremendous purchasing power.
In addition, quality control and labeling criteria for bulbs helped consumers in making an informed decision about CFLs being a better economic and environmental choice. While concerns about mercury (approximately 4.5 mg per bulb) and other metals in CFLs persist, an effective product takeback program to prevent disposal problems of toxic materials is still needed. Walmart is considering how best to facilitate such efforts in its stores to improve the correct disposal rate for used CFLs.
The impact is likely to be dramatic: if the company meets its goals for CFL sales, Walmart customers will reduce their carbon dioxide emissions by 100 million metric tons per year – equivalent to seven average sized power plants (or the combined electricity consumption of Rhode Island, New Hampshire, Maine, Connecticut and Vermont).
In December 2005, Walmart organized a meeting with General Electric Execuitives and invited Professor Steven Hamburg of Brown University to join in the effort in making an ecological and economic case for CFLs. While initially the bubl manufacturers were reluctant, they eventually agreed to invest in this area because of Walmart’s tremendous purchasing power.
In addition, quality control and labeling criteria for bulbs helped consumers in making an informed decision about CFLs being a better economic and environmental choice. While concerns about mercury (approximately 4.5 mg per bulb) and other metals in CFLs persist, an effective product takeback program to prevent disposal problems of toxic materials is still needed. Walmart is considering how best to facilitate such efforts in its stores to improve the correct disposal rate for used CFLs.
The impact is likely to be dramatic: if the company meets its goals for CFL sales, Walmart customers will reduce their carbon dioxide emissions by 100 million metric tons per year – equivalent to seven average sized power plants (or the combined electricity consumption of Rhode Island, New Hampshire, Maine, Connecticut and Vermont).
Transforming Walmart's Habitat: A Green Walmart Store in Texas
Apart from its sales, Walmart is also considering various ways of reducing the ecological footprint of its stores. Through its “Acres for America” program, the company pledged to spend $35 million in buying conservation land through the National Fish and Wildlife Foundation to compensate for the land lost through its box store development.
Efforts are also underway to improve the building design of Walmart stores to make them more environmentally efficient. In 1994, Walmart opened its first green design store in Lawrence, Kansas. However, this remained an outlier for several years until 2005 when two experimental “green stores” were opened in McKinney, Texas and Aurora, Colorado. It has now opened a few new supercenters, including one of its largest stores in Kansas City, Missouri, that have design features to reduce energy consumption by 20%. While many more challenges remain, these are all positive steps that can incrementally make a difference in how consumers perceive Walmart.
While many continue to dismiss these efforts as Greenwash, the organizational changes occurring at Walmart are far more profound and likely to be persistent as the company evolves to be a dominant “species” in the corporate jungle. A confluence of strong leadership, regulatory pressures and consumer activism have brought about these changes. While monitoring and enforcement of positive initiatives must continue we should also dispense with green cynicism about such positive moves. Instead the focus should be on how the power of scale that large corporations can muster can most efficiently be used to benefit the planet.
Efforts are also underway to improve the building design of Walmart stores to make them more environmentally efficient. In 1994, Walmart opened its first green design store in Lawrence, Kansas. However, this remained an outlier for several years until 2005 when two experimental “green stores” were opened in McKinney, Texas and Aurora, Colorado. It has now opened a few new supercenters, including one of its largest stores in Kansas City, Missouri, that have design features to reduce energy consumption by 20%. While many more challenges remain, these are all positive steps that can incrementally make a difference in how consumers perceive Walmart.
While many continue to dismiss these efforts as Greenwash, the organizational changes occurring at Walmart are far more profound and likely to be persistent as the company evolves to be a dominant “species” in the corporate jungle. A confluence of strong leadership, regulatory pressures and consumer activism have brought about these changes. While monitoring and enforcement of positive initiatives must continue we should also dispense with green cynicism about such positive moves. Instead the focus should be on how the power of scale that large corporations can muster can most efficiently be used to benefit the planet.
