In its August 7 issue, Fortune magazine did a lengthy feature article entitled "The Green Machine" analyzing Wal-Mart's corporate initiative to create a more environmentally conscious culture and develop a better model for sustainability -- both in terms of the environment and its business model. The initiative involves everything from changing its own processes, such as upgrading the fuel efficiency and emissions standards of its truck fleet and the energy efficiency of its huge stores, to changing the product lines that it sells to its 176 million customers a week. Judging from the degree to which the initiative is featured on its corporate website, the company certainly appears serious about its new direction.
As with everything Wal-Mart, there is no shortage of detractors and cynics who see this as a PR stunt designed to distract from Wal-Mart's other highly publicized social shortcomings from low health insurance benefits to a sex discrimination class action. Interestingly, the company expressly acknowledges this cynicism on its website -- to me a sign that they are serious. Efforts that are strictly PR usually gloss over or ignore the tough stuff. And at least one potential environmental cynic believes in what the company has undertaken -- a recent company event featuring the initiative included a showing of "An Inconvenient Truth" with Al Gore providing the narrative in person and then praising the company for its efforts.
So can one company make much of a difference in fighting worldwide environmental challenges? Let's use a few stats to put Wal-Mart's effort in perspective:
At $315 billion in sales (or gross company product if you will), if Wal-Mart were its own country, it would be the 21st largest economy in the world ranked by GDP, ahead of countries such as Austria, Argentina and Indonesia.
Wal-Mart employs 1.8 million people worldwide, 1.2 million of them in the United States. That means that 1 in every 120 people in the U.S. labor force are employed by Wal-Mart. With $240 billion in goods purchased for sale in its stores and another and multi-billion dollar spend on SG&A services such as marketing, legal and accounting, I would estimate that the job of 1 in every 65 working Americans is directly dependent on Wal-Mart, either as an employee of the company or as an employee of a supplier that depends on Wal-Mart for its own revenues. It's estimated that 1 in 3 Americans is a regular customer at Wal-Mart.
Approximately $63 billion of Wal-Mart's revenues are in foreign markets. At slightly over 20% of GCP, the company is in the same ballpark as the global average of 25% of GDP derived through exports, and ahead of countries with large well developed domestic markets such as the U.S. itself. Indeed, Wal-Mart's foreign sales alone would be sufficient tot make the company number 21 on the Fortune 500. With its total revenue, its number 2 behind only Exxon Mobil.
Needless to say, that's impressive global reach. With that much influence on employees, suppliers, and customers, if Wal-Mart is serious about its green initiative, this sort of global corporate culture change can have a far more positive impact on improving the world environment than almost any initiative that's gone before -- including an Al Gore movie.