Still dreaming in green
I don't normally read the Supply Chain Management Review. But after hearing about Walmart's policies towards the environment I needed to know more about what they have actually done. Here is the article I found that outlines their approach to greening their business The Greening of Wal-Mart's Supply Chain. What is amazing is that a company as influential would be so comitted to environmental stewardship to take the steps normally used to increase profits to increase accomplishment of goals like Walmart's "To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and the environment." With their approach they can drive 60,000 suppliers behavior by setting requirements on how the suppliers operate in order to be able to sell through the Wal-Mart retail distribution channel. So this is what is so amazing and unexpected to me.
Corporations have been portrayed correctly as inhuman and often acted inhuman in content like the movie "The Corporation" establishing that corporations were created as entities that may employ people and have many of the rights and responsibilities but aren't people. So they have done things that a human wouldn't actually do like ignore human rights issues (think pre-unions), pollute the environment to their own advantage, place unreasonable expectations on suppliers to push for price, force customers into modes where they had no choice of supplier (monopolies), push countries/regimes towards military actions for their own profits (debeers diamonds), exploit third world populations for labor, treat livestock/lab animals in a cruel way (factory farming), etc.
From the imdb site on The Corporation:
"Since the late 18th century American legal decision that the business corporation organizational model is legally a person, it has become a dominant economic, political and social force around the globe. This film takes an in-depth psychological examination of the organization model through various case studies. What the study illustrates is that in the its behaviour, this type of "person" typically acts like a dangerously destructive psychopath without conscience. Furthermore, we see the profound threat this psychopath has for our world and our future, but also how the people with courage, intelligence and determination can do to stop it." Written by Kenneth Chisholm (kchishol@rogers.com)
They needed to do these things to compete and in the Darwinian sense of evolution of corporations if they were non-competitive they wouldn't exist and persist. But unlike evolution of humans going back some 100 million years - corporations have only existed for a few hundred years.
The corporation is evolving. The environment around them is radically different than it was even 15 years ago. Customers always wanted scale to reduce the costs of their goods but they also wanted "Good" practices to be behind them. The big dinosaur of the Wal-Mart's of the world can't hide from the millions of potential critics in the world waiting to expose a flaw in their social ethics. They need to create web sites like Wal-Mart facts to educate themselves and critics about their business ethics. So in order to maintain competitive they need to lead their own organization ahead of the critics. In Wal-Mart's case they partnered with NGOs, big environmentalist organizations, and consulting teams knowledgable about how to do transformation to move in 2 years from being perceived as the big monster destroying American small town jobs into the most powerful instrument on the planet driving change.
The big cool enlighening part of the Wal-Mart effort and what fascinates me is that when Wal-Mart looked at their entire impact as a retailer the tentacles reached farthest and widest when they considered their impact through their influence on the suppliers. So Supply Chain Management designed for changing how you purchase stuff cheaper and reduce inventory, one of the key drivers of Wal-Mart's and many other companies' success, has had an unexpected impact - the supply chain can be managed to achieve ANY objective set by a consumer of the supply chain. So a retailer with pressure from customers to be environmentally responsible can drive back that requirement backwards and it can cascade down to the lowest levels of suppliers of raw materials over the course of each link.
So while the corporation is a legal entity that may not be human it is fully responsible to the demands and needs of humans that ultimately consume it's output. After all corporations must produce some product or service of value to a human sooner or later in order to get that money that the economy operates on. So the new co-evolution of the corporation and the human is leading towards sustainability, the "symbiotic" relationship necessary for the corporation to survive under the scrutiny of us highly judgemental and humans.
Even Deloitte is in the game. They wrote a white paper called Creating the Wholly Sustainable Enterprise. In it they wrote some broad reaching requirements for transformation:
"In evaluating a company’s evolution to WSE status, there are some organizational constructs that may limit or
reduce the effectiveness of an enterprise-wide sustainability strategy.
• ‘Green’ Is Not A Corporate Function: Companies that limit sustainability efforts on to a specific department or
function (e.g. EH&S) may fail to advance in the journey towards overall sustainability. Ownership of
sustainability by a single function suggests that responsibility resides with a specific, limited number of
individuals rather than responsibility residing with everyone as an inherent element of the overall culture.
• ‘Green’ Is Not An Executive Position: Companies are experimenting with a ‘Chief Sustainability Officer’ and
other such titles, perhaps a positive step but insufficient on its own to drive consistent value. While executive
ownership and accountability for ‘green’ is an essential element of an overall approach, it is not, in itself,
sufficient to drive the enterprise-wide activities required to succeed.
• ‘Green’ Is Not a Fad: Like business trends of recent decades, sustainability as ‘the next big thing’ may be
advancing as a means to driving competitive advantage. Yet ‘greening the company’ is more than a fad. Many
business improvement methods of recent years—MRP, reengineering, lean manufacturing, Six Sigma, and
others—can be considered specific application of sustainability principles applied to business activity. It would
be appropriate to begin to think of sustainability as an organizing principle within which business improvement
methods are developed, applied, and evolved. And over time it is reasonable to presume that the next waves of
business improvement frameworks will be based at least in part on principles of value-driven sustainability.
• ‘Green’ Is Not a Cost of Doing Business: Thinking about sustainability in this manner establishes a culture of
sustainability as an ‘add-on’ or incremental cost. Rather than being an integral part of every process,
sustainability is evaluated after ‘core’ decisions are made. This can be illustrated by describing the difference
between a traditional design project followed by a ‘value engineering’ phase, vs a design project initiated as a
A Practical Guide to Driving Shareholder Value Through Enterprise Sustainability 6
‘green’ project where sustainable materials, systems, etc. are a core part of the initial specification and
conceptual design amongst key participants in the design process.
• ‘Green’ Is Not a Political Statement: The history of conflict between ‘environment’ and ‘big business,’ combined
with the natural politicization of the issues creates a substantial amount of ‘baggage’ to the company
undertaking a broad Sustainable Enterprise effort. The successful organization will undertake this
transformation based on the principles of improving shareholder value and company performance, and the
environmental and social benefits will be positive, concurrent consequence."
The fun part of all of this is going to be watching the corporations scramble over the next 5 years to digest the shock of the wave of sustainability. I think we have the following to thank for it: Internet transparency, Supply Chain Management, Improved Movie/education distribution, Global communication networks, Real problems/risks to our planet, and most of all -- millions of people consuming beyond price to drive suppliers for something better. The impact of all of this leads me to believe that the structure can reduce the same drivers for war as we are finding for the environment so that we can conquer the problems raised in the worry around the military-industrial complex in each country hoping to participate in a global economy. Imagine if Wal-Mart, McDonalds decided to stop/prevent wars rather than drive sustainability? Wasn't Michael Moore complaining that Wal-Mart sells bullets and guns? So much seems possible.
So I am filled with something rare about the environment, human rights, animal rights and wars - HOPE!