Wednesday, November 28, 2007
We all worry about global warming and pollution, but no government really knows how to tackle the issue in a way that will bring meaningful change worldwide.
Laws, rules and environmental edicts produce winners and losers. Make environmental standards too stiff in one country and production shifts to another location where it is more cost effective. The air and pollution statistics from rapidly developing nations such as China and India prove that growth is occurring there, and there is very little the U.S. government can do about it. No matter how much we complain, other nations are going to do what is in their self interest.
The result? Many companies in the United States that are trying to comply with our ever changing state and federal environmental standards find themselves undercut and forced to shut down or move offshore.
But there is another approach.
Consider what Wal-Mart is doing with its green initiatives. Often cursed for its size, Wal-Mart employs 1.9 million people, has 6,500 stores, and generates $351 billion in sales. Wal-Mart, like its successful competitors, has a finely tuned ear. It reads trends and customer needs very well.
Wal-Mart knows that people are concerned about their environment. They are going "green." The company found that 92 percent of its environmental impact comes from the products it sells. Therefore, if it is going to have a green impact, it has to drive product changes.
For example, the company announced that by May 2008, it will sell only liquid laundry detergents that are twice as concentrated as those currently on its store shelves. The newly formulated detergents require less water in manufacturing, less packaging, less storage space and fewer delivery trips.
Wal-Mart Canada, according to the Vancouver's Globe and Mail newspaper, has 20 percent of the retail market share in Canada. Canadians estimate the concentrated detergents will save nearly 21 million gallons of manufacturing water each year, as well as 2,200 tons of plastic and 3,300 tons of cardboard used in the plastic containers and shipping cartons. Wal-Mart's goal is to have 25,000 fewer garbage and recycling trucks backing up to its stores north of our border next year.
Worldwide, Wal-Mart believes that reducing just 5 percent of its packaging by 2013 will reduce carbon dioxide emissions by 667,000 tons - equivalent to taking 213,000 trucks off the road each year and preventing the burning of 324,000 tons of coal and 66.7 million gallons of diesel.
According to Tima Bansal, director of the Centre for Building Sustainable Value at the University of Western Ontario, Wal-Mart's move is quite significant because it affects 60,000 suppliers around the world, including those in countries like China. "When Wal-Mart says you do that, that is going to change the actions of suppliers in emerging economies too."
That's an effect that no other government or environmental group is likely to achieve, and it will impact environmental practices from the manufacturing of toys to televisions.
Wal-Mart is not alone. Its competitors are also driving changes to greener, more environmentally friendly products and practices because the shopping public wants those products and behavior. What is occurring in the market place today is living proof that government mandates don't change behavior, people do.
Don C. Brunell is president of the Association of Washington Business.