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How Wal-Mart Plans to Build a Greener Chinese Supply Chain

By 2017, the retailing behemoth plans to buy 70% of its goods sold in U.S. stores and Sam’s Clubs from suppliers in China, the U.S. and around the world who use a sustainability index.

Retail giant Wal-Mart announced new commitments Thursday which the company says will increase the sustainability of its supply chain in China, the U.S. and around the world.

The world’s largest retailer — which operates a chain of big-box stores around the globe known for deep discounts – is placing China at the center of its plans to fund research focused on sustainable business and supply chains, as well as to increase the standards of its sourcing and product design.

“The impacts of these commitments will be global and make a difference around the globe,” Wal-Mart CEO Mike Duke said in front of a Beijing, China audience that included U.S. Ambassador to China Gary Locke, Chinese government officials, nongovernmental organizations, suppliers and academics.

Duke announced the Wal-Mart Foundation will grant $2 million to The Sustainability Consortium to set up shop in China and begin research aimed at stimulating the growth of sustainable business.

First launched with Wal-Mart funding in 2009, The Sustainability Consortium develops reporting tools and metrics designed to measure sustainability. It worked together with Wal-Mart to develop the retailer’s Sustainability Index, a much-publicized effort launched three years ago. The index measures the sustainability of products across a list of 100-plus categories. By the end of 2012, Wal-Mart says that 100 more product categories will be added.

On average, 70 percent of purchases at Wal-Mart are of products which have been evaluated by the Sustainabiity Index, the retailer estimates, and come from the 500 suppliers which have provided data and information to the index.

“[The Sustainability Consortium in] China will provide the local research and reporting systems to help China build more sustainable and more competitive businesses,” Duke said. “Wal-Mart and others will use the knowledge TSC generates to enhance supply chain sustainability in China.”

As a result of the research, “we will have a deeper insight into how we can make manufacturing more sustainable for people and communities in China,” he added.

Domestic suppliers, local retailers, scientists, academic researchers and nongovernmental organizations will all contribute, Duke said.

Kara Hurst, director of The Sustainability Consortium, also projected that the newly funded effort would have significant impact.

“The $2 million grant from the Wal-Mart Foundation will support the Consortium and position us to help bring the best science and research to support the development of the green supply chain here in China and globally,” she said.

Wal-Mart will also roll out the following plans over the next few years, Duke said:

  • By 2017, purchase 70 percent of its goods sold in U.S. stores and Sam’s Clubs from suppliers in China, the U.S. and around the world who use the Sustainability Index to evaluate the sustainability of their products
  • Beginning in 2013, use the Sustainability Index as a basis to influence the design of Wal-Mart’s U.S. private brand products
  • Beginning in 2013, use sustainability as a criteria to evaluate the merchants it sources products from around the world – criteria already in place for its U.S. buyers at Wal-Mart and Sam’s Club stores

U.S. Ambassador to China Locke said that Wal-Mart’s commitments announced in Beijing will advance efforts to make “more affordable and sustainable consumer goods accessible here in China and around the world.”

The plans unveiled in Beijing were the first public series of commitments the company had made in China since its 2008 Sustainability Summit, when it introduced new environmental and transparency requirements for its suppliers and announced an effort to increase energy efficiency at supplier factories.

Kristine A. Wong, an associate editor of GreenBiz, is a multimedia journalist who became an editor and reporter after working for environmental and public health organizations in the Bay Area and Seattle for over 10 years. She has a master’s degree in journalism from UC Berkeley. Follow Kristine on Twitter: @wongkxt

This article first appeared at GreenBiz.com and is republished here with its permission.

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