Friday, March 14, 2008

Wal-Mart to "green" Chinese suppliers

As part of any analysis of the costs and benefits of multinationals and FDI the popular mantra is about "spillovers" whether they be technical or knowledge spillovers. In recent work we have been searching (not always successfully) for evidence of "environmental spillovers".

Here is further annecdotal evidence.

Wal-Mart Pushing Chinese Suppliers To Go Green - CEO [PlanetArk]

GOLETA - Wal-Mart Stores Inc will meet with its thousands of Chinese suppliers this fall as part of a big push to reduce waste and emissions at factories that make its products, Chief Executive Lee Scott said on Thursday.

"We started a very aggressive program in China that is not only going to deal with environmental sustainability, but is also going to deal more aggressively with the issues of sourcing in China," Scott said during an appearance at the Wall Street Journal ECOnomics conference in Goleta, California.

As the world's largest retailer, Wal-Mart is considered one of the few companies that can use its heft to tackle environmental issues, like reducing energy consumption. It has already pushed its US suppliers to cut back on packaging and has set a goal of one day producing no waste and using energy only from renewable sources.

But Wal-Mart has also stumbled with some of its "green" efforts. For instance, it has found that pushing suppliers to make electronics that use less energy or can easily be recycled is harder than it appears, and involves a great deal of re-engineering.

To help speed up its efforts in China, Wal-Mart has hired an outside consulting firm, Scott said at the conference. It will also work with non-governmental organizations to help its plant inspectors understand the company's sustainability initiatives.

"It will take a long time," Scott said of the initiative.

Scott told reporters at the conference that he would personally attend the meeting this fall.

The company's top priorities in China will be to address the appropriate disposal of waste as well as to make reductions in both waste and greenhouse gas emissions. It will also work on reducing packaging and boosting energy efficiency, much as it has in its US business, Scott said.

Wal-Mart has pushed its suppliers to cut back on the amount of packaging they use by 5 percent by 2013.

Wal-Mart is also working with its suppliers to make the most "energy intensive" products in its stores 25 percent more energy efficient within three years. By 2010, the retailer also wants all its flat-panel TVs to be 30 percent more energy efficient.

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