chapter  5
Strategy Principles and Analyses to Inform Strategy
Pages 27

Today, Wal-Mart’s “economy” is actually larger than Ireland’s (with a 2014 market capitalization of $244.17 billion).1 However, back in 2005, Lee Scott (the CEO at the time) felt that Wal-Mart was in trouble. The company’s growth was stagnant, it was receiving pushback from various stakeholder groups, and its international expansion was not very successful. The company was also engaged in numerous lawsuits, received an enormous amount of bad press for failing to provide a living wage and healthcare to over half of its employees, and was being accused of gender discrimination and the destruction of local economies.2 Sales growth had slowed in previously prosperous stores, and its stock price (after rising 1,205 percent during the 1990s) had fallen 30 percent since Scott took over in 2000.3

Scott was looking for ways to improve the company’s performance and reputation.4 He decided to focus on environmental sustainability, using the company’s supply chain management as the target for increased profitability. This supply chain focus was nothing new to Wal-Mart, yet it was new in terms of what demands it would place on the chain. In October 2005, in an auditorium in Bentonville, Arkansas, Scott announced to the company’s 1.6 million “associates” (Wal-Mart’s name for employees) that the company would be taking on three aspirational goals: “to be supplied by 100 percent renewable energy; to create zero waste; and to sell products that sustain our resources and the environment.” 5

The audience wasn’t expecting this. Wal-Mart had been a defensive player when it came to environmental issues and had previously viewed sus-

tainability as a compliance challenge. However, the company realized that it was the largest private user of electricity in the United States, emitted more than the equivalent of 2.8 million households in terms of carbon (28 million households if you counted their supply chain),6 and that it could work with several outside groups on this new effort. Key consultants included Blu Skye, Conservation International, and the Environmental Defense Fund (EDF). These organizations helped Wal-Mart identify products and processes (e.g., within production and shipping) that would have the greatest environmental impact if altered.