Thursday, July 16, 2009

A pleasant surprise to the sustainability movement

Wal-Mart announced that it is committed to developing a universal rating system to measure the environmental impact of every item it stocks on its shelves.  There couldn’t have been better new than this to groups and individuals interested in reducing the negative impact of consumption.  A typical Wal-Mart stocks close to 100,000 SKU’s and rakes in revenues of about 100 million USD a year.  With sales surpassing 400  billion USD Wal-Mart has a big impact on how other large retailers conduct business. 

If Wal-Mart pulls this stunt successfully then it would have helped energize the revolution in the corporate world.  Yes, many firms have had starts in this direction but the impact that Wal-mart’s decision may cause is manifold.  Its entire supply-chain consisting of many thousands of suppliers would be forced to cough-up information.  Such disclosure would create more competition among suppliers to create products that have a lower negative impact on the environment.

Arguments against the sustainability movement include high costs and a move such as this which leads to higher competition among firms will force them to innovate and hopefully reduce manufacturing costs.  Three cheers to Wal-Mart!