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Wal-Mart's motive is no secret: Going green saves it money

Public goodwill is nice, but Wal-Mart officials say their environmentally friendly moves are motivated by the bottom line.

June 04, 2011|By Tiffany Hsu, Los Angeles Times
  • A Wal-Mart in Santa Fe Springs has solar panels and skylights to cut electricity bills.
A Wal-Mart in Santa Fe Springs has solar panels and skylights to cut electricity… (Gary Friedman, Los Angeles…)

Wal-Mart wants to extract more green out of greening.

The retail giant's supercenter in Lancaster recently installed fuel cells that provide half of the electricity to the 222,876-square-foot store. It has punched holes in the roof for skylights that provide 70% of the store's lighting needs during the day. To help keep the scorching sun at bay and cool the building naturally, it has painted the roof white.

The store has been recognized for being eco-friendly, but Wal-Mart Stores Inc. officials say they're actually happier with how the upgrades have improved the bottom line. Since it began installing solar panels at several stores, the company says it has shaved $1 million from its electricity bill.

"We think it's good business," said Kimberly Sentovich, senior vice president of Wal-Mart's Pacific Division. "We don't only want to do things that are good for the environment."

Not even a decade ago, the world's largest company was reviled as an environmental villain. Activists condemned Wal-Mart, and many other retail behemoths were condemned for wasting natural resources by relying on a sprawling network of suppliers. Wal-Mart's massive supply chain had an outsized impact on the environment, they said.

Now, Wal-Mart and many mega-companies — whether because of outside pressures or an internal change of heart — are preaching that being green makes good business sense.

Some critics are not convinced and contend they are just "greenwashing" — a marketing ploy without any real eco-friendly results. Others suggest they are making the efforts only to stay competitive.

Wal-Mart and some other major companies are more straightforward. They say they are being driven by the bottom line and see any resulting public goodwill as a side benefit.

Wall Street is also embracing the move to green, analysts said. Cutting back on waste and packaging can result in huge cost savings, and improving materials and limiting toxins can reduce potential legal liability. Companies also want future access to key but dwindling natural resources.

Beer brewer Anheuser-Busch InBev said it wanted to cut 30% of water use from its production process within five years and to recycle and reuse 99% of its waste by 2012. Hardware chain Lowe's has recycled nearly 1 billion pounds of wood pallets and cardboard.

Next year, PepsiCo Inc. is planning to test beverage bottles made entirely from plant-based sources — which could include the more than 1 billion pounds of oat hulls and orange peels that the company's production facilities produce as waste.

IBM Corp. ranked first for environmentalism on a list of 100 companies compiled this year by Corporate Responsibility Magazine. But environmentalism isn't "a demonstration of corporate virtue" or a form of philanthropy for the company, Chief Executive Samuel J. Palmisano said in a speech last year. It's a growth strategy.

"The concerns about our natural environment are not opposed to the concerns of our economies and our societies — they are one," he said.

Wal-Mart shelves now feature dog beds and picture frames made of recycled materials as well as eco-friendly diapers and detergents.

But behind the scenes, operations have also gotten a sustainable revamp. The company said it was diverting 80% of its waste in California away from landfills — recycling some into new products. It has already saved millions of dollars scaling back the amount of product packaging.

Wal-Mart decided to go green in 2005 and has since won over many of its harshest environmental critics.

But not all of them. Last year, to settle lawsuits from activists unhappy about the carbon footprint of several proposed Southern California supercenters, the chain agreed to install more solar panels and incorporate more energy-efficient designs.

Wal-Mart says it's proceeding cautiously because any step it takes could significantly affect thousands of suppliers.

"As a large company, we have a responsibility and an opportunity — the decisions we make can accelerate change across the whole supply chain," said Leslie Dach, executive vice president of corporate affairs. "But we also have to be more careful and considerate because of who we are."

tiffany.hsu@latimes.com

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