\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/03\/GettyImages-1921160286-e1711739192155.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Walmart<\/a> may not be the first corporation that comes to mind when you think of \u201cgreen companies,\u201d but maybe it should be. Back in 2017, before the SEC\u00a0climate rule<\/a>\u00a0was even a twinkle in Gary Gensler\u2019s eye, Walmart launched Project Gigaton, an ambitious project to eliminate one gigaton of greenhouse gas emissions from its supply chain by 2030. (For reference, that\u2019s 1 billion metric tons\u2014close to the amount Japan releases in\u00a0one year<\/a>\u00a0as of 2021.)<\/p>\n During an earnings call in February, Walmart announced that Project Gigaton had met its goal\u2014six years\u00a0early<\/a>. More than 5,900 suppliers, responsible for around 75% of Walmart\u2019s sales, have participated.<\/p>\n Walmart partnered with organizations including the Environmental Defense Fund (EDF), a nonprofit advocacy group, to get Project Gigaton up and running. Fred Krupp, president of the EDF, spoke with CFO Brew about how Walmart was able to achieve the success that it did\u2014and what other companies can learn from it.<\/p>\n The EDF first approached Walmart about reducing its emissions \u201cabout 20 years ago,\u201d Krupp said, \u201cin recognition of how powerful they could be as a leader for change.\u201d At that time, \u201cthere hadn\u2019t been so much attention\u201d paid to the business case for ESG, he said, noting, \u201cWe saw it as a way to have this highly respected business leader make the point that things that are good for business could also be good for the environment.\u201d<\/p>\n At first, according to Krupp, Walmart executives weren\u2019t receptive, but, over time, attitudes changed. As upwards of\u00a090%<\/a>\u00a0of retailers\u2019 emissions are from sources outside a company\u2019s direct control (like its supply chain), according to the National Retail Federation, suppliers were a natural place to focus. \u201cTo the extent [Walmart] could have an impact on their 100,000 suppliers, that could change the world,\u201d Krupp said.<\/p>\n Initially, the company set a goal to have its suppliers prevent 20 million metric tons of emissions from being released, Krupp said. After achieving that goal, it set its sights 50 times bigger: one gigaton.<\/p>\n Walmart encourages its suppliers to take steps to reduce their emissions in one or more of six areas: nature; energy use; product design and usage; packaging; transport; and waste.<\/p>\n Supplier data \u201cgoes through an intensive QAQC [quality assurance and quality control] process that includes checks that identify outliers and duplication,\u201d Aman Singh, Walmart\u2019s director of global responsibility communications for sustainability, told CFO Brew in an email. If data exceeds certain thresholds, Walmart will reach out to suppliers for supporting documentation.<\/p>\n \u201cA team of experts reviews select submissions and signs off on the final data,\u201d Singh said.<\/p>\n Suppliers that meet the criteria are\u00a0recognized<\/a>\u00a0on Walmart\u2019s website. In FY 2023, more than 750 suppliers earned \u201cSparking Change\u201d status, and more than 1,100 received \u201cGiga Guru\u201d status, Singh said.<\/p>\n As Walmart has suppliers ranging in size from giants like Procter and Gamble down to small companies making just a handful of products, it provides a range of ways for them to participate. Smaller or less-experienced suppliers can concentrate on just one of the six areas; those that are better-versed in ESG can tackle more.<\/p>\n \u201cOur focus was on making emissions reduction accessible and [to] enable suppliers to get started regardless of their size,\u201d Singh said.<\/p>\n It also helps educate suppliers about cutting emissions with resources, including videos, calculators, and a 119-page accounting\u00a0methodology<\/a>, she added. The company also holds events for specific industries, like dairy, Krupp said. More robust initiatives are available as well: Five Walmart suppliers\u2014Amy\u2019s Kitchen, Levi Strauss<\/a>, Great Lakes Cheese, J.M. Smucker<\/a>, and Valvoline\u2014have entered an agreement to purchase\u00a0energy<\/a>\u00a0from a wind farm in Kansas through\u00a0Gigaton PPA<\/a>, Walmart\u2019s clean energy accelerator. Suppliers that manufacture Walmart\u2019s private label brands can also receive financing for investments in sustainability through HSBC and CDP banks.<\/p>\n Walmart\u2019s size and clout convince many suppliers to participate. Walmart, which accounts for more than\u00a025%<\/a>\u00a0grocery dollars spent in the US, is an \u201cexceptionally large buyer,\u201d Krupp said. If it\u2019s emphasizing an initiative like Project Gigaton, \u201cthen it\u2019s smart for a supplier to recognize that\u2019s a signal being sent\u2014maybe a soft signal,\u201d he said. \u201cIn the back of your mind, you\u2019re thinking, \u2018Hey, the purchaser wants this. I better learn about it and see what it\u2019s feasible for me to do.\u2019\u201d<\/p>\n Suppliers have seen benefits from participating as well, Krupp said. They\u2019ve realized \u201cthere\u2019s pollution savings and cost savings available\u201d from being involved, he said. And it also helped prepare them \u201cto develop the sorts of systems that now they need for regulatory purposes,\u201d he said.<\/p>\n Krupp said he believes that one of the reasons Walmart was able to achieve Project Gigaton\u2019s goal early was that it set the right tone at the top and encouraged employees to buy in.<\/p>\n \u201cFrom [president and CEO] Doug McMillon on down, there is huge passion for this work among Walmart [employees],\u201d Krupp said. To create energy, he said, the company holds annual milestone meetings where divisional leaders come up on stage and announce the progress they\u2019ve made.<\/p>\n Even companies without Walmart\u2019s huge global footprint can study what the retailer\u2019s done for ideas, Krupp said. Start with \u201cthe math of what\u2019s the most important thing for [you] to tackle\u201d and where you can \u201cget the biggest gains\u201d for the \u201cenergy\u201d you put into it, he suggested.<\/p>\n Singh added the advice to \u201clisten to your suppliers. Year after year, as we gathered data from suppliers, we learned about their challenges, helping us create focused resources to speed progress and launch supplier collaborations.\u201d<\/p>\n This article was initially published<\/a> by CFO Brew<\/a>, a branch of Morning Brew<\/a>.<\/em><\/p>\n<\/div>\n\nWhy Walmart?\u00a0<\/strong><\/h2>\n
How Project Gigaton works<\/strong><\/h2>\n
Secrets to success<\/strong><\/h2>\n
Subscribe to Impact Report, a weekly newsletter on the trends and issues shaping corporate sustainability. Sign up<\/a> for free.<\/div>\n