Global Economics

Wal-Mart, Waste, and the Developing World


U.S. companies such as Wal-Mart are working hard to reduce waste, but global efforts to go green are the biggest environmental challenge

What happens when the world's largest retailer holds its thousands of suppliers around the world to a level of environmental accountability they have never encountered before? Wal-Mart Stores (WMT) is about to find out.

That's because the Bentonville (Ark.)-based company recently announced it will be introducing a sustainable product index to decide how "green" its suppliers are. By doing so, Wal-Mart aims not only to reduce the amount of waste it produces every year but also the amount of waste its millions of customers produce, too.

Every year Americans throw out approximately 220 million tons of garbage, according to the Environmental Protection Agency. And while recycling reduces waste, much of it is still going into landfills. In fact, one study by the EPA estimates that the annual amount of garbage the U.S. produces is the equivalent of more than 82,000 football fields packed six feet deep in compacted garbage.

There are no accurate figures to estimate the amount of garbage thrown out worldwide. But given the fact that the U.S. is the world's biggest garbage producer and makes up only 4% of the world's population, it is probably safe to say the annual global total is well over a billion tons of garbage—or more than 400,000 footballs fields.

Regulation Is Key

Fortunately, these days most of those "football fields" in the U.S. and in other developed economies are governed by stringent regulatory guidelines. What had once been toxic time bombs now have minimal impact on the health of the local populations and ecosystems.

The bigger problem today is that sanitation reform isn't being properly addressed in the developing world, says waste expert N.C. Vasuki, retired CEO of the Delaware Solid Waste Authority. "It's talked about. Money is spent, but there really isn't any measurement to make sure the system is improving," he says.

Vasuki has assisted the Clinton Foundation in its efforts to decrease greenhouse gas emissions at landfills around the world. He says the U.N. and World Bank give money, "but then after that, they don't keep track of what happened." Trash is difficult to track because there simply aren't systems to measure it in most of the world.

While waste is forgotten by most Americans as soon as it is hauled away in a garbage truck, it remains a dire problem for most of the world. "Inadequate sanitation is the No. 1 cause of death on the planet," says Allen Hershkowitz, senior scientist at the Natural Resources Defense Council (NRDC). "The materials tend to be very toxic." Exposure to toxic waste can cause respiratory illnesses, cancer, and other health problems.

Beyond Landfills

But amid all that waste comes opportunity. As companies develop new initiatives to go green, the waste industry, which generates $55 billion in annual revenue in the U.S., is looking for ways to innovate in a market focused on sustainability. "Garbage is now more of a resource than a waste," says Bruce Parker, CEO of the National Solid Wastes Management Assn., a trade group based in Washington. Waste companies are expanding into the energy business as power plants use methane gas collected at old landfill sites. They are using compressed natural gas and hybrid garbage trucks. They are also using new technology to make recycling more efficient. "Landfills are still very, very important today, but we're doing so much more," Parker says. The largest waste company in the U.S., Waste Management (WM), is one of the founding members of the sustainability consortium that Wal-Mart helped create.

Private industry might be able to help make progress where governments and NGOs are stalling. "Wal-Mart, obviously with its size, has the ability to push standards that could trickle down," says Jeff Rodgers, a research associate who studies green supply chains at the World Resources Institute. "It's sending a market signal." Wal-Mart has more than 100,000 suppliers throughout the world. Randolph Kirchain, who works at the Massachusetts Institute of Technology's Department of Materials Science & Engineering, says that "what [Wal-Mart] could affect is energy consumption" among suppliers abroad. While he is enthusiastic about this index, he does not think it would have much effect on waste generation in developing countries since most products end up in developed countries.

But many of these countries have worked hard to improve their environmental record—and the potential for profits down the road remain considerable. "Landfilling is a huge problem in the developing world," says Hershkowitz. "It's not just a question of the size of the landfill. It's the proximity to people." Also, says Joe Truini, a reporter at Waste & Recycling News, "[Developing countries] don't necessarily have the recycling infrastructure to collect and process materials." He says that someone "is going to have to develop that infrastructure, and it may be private investors."

Another sector that needs to be addressed is the informal sector—people like the recicladores, or waste-pickers, in Latin America. Waste-pickers collect garbage and sort through it to sell recyclables to third parties. "In Colombia we have been trying to do something like [Wal-Mart's index] for the last 10 years, and we haven't had any results, and we think that it will be a very important example—a very important message to our country," says waste-picker representative Nohra Padilla through a translator.

Incorporating Waste-Pickers

Padilla is the executive director of the Bogotá Waste-Pickers Assn. in Colombia, and she grew up watching her mother and grandmother struggle to make a living sorting through trash. She hopes waste-pickers can be integrated into the recycling industry so they can process their own recyclables instead of selling the materials. If the social development aspect of sustainability can be addressed, informal members of the waste industry might also benefit from corporate sustainability policies.

Wal-Mart spokesman Kory Lundberg says it will ask suppliers specifically about waste partly because "there's a good business opportunity there." Instead of the company paying someone to have waste taken away, recyclers pay the company to take away supplies.

The biggest hurdle Wal-Mart faced with internal efforts to reduce waste was simply figuring out how much it was sending to landfills. "Our previous waste management systems weren't sufficient to measure our waste streams," Lundberg says, and he thinks that might be a problem for suppliers. He thinks it is a potential opportunity for the waste industry to help build the capability to measure company waste streams.

A Corporate Turning Point?

There are some unanswered questions about this sustainability index, such as how difficult it will be to implement. There are no universal standards, which makes these issues hard to track. It remains to be seen whether other large retailers will follow suit. Some issues, such as toxic materials, were not even addressed.

Still, this effort could mark a turning point in corporate standards. Rodgers of the World Resources Institute says suppliers should jump on the bandwagon. "The first thing that companies really need to do is begin to assess their risk to these environmental trends…and begin to measure and monitor their impacts," Rodgers says. Then companies can develop strategies to reduce waste and "differentiate from competitors what kind of environmental impacts it addresses," he says. "These types of things are coming to the forefront more and more."

Kirchain at MIT would like to see more technological improvements that could improve the separation of waste and recycling. He would like better measurements to help corporations determine how to keep waste out of landfills in the first place. "Most recycling operations do, on average, have higher employment than landfill operations," he says. Better technology "could really change the industry," he says, and have economic and environmental benefits throughout the world.

Click here to see the world's biggest garbage dumps.


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