The New York Times-20080124-Wal-Mart Sets Agenda of Change
Return to: The_New_York_Times-20080124
Wal-Mart Sets Agenda of Change
Full Text (949 words)Wal-Mart pledged Wednesday to cut the energy used by many of its products 25 percent, to force the chain's suppliers to meet stricter ethical standards and to apply its legendary cost-cutting skills to help other companies deliver health care for their employees.
In a lofty address that at times resembled a campaign speech, the chief executive of Wal-Mart Stores, H. Lee Scott Jr., said that we live in a time when people are losing confidence in the ability of government to solve problems. But Wal-Mart, he said, does not wait for someone else to solve problems.
He then laid out sweeping plans for the company on several health and environmental issues, and he hinted that even more ambitious goals might be on the horizon. Mr. Scott said, for instance, that Wal-Mart is talking to leaders of the automobile industry about selling electric or hybrid cars -- and might even install windmills in its parking lots so customers could recharge their cars with renewable electricity.
With the new commitments, Wal-Mart is trying to cement its reputation as a leader in areas where it was once known as a laggard. The initiatives are the most visible sign to date that Wal-Mart, which spent much of the past decade defending itself against criticism of its business practices, has gone on the offensive.
Since 2005, it has committed itself to a dizzying number of reforms, and even some of the chain's critics concede that it has begun to make good on the promises. For instance, Mr. Scott said Wednesday that Wal-Mart had sold 145 million compact fluorescent light bulbs, which he said had saved enough electricity to forestall the need for three coal-fired power plants in the United States.
Several experts applauded the new goals, saying they would have an impact beyond Wal-Mart, given the chain's influence over companies that supply Wal-Mart and other retailers. When Wal-Mart asks, suppliers jump, said Noah Horowitz, a senior scientist at the Natural Resources Defense Council. There are positive ripple effects throughout the supply chain.
On health care, Mr. Scott said that Wal-Mart would begin working with major American employers to help them manage and pay prescription drug claims, a costly task now handled by companies known as pharmacy benefit managers. He estimated Wal-Mart could save companies $100 million in 2008. That is a relatively small sum in the nation's $275 billion annual drug bill, but Wal-Mart has a history of refashioning nearly every business that it tackles.
In the address to store managers, Mr. Scott said Wal-Mart would try to fill eight million electronic prescriptions in 2008, four times the number filled last year. Such prescriptions are considered safer than handwritten doctors' notes, which can be misread by pharmacists, leading to medical errors, experts said.
And the chain said it would provide electronic health records to all of its United States employees and their family members by the end of 2010. These are intended to give doctors a full survey of a patient's medical history, in part to prevent treatments that conflict with one another.
Ron Pollack, the head of Families USA, a health care advocacy group, said the moves had the potential to significantly improve quality and reduce the cost of health care.
Given Wal-Mart's size and influence over its peers, Mr. Pollack said, the plans should have a salutary impact on employer-based health care.
Mr. Scott said that Wal-Mart, which already promotes energy-saving products in its stores like the fluorescent light bulbs, would begin focusing on additional products that use a large amount of energy, like air-conditioners, microwave ovens and televisions.
Its goal is to work with suppliers to make such products 25 percent more energy-efficient within three years. We do not know exactly how we will get there, Mr. Scott conceded.
Advocacy groups have long argued there is room to cut electricity demand in the United States by improving the efficiency of appliances. Highly efficient appliances are available today, but they often cost more than inefficient ones, and many people decline to buy them even though that would save them money in the long run.
Mr. Scott said Wal-Mart was committed to selling energy-efficient products at low prices to make them accessible to its working-class customers.
Mr. Horowitz of the Natural Resources Defense Council said that in the past, Wal-Mart had successfully reduced diesel use by its trucks and electricity use in its stores. Now, he said, they are taking the next step -- to look at the energy used to make and operate the products they sell.
Mr. Horowitz said Wal-Mart had room to improve, however. Its next goal, he said, should be to stop selling the least energy-efficient products, rather than simply introducing better models.
Finally, Mr. Scott committed Wal-Mart to creating a more socially and environmentally conscious network of suppliers around the world. He called on other major retailers to join a global network of retailers and consumer goods companies, led by a Paris organization known by the initials C.I.E.S., that is developing socially conscious manufacturing standards.
We believe there should be one framework of social and environmental standards for all major global retailers, he said.
Mr. Scott also said he would press for suppliers in China, which are known for flouting environmental rules, to comply with that country's environmental regulations and would require them to certify that they meet industry standards.
If an industrywide effort falters, Mr. Scott said, Wal-Mart will in fact lead; we will move forward by ourselves.
[Illustration]PHOTO: Compact flourescent bulbs at a Wal-mart in Kansas City, Mo. The chief executive of Wal-Mart Stores, H. Lee Scott Jr., told store managers that the company had sold 145 million of the bulbs. (PHOTOGRAPH BY ED ZURGA/BLOOMBERG NEWS)