Wal-Mart, Tesco and Sustainability

Many companies who sell to Wal-Mart and Tesco have found in the last year that they are facing an increasingly complex set of demands on environmental issues.  What is happening?  Why have these companies embraced sustainability?  Or have they?

These demands are the beginning of a trajectory that could lead to fundamental change for global supply chains and regulatory frameworks.  Over the next few weeks, we will consider this issue, the privatization of regulation.

Anyone looking round this site will know of our strong support for global environmental certification schemes, such as the Marine Stewardship Council and the Forest Stewardship Council. These certification schemes offer a means by which the commercial world can benefit the environment without incurring competitive disadvantage.

Why, then, do we draw attention to the potential causes for concern in Tesco and Wal-Mart’s actions in imposing their own higher environmental standards upon their suppliers? As a start, here are some of the questions that it would surely be useful if mainstream media commentators asked:

  • What happens if other supermarket chains follow this pattern but adopt standards of their own?
  • What are the additional costs to upstream industry of this?
  • Is it right that the point in the supply chain that is imposing these standards should have the least cost implications to themselves?
  • What happens when supermarket chains in different countries adopt environmental and social criteria appropriate to their national cultures?  Protectionism anyone?
  • If global manufacturers are forced to produce differing versions of their products for different “regulatory markets” are we not really rolling back the process of globalisation?
  • If it is true that this shift is being driven by consumers, why are governments scared stiff of tackling the same environmental issues, fearful they will be kicked out of office by these same consumers?
  • It is entirely right that these retailers should look at their shareholders’ interests when assessing which area of environmental concern they are going to address.  Why are the suppliers being asked to subsidize these retailers’ political manoeuverings?
  • Concern has been expressed at how much power the retailers now have over agricultural producers and the impact that is having on markets.  Is it not right that the extension of that power into the field of formally democratic environmental legislation is at least properly publicly discussed?
  • Why do the major political parties seem so happy at this “privatization of regulation”?

We don’t think we have all the answers; but we think we ought to be told!

November 2009