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Wal-Mart's New Shade of Green: What It Means for Small Suppliers

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By Neetal Parekh on July 16, 2009 12:53 PM

First Wal-Mart endorsed President Obama's government-mandated health care plan and now it is taking 'going green' to unchartered territory---ok, we're listening.  In this new phase of the mega-retailer's shelf life, Wal-Mart is set to announce its creation of an electronic indexing system to rate the social and environmental impact of every product it carries.

In light of Wal-Mart's new recent eco-commitments, what do these changes mean for small business and how will they affect the mega-store's vast network of suppliers?

First off, Wal-Mart's then-CEO H.Lee Scott Jr. publicly declared the company's goal of meeting or exceeding all social and environmental laws and regulations in the near future last year on a world stage in Beijing.  The onus of Wal-Mart's green goals falls squarely on the shoulders of its tens of thousands of global suppliers.  Wal-Mart is hoping to ease into to the changes by providing support to existing top suppliers to improve energy efficiencies and to retrofit their operations with clean technologies.  But it has set a firm deadline of 2012, after which it may begin severing ties with suppliers who do not make the grade with going green.

And now, with the pending announcement of the the standardized electronic index, the world's largest retailer will be able to track the sustainability of products on the basis of product life cycles.  Just as Wal-Mart did last year in Beijing, it is expected to charge it's estimated hundred-thousand suppliers with the task of analyzing their supply chains according to the new indexing system.

Suppliers probably don't need to start packaging their products in banana leaves just yet, as Wal-Mart will likely group it's green goals into phases and will take measures to help companies to conform to the changes.  However, it is a good idea for all suppliers to begin taking a closer look at their carbon footprints and to be ready to adapt and adjust to the upcoming changes...because where Wal-Mart goes, other retailers are likely to follow. 

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