In Force of Nature: The Unlikely Story of Walmart's Green Revolution, Edward Humes describes what he calls "the next industrial revolution — the one in which the pursuit of profit and the protection of the planet stop being mutually exclusive and start being one and the same."
The book focuses on a "river guide turned corporate consultant" named Jib Ellison who tells businesses they should become more "sustainable" not just because it's good for their image or the right thing to do but because it will help their bottom lines.
Mr. Ellison's signature client is Walmart, where he got involved though a connection to Walmart's chairman, Rob Walton.
And indeed, this book contains lots of examples where eliminating waste saved both energy and cost. Walmart switched to "ultraconcentrated" laundry detergent sold in containers the size of large ketchup bottles, and it stopped selling the standard liquid laundry detergent sold in containers the size of gallon milk jugs. The author reports that change saved 125 million pounds of cardboard and more than a half-million gallons of diesel truck fuel that would have been used to pack and haul the larger bottles over three years.
Another example: reducing the size of a cardboard display box for a toy car and truck set led to a savings of $2.4 million in annual shipping costs. Frozen chickens, which had arrived in un-recyclable waxed cardboard boxes, now were to come in regular boxes, and garbage that Walmart had paid to have hauled away became a commodity that could be sold to a recycler.
Walmart saved another $25 million a year by installing auxiliary power units on its trucks. More energy savings came from using closed freezers instead of open ones, and putting skylights in stores, using sunshine to save on lighting bills.
The book also contains some useful background on Walmart corporate culture. Founder Sam Walton, we're told, "patronized the same five-dollar-a-haircut barber most of his adult life — and never tipped." The old pickup truck Sam Walton drove to work even after he became the richest man in the world on Forbes's list is on display in the Walmart museum. Employees shout out a Walmart cheer: "Who's number one? The customer! Always!"
At times the book is alert to the perils and perversities of big government. The author writes, "regulation hasn't made America green and sustainable in nearly fifty years of trying, because regulation is about establishing a floor, a lowest common denominator. Regulation begets, at best, grudging compliance."
The book reports that German courts at one point actually ordered Walmart to raise its food prices; after several appeals, the company sold off its German stores. The American government decided 50 years ago to subsidize cheddar cheese, but no other kind.
Sometimes, as when it stopped carried baby bottles with the plastic ingredient BPA, Walmart acts ahead of federal regulators.
Other times, though, the company begs for regulation, as when it sought tougher worldwide restrictions on fishing, got Congress to mandate a phaseout of old-fashioned lightbulbs in favor of compact fluorescents, and twice testified on Capitol Hill in favor of "cap-and-trade" climate legislation. The author also sometimes favors aggressive government action, as when he waxes enthusiastic about federal grants and loan guarantees for "methane digesters" that make electricity from cow manure.
It's all an interesting story, briskly told, and worth reading for anyone interested in Walmart or the intersection of business and environmentalism. But it's worth reading with a bit of skeptical distance, too. William Simon, the head of Walmart's U.S. division, said in a recent interview with the Wall Street Journal published on March 21, 2011: "A lot of things have distracted us from our pricing mission…. Sustainability and some of these other initiatives can be distracting if they don't add to every day low cost."
You can see the results in the stock price. The book reports that Walmart went public in 1970; by 1990 a single share had split 512 times and soared in value to $32,000 from $16.50. During David Glass's 12 year tenure as CEO, which began in 1988, the stock price rose by 1,100%, an average annual return of 30%. Since Mr. Ellison began consulting for Walmart in 2004, the company's performance has been more modest: a gain of about 18% total over the period if you include dividends. Some of this is related to the performance of the stock market overall, and some doubtless represents the classic leveling out of a growth company that reaches the limit of its growth. But the business case for environmentalism this book attempts to make might be a stronger one if Walmart had been championing organic cotton, compact fluorescent lightbulbs, and sustainable fisheries during the 1,100% growth years rather than the 18% growth years.
Disclosures: I got a review copy. I own shares in some retailers that compete with Walmart. If you buy the book at the link above this site gets a share of the revenue.