Wal-Mart Faces Hurdles in Green Electronics
Date: 11-Jan-08
Country: US
Author: Nicole Maestri
Manufacturers that sell goods in Wal-Mart's stores have responded quickly to the company's request to cut packaging waste, slashing the size of cereal boxes or bulking up toilet paper rolls to eliminate the need for extra cardboard centers.
This year, Wal-Mart wants electronics makers to fill out scorecards that would rate their products on areas like energy use, durability and ease of recycling. Wal-Mart would use the scores to help decide which products to stock on its shelves.
But the foray into "green" electronics is proving to be more complicated than its foray into "green" packaging.
Also, there are no uniform US guidelines regarding energy consumption or recycling, so Wal-Mart is sorting through a maze of international and local standards.
"We'd like to see some kind of federal legislation that would take all the individual state programs and bring it together," said Kevin O'Connor, Wal-Mart's general merchandise manager for consumer electronics, in an interview at the Consumer Electronics Show, or CES, this week in Las Vegas.
THE GREENING OF WAL-MART
Wal-Mart has set a goal of one day using only renewable energy and creating zero waste, and it has challenged its suppliers to remove nonrenewable energy from their lives.
Because of its status as the world's largest retailer, Wal-Mart is considered one of the few retailers with enough heft to make direct changes to global energy consumption.
While the efforts may help the environment, they are also designed to help Wal-Mart's bottom line.
Wal-Mart said it would save US$3.4 billion by reducing packaging 5 percent by 2013, and Chief Executive Officer Lee Scott bristles at the notion that being green clashes with low-cost business.
"Even if you're against the idea that climate change is important, why in God's name would you be against saving money?" Scott said at the company's annual meeting.
"It's taking out cost," he added. "We're not doing things that are silly."
Indeed these goals are no laughing matter for Wal-Mart suppliers, who know that producing poor scorecard ratings could mean losing space on the retailer's shelves.
"When they move to make it (the scorecard) a buying criterion, it will become a very powerful force," said Theo Schoenmakers, head of sustainability for Philips Electronics Group's Consumer Lifestyle, at CES.
TACKLING GREEN
Suppliers are facing issues engineering green electronics.
"The thing that they're going to have the most difficult time with is a lot of the raw materials," O'Connor said.
For instance, Seong Ohm, head of technology for Wal-Mart's Sam's Club warehouse division, said the company is looking for a way to recycle the glass panels in flat-panel TVs.
"We're talking to Corning (Inc), who makes the glass panels, and saying what can you do to recycle those?"
But finding methods to recycle the millions of phones, TVs and computers sold at Wal-Mart presents another challenge.
Some vendors, like Hewlett-Packard Co and Dell Inc, have their own recycling efforts, but it would become a logistical nightmare if each of Wal-Mart's suppliers had separate programs. It has almost 61,000 US suppliers.
Ohm said Wal-Mart needs to figure "how do we make this more inclusive so that we don't have to have one-off programs."
WHO PAYS FOR THE GREENING?
While Wal-Mart may push for these changes, there is little chance it would want to charge a premium for green goods.
That puts manufacturers in a bind, because building these electronics costs more, said Accenture Global Managing Director Allen Delattre.
"That's one of the reasons the bad stuff was used in the first place -- it was cheaper," he said.
Delattre said one way to deal with the higher prices is to tell consumers that a product might cost more upfront but would bring future savings if it consumed less energy.
That was the tactic Wal-Mart took to pr
