Beyond shelf life

Wal-Mart drives responsible supply chain management.

The spector of potential climate change legislation brought carbon footprint analysis to the forefront of the business community. So it’s no surprise that companies are using lifecycle assessment (LCA) tools to determine the greenhouse gas emissions—and other social and environmental impacts—throughout their supply chains. As with other kinds of externality markets, they will rely on LCA as the calculation engine.

Countless companies, from small startups to large corporations and government, are using LCAs performed by third parties to evaluate their supply chains—and make adjustments to them. Apple (Nasdaq: AAPL), for example, redesigned its MacBook Pro to contain no arsenic, brominated flame retardants (BFRs), mercury, phthalates and polyvinyl chloride (PVC) in products. Nike (NYSE: NKE), Herman Miller (Nasdaq: MLHR) and Siemens (NYSE: SI) are among other leaders. The Department of Energy loan guarantee program uses LCA for evaluation of energy-related programs.

But there’s perhaps no company making as big a splash into LCA as Wal-Mart Stores Inc. (NYSE:WMT). Citing customer demand as one of the main drivers behind its efforts, Wal-Mart in July 2009 announced it would spend time and effort creating a sustainable product index to provide LCA for the products it sells.

To jumpstart the multi-year effort, Wal-Mart sent more than 100,000 global suppliers a brief survey with questions about their energy and water use, carbon reduction goals, and community give-back programs.  By mid-October, the company had received almost all of the questionnaires back, according to Bill Wertz, Wal-Mart’s divisional director of community and media relations.

Wal-Mart plans to input the survey information into a database of products and materials that it could use to develop a consumer-facing label program intended to help Wal-Mart’s customers make sustainable purchasing decisions on their own. The information would be available to other retailers as well, according to Wertz.

The long-term benefits of LCA for retailers such as Wal-Mart, manufacturers and consumers are numerous. Along with finding opportunities to save money, they can also use LCA to communicate information about products to consumers in credible ways, says Heather Gadonniex, managing partner of sustainability at San Francisco–based MindClick SGM. “As consumers get savvier and seek information based on transparency, manufacturers will use LCA as a way to connect with customers as consumers, but also as a way to optimize internal processes,” Gadonniex says.