Wal-Mart to reward green firms as some suppliers lag behind

Wal-Mart to tempt partners to go green with financial carrot, as Staples wields stick against Indonesian paper supplier

Wal-Mart's head of sustainability has revealed it is willing to reward its most environmentally conscious suppliers by paying more for their products as it seeks to bring its entire supply chain into line with its high profile environmental commitments.

According to Reuters' reports, Wal-Mart's senior vice president of sustainability Matt Kistler said the company would be willing to pay more for products that boast longer life spans and a lower environmental impact, adding that it could do this without impacting retail prices.

"I don't know if we have to pass on the higher costs," he told the newswire. "We are looking at a very small amount of dollars and the savings in the supply chain that we are finding because of sustainability in some cases will more than offset the incremental costs of what we are paying for a better quality item."

However, while Wal-Mart has secured plaudits for its recent environmental commitments some of its smaller suppliers appear to be resisting calls from the retail giant to clean up their act.

Speaking at the Clean-tech Investor Summit in Indian Wells, California last week, Kistler admitted suppliers responsible for around a fifth of Wal-Mart's products had failed to meet the February 1 deadline for signing up to the company's packaging scorecard initiative, which requires firms to report on their progress in reducing packaging.

"We do not have all suppliers 100 per cent compliant today, which is a disappointment because we did give them a year," he said. However, he did insist that the scheme had already delivered improvements in packaging and that those firms that had failed to comply tended to be smaller companies who do not consistently supply Wal-Mart.

While Wal-Mart is seeking to use the carrot of higher prices to encourage suppliers to green their operations, stationary giant Staples took the opposite approach last week ditching one of its suppliers over concerns about its e nvironmental practices.

According to Wall Street Journal reports, the retailer ended its 11-year relationship with Asia Pulp & Paper Co. last month citing concerns over its supplier's "clear lack of progress in improving their environmental performance".

Asia Pulp & Paper is Indonesia's biggest paper manufacturer and had supplied Staples with around five per cent of its paper. But the company has recently faced fierce criticism from environmental groups over its reported links to deforestation. The World Wildlife Fund recently claimed Asia Pulp's partners were responsible for the clearing of around 50,000 acres of natural forest in the Bukit Tigapuluh national park and warned that the company's plans to build a road to move logs could destroy forests that are home to Sumatran tigers and elephants.