Remarks as Prepared for H. Lee Scott, Jr.
CEO and President of Wal-Mart Stores, Inc.
“ Sustainability 360: Doing Good, Better, Together”
Lecture to the Prince of Wales’s Business & the Environment Programme

Feb 1, 2007

Your Royal Highness, Secretary of State, lords, ladies and gentlemen:

Delivering this lecture is a privilege not only for me, but for the entire Wal-Mart and ASDA family.

Quite frankly, at Wal-Mart, we are thrilled whenever we can talk about what we are doing and learning in the area of sustainability.

Forgive the jargon, but we think sustainability is “cool.”

That is why we are especially honored to speak about this issue at the invitation of the Prince of Wales.

He was a leader in sustainability long before sustainability was “cool.”

He has been making the business case for sustainability for decades -- whether it is his organic farm, his recent accounting project, or this very program.

It is remarkable to think that the Prince commissioned the Business & the Environment Programme from Cambridge University nearly 15 years ago.

It is now rightly regarded as the best of its kind anywhere in the world.

Your Royal Highness, we know that compared to you Wal-Mart is relatively new at sustainability.

We know that we have a lot to learn and a lot of work to do.

But we are grateful for the opportunity to share our progress before such a distinguished group of leaders.

And above all, we are grateful for the inspiration that your leadership has provided us throughout our own journey.

In December, when the Prince of Wales launched his Accounting for Sustainability program, he talked about the evolution of sustainability in the public arena.

He said: “What we are doing to our environment is the subject of increasingly urgent and mainstream debate. It is not a moment too soon.”

At Wal-Mart, we have come to see sustainability in the very same way.

Whether it is the world’s rapidly growing population or the worsening problem of global warming, we see the need for sustainable business practices as increasingly urgent.

And perhaps more than anything else, we see sustainability as mainstream.

Every week 176 million customers shop our stores in 14 countries around this world.

And no matter where they are from or what they are looking for, the majority of those customers are working men and women.

They care about quality merchandise and a good shopping experience -- which we give them.

But across the board, they care about and need unbeatable prices.

These are men and women who don’t have the luxury of want.

They need the most value for their hard earned money.

To a Wal-Mart customer, saving a dollar … or a pound … or a peso means something.

It means a parent can send their daughter to school with crayons, a backpack and clothes that are just as good as the other kids’.

It means a parent can put quality meat and fresh vegetables on the kitchen table at night.

And as we see in America with our $4 prescription drug program, it means a senior citizen doesn’t have to split pills in two -- but can take the medicines she needs to live a full and healthy life.

This is the value that our customers find every day in our stores.

And when it comes to sustainability, we want to deliver that same value.

We believe working families should not have to choose between a product they can afford and a sustainable product.

We want our merchandise to be both affordable and sustainable.

Because when it is, we empower our customers to make the right decisions.

We empower the men and women of Breck Road in Liverpool, or the Warehouse District in New Orleans, or Chiapas in Mexico to do the right thing.

To buy compact fluorescent light bulbs, organic milk and sustainably-harvested fish.

To do the right thing for themselves and their families, but also for humanity and this planet.

At Wal-Mart, this is how we view sustainability.

It’s a view that takes in our entire company -- our customer base, our supplier base, our associates, the products on our shelves, the communities that we serve.

It’s not just about reducing our environmental footprint. And it’s not just about having our house in perfect order before we can be bold.

It’s about stepping out -- even without all the answers -- and aggressively promoting sustainability among all the stakeholders of our company.

We are calling this approach “Sustainability 360.”

And we believe every business can look at sustainability in this way.

In fact, in light of current environmental trends, we believe they will and soon.

After all, what holds the most value for our businesses and the most promise for our planet:

• Is it one company doing everything a sustainable business should do -- and doing it perfectly -- but only within its own four walls?

• Or is it helping thousands of suppliers, millions of associates, and tens of millions of customers make billions of individual decisions that sustain themselves, their communities and, in turn, the Earth?

I believe each of us can travel down multiple paths in our individual journeys toward sustainability.

But no matter which path we take, we all have a responsibility to start the journey.

It is the responsibility of every corporation to be more sustainable.

Today I would like to talk with you about the six paths we are taking at Wal-Mart as part of “Sustainability 360.”

Wal-Mart has always been driven by a singular purpose -- to save people money so that they can lead better lives.

In order to do that -- to deliver Everyday Low Prices -- you have to pursue Everyday Low Costs.

You have to drive costs out of the system, so that you can pass those savings and the best prices on to your customers.

More than a decade ago, we discovered the potential for conservation to reduce costs.

Our initial steps included a daylight harvesting program and building environmental stores.

But that was just the beginning.

I never imagined -- and I don’t think anyone at Wal-Mart did -- the many paths we would be on today.

We really started to get serious about sustainability, as we know it, about a year and a half ago.

We had done a lot of work leading up to that point.

We had called on the advice, expertise and generosity of a lot of environmental NGOs and leaders.

And they were incredibly helpful.

But there was one event that pushed us from a learning process into taking more aggressive action.

I am sure many of you saw and remember the desperate images of Hurricane Katrina:

Katrina was one of the worst disasters in the history of the United States. But it also brought out the best in our company.

We had several feet of water in many of our stores. We had associates who had lost everything, including loved ones.

Yet those associates and our entire company rallied and responded quickly and decisively.

We responded by doing what we do best: We empowered our people and leveraged our presence and logistics to deliver the supplies that hurricane victims so desperately needed.

Hurricane Katrina changed Wal-Mart forever. And it changed us for the better.

We saw our full potential -- with absolute clarity -- to serve not just our customers, but our communities, our countries and even the world.

We saw our opportunity and our responsibility.

In the aftermath of the storm, we asked ourselves: How can we be that company -- the Wal-Mart we were during Katrina -- all the time?

Sustainability became a big part of the answer.

Almost immediately, we set three goals for our company:

That is the first path we set out on -- our environmental footprint and our products.

And so far, we have been very pleased with our progress.

Right here in the U.K., we believe ASDA -- which has been leading on sustainability for some time -- will send zero waste to landfills by 2010.

That will keep 245,000 tons of waste from entering U.K. landfills every year.

And just the other day in Kansas City, Missouri, Wal-Mart opened our next generation of environmental experimental stores.

This is our first high-efficiency prototype in the U.S., and it uses about 20 percent less energy than the already efficient Wal-Mart stores being built today.

And when it comes to products, we are taking a hard look at what is on our shelves.

This led us to work with one supplier to reduce the packaging on our Kid Connection line of toys.

As a result, we now need 497 fewer containers to ship the same number of items. This will save us $2.4 million a year in shipping costs.

But equally as important, it will save 3,800 trees and 1,000 barrels of oil per year.

That’s just one supplier, just one product line, and just 255 items.

Our company has more than 60,000 suppliers worldwide and the typical Supercenter in the U.S. stocks 142,000 items on its shelves.

The typical ASDA store stocks 40,000 items on its shelves.

As we headed down this first path in our sustainability journey and started to see these results, we really got excited.

And the possibilities started to open up.

We began looking beyond our environmental footprint and our products and taking a much more holistic view of sustainability.

That leads me to our second path -- suppliers.

We are working with our suppliers to make our products more sustainable.

But we are also helping them become more sustainable businesses in their own right.

A few months ago, we announced an effort to measure the ability of our suppliers to reduce packaging and conserve natural resources.

Our goal is a five percent reduction in overall packaging by 2013.

Again, think about the multiplier effect of more than 60,000 suppliers around the world.

The impact of this packaging effort will be equal to removing 213,000 trucks from the road, and saving about 324,000 tons of coal and 67 million gallons of diesel fuel per year.

This is great for the environment. But there’s also a business advantage -- and a pretty big one.

We believe this effort could save the global supply chain nearly $11 billion. Our supply chain alone could save $3.4 billon.

And you will be happy to know that ASDA has already stepped up.

In the U.K., we recently announced that we will reduce packaging on food by 25 percent by the end of next year.

There are other opportunities with our suppliers beyond packaging.

This year, our company will launch a new ethical sourcing initiative.

Our goal is to build more long-term and sustainable partnerships with our suppliers' factories and the communities they operate in.

Where we have been able to do that, we have seen some great results.

For instance, we were buying from a candy factory in Brazil that just did not have a good system in place for processing, recycling and disposing waste.

So our auditors sat down with the factory’s management, explained that sustainability can be profitable, and made recommendations.

These managers were skeptical, but they took on the challenge.

The next time we visited the factory, we saw a new waste management program.

And you know what? The factory managers proudly reported that their new program was generating $6,500 per year in new profits.

At Wal-Mart, we already have a team of 200 people dedicated to ethical sourcing.

We are going to invest more in that team because we see a real and meaningful opportunity.

Perhaps the most far-reaching opportunity with our suppliers is a simple idea with potentially profound consequences.

Just think about this: What if we worked with our suppliers to take non-renewable energy off our shelves and out of the lives of our customers.

We could create metrics and share best practices so our suppliers could make products that rely less and less on carbon-based energy.

I have asked the leadership of Wal-Mart to start thinking about this idea in a very serious way.

And we are doing that through a new program we are calling “Global Innovation Projects.”

So why are we focusing so much on suppliers?

Because we think there is real potential here to do the right thing not only for our business and for our suppliers, but also for our customers and the environment.

The fact is our businesses can have a positive impact well beyond the communities where we traditionally do business.

And that is the third path we have taken at Wal-Mart -- the community.

As businesses, we can go further -- to places where we may have no connection other than a simple bond of humanity.

We should look to these places and ask: Can we be profitable here and, in the process, help more people and communities build a sustainable future?

Under the leadership of Andy Bond, ASDA asked this question. And they came up with what I think is a compelling answer.

At Wal-Mart, we are very proud that ASDA has shown for a number of years its commitment to supporting local communities through local sourcing.

This started with support for farmers in the Lake District during the foot and mouth crisis.

But since then, ASDA has rolled out a market-leading program.

We now have 3,000 locally sourced products delivered to our stores mainly from ten local hubs.

And to service these hubs, we work with 300 local suppliers -- in addition to our fruit and vegetable suppliers.
This is great for local communities.

Every single store has access to a locally produced product.

In Cornwall, for example, Roddars clotted cream outsells ASDA brand clotted cream 50 to 1.

But it is also good for our business -- which revolves around customers.

More than 60 percent of our U.K. customers say they want to be able to put locally sourced products in their baskets.

That is why ASDA will open another five local sourcing hubs by the end of this year.

The fact is that all of our companies can “do well while doing good.”

And individuals deserve that opportunity too

That’s the fourth path of our journey -- making sustainability affordable and accessible to customers.

At Wal-Mart, we want sustainability to be another way we can save people money so they can lead a better life.
That can be done. It can be done on a large scale.

And there is tremendous potential in doing it -- to be profitable, to help people and to sustain our planet.

Let me give you an example of this right here in the U.K. It’s an everyday product in every sense of the word.

At ASDA, we have the somewhat dubious distinction of having the best quality private label brand of bathroom tissue -- or, as you call it, loo roll -- in the U.K.

We currently sell about 250 million rolls of it per year.

Now most of us do not think about bathroom tissue in the same way we think about recycling paper or making furniture from sustainably harvested wood.

But we should. It takes a lot of trees to make all those rolls of bathroom tissue.

So we asked ourselves: What if we manufactured our bathroom tissue out of sustainably harvested wood?

Over the last two years, our supplier has worked closely with the Forestry Stewardship Council, which is the stamp of approval for sustainable forestry.

This work culminated just last month in the relaunch of ASDA’s bathroom tissue.

Now 45 percent of the fiber used to make our bathroom tissue is sourced from a FSC certified plantation in Brazil.

Our goal is to encourage other forest and plantation owners to become certified by the FSC.

Eventually, we want to use only sustainable timber and pulp-based products to manufacture our brands.

But here is the best part of the story: shifting to sustainable timber has not added one single penny to the price of our tissue.

It was a great value before -- and by being a socially responsible product -- it is an even better value to our customers in the U.K.

They are able to make an affordable purchase and a sustainable purchase at the same time.

I believe we all have an opportunity to approach sustainability this way -- to increase the acceptance and prevalence -- and drive down the cost -- of sustainable practices.

I have talked about sustainability with suppliers, communities and customers.

But there is another critical stakeholder.

And it is our fifth path -- your employees -- or at Wal-Mart, our associates, and at ASDA, our colleagues.

When I first started to learn about sustainability, it certainly interested me.

But pretty soon it started to excite me -- just like it has excited a lot of other Wal-Mart associates.

Sustainability has caught on throughout our company.

It has become an integral part of the Wal-Mart culture.

It has even become a recruiting and retention tool.

Our young managers view our focus on sustainability as a higher calling.

I believe we owe all of our people this opportunity -- which is why we have launched Personal Sustainability Practices or PSPs for all Wal-Mart associates.

PSPs will help our associates understand that sustainability is part of our business culture, and that they as individuals can make a difference in our company.

Let me just give you an example of the potential we see for engaging our associates in sustainability.

After Katrina, we made it a priority to roll back the prices of compact fluorescent light bulbs and promote them in our stores.

Our associates took that mission to heart -- associates like Cheryl Molinares.

Cheryl is a Wal-Mart associate from Ionia, Minnesota.

Last March, she sent us a note in Bentonville.

She said that her grandmother owns a motel in Ionia. And that they talked about the new light bulbs and how much money they can save her.

Cheryl wrote: “My grandmother told me she would take the Wal-Mart challenge herself by buying one light bulb a day until her house and the motel had a light bulb in every room. Counting today, she has purchased 15 light bulbs."

Last month, we checked up on Cheryl.

She said her grandmother has replaced every bulb in her motel and her house. And listen to this: according to Cheryl her grandmother has cut her monthly electrical bills by 85 percent.

At Wal-Mart, we are depending a lot on the enthusiasm of associates like Cheryl.

ASDA has committed to boosting the sales of energy-efficient bulbs here in the UK. And in the U.S., we recently set a goal to sell 100 million compact fluorescent light bulbs by the end of this year.

If we achieve this goal -- and we have some outstanding partners to help us -- we will save consumers a total of $3 billion in electrical costs over the life of the bulbs.

We will also prevent 20 million metric tons of greenhouse gases from entering our atmosphere, which is equal to taking 700,000 cars off the road.

As Cheryl has shown us, our people - your people - can make the difference with sustainability.

Let me now turn to our final path, and one that I think is truly remarkable -- the potential to create new markets for sustainability.

I would like to illustrate this through a story about light emitting diodes or LEDs.

As you probably know, LED lights last longer, produce less heat, contain no mercury, and use significantly less energy than other types of lights.

At Wal-Mart, lighting accounts for about one-third of our energy costs. And a portion of that cost comes from lighting our refrigerator cases.

Over the last three years, we have invested about $17 million in developing an LED lighting system for our refrigerator cases.

GE has been a key partner in this effort.

Last November, we announced that we will outfit refrigerator cases in more than 500 of our stores with the new system.

This will save us about $13 million per year and reduce our carbon dioxide emissions by 63 million pounds - in weight.

That’s exciting. But the greatest potential is in creating a new market for LED lighting.

Tens of thousands of grocery stores and other retailers will be able to take advantage of this new technology.

So multiply the cost savings. Multiply the savings in carbon dioxide emissions. And just think about the impact on our economy and the environment.

There are other examples, such as our commitment to organic cotton.

Cotton farmers can now invest in organic farming because they have the certainty and stability of a major buyer.

Through leadership and purchasing power, all of us can create new markets for sustainable products and services.

We can drive innovation. We can build acceptance. All we need is the will to step out and make the difference.
Sustainability is a new journey for Wal-Mart, and we know it is going to be a long journey.

There are leaders and businesses in this room that have been working on sustainability for a decade or more.

Even within my own company, ASDA has been working on sustainability for much longer than our U.S. business.

So on our journey to becoming a more sustainable business, we want to learn from you.

We want to work with you.

We want to do good … better … together.

And that's what our six paths and “Sustainability 360” are all about.

Doing the right thing.

Doing better for our customers, our companies and for our planet.

And doing it together.

We all have an opportunity to be more sustainable. But even more, we have a responsibility.

We need to be sustainable companies and countries made up of people who live sustainable lives.

If we do that, if we do it throughout the coming decades, I believe we will make sustainability… sustainable.

And this generation will leave a healthier humanity and a healthier planet to future generations.

Your Royal Highness, Secretary of State, lords, ladies and gentlemen.

Thank you for your attention.