Sustainability Faceoff: Walmart vs. Target

Walmart vs. Target

There can be only one winner in the battle of the big box retailers. In the new book The HIP Investor, author R. Paul Herman compares Walmart and Target in terms of profit, management, and human impact (health, wealth, earth, equality, trust). So which retailer is more sustainable? In our opinion, Walmart is the winner.

It's hard to argue with Walmart's superior profitability, but sustainability is always subjective. We've detailed Walmart's sustainability initiatives extensively on FastCompany.com--the company offers locally grown produce, energy-efficient products, and innovative internal recycling policies, among other things. Walmart's crown jewel, though, is the sustainability consortium it pioneered--a conglomeration of four major retailers (Walmart, Safeway, Best Buy, Ahold), 34 manufacturers, and 9 universities that is developing a green product-labeling standard for products found on all of these retailers' shelves. It's one of the most impressive things we've seen a big box retailer spearhead--ever.

That's not to say Walmart is perfect. The company isn't exactly known for having fair worker's rights policies, and its $10.76 average full-time hourly wage isn't too impressive either. But overall, Walmart has made impressive strides in leveraging its power for good.

Target, on the other hand, has a ways to go. The company has made improvements on the sustainability front, besting Walmart in 3 of the 5 Human Impact categories from HIP Investor. And it was ranked first on Greenpeace's Carting Away the Oceans report for enacting superior seafood policies. The company also recycles 70% of all solid waste materials. But in an interview with Herman, Anthony Heredia, Target's VP of Corporate Risk and Responsibility, admitted that the company hasn't published any business goals around sustainability metrics. "The reason we are perceived about lagging behind other companies is because we have not been explicit about those goals," he said. Without a solid vision for the future, how can Target possibly get ahead?

Target fares better on the human rights front. The company offers full benefits to managers and scaled benefits for hourly workers, and it contributes 5% of annual net income to programs that serve Target communities. All good things, but the company just isn't quite shaking things up as much as we'd like.

Check out the full HIP Investor chart below.


 
Walmart   Target  
Overview 2.1 million employees, 8,100 retail units in 15 countries, $405.6 billion in annual revenue   351,000 employees, 1,684 stores in 48 states, $64.9 billion in annual revenue  
Product Selling products like affordable organic produce, fair trade coffee, and compact fluorescent light bulbs; has specific goals for increasing HIP products in its stores   In 2006, expanded its Archer Farms brand to include affordable organic food products  
Management
Practices
23 of 25: Comprehensive goals of zero waste, 100% renewable energy and sustainable products. Launched Sustainability Index across 60,000 suppliers. Front-line to Board accountable for increasing positive impact.   16 of 25: Seeks to use resources responsibly, minimize its carbon footprint, develop facilities that align environmental, community, and business needs, and influence its vendors and suppliers to embrace sustainable practices  
Health

of 20%

  47.4% of Walmart associates get health-care coverage from Walmart; Customer satisfaction: 68% to 70% depending on store category 6%   Target offers full benefits to eligible managers and scaled benefits for hourly workers; customer satisfaction: 77% 7%
Wealth

of 20%

$10.76 avg. full-time hourly wage in U.S.; Plans, including 401(k) and profit sharing, may be available to employees after 12 months of employment 8% Dollar-for-dollar match for retirement up to 5% of pay with immediate vesting; Since 1946, contributed 5% of annual net income to programs that serve Target communities 13%
Earth

of 20%

In 2008, goal to make fleet 25% more efficient was achieved; retrofitted 500 stores with low and medium temp. refrigerated display cases 11% 70% of solid-waste materials are now redirected from landfills through various conservation programs for reusing and recycling 8%
Equality

of 20%

Score of 40 on the Human Rights Campaign equality index 14% Score of 100 on the Human Rights Campaign equality index 16%
Trust

of 20%

Despite $6.6 million lobbying, publishing many quantitative metrics and encouraging cross-sector sustainability index to share quantifiable supplier performance 12% $2.6 million lobbying (one-third of Walmart’s lobbying spend, while firm is one-sixth of Walmart’s revenue), some quantifiable metrics published. 12%
Human Impact

of 100%

TOTAL 51%
TOTAL 55%
Corporate Profit

of 20%

+20.4% return on equity (2009)

-0.1% annualized total return, including reinvested dividends (6/2004-6/2009)

+2.0% annualized total return, including reinvested dividends (6/2006-6/2009)
  +15.3% return on equity (2009)

-0.5% annualized total return, including reinvested dividends (6/2004-6/2009)

-5.7% annualized total return, including reinvested dividends (6/2006-6/2009)
 

Read more Sustainability Faceoffs.

HIP InvestorTable excerpted from The HIP Investor: Make Bigger Profits by Building a Better World by R. Paul Herman Copyright (c) Published by John Wiley & Sons. Used with permission.

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2 Comments

  • Z Z

    I totally agree with Kent Comfort!! These scales seem very subjective, and rely heavily on what the author weights in the definition "sustainable."

  • kent comfort

    I need to take issue with some of the points by Mr. Herman in this post. I would suggest he give a look at "China Price" by Alexandra Harney. Her revelations about Walmart's China connection seriously lay waste to their sustainability argument. Furthermore, I believe the human rights and policies factor should be weighted far greater than is apparently the case. We have observed several decades of general decline that I believe is directly attributal to notable and measurable disregard for the overall wellbeing of workers. Walmart gets nothing but negative marks for their conduct in that regard. Again, that has be considered an unstustainable practice on their part. Sustainability, after all, is about the long haul, not quarterly profit reports.