In 2008, Walmart set an ambitious goal: making the company's top 200 Chinese factories 20% more energy-efficient by 2012. That's a daunting task in any country, but even more so in China, where some factories don't even have electric meters.
Walmart had no idea how it would make the plan work, but the company told suppliers that it would teach them how to increase energy efficiency—and nix them if they failed to meet the new standards.
The Environmental Defense Fund, a group that often works with Walmart, stepped in to teach Chinese suppliers how to clean up their act. Over the past year and a half, the EDF has visited hundreds of Walmart's factories, advising each of them on how to become more efficient.
"Our expectation was that this was going to be a bit of a battle. The first few minutes of a visit are that way," concedes Andrew Hutson, the project manager for corporate partnerships at the EDF. "They let us in the door because we're with Walmart, they learn that we're independent of Walmart—then they understand that these things we're suggesting are quite good for business. These are things that are going to save you money, improve productivity. The conversation quickly changes to how we can get this done."
Walmart's factories produce a variety of goods, of course, so energy-saving tactics are different at each location. For a toy manufacturer, the biggest energy hog might be plastic injection molding machines. So the EDF could dramatically slash energy use by tweaking those machines. "With factories that truly understand the opportunity, progress has been pretty rapid," Hutson says.
There are barriers—energy saving can cost a lot of money, and some factory-owners are reluctant to invest (factories sometimes change industries, and investing in energy-saving equipment for, say, toy manufacturing might not be worthwhile in the long term).
Hutson also believes that Walmart could ramp up its efforts. The company will likely reach its 20% goal, but "the goal needs to be more aggressive," he says."We've been uncovering opportunities of 40% to 60% energy savings in factories."
And if Walmart expanded its efforts to include the top 500 or top 100 factories? "The reduction opportunities are huge," Hutson says.