“Greenbackwashing”: Wal-Mart Admits It’s Not Green

Wal-Mart CEO Lee Scott has finally admitted what many of us suspected all along: the company’s widely celebrated embrace of environmental principles is bogus. Responding to a question as to why his company’s carbon footprint continues to grow, Scott told the Wall Street Journal ECO:nomics conference the other day: “We are not green.” At the same event, when asked why Wal-Mart continues to sell bottled water, despite its harmful environmental effects, Scott said: “We have to stay in business…If the customer wants bottled water, we are going to sell bottled water.” To top things off, he replied to a question as to when the company might reach its professed goals of generating zero waste and using 100% renewable energy by saying: “I haven’t a clue.”

While these comments were a far cry from the company’s usual green hype, the underlying point is one that Scott has actually been making all along. Wal-Mart’s environmental initiatives are in fact nothing more than an extension of its usual obsession with efficiency. Anyone who bothered to closely read Scott’s landmark “21st Century Leadership” speech in October 2005 saw that he framed the company’s efforts as waste reduction, which would reduce costs, which in turn would raise profits.

Scott reaffirmed this idea in a separate interview with the Journal’s Alan Murray at the ECO:nomics conference, video of which Wal-Mart has posted on its website. He reiterates the idea that what the company is doing is “driving waste out of the system” and thus reducing costs. When Murray asks about trade-offs, Scott amazingly denies there are any. “There don’t have to be trade-offs,” he asserts.

This is the heart of Wal-Mart’s philosophy not only about the environment but about its entire approach to business. The giant retailer can pretend there are no trade-offs because it is the master of cost shifting. It shifts employee healthcare costs to the public sector, it avoids what should be its full labor costs by fighting unionization—and it shifts the costs of environmental transformation (and other innovation) onto its suppliers. Having used its power to avoid cost burdens and difficult decisions, it is possible for Scott to dwell in a cloud-cuckoo-land where tackling problems such as global warming requires no sacrifice and is in fact a way to fatten the bottom line.

While for most economic players there is no free lunch, Wal-Mart can gorge itself at will. When other companies make misleading statements about their environmental record, that is greenwashing. What Wal-Mart has been doing might more accurately be called “greenbackwashing”—promoting the fallacious idea that a green transition can be costless.

Another corporate speaker at the ECO:nomics conference was a bit more honest. Duke Energy CEO Jim Rogers acknowledged that there will be substantial costs in moving to a system of carbon regulation. However, he went on to argue that companies such as his—which is one of the largest CO2 emitters in the country—should get their greenhouse gas permits for free. This, he solemnly stated, was solely for the sake of his ratepayers. “I make a commitment that every one of those allowances will go straight to my customers, and I will sign that commitment in blood,” he said.

Undoubtedly, there will be blood—a lot of it—unless major corporations such as Wal-Mart and Duke Energy acknowledge that environmental transition will entail costs and that corporate profits cannot be immune from those burdens.