updated 9/22/2006 4:35:33 PM ET 2006-09-22T20:35:33

Wal-Mart Stores Inc. on Friday announced a five-year program with its suppliers to help reduce overall packaging by 5 percent, hoping to keep trash out of landfills and global-warming gases out of the atmosphere.

In the latest step to polish its environmental record, the world’s largest retailer said it will begin the initiative in 2008, and it could help Wal-Mart save $3.4 billion in its own costs. In the five-year plan, Wal-Mart will push its 600,000 global suppliers to find more efficient packaging methods. It estimates total supplier savings of $11 billion.

Wal-Mart said it will start working with suppliers in November so they can prepare for the changes.

In a conference call to reporters Friday, Matt Kistler, vice president of packaging at Wal-Mart, said that the move should “spur packaging changes in the industry.”

The announcement on the third day of the Clinton Global Initiative, an annual conference of business, political and nonprofit leaders hosted by former President Clinton, is the second made this week by Wal-Mart to improve its image.

On Thursday, Wal-Mart announced that it was cutting the prices of many generic drugs to $4 at its pharmacies. The program began Friday in Florida but is expected to be rolled out to the rest of the country next year.

While Wal-Mart has acknowledged that health care is the biggest issue that has harmed the company’s reputation, the company is winning kudos from critics for becoming more environmentally friendly. Last October, the company’s CEO Lee Scott said Wal-Mart would become a leader in sustainability with three goals: reducing waste to zero, moving toward using only renewable energy and offering more products made in a way that preserves the environment.

Wal-Mart Watch, a union-backed group more accustomed to criticizing the retailer, praised the company’s latest environmental initiative.

“This goes to show Wal-Mart’s power when it chooses to be a leader. Wal-Mart has the ability to help transform American health care and wage standards, and we look forward to working with them on these efforts,” said Andrew Grossman, executive director of Wal-Mart Watch, said in a statement.

Last year, Wal-Mart teamed up with suppliers to improve packaging on its store label Kid Connection toy line. By reducing the packaging on fewer than 300 toys, it said it eliminated $3.5 million in transportation costs and saved more than 5,000 trees in one year among other savings.

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