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Wal-Mart announces bold social initiatives

Wal-Mart, which launched a broad environmental push in late 2005, wants to expand that focus to other issues including energy prices, international trade and U.S. health care costs.
/ Source: The Associated Press

Wal-Mart Stores Inc., which launched a broad environmental push in late 2005, wants to expand that focus to other issues including energy prices, international trade and U.S. health care costs.

Chief Executive Lee Scott outlined plans in a speech Wednesday to push for more energy-saving products for Wal-Mart shoppers, work with other retailers on social and environmental standards for the foreign companies they buy from, and trim prescription and health records costs at home.

The world’s largest retailer may even someday install windmills or solar panels at its stores that would allow shoppers to charge electric vehicles, and it is talking with automakers about a possible role in the hybrid and electric car market, although Scott said those ideas were still “out there.”

Scott said the effort follows on goals he set in another major speech in October 2005 that started Wal-Mart’s current drive to use less energy in its stores, cut down solid waste from things like packaging and sell more environmentally friendly products.

Scott spoke before about 7,000 Wal-Mart store managers in Kansas City, where the company holds a convention center meeting at the start of every year to look at new products and sales plans for the year ahead.

“Wal-Mart can take a leadership role, get out in front of the future and make a difference that is good for our business and the world,” he said, according to an advance copy of his remarks.

Scott said Wal-Mart has a culture of action and innovation that he contrasted with the world of politics.

Scott said people are losing confidence in the ability of government to solve problems, but that at Wal-Mart “we don’t see the sidelines that politicians see. And we do not wait for someone else to solve problems that might hurt our business or affect our customers in a negative way.”

Retail analyst Patricia Edwards of San Francisco-based Wentworth Hauser and Violich, which recently bought about 400,000 Wal-Mart shares after selling most of its stake in 2005, said Wal-Mart’s efforts are real and could benefit the company by generating goodwill among customers.

“You also have to remember that higher income customers are more likely to shop their conscience and spend more too. If Wal-Mart can continue to softly woo those higher income customers into their stores with this ’kinder and gentler’ personality during a harsher and more caustic economy, they’ll do well,” Edwards said.

Specifically, Scott laid out three areas for Wal-Mart’s attention.

He said rising energy costs are hurting Wal-Mart customers, so the retailer will work with its suppliers to offer more energy-saving products.

A Wal-Mart statement said this will include making its most energy-intensive products, such as computers, microwaves and water heaters, 25 percent more efficient within three years. It will also seek to cut power use by the flat-screen televisions it sells by 30 percent by 2010.

Second, Wal-Mart will launch an effort with other major retailers to improve social, ethical and environmental standards among its global suppliers.

Wal-Mart will work with the international retail body CIES to come up with those standards and find a way to share joint auditing of foreign factories, which now are visited by inspectors from many individual customers.

In China, Wal-Mart largest single supplier, Scott said the company will work with the government and NGOs to make sure suppliers comply with Chinese environmental laws.

On U.S. health care, Scott said Wal-Mart can help drive down the costs of prescriptions beyond the $4 generic drugs it has introduced.

Wal-Mart will contract with “select employers” to help them manage their employee prescription claims and processing.

It will also work with doctors to increase the number of electronic prescriptions, which it said will save costs compared to paper records, and introduce electronic health records for all its U.S. employees and retirees by the end of 2010.

Environmental Defense, a group that works with Wal-Mart and other large corporations to improve their green practices, welcomed the new targets.

“Lee Scott’s focus on energy efficiency and supply chain responsibility is right on. It goes to the heart of some of the biggest environmental challenges we’re facing,” said Gwen Ruta, director of corporate partnerships for the New York-based group.

Ruta said the 25 percent energy efficiency commitment is an aggressive goal. “We are anxious to see the structure behind it,” she said about Wal-Mart’s dealing with suppliers to reach those targets.