A few weeks ago, giant Walmart rolled out a new Sustainability Leaders program, under which products in a category will designated as Sustainability Leaders for consumers to consider when making an on-line purchase (the program has not moved out at this point to its retail stores). See Walmart Web Site to Name Environmental Leaders in Different Product Categories.)
The effort is actually similar to a program Target developed in 2013 called the Sustainable Product Index. Walmart's program has certainly gained it some praise, but also some questions and even criticism that other companies considering such a move should heed in constructing their own programs.
On Greeniz.com, chairman and executive editor Joel Makeover first offers some plaudits to the Walmart program, which has partly renewed his hope for more popular support amongst consumers for Sustainable products.
That said, Makeover also has some concerns about the Walmart program. One is a certain level of confusion as to whether the Sustainability Leader designation is connected to a specific product. It appears in fact, not to be – the designation is at a product category level. So, after completing a Walmart questionnaire, a manufacturer can be determined to be a Sustainability leader (by scoring 80 out of 100 total points). That means all of its products in that category will receive the designation, regardless of the specifics related to a given SKU.
This certainly may not be clear to consumers. Makeover has three other concerns:
1. A lack of transparency: Makeover says consumers won't know exactly how Walmart scores each company on each of the categories, only which ones are "leaders," since the retailer has promised suppliers that the data they submit will be confidential. Even the questions Walmart is asking the retailers aren't disclosed. "That lack of transparency will need to change for the program to be credible," Makeover says.
2. Explanatory information is hard to find: Information about why an individual product's manufacturer has been given the Sustainability Leaders badge can be hard to find on the web site. Makeover argues that there needs to be user-friendly one-click information readily available.
3. The Sustainability criteria will need to improve over time: Many of the underlying assumptions about what's material for a given product seem far from comprehensive, Makeover says. Walmart has promised that the bar will rise as companies continually improve, but that remains to be seen.
Makeover also questions how much effort Walmart will actually deploy to push web visitors to the Sustainability Leaders page.
Meanwhile, over at US News and World Report a column by David Brodwin, co-founder and board member of the American Sustainable Business Council, says Walmart's program illustrates how exceedingly difficult it is to produce such a rating system.
The first challenge with such ratings, Brodwin says, is how to define Sustainability and its components.
"Any company setting out to rate products and companies on Sustainability must decide what to emphasize," he says. "Is climate change the most important criterion? Labor conditions in the factory producing the product? Or other environmental impacts, such as the use of toxic materials or consumption of irreplaceable rain forests?"
You can also add the protection of U.S jobs, global sourcing practices, women's economic empowerment and more to the potential list of Sustainability factors. That of course means the rating from one retailer for the same product could be very different from that by another, depending on what elements are used in the scoring.
Another issue has to do with the self-reporting nature used in most of these programs, an approach companies will almost surely continue to rely on, given that even a giant such as Walmart lacks the resources to validate all the supplier claims.
"Self-reporting is popular because it can easily be gamed. With self-reporting, companies can win a good rating without necessarily deserving it," Brodwin says. "Unfortunately, third-party review is expensive, and most companies being rated don't want to subject their proprietary technology to outside review."
 Walmart has responded a bit to this criticism by saying a supplier's head of Sustainability must sign off on the responses, and that it thinks few suppliers will risk the later wrath of Walmart by overly fudging the answers, a practice that could be revealed at some later point.
Brodwin also has concerns that Walmart's questions to suppliers aren't detailed enough. Those questions are based on models by product category developed in conjunction with an organization called The Sustainability Consortium (TSC). TSC is jointly run by the University of Arkansas and Arizona State University, and has evolved into a collaboration of more than 100 of the world's largest retailers, consumer product companies, and NGOs and academic partners.
Part of what TSC has been doing over the past few years is determining what makes certain products more sustainable than others. It reviews considerable research on different product categories for environmental, social and other issues related to Sustainability. Water usage may be a big issue for one product category, for example, while use of conflict minerals may be a top issue in certain electronics categories.
TSC has managed to develop Sustainability profiles for over 100 product categories. In turn, it translates that to about 10 to 15 questions that manufacturers and consumer products companies can answer, which generates a score for each product and company in a given category.
The problem, says Brodwin, is that the details of those questions is not being revealed by Walmart - and that the one sample question that was released is problematic.
Suppliers are asked, "Does your company have goals for reducing the greenhouse gas emissions released during the manufacture of your products?" Brodwin notes. "Clearly, a supplier could answer "Yes" to this without in fact having made any actual progress towards reducing greenhouse gas emissions. Worse, a company could potentially answer "Yes" even if its products were among the worst in the industry for greenhouse gas emissions."
Brodwin also notes that how Sustainable a given product is has other contextual dynamics. For example a pint of blueberries can have a low carbon footprint for consumers in Michigan if the berries were sourced locally. It might be a different calculus if they are trucked in reefer van all the way to Texas.
"By scoring products and suppliers on Sustainability, Walmart and other companies lend credibility to the principle that sustainability matters," Brodwin concludes. "This encourages consumers to take Sustainability into account. It certainly helps. But we have a long way to go before consumers have truly meaningful information that they can use to shop with Sustainability in mind."
The greeensupplychain.com notes that all the issues discussed in this article could lead different retailers to rate the same product with vastly different scores - and that will be sure to bring lots of confusion to consumers and suppliers.
Do you agree creating these Sustainability ratings is harder than might initially appear? Will consumers really get it, or be confused? Let us know your thoughts at the Feedback button below.
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