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Walmart targets climate-smart suppliers

Photo via Pixabay.

When an Iowa corn and soy farmer named Tim Richter took the stage at a big sustainability conference organized last fall by Walmart, he had a message for the crowd gathered to hear about the giant retailerโ€™s sweeping efforts in food and agriculture: Sustainability makes business sense.

โ€œI like to grow corn, and you canโ€™t grow corn without fertilizerโ€”especially nitrogen fertilizer,โ€ says Richter, who farms about 7,000 acres of land. โ€œBut . . . in a leaky system of agriculture, what you donโ€™t use becomes a pollutant.โ€ Nitrogen not soaked up by crops can escape as a potent greenhouse gas, while runoff from excess fertilizer pollutes waterways and creates dead zones in the ocean.

Lately, though, Richter has been using an Internet-based tool calledย Adapt-N that relies on field-specific information and weather data to help corn farmers manage nitrogen use. The software, he says, helped reduce his fertilizer costs by as much as $150 an acre without hurting yieldsโ€”huge savings for a farmer.

โ€œIt has totally changed the way we use nitrogen, how much we apply and when we do it,โ€ says Richter. โ€œIf sustainability means becoming more efficient, count me in.โ€

Thatโ€™s exactly the kind of response Walmart is looking for from its suppliers, says executive Kathleen McLaughlin, who oversees the companyโ€™s climate-smart agriculture program rolled out last fall as part of a broader effort to improve the food system in the United States and elsewhere. As Walmartโ€™s senior vice president of sustainability and president of the Walmart Foundation (which helped fund development of Adapt-N), McLaughlin manages all of the corporationโ€™s sustainability initiatives.

McLaughlin says Walmartโ€™s climate-smart platform will be carried out in partnership with its suppliers, notably well-known food companies like General Mills and PepsiCo, which have promised to reduce their own climate impacts. The effort will work its way down their supply chains until the program reaches thousands of farmers around the world, like Tim Richter. If all goes according to plan, says McLaughlin, the reduced fertilizer use and optimized production of commodities throughout the vast Walmart supply chain will cumulatively eliminate about 11 million metric tons of greenhouse gas emissions by 2020. Thatโ€™s the equivalent of taking about 2.3 million cars off the road for a year.

โ€œItโ€™s in our interests to provide our customers with sustainable food,โ€ says McLaughlin, who joined Walmart 18 months ago after more than two decades at McKinsey & Co., a global management consulting firm. โ€œAnd we want to do that in a way thatโ€™s going to secure that supply of food not just for this generation but for future generations of customers.โ€

 

Taking giant steps

Affordability has helped make Bentonville, Ark.-based Walmart the worldโ€™s largest retailer and grocer, with $473 billion in revenues last year, more than half of that from food. Now, with its climate-smart agriculture initiative, the company is aiming to lower what McLaughlin calls the โ€œtrue cost of food . . . food that has a lower cost to the environment and to people.โ€

Achieving that goal is made easier by Walmartโ€™s mammoth global presence and the accompanying value of its shelf space. Every major food company wants to have a good relationship with Walmart, and in 2014 Walmart was able to secure commitments from Campbell Soup, Cargill, Dairy Farmers of America, General Mills, Monsanto, Kelloggโ€™s, PepsiCo and Unilever, among others, to measure and reduce usage of water and fertilizer in their supply chains. It wasnโ€™t hard to persuade them to join in, says McLaughlin: Most food and beverage brands have made climate-related commitments of their own, and they face persistent pressure from nongovernmental organizations (NGOs) to do better.

McLaughlin says itโ€™s up to each brand to track and report on its own progress. โ€œThey work with their suppliers and the farmers on the ground to track whatโ€™s happening on the acreage,โ€ she says. Barley farmers in Idaho who supply MillerCoors, rice farmers around the world who supply Kelloggโ€™s and growers who supply Campbell Soup with tomatoes and carrots will measure and then reduce their impacts, among them greenhouse gas emissions, water and fertilizer use. Walmart doesnโ€™t offer any financial incentives for compliance; the assumption is that farmers and manufacturers will realize financial benefits of their own as they reduce inputs.

Walmart has also struck up a key partnership with United Suppliers, a network of more than 700 agricultural retailers in 20 states, which offers a program called Sustain. The retailersโ€™ field staff are being trained to help farmers better manage and track their inputs, and United Suppliers has promised Walmart that it will reduce fertilizer on 10 million acres of cropland by 2020. That work alone would get Walmart nearly halfway to its emission reduction goal.

Meanwhile, Walmart has made its own commitments to buy commodities that are certified as sustainable by independent third parties. This effort began nearly a decade ago with seafood; today, more than 90 percent of Walmartโ€™s fresh and frozen, wild and farmed seafood meets a standard. About 27 percent of the palm oil in its store-brand products is sustainably sourced, and the company recently joined an industry-nonprofit coalitionย to set standards for sustainable beef. The industry standards that have been developed for commodities like soy, palm, sugar and beef all take climate impacts into account.

 

Courting controversy?

Not everyone is cheering these efforts, however. As Walmartโ€™s influence on agriculture grows, the companyโ€™s critics worry that the giant retailer will squeeze out smaller, family-owned farms, just as its retailing success often came at the expense of small-town, mom-and-pop stores. โ€œBecause of the volume they need, I fear they will drive out smaller [agricultural] producers,โ€ says Danielle Nierenberg, president of Food Tank advocacy group.

But even though its climate-smart agriculture initiative takes on the often contentious issue of global warming, McLaughlin says Walmart hasnโ€™t seen any backlash to its efforts from customers, suppliers or even politicians, and that the company is more determined than ever to go forward.

โ€œWe have very bold aspirations for systemic change,โ€ she says. โ€œWeโ€™re not playing small here. This is a whole company, a whole industry, a whole system effort.โ€


 

This article originally appeared on Future Food 2050.

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