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Wal-Mart's Pioneering Sustainability Strategy Addresses Critical System Change Issue

Wal-Mart's Pioneering Sustainability Strategy Addresses Critical System Change Issue

Published 04-18-06

Submitted by Global System Change

Wal-Mart, General Electric, Goldman Sachs and many others have recently adopted aggressive sustainability strategies. Why are the largest, most successful business and financial institutions embracing sustainability? Because it makes good business sense says Frank Dixon in an article called "Sustainability and System Change: Wal-Mart's Pioneering Strategy".

The article makes a compelling case that sustainability will be the most important determinate of business success in the 21st Century. The Wal-Mart article and other system change papers can be downloaded at www.globalsystemchange.com.

Announcing Wal-Mart's sustainability strategy on October 24th of last year, CEO Lee Scott gave what may be the most important business speech ever. In it, he committed the largest company in the world to making zero waste, using 100 percent renewable energy and selling sustainable products. These ambitious goals signal a sea change in the sustainability movement.

Sustainability strategies involve enhancing business value largely by reducing negative impacts on the environment and society. As the scale of human activity increases in the finite global system, environmental and social problems are becoming business problems. Wal-Mart is the largest retailer of many types of products. Supply constraints driven by environmental and social problems seriously threaten its ability to prosper.

Wal-Mart became the largest and perhaps most successful business in history in part because of its excellence at strategy execution. As it applies this strength to sustainability, the company likely will drive major change in many industry sectors. Wal-Mart has over 65,000 suppliers. Many are largely or completely dependent on the company for their continued success. As Wal-Mart moves forward with its sustainability strategy, suppliers will be encouraged to improve their own environmental and social performance as well as help Wal-Mart achieve its sustainability goals.

Probably the most important aspect of Wal-Mart's sustainability strategy is system change. Currently, efforts in this area represent only a small part of the company's strategy. However, they hold the highest potential to benefit Wal-Mart and society overall.

Dixon claims that system change is by far the most important sustainability issue, but that it receives relatively little attention. This presents a major opportunity for business. Companies addressing this issue in a practical way stand to gain large reputational and other benefits.

Dixon points out that many negative corporate impacts are in effect systemically mandated, and thus cannot be mitigated. Economic and political systems create conflicts between what's best for business and what's best for society, he says. Changing systems in a way that removes these conflicts is the most difficult challenge facing business and society. There are no easy answers. Effective solutions can only be developed through collaboration between business, government and civil society.

Sustainability cannot be achieved without system change. By integrating practical system change efforts into its sustainability strategy, and encouraging others to do the same, Wal-Mart is implementing what may be the first sustainability strategy that actually has the potential to achieve sustainability.

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