Wal-Mart to pay more for "greener" goods

Nichola Groom, Reuters 7 Feb 08;

INDIAN WELLS (Reuters) - Wal-Mart Stores Inc is willing to pay more for products that last longer and hurt the environment less, the company's director of sustainability said on Thursday, adding it might not necessarily have to raise retail prices as a result.

"Bad quality products create waste, and so having tighter standards on the social side, on the environmental side and on the quality side will reduce waste," Matt Kistler, Wal-Mart's senior vice president of sustainability, said in an interview.

"We are even willing to pay more for products that have that." But that does not have to mean higher prices for customers.

"I don't know if we have to pass on the higher costs," Kistler said at the Clean-tech Investor Summit in Indian Wells, California.

"We are looking at a very small amount of dollars and the savings in the supply chain that we are finding because of sustainability in some cases will more than offset the incremental costs of what we are paying for a better quality item."

Wal-Mart, the world's largest retailer, has set a goal of one day using only renewable energy and creating zero waste.

As part of that effort, the company has pushed its suppliers to cut back on the amount of packaging they use by 5 percent by 2013.

To meet that goal, it has developed a "packaging scorecard" that will rate its 60,000 suppliers on their ability to cut waste and conserve resources.

Wal-Mart's suppliers had a February 1 deadline to comply with the "packaging scorecard" initiative, but many of the company's smaller vendors -- which represent roughly 20 percent of the goods the company buys -- have yet to do so, Kistler said.

"We do not have all suppliers 100 percent compliant today, which is a disappointment because we did give them a year," he said. "The smaller companies that we may not buy consistently from or the same product from, those are the ones that either have not (complied) or it simply doesn't make sense for them."

But Kistler added the scorecard had already produced a lot of change in the packages of its most popular products.

"The scorecard is really more geared toward the products we buy year after year," he added.

(Reporting by Nichola Groom; Editing by Andre Grenon)