By 2010, Wal-Mart and its suppliers are going to be a lot more energy efficient.
The retailing giant has set a goal of getting suppliers to increase the energy efficiency of its products by 25 percent in three years. For some suppliers, the standards are a little more stringent. By 2010, the company will only sell Energy Star-rated air conditioners. Flat panel TVs will have to be 30 percent more energy efficient than they are now.
"If we achieved our 25 percent goal just in the U.S. we would save enough electricity to power 3 million homes per year or the equivalent of 10 million barrels of oil," said CEO Lee Scott in a speech to employees earlier this week. "We do not know exactly how we will get there. We do not even now if our suppliers can make times like hair dryers that user 25 percent less energy. But we do know that our approach works--to partner with suppliers, to help customers make better decisions, and to use our business model to drive out waste."
The company might also start building charging stations (powered by solar panels) so that customers can charge up their plug-in hybrids or electric cars, Scott said. General Motors has been working with Wal-Mart to install ethanol pumps, which ordinary gas stations recoil from. Families in the U.S., he asserted, spend on average 17 percent of their income on energy.
Wal-Mart has been one of the leaders among large corporations to cut its carbon footprint. The company, for instance, has tested out solar lighting and electricity at certain stores and is swapping out conventional lights for LEDs in freezer cases. It saved a $1 million a year in power bills just by taking out the light bulbs in coke machines.
It has also encouraged suppliers to change their packaging and distribution techniques to cut energy consumption as well. Wal-Mart's mandates don't work. A few years ago it told suppliers to start using RFID tags or else, and only some have. Still, the company can have a big impact because of the sheer number of products that flow through its doors.
The company's also not shy about telling its suppliers about its goals. "We will favor--and in some cases even pay more--for suppliers that meet our standards and share our commitment to quality and sustainability," Scott said.
Wal-Mart, he further added, will also try to keep the price of energy-efficient cost-competitive with standard products. The company, for instance, cut the price of some 3M air filters by $2.
"Our goal is to double the sale of products that help make home more energy efficient," he said.