Green Valley In Wal-Mart's Back Yard
Start-Ups Set Out to Sustain Giant's Eco-Friendly Focus

By Ylan Q. Mui
Washington Post Staff Writer
Friday, September 7, 2007

FAYETTEVILLE, Ark. Daniel Sanker has traveled to the most chic cities -- London, New York, Los Angeles -- as founder of the shipping and logistics firm CaseStack. But his quest to create a more sustainable business is taking him to the home turf of a company that is virtually synonymous with suburban sprawl: Wal-Mart.

Two years ago, the world's largest retailer set out on a mission to change that reputation by promising to transform itself into an eco-friendly business. It set wildly ambitious goals to create no waste, be supplied by renewable energy and sell more sustainable merchandise.

Critics have dismissed the effort as a public relations stunt designed to draw attention away from Wal-Mart's controversial labor and health-care policies. How successful Wal-Mart will be at greening itself remains to be seen. But there is little question that it already is reshaping its own back yard.

A wave of start-ups developing the technology to help suppliers prove their green credentials has swept into this sleepy college town, half an hour from the company's headquarters in Bentonville. Sanker is looking at ways to improve fuel efficiency in shipping. Others are developing agricultural-based alternatives to petroleum or studying how electronics can function at higher temperatures, thereby cutting energy use. The University of Arkansas has established the Applied Sustainability Center at the campus here using a $1.5 million grant from Wal-Mart.

It may seem an unlikely place for a green revolution, far from such traditional environmental strongholds as Portland and Seattle, but local officials hope Fayetteville will become to sustainability what Detroit is to the automotive industry and the Silicon Valley is to technology. In fact, they've coined their own term for the vision: Green Valley.

"We are driving a stake in the ground to become the center of the sustainability movement," Fayetteville Mayor Dan Coody said.

Wal-Mart's magnetic power has brought explosive growth to Bentonville and nearby Rogers. Scores of vendors who supply the merchandise for Wal-Mart's shelves -- from massive conglomerates like PepsiCo to smaller players like Sassy baby products -- have opened satellite offices in the region to keep up with their most important client. Construction cranes dot the landscape, and strip malls are clogged with traffic.

The effect has been less in Fayetteville, a progressive outpost in this largely conservative landscape. It is home to the University of Arkansas and boasts a walkable downtown, quaint coffee shops and an organic restaurant. Locals call residents of Bentonville and Rogers "Wal-Martians," while they scoff at the strict city ordinances and more liberal posturing of "Fayette-Nam."

Fayetteville's quirky personality is proving attractive to sustainable businesses. Eventually, the town may consider financial and tax incentives to help lure more green companies. But for now, news is spreading through word of mouth and Wal-Mart.

Arkansas "is called the Natural State," said Tom Muccio, founder of BioBased Technologies, which manufactures agricultural-based chemicals that can replace petroleum in the production of plastic. "I think now we have the opportunity to really bring that alive."

"The environmental community is really focused on Northwest Arkansas," said Jonathan L. Johnson, executive director of the university's Applied Sustainability Center. "There's a huge experiment going on here."

Critics argue that the big-box model of retailing is inherently unsustainable because it eats up large tracts of land and forces customers to drive long distances to run errands. A report released last week by Wal-Mart Watch, which is funded by the Service Employees International Union, estimated that the retailer's new stores will use more energy than can be saved through its current programs.

But some suppliers and local officials say they think Wal-Mart is serious and that being green is key to winning new business from the retailer. Coody recalled attending the screening of "An Inconvenient Truth," the environmental documentary featuring former vice president Al Gore, at Wal-Mart's home office last summer. At the event, Chief Executive H. Lee Scott Jr. told the audience of suppliers that the company would consider environmental impact when choosing products to sell. The crowd grew visibly tense.

"Everybody was looking around the room at each other going 'uh-oh,' " Coody said.

Such statements are spurring companies such as BioBased to move their headquarters to Fayetteville. Muccio has purchased a 20-acre site on Cato Springs Road in the southern part of town. Rust envisions the facility as anchoring the western end of a technology and research corridor along the road, which is now dotted by small single-family homes.

At the eastern end is a research and technology park owned by the University of Arkansas, where one of the buildings is a former pantyhose factory and another is the first structure in the state to be certified by the U.S. Green Building Council. Tenants include Arkansas Power Electronics International, a $2 million research and development firm that works on electronics systems; BioDetection Instruments, which helps find pathogens and chemicals in food; and Virtual Incubation, a venture capital firm focusing on green business.

The city has also adopted the philosophy. The mayor regularly rides an electric bike to work and is planning to build a solar-powered home. He appointed the town's first sustainability director, whose salary is paid by energy savings that he implements. All traffic signals have been outfitted with LED lighting, chopping $53,000 from the town's electrical bill.

"People recognize hypocrisy when they see it," Coody said. "We want to show people we're serious here."

Fayetteville isn't the only city hoping to turn green into greenbacks. This summer, San Bernardino and Riverside counties in Southern California launched their own Green Valley Initiative. The region hopes to attract environmentally friendly businesses and development and create sustainable neighborhoods. In Kentucky, Louisville partnered with a local school district and the University of Louisville to reduce energy costs and convert all educational facilities into green buildings. The Metro Mayors Caucus in Denver has developed strong policies on energy efficiency and consumer education for the more than 37 cities in the region.

Many of those areas have more technology companies and more venture capital. But they don't have Wal-Mart.

"Wal-Mart is so large that when Wal-Mart changes how it does business, most businesses have to come along," said Charles Fishman, author of "The Wal-Mart Effect." "This where the change is."

That's why Sanker moved his wife, Jane, and two sons from Santa Monica, Calif., to rural Fayetteville three weeks ago. They used to walk to Trader Joe's and shop at Nordstrom. Now, there are bales of hay lining the two-lane country road leading to their home.

Sanker is looking for office and warehouse space and anticipates he will hire as many as 100 people. He tried to get space in the research park on Cato Springs Road, but it was booked. He is betting his career and his family's future that Wal-Mart will live up to its promise -- and that Fayetteville will come out on top.

"It was just so much more dynamic than anything I've seen," Sanker said. "Maybe we're all crazy, but I don't think so."

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