By Ylan Q. Mui
Washington Post Staff Writer
Saturday, November 24, 2007; A01
When Conservation International wanted to educate the world about Brazil's indigenous Kayapo Indians, whose Amazon home is threatened by deforestation, it brought an unlikely advocate to Washington: S. Robson Walton, chairman of Wal-Mart Stores.
A partnership between Wal-Mart, reviled by labor unions and their allies as the enemy of the little guy, and an environmental nonprofit group was unthinkable just a few years ago. Critics had long accused Wal-Mart of treating its workers badly and crushing independent businesses with its mammoth stores. Its relentless focus on low prices has been blamed for the outsourcing of manufacturing jobs and deadly pollution in underdeveloped countries. To some, Wal-Mart symbolized capitalism at its worst.
For years, the company ignored the attacks, content to hunker down at its headquarters in remote Bentonville, Ark. But as sales began to slow, efforts to expand were blocked and the chorus of critics spread to lawmakers in Washington, the retailer realized it had to act. The partnership between Walton and Conservation International is part of a radical new approach that Wal-Mart calls engaging the opposition.
The environment is the first front.
"It was never part of the conversation before," Walton said during an interview in which he was accompanied by Conservation International's chairman Peter A. Seligmann and Kayapo chief Megaron Txucarramae. "And it's part of every conversation now."
The overarching goal is to improve the company's image so it can operate unhindered by the automatic opposition its reputation has inspired. It also had a specific legislative agenda spanning issues such as normal trade relations with China and the number of hours truck drivers are allowed to work. In its attempt to make its desires known, it has transformed its lobbying force from a humble two-man shop to a $2.5 million operation that employs some of K Street's heaviest hitters.
Campaign donations from Wal-Mart's political action committee to federal candidates jumped from $135,750 during the 1998 election cycle to $1.3 million in 2006 -- the biggest increase and largest amount of any retailer or retail trade organization, according to the Center for Responsive Politics. It has added consultants ranging from a whitewater guide to a former presidential adviser to court the activist groups that have been Wal-Mart's most vocal opponents.
"You don't want Wal-Mart making policy. You want Wal-Mart running retail stores," said Andrew Ruben, the company's vice president for strategy and sustainability. "But we're not naive enough to think we can change without it."
That wasn't always Wal-Mart's philosophy. It started as a five-and-dime store in Bentonville in 1950 with a singular mission to deliver the lowest prices possible. Even after Wal-Mart became a global behemoth and its founder, Sam Walton, became one of the richest men in America, its headquarters remained in this small town. Politics was so far off Walton's radar that former Arkansas senator Dale Bumpers joked that waiting for a campaign contribution was like "leaving the landing lights on for Amelia Earhart."
"They were doing very well without any government assistance, and the government was not interfering with them too much," Bumpers said. "And I guess they felt it would be money sort of wasted."
That worked until 1999, when federal lawmakers blocked Wal-Mart's acquisition of a small thrift in Broken Arrow, Okla., over concerns that the company would use its size and low prices to dominate the industry. So that year, Wal-Mart hired its first full-time Washington lobbyist, retired Air Force Lt. Gen. Norm Lezy. In 2000, another Air Force veteran, Erik Winborn, joined the operation.
The two worked alone for the next two years, establishing roots in Washington. They first met and had breakfast with the Arkansas delegation and representatives of states where Wal-Mart had a strong presence, such as Texas and Florida. For the Republican-leaning company, talking to liberals from California and the Northeast was akin to "missionary work," said Asa Hutchinson, a Republican who represented Arkansas in the House.
Hutchinson used to play tennis with Walton but only once received a campaign donation from him: a $500 check with a note saying it was all Walton could afford. Years later, when Lezy and Winborn knocked on his door for help, Hutchinson showed them around the Hill and became an ally in their quest for normal trade relations with China and trade agreements in Latin America.
Wal-Mart also opposed legislation that it said would have increased litigation for companies that administer their own health benefit plans, and it joined a coalition of businesses to overturn ergonomics regulations. As its Washington presence grew, it lobbied for government to work with business on more affordable health care and supported a cap-and-trade program for greenhouse gas emissions. This is a remarkable change for a company that so cherished its silence.
"When they became the largest retailer . . ., a target was put on their back. They couldn't just any longer quietly exist," Hutchinson said. "The world changed, and Wal-Mart had to change with it."
Some lawmakers are still wary of having their names associated with the company. During her 2006 Senate reelection campaign, Hillary Rodham Clinton returned $5,000 to Wal-Mart's political action committee, citing differences with the company, despite having served on its board from 1986 to 1992. This spring, Clinton was noticeably absent from a reception Wal-Mart sponsored to celebrate a documentary about female senators.
Still, she has accepted $19,190 in donations from Wal-Mart executives and employees this year -- more than half of the total Wal-Mart employees have given to all presidential candidates, according to campaign finance records.
Wal-Mart's latest lobbying disclosures show that the company has eight in-house registered lobbyists and retains about a dozen outside firms. According to the Center for Responsive Politics, Patton Boggs signed Wal-Mart as a client in 2000 and has since received $1.8 million, the most of any firm. Washington heavyweight Cassidy & Associates began working for Wal-Mart three years ago and has gotten $640,000. (Both Winborn and Lezy have left Wal-Mart.)
Yet Wal-Mart's $2.5 million in lobbying expenditures in 2006 is small potatoes for a company with annual revenue of about $350 billion. By comparison, General Electric had revenue of $163 billion and spent $21 million on lobbying last year.
Although Wal-Mart has the largest political action committee of any retailer, its opponents outspend it in political donations. In the 2006 election cycle, Wal-Mart gave $1.3 million to federal campaigns, most of them Republican. The Service Employees International Union and the United Food and Commercial Workers, two of the country's largest labor groups, together spent $2.9 million and are ranked among the top all-time donors to the Democrats.
Two years ago, the SEIU and the UFCW launched campaigns against Wal-Mart -- Wal-Mart Watch and Wake Up Wal-Mart, respectively. They criticized the company's health-care plan, saying it charged high deductibles and pushed workers onto state-funded plans. They were behind high-profile but unsuccessful efforts in several states, including Maryland, to pass legislation to force Wal-Mart to spend more on its benefits. The groups also leaked embarrassing Wal-Mart documents, organized protests, and recruited Democratic presidential candidates Barack Obama and John Edwards to criticize Wal-Mart.
"Wal-Mart is willing to spread its money wherever it thinks it can buy protection for its poor business practices," said David Nassar, executive director of Wal-Mart Watch.
In response, the formerly media-shy company hired the public relations firm Edelman, created a "war room" staffed with former political operatives at its headquarters and dispatched its executives to Washington to meet with lawmakers. And it began looking at the environment as an issue on which it could play offense.
Environmental activists debated which side to join. They worried that Wal-Mart encouraged shoppers to drive long distances and pushed manufacturing jobs to countries with lax environmental regulations. Some, like the Sierra Club, argued that Wal-Mart's social problems were inextricably linked with its environmental ones and refused to work with it.
But others saw opportunity. Even the smallest changes within the company had the potential to resonate not only with its vast customer base -- 176 million weekly worldwide -- but also with the company's roughly 60,000 suppliers.
"You can have the right role to play at the right time," said Michelle Harvey, an activist with Environmental Defense, a nonprofit group that recently opened an office in Bentonville to work more closely with Wal-Mart. "And you can change the trajectory."
One way in was S. Robson Walton, who joined the board of Conservation International in 2004 after scuba-diving with Seligmann, the group's chairman, in Costa Rica. A few months later, Seligmann mentioned that an old friend was looking for clients for a new consulting firm, called Blu Skye Sustainability.
That friend was Jib Ellison, who had led whitewater expeditions on five continents before becoming a consultant. Within months of meeting Walton, he was on a plane to Bentonville to meet with H. Lee Scott Jr., Wal-Mart's chief executive.
"We're getting hammered in the press. I know we don't know anything about our environmental impact," Ellison recalled Scott telling him during their meeting in a windowless conference room at Wal-Mart's modest headquarters. "Can you do some research and tell me where we might be exposed?"
Ellison responded: "With all due respect, Mr. Scott, if your concern is around the risks associated with your footprint environmentally and especially if you add your supply chain . . . let me save you years of work and millions and millions of dollars and just tell you: In all areas that matter, there's risk."
Scott hired him on the spot. Over the past three years, Ellison has helped Wal-Mart implement an ambitious environmental program. Wal-Mart, the country's largest private consumer of electricity, has taken steps to make its buildings 15 percent more energy-efficient. It created the first heavy-duty hybrid truck. Its executives carry miniature business cards to conserve paper. It has introduced organic baby clothes, fair-trade coffee and sustainably farmed seafood into its stores.
Wal-Mart says such achievements are good for the earth and good for business. Executives said they have become personally committed to improving the environment. Still, Wal-Mart acknowledges that its success so far is also good politics. Going green has slowly helped Wal-Mart make inroads with its critics.
"We're able to have positive conversations with elected officials that, a year or two ago, we weren't really able to have," Leslie Dach, a former Clinton administration aide who oversees Wal-Mart's corporate affairs and government relations, said at a meeting with analysts last month in Bentonville. "This company can make a real difference in sustainability, and they're choosing to kind of play with us in that space."
The Alliance to Save Energy, a coalition of mostly businesses and trade organizations, recognized Wal-Mart last year for its work in energy efficiency. Five months later, the group's president, Kateri Callahan, and Wal-Mart executive Charles Zimmerman spoke before a Senate energy subcommittee led by Sen. Byron L. Dorgan (D-N.D.), who formerly chaired the alliance.
Dorgan had criticized Wal-Mart in his book on the outsourcing of manufacturing jobs, titled "Take This Job and Ship It." But when it came to the environment, Dorgan found little to impugn.
"A number of us have disagreements with the marketing strategies of Wal-Mart," he said. "But there's no question that Wal-Mart is an unbelievable merchandiser and a very savvy business competitor.
If you, with that savvy judgment, can take a look at efficiency and say, 'This makes good business sense for us' . . . it ought to be a lesson for others."
Wal-Mart scored a coup last summer when former vice president Al Gore screened his film, "An Inconvenient Truth," at the company's headquarters to a standing ovation. Michael Marx, head of the Business Ethics Network, an umbrella organization for several activist groups, likened it to a "religious revival." Wal-Mart later donated $75,000 to Gore's nonprofit organization, the Climate Project.
"More and more opinion leaders, members of Congress, members of [nongovernmental organizations] have allowed Wal-Mart to get into their hearts and actually feel a lot better about us," Dach said during the meeting with analysts.
But the bridge between the retailer and its critics remains tenuous. In September, Wal-Mart Watch issued a report calling the company's business model "fundamentally unsustainable."
That same month, a coalition of 23 activist organizations delivered a scathing critique of Wal-Mart's environmental initiatives.
"They've realized that they can be green," Marx said. "But if they're not blue and community-friendly, they're not coming to town."
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