Wal-Mart Sharpens Vision

H. Lee Scott told employees that the firm will play a bigger role.
H. Lee Scott told employees that the firm will play a bigger role. (April L. Brown - AP)
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By Ylan Q. Mui
Washington Post Staff Writer
Thursday, January 24, 2008

KANSAS CITY, Mo., Jan. 23 -- Wal-Mart chief executive H. Lee Scott Jr. on Wednesday laid out ambitious plans to improve health care, put less stress on the environment and set high standards for suppliers, as the world's largest retailer attempted to show it cares as much about social responsibility as low prices.

During an annual meeting with about 7,000 employees and suppliers at the Kansas City Convention Center, Scott promised to work with other companies to help them lower health-care costs, develop more energy-efficient products and strengthen standards for goods imported from China and for the suppliers who make the products, among other things.

"Because of your success and the success of your company, the world has great expectations of you. They expect you to play a bigger role," he said. "And you have both an opportunity and a responsibility to play that larger role."

This year marks the first time that the traditionally reclusive Bentonville, Ark., retailer has opened the annual meeting to reporters. The company has been on a mission to change its image in recent years. It became the largest retailer in the world through its single-minded focus on low prices and is famous for its no-frills stores and squeezing pennies out of suppliers. Critics have blamed the retailer for a host of social woes because of that strategy.

Labor groups have accused the company of providing stingy health benefits to cut costs. Environmentalists complain about its massive big-box stores and blame it for manufacturers' moves to countries with lax environmental and social regulations. Wal-Mart Watch, a group funded by the Service Employees International Union, said Scott's speech avoided accountability and shifted too much responsibility to suppliers.

"Certainly Wal-Mart has made some progress in a few areas, but the progress thus far is not what we can and should expect from the largest company in the world," said David Nassar, the group's executive director. "In typical Wal-Mart fashion, [Scott] takes credit for 'leading' and then doesn't do it."

In his speech, Scott addressed several of those issues. Perhaps most notably, he said that suppliers who make or import foreign goods will be required to meet more-stringent environmental standards within three to five years. Wal-Mart would be willing to pay them more for it, he said, an important concession for a company for which price has always been paramount. Wal-Mart also said it wanted to work with other retailers to create new industry-wide environmental standards.

In health care, Wal-Mart plans to lower costs by working with doctors to increase the use of electronic prescriptions and establishing electronic health records for its U.S. employees and their families by 2010. Wal-Mart also said it could help other companies save millions of dollars by helping them process patient prescription claims more efficiently.

Scott also said the retailer hopes to double its sales of merchandise that helps shoppers reduce their energy use, such as weather stripping and air filters, as well as work with manufacturers to develop a flat-panel TV set that is 30 percent more energy efficient than other models.

Wal-Mart has been working on its "green" makeover since fall 2005, when Scott laid out the company's environmental agenda: to create zero waste, to be supplied by renewable energy and to sell more environmentally friendly products. As a result, organic produce and fair-trade coffee are now on the shelves at Wal-Mart stores and at its warehouse division, Sam's Club.

Environmental Defense, a nonprofit group that has worked closely with Wal-Mart, said it awaits details of how several of the initiatives announced by Scott would be implemented, particularly as they pertain to China. Gwen Ruta, the group's director of corporate partnerships, said Wal-Mart's moves were "necessary and prudent."

"It's a good vision. It really goes to the heart of some of the biggest challenges we face today," she said. "Now we need to make it a reality."

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