Wal-Mart’s sustainability pledge

By: Leonie Barrie - 3 February 2010 19:13

While most industry observers have been unanimous in their praise of Wal-Mart's mega sourcing deal with Li & Fung, now that its full impact has had time to settle in there are some out there who are starting to question the retailer's true motivations.

One of the biggest elephants in the room is where it leaves Wal-Mart’s recent pledges on sustainability. Signing a $2bn deal with Li & Fung seems to be taking a big step away from plans rolled out last July to get its suppliers to complete a Sustainability Index calculating the full environmental costs of making every product on the retailer's shelves. With Li & Fung bridging the gap between the factories and the retailer, it will be interesting to see how successful its efforts at transparency really are.

The outsourcing measure also seems to be at odds with Wal-Mart’s wider goals to increase the proportion of goods it buys directly from manufacturers, rather than through third-party procurement companies or suppliers. In January the retailer estimated that shifting to direct purchasing could reduce costs by 5% to 15% across the supply chain within five years.

Comments on this blog post

Your comment on true motivations are indeed something to seriously think about. Firstly, by appointing Li & Fung there is no way they are going to get goods cheaper with L&F commissions added on. The only losers in this whole affair will be Chinese/Indian factories who having been screwed to the ground over the last two years, will be screwed even more. Will see L&F expand even further with their own factories.

BILL GREGORY, Australia