Giant retailer Wal-Mart, as part of a number of bold moves in recent years to improve its image as a good corporate citizen, has just announced that it is now going to display eco-ratings on the products it sells. There's only one small catch, of course: such ratings do not currently exist. Wal-Mart, however, has the answer: it is going to insist that its suppliers participate in this initiative, with Wal-Mart funding the development effort.
Wal-Mart sees this as a three-step process: first, collect data from its suppliers that will be input into a central database. The second step is to collaborate with universities and other groups to work through the various weights to be assigned to each data element. The third step will be to translate the weighted data into a single "sustainability index number," that will essentially reflect how green a product is in terms of how it is manufactured, how it is distributed, and the extent to which it can be recycled.
But just because Wal-Mart is behind this initiative, it's not a closed system. Wal-Mart has publicly stated that it wants to develop a universal sustainability index for all products, and it wants other companies to participate. The product database, as we understand it, will be publicly accessible both to promote transparency, and to spur ancillary uses of the information.
This is a huge initiative, and one that many others have looked at, although generally on a less ambitious scale. Offering meaningful sustainability ratings is not only a worthwhile business, it can be a lucrative business as well. The key, of course, is getting market acceptance and critical mass. That where it helps to have the clout of Wal-Mart, with sales equating to 2% of GDP, and a proven willingness to use supplier mandates to enforce participation.
This is a project to watch as it takes shape over the next few years. Data publishers may want to start carrying sustainability index data along with product information (again, our understanding is that Wal-Mart will make this information publicly available). There may also be some interesting spin-off opportunities in crunching and re-packaging the underlying dataset.
Will Wal-Mart succeed? There's certainly no guarantee, but nothing populates a database faster than a major customer asking its vendors to provide them with some information.