Tuesday, 15 May 2012

By John Sula

Looking at Walmart’s business model, I see a striking resemblance to Milton Friedman’s views on Corporate Social Responsibility . “Using its resources effectively to maximise profits and in the context of the environment do it lawfully without fraud or deception”. Walmart’s social responsibility towards the environment has impressive results as detailed in Marc’s post. In 2005 Walmart voluntarily acted to reduce their carbon footprint by investing in a sustainability program. Marc’s first chart looks impressive. But is it good enough? Let’s consider this using a question that Friedman might ask. Do they know how to do more and would it be the right way? Walmart are specialists at what they already do. Are they experts when it comes to the environment? They are not, it is not their mandated sphere of concern, what Walmart are showing is professional responsibility. As Walmart is not a person but an artificial agent it just concentrates primarily on its own concerns. They could view their contribution thus far towards the environment, employment, lower cost of living for everybody and revenue through taxes collected by the Government from its activities is enough (The Open Polytechnic, 2011).

Despite all of its efforts, Walmart’s making the climate crisis worse. Marc’s charts are compelling. From 2005-2010, the first chart shows Walmart’s efficiency. Emissions dropped a net 10 million tonnes of CO2e per million dollars in sales. The second chart shows a rise of net three million tonnes per million dollars of sales of CO2e. Combined, this is a net loss of 7 million tonnes of CO2e.
I’d like to introduce a third chart. Using Marc’s data of CO2e emissions and combining the two charts, it shows Walmart are not making it worst but in total, emissions have dropped and plateaued.

Combined Emissions Chart

- Is largely driven by the fact that people are consuming more. In today’s world, that means generating more climate pollution.
Or should that read? There are now more people consuming. We must consider the fact the world’s population according to the United Nations (U.N) is growing at 1.14% per year (equivalent to around 75 million people) (wikipedia.org). These people will require food, clothes and shelter. As other nations continue to develop, Abraham Maslow’s ‘Hierarchy of Needs’ will see people wishing to meet their lower needs first before higher needs is plausible. 

 That’s because Walmart can’t stop people from buying stuff, including lots of stuff they probably don’t need. This statement appears quite narrow. Consumers each are different in their desires when shopping. Autonomous and/or rational in their decision making, driven by trends, cultures, word of mouth, advertising by suppliers and consumer reviews. Who is it for us to say what people probably don’t need? It’s an individual choice. Companies like Walmart would not stock items that people don’t need; it would be hard to make money that way. Walmart stock items in high volume that people buy and continue to buy. People buy either for a need, a feeling, a sensation or enjoyment (Arrington, 2004 p.413).
Does Walmart have to do more? It could, but it would come at a cost and who will bear that burden? R.E Freeman’s, A Stakeholder Theory from a wide-definition, includes any group that can benefit or be harmed. Walmart’s stakeholders would include but not limited to; management, customers, suppliers, employees, the community, government and we’ll include the environment itself. Each group has a stake in Walmart. Management’s job is to decide how to balance the needs of each group and find the balance for overall happiness. That’s a challenge. Will suppliers reduce their prices even more to help pay? Unlikely, suppliers are most likely to be screwed down already. Will employees reduce their hours or take redundancies? This would not lead to much happiness. What about pushing up prices on goods for consumers? (Freeman p.59).If you didn’t know already, Walmart’s' mission statement is –“people, saving money, and a better life”. Walmart’s success is based on its business model, and putting up prices would go against it. If Walmart was successful to do the above, it would in effect be imposing taxes on to the stakeholders and then deciding how theses taxes should be spent on their behalf. In principle should a company have the right to do this? (Friedman p.250).It also risks consumers going elsewhere for their goods, possibly a competitor who may not even have a sustainability program or another consequence, assist in driving up inflation.

 What about the government as a stakeholder?  It is interesting to note the “U.S has not ratified the Kyoto Protocol ; sighting potential damage to the U.S economy required by compliance and questions its scientific justification, but would look at market-based incentives and voluntary measures for corporations” (eoearth.org).If the government is having conflict within itself as to the best action to take, then Walmart should be commended on its actions to reduce CO2e and still return profits for its stockholders

Suggestions -The first and most obvious is to speak out more strongly about the need for governments to put a price on carbon emissions.
As individuals should it not be us that speaks out more strongly and have the government listen? Is it not the governments’ social responsibility to look after our needs of now and in the future? “The government is mandated to develop knowledge and expertise” (The Open Polytechnic, 2011). The government can create laws for company’s to abide. The collective approach to towards the environment has more chance of making a difference than singling out one company.

Second, Walmart could do more to try to change consumer behaviour. Even though it may be right, is this not manipulation and control of consumer behaviour? (Arrington p.412). I have already suggested that Walmart are not experts, but they could provide information for consumers. Kant says “that people have intrinsic worth and as free agents they are capable of making their own decisions. Humans can use their conscientious actions that have moral worth by making the right choice”, in this context of whether to buy or support a product that is carbon neutral or not (Rachels p.137).