As the world’s largest retailer, Walmart serves 200 million customers with nearly 2 million staff and a base of 60,000-plus suppliers, who provide the products to sell – which also contribute 90% of the chain’s total environmental footprint.  Byy one estimate, the total revenues of Walmart’s suppliers equal one-third of global output (GDP) – with a likely similar share of environmental impacts.  Shift this supply chain and you can change the world fast.

How? By scoring your suppliers on sustainability. Corporate leaders like Walmart are beginning to rate and rank suppliers with a scorecard tracking sustainability, weighting those factors alongside price, quality and service, and shifting the mix of products that is merchandised in stores. Walmart expects to start at the company level, proceed to the category level and end up at the product level when it’s complete – from local, national and global suppliers (including the large share of China’s exports that Walmart receives).

To accomplish this massive transformation, Walmart has opened up its internal workings to “outsiders” – including its suppliers (those pursuing sustainability and those who need to get started), environmental- and socially-minded non-profits (like Environmental Defense Fund, Conservation International and NRDC), and a range of leading experts and sustainability advisors (including BluSkye Consulting and HIP’s CEO + Founder).  In conjunction with Walmart’s buyers and staff, this cross-sector group is formalizing a supplier scorecard for sustainability.

Wal-Mart SVP of Sustainability Matt Kistler is heading this ambitious global effort, and is speaking publicly about the company’s efforts.  Senior Director Rand Waddoups and his teammates are managing multiple pilot initiatives, including keeping an open dialogue with bloggers critiquing the company.

A cross-sector “sustainability working group” is building on the “sustainable value networks” Walmart launched across a dozen product categories (plus packaging) in conjunction with its strategic consulting partner BluSkye. In dairy products’ packaging, a radical new square container now holds more than 50% the milk per cubic foot than previous cartons (and is cheaper to move and transport). In the jewelry department, the Love, Earth line allows customers to track online where necklaces and bracelets were sustainably sourced, handled and sculpted.

Earlier this month in northwest Arkansas, Walmart brought together over 150 representatives of suppliers, NGOs, Walmart buyers and advisors (like HIP) to share and co-design the latest version of the sustainability scorecard for suppliers. This three-day meeting culminated in a broader awareness of the “Big 3” goals (100% renewable, clean energy; zero waste, including products and packaging; and sustainable products, benefiting society and the earth), feedback on and refinement to sustainable performance measures, and a consensus to track the full “lifecycle” of products from source to manufacturing to transport to use to recapture/re-use (or as Bill McDonough would say, “cradle to cradle”.

Now, imagine rolling a supplier scorecard out across multiple product categories – and you see how Walmart’s leadership will help change the world, and accomplish sustainable, profitable growth. By applying measures of Human Impact – less energy and climate impacts, reduced waste, lessened ecosystem impacts, closer social and community ties – suppliers will develop more sustainable products for customers to purchase, leading to a more environmentally sustainable and socially benefitical world - while at the same time increasing revenues and lowering costs for Walmart and its suppliers.  This is the essence of a HIP approach.

As a HIP customer, this means you will find more health-oriented products like Burt’s Bees personal care for your body, more eco-products like Clorox GreenWorks for your home, lighting products featuring low-usage LEDs in store displays and for purchase, and health-care innovations like the $4 generic pharmaceuticals and new financial products like a low-fee debit-card for the 10 million low-income families without a bank.

As a HIP investor, these initiatives are increasing in size and share at Walmart. The top three goals are being pursued each at the strategic, procurement, stores, and employee levels. With CEO Lee Scott leading the way – “the sustainability train has left the station, you need to be on it” – Walmart and its Board are serious about creating value for shareholders, staff and society.

All of this - the sustainability pilots, related supplier scorecards and increased transparency - is a major shift from the April 2007 HIP Scorecard (TM) that we published in Fast Company magazine (http://www.fastcompany.com/investing/21-walmart.html) [NOTE: you may need to hit reload for this link].  At that time, Walmart’s management practices and human impacts were rated on the lower end of the 21 companies evaluated, though still in a core group of industry leaders.  However,  over the past year, Walmart has continued to become more open, more systematic and ramped up increased sustainability in an increasingly comprehensive and swift manner.

And at the Walmart quarterly milestone meeting celebrating sustainability successes including Earth Month (April) record sales of sustainable products, actress Cameron Diaz, a sustainability advocate herself, encouraged all Walmart staff: “Everyone makes a difference with their purchases,” “economics alone don’t matter if you don’t have a planet,” and “This is not just a trend, but an absolute necessity,” and finally “I know you guys can save the planet!”

HIP’s July 2008 Investor Roundtable featured a mix of travel and hospitality innovators:

• Samara Diapoulos of Fairmont Hotels & Resorts shared the company’s history of pioneering green hotel management practices (and their green guide for hotels, used by Cornell’s Hospitality School), as well as the cost savings realized through increased energy efficiency and waste reduction at their properties.
• Damien Keller explained how Orchard Garden Hotel built their property to LEED new-construction certification standards which has benefited the health of their staff and guests.
• Kirsten Mecklenburg of Deloitte described the consulting giant’s efforts to reduce the impact of its client-driven travel (e.g. using Cisco’s TelePresence systems; refusing turn-down service at hotels to save energy) with its “Travel Less, Travel Green” program, which has increasing participation firmwide.

Also, please feel free to ask questions of the HIP Team and/or other participants and post below.

Since HIP’s March 2008 Investor Roundtable on Banking, we have new information to share with you - and highlight a sustainable bank’s HIP commitments:

First, two financial institutions featured in HIP’s 10 HIP Places to Park Your Cash list have since received recognition as leaders in sustainable banking:

• New Resource Bank was a featured employer in a Fortune magazine feature on Great Green Careers (“Earth friendly jobs aren’t just about organic farming and installing solar panels. Meet the carbon traders, eco-bankers and corporate climate strategists shaping the new green economy.”) New Resource Bank opened in 2006 with around $25 million in capital and now has assets of more than $130 million (Inc.com).

• ShoreBank Pacific’s was recognized by Washington CEO magazine with a Green Washington Award as the “greenest” financial organization in the state. Out of 140 applicants in 12 categories, ShoreBank Pacific was selected amongst 25 Washington other companies honored at the inaugural awards event. At the end of the first quarter of 2008, ShoreBank Pacific had accumulated earnings of $252,000 and their assets had grown by 16% in to $175 million (banking-business-review.com).

Across the Atlantic, on June 3 the Financial Times’s Sustainable Banking Awards recognized Banco Real with its Sustainable Bank of the Year Award. In 2003 the bank restructured, beginning by reformulating both its vision and mission statement for banking in the 21st century.

Ever since, Banco Real has become an industry leader in sustainability and performance by bringing all stakeholders into focus and innovating to solve human problems. Banco Real has a diverse leadership that represents the clients they serve and they are actively tapping into emerging markets by offering a variety of products to serve micro-enterprise and low-income borrowers.

Banco Real made over 70,000 microfinance loans to small businesses across 200 municipalities last year, and established sustainability programs in each and every business unit (Ethical Corporation).

As the CEO reports, this approach has already paid dividends:

“When we initiated the process of inserting sustainability into our businesses, our aim was to build a new bank for a new society, and reinforce the role of banks generally as agents for economic and social development.

We began by substantially reducing the environmental impact of our activities and looking at our products and services as a means of transforming society positively …

We have also started to share our knowledge with clients and suppliers in a structured manner to shorten the path to be taken by companies towards sustainable goals.

Even though it is difficult to objectively prove the relationship between sustainability and financial results, our results have improved year after year, and our performance has strengthened the bond with our clients and other stakeholders.”

Visit Banco Real’s website to download their annual report.

ATTEND: We invite you to join HIP for our next Investor Roundtable on July 8th, “HIP Your Trip: Eco-Travel and Hospitality” (click here to register).

SUBSCRIBE: Also, subscribe to our HIP Perspectives feed, which features topical industry research and HIP analysis as well as notable HIP developments.

FEEDBACK: What banking practices do you think are most HIP? What other banks in the world are HIP? Which criteria are most important to you in parking your cash? Join the discussion below.

• Bob Okunski of Sunpower (Sunpowercorp.com) spoke about the solar pioneer’s technology advances and their efforts to cut the costs of solar power, while enumerating challenges of the current policy landscape.
Jay Rooke explained how TerraPass (Terrapass.com) takes a grassroots approach to cutting carbon emissions, and highlighted its innovative methane capture methods at local dairy farms.
Josh Becker, co-founder of New Cycle Capital (Newcyclecapital.com), an early-stage venture capital firm, explained some of the firm’s criteria for seeking out promising ventures within the “extended green economy”.

Entrepreneurs, industry experts, investors and students networked prior to the presentations - and engaged in an energetic discussion during the Q&A session.

The discussion highlighted innovative new initiatives (e.g. 1 Block Off the Grid -www.1bog.org), emerging technologies within the renewable energy space, and the policy debates currently consuming the renewable energy community, such as investment tax credits.

Attendee Kathy Brozek enthused,

“It was a perfect mix of presentations, data analysis, discussion and networking…(with) a stimulating mix of attendees.”

Listen to the presentation and see HIP’s PowerPoint (with audio from the roundtable):

Register for July’s Roundtable: HIP Your Trip - HIP Travel and Hospitality!

To learn more about HIP Investor Services, contact Jessica Skylar at Jessica@HIPInvestor.com.

Ask Your Questions in the ‘comments’ section below! The HIP team will respond over the next month to attendees’ and subscribers’ inquiries.

HIP Investor Inc.’s CEO + Founder R. Paul Herman was interviewed at the Sustainable Brands 2008 conference in Monterey, California - where he also presented on “Measuring Sustainability” to a crowd of 100-plus corporate, entrepreneurial and media attendees.

Paul was interviewed about the HIP framework, scorecard, and how it can be used by investors and capital markets - as well as by companies seeking to be a good investment, since the majority of invididual investors say they want to “do good” and “make money” at the same time.

 ”What is a HIP Investor?” - Paul answers in less than a minute…