The first part of this series of blogs outlined three three drivers for stakeholder engagement, self-interest, enlightened self-interest and altruism. In this blog we will look at enlightened self-interest using Walmart for illustration. Such companies want to make money and be more sustainable. They attempt to operate in ways that are not just financially sustainable, but also factor in the well-being of others and care of the environment. They look for synergy in these aspirations.
The sweet spot
The emergence of sustainability as a major driver of business decision making is now undeniable. Companies that attempt to privilege their own self-interest over broader societal and environmental concerns will become increasingly irrelevant. Smart companies pursue the “sweet spot”, of synergy between self-interest and creating value for society and the environment. In the sweet spot self-interest becomes meritorious.
First some disclosure: I live in New Zealand – we have no Walmart stores so I rely in the media for my knowledge of Walmart. Much has been written about former CEO Lee Scott’s crucible experience in Hurricane Katrina and the company’s work to rectify negative publicity. Given its sheer size, Walmart still attracts negative publicity, but there is an increasing amount of evidence that they are a great example of enlightened self-interest.
In part one of this series, factors that indicate enlightened self-interest are:
- engagement focus
- creating value chains
- sustainability aspirations
- values driven decision-making
And as they embed these practices evidence of altruism starts to emerge and the organisation becomes more driven by the greater-good. Here are some examples. They explicitly illustrate the creation of value chains and sustainability aspirations, and we can infer they require an engagement focus and values decision decision-making.
Creating shared value with suppliers
In each trans-pacific journey from China to Walmart, the massive Emma Mersk transports 15,000 containers. With 60,000 suppliers, it must be difficult for Walmart to achieve intimate engagement with each, but the company can have a huge influence in ramping up sustainability expectations. With larger suppliers, such as Peterbilt, Walmart are working closely in pursuit of its sustainability aspirations. Peterbilt recently delivered eight hybrid trucks to help Walmart achieve its goal of 100% increased efficiency by 2015 from a 2005 baseline. In this video Hunter Lovins, of Natural Capitalism Solutions, states “Walmart may now be the centre of environmental responsibility on the planet”. By combining improved aerodynamics, auxiliary power units capturing energy from breaking, improved rolling resistance in tyres and improved load management Walmart has already achieved 60% reductions. Walmart’s aspirations reduce costs and pollution, delivering on self-interest and benefits for customers, suppliers and the environment.
Learning from criticism
If Walmart was motivated solely by self-interest, it would choose suppliers based mainly on cost. In a recently announced initiative, the company revealed plans to double what it buys from businesses owned by women by 2016. The initiative will support women’s economic development both in the U.S. and other supplier nations and promote greater gender and minority presence through the entire value chain. Earlier this year, a class-action lawsuit by some of Walmart’s female workers was dismissed by the US supreme court. Whether or not these issues are linked indicates that Walmart continues to respond to and learn from public perception.
Public health – towards altruism
Walmart’s recent initiative to require suppliers to reduce sugar and sodium in foods, and to eliminate transfats is another great example of enlightened self-interest – the company has been criticised for being part of the American obesity culture. This initiative has potential to generate huge good, as Walmart supplies 25% of the nations food. Those suppliers and others will now be rethinking their role in public health. As Walmart ventures more into this territory, is it on the cusp of altruism? I welcome your thoughts.