Walmart’s Supplier Sustainability Index: Risky Business?

Walmart’s announcement about its new supplier sustainability index has generated publicity at a scale that is fitting for the world’s largest retailer.  News media, green groups and manufacturers have published numerous articles and discussions about the index – so much so that there is no need for us to post a link here.  The proposed program is grand and sweeping as it is intended to catalyze dramatic change in business frameworks.

Elm has worked with trade associations in efforts to obtain, aggregate and make available certain types of environmental compliance and sustainability information in a manner similar to what Walmart envisions.  These efforts were much smaller in size and scope than Walmart’s yet they provide relevant insight into hidden risks.

From our experience, some obstacles to full implementation of the program include:

–       Potential anti-trust implications from information sharing between competitors

–       Concerns from suppliers about disclosure of certain information to their competitors

–       Potential legal liability stemming from the index information – both for Walmart and the suppliers providing the information.

Suppliers do not have much time to evaluate the potential risks they face in participating in the index (the response to the initial questionnaire is due October 1, 2009).  Therefore, suppliers will need to assess their views of these  – and other – risks in short order to determine if continuing their relationship with Walmart outweighs potential downsides.

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