The Business Ethics Blog

Here’s a story for those of you who dislike Wal-Mart, and who have thought to yourselves, “if only they could use their power for good, instead of for evil!” From yesterday’s NY Times: Wal-Mart Puts Some Muscle Behind Power-Sipping Bulbs

…the long-lasting, swirl-shaped light bulbs known as compact fluorescent lamps are to the nation’s energy problem what vegetables are to its obesity epidemic: a near perfect answer, if only Americans could be persuaded to swallow them.
But now Wal-Mart Stores, the giant discount retailer, is determined to push them into at least 100 million homes. And its ambitions extend even further, spurred by a sweeping commitment from its chief executive, H. Lee Scott Jr., to reduce energy use across the country, a move that could also improve Wal-Mart’s appeal to the more affluent consumers the chain must win over to keep growing in the United States.

For those of you to whom Wal-Mart is a symbol of unmitigated corporate evil, this story must be mightily confusing. Wal-Mart doing something good?

Two themes are worth considering, here.

The first theme is Wal-Mart’s attempt to reposition itself as a leader in ethics, social & environmental responsibility, etc. Apparently they’re tired of being the bad boy of retailing:

More than a year ago, Mr. Scott, the company’s chief executive, began reaching out to some of environmental groups, telling them that Wal-Mart, long regarded as an environmental offender, wanted to become a leader on issues like fuel efficiency and greenhouse gas emissions.

Clearly, Wal-Mart has the organizational wherewithal, and the cash, to implement big changes. And there’s nothing in Wal-Mart’s business model that says it can’t be an environmental leader. Of course, selling a hundred million energy-efficient bulbs doesn’t turn Wal-Mart into an enviro-saint; there are doubtless other issues it needs to work on. But it apparently has the will, and is clearing beginning to find the ways. (See also my prediction about Wal-Mart from back in March.)

The second theme is Wal-Mart’s enormous power. We might usefully distinguish 3 kinds of power Wal-Mart has. The first lies in its own size, organizational capacity, & cash-flow. When Wal-Mart wants something, it’s got the resources to make it happen. Even if Wal-March changes no one’s light-bulb purchases but its own (for over a thousand stores in the U.S. alone), that’s still going to have a huge impact. The second lies in its access to the eyes & minds of gazillions of consumers: advertising energy-efficient bulbs on the end of an aisle at Wal-Mart is probably more effective marketing than a 30-second commercial during the Superbowl. This means that Wal-Mart has the power to influence people’s thinking. (Which do you think is more effective: an aisle-end display at Wal-Mart, or endless Saturday-morning public service announcements about hte importance of turning off light-switches?) The third is its power as a business partner. When Wal-Mart sets its mind to something, other key players are pretty much bound to come along for the ride:

In a December 2005 meeting with executives from General Electric, Wal-Mart’s largest bulb supplier, “the message from G.E. was, ‘Don’t go too fast. We have all these plants that produce traditional bulbs,’ ” said one person involved with the issue, who spoke on condition of anonymity because of an agreement not to speak publicly about the negotiations.
The response from the Wal-Mart buyer was blunt, this person said. “We are going there,” the buyer said. “You decide if you are coming with us.”
In the end, as Wal-Mart suppliers generally do, the bulb makers decided to come with the company.

Yikes. Not a lot of companies can get away with being snippy to G.E. (the world’s second-largest company). When you see that kind of weight being thrown around, it’s pretty hard not to agree that it’s being done in service of something like energy efficiency. Sure, Wal-Mart probably wouldn’t be doing this if they thought they’d lose money at it, but why should they? And besides, there are lots of products to make money on. Energy-efficient lightbulbs? We could do a lot worse.