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Wal-Mart announced yesterday that by May 2008 it plans to only sell concentrated products in the liquid laundry detergent category in its U.S. Wal-Mart Stores and Sam's Clubs.

According to a statement released by the company, “The commitment will save more than 400 million gallons of water, more than 95 million pounds of plastic resin and more than 125 million pounds of cardboard. For water alone, this is the equivalent of 100 million individual showers. Since approximately 25 percent of the liquid laundry detergent sold in the United States is sold through Wal-Mart stores, the potential savings in natural resources through the entire retail industry could be four times as much.

“The technology to concentrate liquid detergent has been available for more than a decade, but was little used due to lack of interest in commercialization. Partnering closely with its suppliers, Wal-Mart made the decision to offer only concentrated detergent, and leading manufacturers began transforming their facilities to accommodate this request, leaving less capacity for old-fashioned detergents with high water content. This encouraged other retailers to move toward selling only the concentrated version of liquid detergents.”

The announcement was made by CEO Lee Scott at the annual meeting of the Clinton Global Initiative in New York City. "People expect businesses to step up and work together to help solve the big challenges facing the world," Scott told the conference. "What we have done is work with suppliers to take water -- one of our most precious natural resources -- out of the liquid laundry detergent on our shelves. We simply don't want our customers to have to choose between a product they can afford and an environmentally friendly product.”

The announcement came on the heels of a terrific column in the New York Times by Thomas L. Friedman in which he looks at Wal-Mart’s environmental strategies, and suggests that the retailer is far ahead of both the American and Chinese governments.

“The ‘Wal-Mart environmental moment’ starts with the C.E.O. adopting a green branding strategy as a purely defensive, public relations, marketing move,” Friedman writes. “Then an accident happens — someone in the shipping department takes it seriously and comes up with a new way to package the latest product and saves $100,000. This gets the attention of the C.E.O., who turns to his P.R. adviser and says, ‘Well, isn’t that interesting? Get me a sustainability expert. Let’s do this some more.’

“The company then hires a sustainability officer, and he starts showing how green design, manufacturing and materials can save money in other areas. Then the really smart C.E.O.’s realize they have to become their own C.E.O. — chief energy officer — and they start demanding that energy efficiency become core to everything the company does, from how its employees travel to how its products are manufactured.”

Friedman’s premise, in essence, is that Wal-Mart has become a leader in this area by actually daring to lead – and that this gives it a kind of moral authority as well as long-term and short-term financial benefits that will give it advantages over its competitors. And, he writes, this is the same sort of approach being taken by the state of California, as it has embraced a “real carbon-reducing strategy” beyond that being adopted by the federal government.

“At such a key time, if the U.S. government adopted a real carbon-reducing strategy, as California and Wal-Mart have, rather than the obfuscations of the Bush team, it would have a huge impact on China and only trigger more innovation in America,” Friedman writes, suggesting that “Leadership is about ‘follow me’ not ‘after you.’ Getting our national climate regulations in order is necessary, but it will not be sufficient to move China. We have to show them what Wal-Mart is showing its competitors — that green is not just right for the world, it is better, more profitable, more healthy, more innovative, more efficient, more successful. If Wal-Mart can lead, and California can lead, why can’t America?”
KC's View:
Wal-Mart’s decision about selling only concentrated detergent is the definition of leadership – and not just in terms of the environment. Yes, it will save water, plastic resin and cardboard. But it also does something else very important – it eliminates SKUs in a crowded department, which allows Wal-Mart to be both environmentally conscious and even more efficient.

As for Tom Friedman, he is consistently one of the most provocative pundits out there, and whether one agrees with his politics or not, I think he’s right on the nature of environmental leadership. And Wal-Mart is a great example.