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The Financial Times reports this morning that Walmart plans to use a global sustainability summit in Beijing to inform its suppliers that it will use its market power to raise standards throughout its supply chain – especially in China, where Walmart does a significant amount of sourcing, but where concerns about product safety have emerged against a series of scandals.

Walmart reportedly has more than 60,000 suppliers worldwide and sources roughly $9 billion worth of goods directly from China each year.

According to the story, Walmart CEO Lee Scott will “set out a range of objectives for the company’s supply chain and for its Chinese retail operations, which will include targets for the reduction of water and energy usage, reductions in packaging, and commitments to develop more sustainable products … The retailer will also be promoting a new ‘Green Supply Chain Initiative’ being led by the Environmental Defense Fund (EDF), a non-profit group that has worked with Wal-Mart on sustainability issues in the US. The project is aimed at working with individual suppliers on energy saving and other issues, and is expected to extend to other US and European retailers, covering another 20,000 factories.”

Among the industry leaders attending the summit, according to FT, are “AG Lafley, chief executive of Procter & Gamble, Fred Smith, head of FedEx, and Yuanqing Yang, chairman of Lenovo, who are keen to adopt a similar approach. Executives from Kimberly-Clark, Coca-Cola and Newell Rubbermaid will also be on hand for the most ambitious private sector drive yet to reduce waste and pollution in China’s export-focused manufacturing industries.”

The New York Times writes this morning that “the changes signal a move on the part of Wal-Mart, the world’s largest retailer, away from intermittent transactions with many suppliers toward longer-term arrangements with a smaller group of manufacturers. Wal-Mart is betting that using its buying power this way can help keep prices low even as it keeps a closer eye on its suppliers.

“Wal-Mart, long criticized for its treatment of workers in the United States and its ostensible willingness to overlook violations abroad, has in recent years offered a series of environmental and labor initiatives … By next year, Wal-Mart will start keeping close track of the factories from which its products originate, even if they pass through many hands. By 2012, Wal-Mart will require suppliers to source 95 percent of their production from factories that receive the highest ratings in audits of environmental and social practices. The agreement includes a ban on child and forced labor and pay below the local minimum wage.”

Reuters notes that CEO Scott conceded that these changes could mean smaller margins for Walmart, but that he was willing to accept that possibility.

KC's View:
I read stories like these in the Financial Times and the New York Times and I cannot help but get the feeling that while governments dither, react to the crisis of the day and put out fires, companies like Walmart and Procter & Gamble are simply moving ahead to deal with real priorities in tangible ways.