Warm and Fuzzy Wal-Mart?

CEO H. Lee Scott rolls out eco-friendly sustainability plans, cheap prescription drugs, and Al Gore.

Last week, movie moguls Bob and Harvey Weinstein, MTV creator Robert Pittman, talk show host Charlie Rose, NBC Universal Chief Executive Bob Wright, and MTV creator Robert Pittman hosted a lavish bash at New York's Rainbow Room, the sort of event that usually celebrates good box office or a good cause. Waiters served organic and fair-trade fare, including New York grass-fed beef. The favorite rockers of aging hippies everywhere, The Eagles, provided the night's musical entertainment.

The guest of honor? Wal-Mart CEO H. Lee Scott, who was there to receive an award for "his commitment to environmental sustainability."

H. Lee Scott, fêted by the entertainment industry's elite?  For his "environmental sustainability?"  What's wrong with this picture?

"I've never heard of another meeting like this," Wal-Mart analyst Mark Husson at HSBC Securities in New York told the L.A. Times, "Lee Scott in the midst of the liberal establishment? It's a very rare thing."

Scott seems to have lots of lefty friends these days. Earlier this month, Wal-Mart, heretofore mostly known in music circles for selling bowdlerized versions of CDs with racy lyrics, paired up with MTV for a huge, interactive Times Square exhibit called "Everyday Green," running through November 11. In a statement released by MTV, Wal-Mart marketing vice president John Fleming heaped praise on the company's new pal: "MTV connects with the youth generation in a deep, interactive way unlike any other company which makes them the perfect partner for this unique, educational exhibit. At Wal-Mart, we've established simple and straightforward environmental goals to sustain our environment and through the 'Everyday Green' exhibit MTV will lend their voice to help share our goals with young people so that together we can make an enormous difference for the future of our planet."

The exhibit features a wall of eco-friendly light bulbs powered by stationary bikes, a pitch for reusable shopping bags and, oddly, a feng shui demonstration ("this display of bamboo plants brighten [sic]  up the room and keep you alive too! See how plants filter harmful substances, create oxygen and reduce stress levels.") Not what one expects from Wal-Mart, whose TV advertising usually only boasts "everyday low prices."

Last October, Scott announced a formal goal to run Wal-Mart on 100 percent renewable energy and to produce zero waste.  Initially, the plan drew raised eyebrows from green activists, and mumbling to the effect of "We'll believe it when we see it." But in the year since the announcement, Scott has gained converts, both for the real progress Wal-Mart has made, and for the specific, realistic goals he's set out for the next few years.

Here's how Scott describes his plans to give the retail giant a green makeover:

We will be investing approximately $500 million annually in technologies and innovation to do the following: Reducing greenhouse gases at our existing store base around the world by 20 percent over the next seven years. Designing and opening a viable store prototype that is 30 percent more efficient and will produce up to 30 percent fewer greenhouse-gas emissions within the next four years. Reducing solid waste from U.S. stores by 25 percent in the next three years. Increasing our truck fleet efficiency by 25 percent over the next three years, and doubling it within 10 years. If implemented across our entire fleet by 2015, this would amount to savings of more than $310 million a year….

As I got exposed to the opportunities we had to reduce our impact, it became even more exciting than I had originally thought: It is clearly good for our business. We are taking costs out and finding we are doing things we just do not need to do, whether it be in packaging, or energy usage, or the kind of equipment we buy for refrigeration in our stores, that there are a number of decisions we can make that are great for sustainability and great for bottom-line profit.

It's also the little things that are winning people over:

· Wal-Mart is switching to energy-efficient light bulbs in each of the countless ceiling fans in its stores. Andrew Ruben, the company's vice president of strategy and sustainability says  the change will save Wal-Mart will save about $7 million per year -- peanuts in real dollars, but worth quite a bit more in PR.

· Wal-Mart issued a statement supporting caps on carbon emissions last year.

· Wal-Mart has also doubled its stock of organic food and is on track to become the nation's biggest supplier of organic products. Last year, the retailer started phasing in organic cotton and phasing out petroleum-based based plastic packaging, as well.

The softening of Wal-Mart's image goes beyond being eco-friendly. The Bentonville, Arkansas-based behemoth in the process of implementing its plan to offer dozens of prescription drugs for a $4 co-pay in 15 states, and plans to make cheaper health care available to Wal-Mart employees -- a frequent sore spot with the store's critics.

Wal-Mart's also venturing out of Red America: For the first time, the company's annual meeting for financial analysts and investors was held outside of Scott's beloved Arkansas, just across the river from Manhattan, in Teaneck, NJ.

Last summer, Al Gore even cozied up to the retailer, appearing in Bentonville to give a well-received talk--and offer some advice: "Following through [on your environmental goals] is the single most important thing that can be done in this country to transform the relationship between NGOs and business," he said, explaining that critics will otherwise be able to say, "'See there, I told you they weren't serious.'"

Of course, not everyone is convinced that Wal-Mart has turned into a big green teddy bear. Pat Purcell, coordinator of Wal-Mart Free NYC, scolded: "The only 'green' Wal-Mart executives care about is the money in their pockets," and pointed to $5 million worth of fines Wal-Mart has paid since 2003 to state and federal environmental agencies.

Others skeptics have been more direct. Stacy Mitchell of the Institute for Local Self-Reliance and author of a forthcoming book about big box stores said, rather bluntly, "The best thing for the environment would be if Wal-Mart stopped building stores," She added, "What is truly sustainable is local sourcing. Of course we will always have trade, but sourcing locally cuts down dramatically on fuel and energy use."

But Wal-Mart isn't likely to stop expanding. The week of Scott's "zero waste" announcement, the company also announced plans to build more than 60 million square feet of new retail space.

Even so, there's no question that Wal-Mart is making an effort to be nice to people who think about "social justice" and environmental issues.  What inspired those gestures?  Some say it's the company's formidable new presence in Washington circles.

Scott recently hired Democratic operative Leslie Dach away from the Edelman public relations firm. Advertising Age reports that Dach, who helped Clinton through the impeachment process, will earn up to $3 million over the next two years to manage "one of the most ambitious corporate-image makeovers ever."  One upcoming TV slogan, for example, advertises how Wal-Mart's low prices buy a "whole bunch of freedom." Wal-Mart may have decided to beef up its public image campaign and D.C. presence primarily in response to recent attacks on various social responsibility measures, but Wal-Mart watchers wonder if there are ulterior motives as well--possible future negotiations about trade laws, or to ward off trouble with state and local governments.  

Regardless of intentions, though, Wal-Mart is rapidly becoming the latest company to collapse the distinction between virtue and profit, increasingly common in the age of corporate environmentalism. Lee Scott may be seem like an unlikely heir to the compassionate capitalism corporate philosophy of John Mackey of Whole Foods, but Scott knows that what Mackey wrote in Reason's October 2005 issue is true: "There can be little doubt that a certain amount of corporate philanthropy is simply good business and works for the long-term benefit of the investors."

A few days after the New York gala, on October 24, rock legends the Eagles signed on to a "long-term strategic deal" with Wal-Mart. The statement was filled with references to Wal-Mart's goals to "be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain the earth's resources and environment" and noted that the "Eagles were attracted to a Wal-Mart partnership because of the retailer's drive to take a lead in sustainability and make a difference for future generations."

The Eagles aren't exactly "all alone against the world" in that alliance.  From MTV to the Weinsteins, from Charlie Rose to Leslie Dach to even Al Gore --an all-star roster of elites are rolling up their sleeves, slapping a happy face to their lapels, and welcoming Wal-Mart to the ranks of the do-gooders.

Katherine Mangu-Ward is an associate editor at Reason magazine.