Wal-Mart needs to appreciate an observation made by Napoleon: “Never interrupt your enemy when he is making a mistake.”
At the recent U.S. Conference of Mayors Climate Protection Summit, Wal-Mart announced the company was forming a partnership with the Clinton Climate Initiative to develop and sell energy saving products for lower prices to cities. This announcement is further evidence that Wal-Mart’s Corporate Social Responsibility (CSR) policies are damaging its business.
Wal-Mart believes it can use the concern about global warming to improve its public image. Accordingly, the company is disclosing its estimated environmental impact and promoting its actions to reduce its carbon footprint. By following this model of a CSR company, Wal-Mart hopes to earn public credit by playing an active role in being part of the “solution”.
The problem for Wal-Mart is its CSR strategy has blinded it from the reality that global warming alarmism and subsequent regulation is a colossal business risk. In the short term, the company will get some positive headlines for being “green” but in the long term, the impact of high-energy prices from global warming regulation will harm its business.
Unbelievably, Wal-Mart’s CSR strategy includes lobbying to increase its operating costs. Wal-Mart is demonstrating its “responsibility” in fighting global warming by supporting a cap-and-trade regulatory scheme to reduce carbon dioxide emissions.
In 2006, Wal-Mart joined a number of other companies in a Senate hearing and urged Congress to establish mandatory emissions on carbon dioxide. At the hearing, Wal-Mart’s vice president of corporate strategy and sustainability said, “Because we see climate as a critical social issue and because we believe that greenhouse gases can be cost-effectively reduced throughout the economy, Wal-Mart would accept a mandatory cap-and-trade system to control greenhouse gas emissions.”
Since fossil fuels account for over 80 percent of U.S. energy supplies, cap-and-trade will drive energy prices significantly higher.
Because of its mammoth size, energy is a major driver of Wal-Mart’s operating expenses. It operates one of the largest truck fleets in the nation. In fact, according to its website, Wal-Mart owns almost 7,000 trucks that drive over 870,000,000 miles a year and consume an estimated 134,158,000 gallons of diesel fuel.
In addition, Wal-Mart is the largest private consumer of electricity in the U.S. Clearly, even a modest increase in energy prices will dramatically increase the operating cost of its business.