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Corporate Climate and Energy liability: markets, regulations and…… Wal-Mart…

October 6, 2009

Australian business has had their eyes on Government-led greenhouse gas emissions pricing, greenhouse gas reporting obligations, energy reporting obligations, and other measures which conspire to drive corporations to act on their exposure in this area.

Now, one more driver has entered the mix – one that is potentially more pervasive through the manufacturing and services supply-chain. A few months ago Wal-Mart announced its Sustainable Product Index, an attempt to measure and inform on the sustainability performance of each of its suppliers and products.

Wal-Mart is asking 15 questions around the themes of Energy and Climate, Material Efficiency, product sourcing, and Responsible and Ethical Production. Wal-Mart has $100bn in annual sales, over 3800 outlets, 100,000 suppliers around the world, and serves 49 million customers weekly. If Wal-Mart starts asking suppliers questions, you can be sure that, with their buying power and market penetration, all suppliers are going to sit up and take notice.

While Wal-Mart has yet to enter the Australian market place, it has in the past been reported to be sniffing around Woolworths and Coles. Where Wal-Mart goes, other discount retailers will likely follow. In today’s inter-woven global supply chains, Australia cannot be insulated from this development.

While many companies are already on the path to engaging in core issues relating to climate change and energy, more and more will have to move to address the following questions:

“Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions

1. Have you measured your corporate greenhouse gas emissions?

2. Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?

3. What is your total annual greenhouse gas emissions reported in the most recent year measured?

4. Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets? “

While the nature use and communication of the data that will come from this process has not been completely resolved, it is clear that both Wal-Mart and their clientele will have access to enhanced and comparable information of the sustainability performance of each and every product.

This is a stakeholder asking questions about greenhouse gas performance over which no Australian company, large or small, will have much leverage to negotiate terms with:  A potent force.

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