In June, the 2010 Corporate Eco Forum Annual Meeting drew more than 200 member executives from 18 industries to the Palace Hotel in San Francisco. Participants shared best and next practices, discussed challenges, networked, collaborated and drew on each other’s enthusiasm to bring new ideas and opportunities to their respective organizations.

Insights 2010 is a CEF members-only report which summarizes the key takeaways from the Annual Meeting, including highlights in the areas of supply chain, water assessment, green IT, buildings and employee and customer engagement. The excerpt below shares knowledge on lifecycle assessment.

LIFECYCLE ASSESSMENT TAKEAWAYS

• Understand why you are performing a lifecycle assessment, or LCA.

• Know that insight is often the most valuable result of the process.

• Beware of using LCA as a point of comparison for products.

• Choose an LCA tool but be cautious of cost and complexity

• Temper expectations of your suppliers’ maturity.

• Develop a basic competency.

Understand why you are performing an LCA. An LCA  is a tool designed to help companies analyze product development and process design, understand environmental risks and target areas for improvement. It can be a costly exercise, so you have to know what decisions you are trying to make. For example, many customers request LCA data without a specific use in mind (and with no interest in paying for it). For some members, it is policy to say no to a customer request for this information.  This decision has actually brought members closer to the customer by initiating a dialogue that leads to joint exploration of the problems the customer is trying to solve.

Know that insight is often the most valuable result of the process. Sometimes the insight is as simple as learning that your footprint’s biggest impact is not where you thought it was. Or it can shine a light on trade-offs in materials selection. As one member described it, “An LCA is simply a tool to help determine where a certain element is used the most in a process and where to focus attention for improvement.”

Beware of using LCA as a point of comparison for products. Comparing products on LCA performance is  inaccurate at best. There are no standardized protocols for performing an LCA. An assessment performed with even slightly different assumptions—about product use, raw material inputs and so on—can result in very different numbers. “Almost all the tools that are being used today have an uncertainty or a variability in the data that can be at least plus or minus 50 percent,” said one member. “And it is probably more [variable], depending on what assumptions you made on the scope and the data set you are actually using.”

Choose an LCA tool but be cautious of cost and complexity. Many large companies are using LCA tools, but these tools can be very expensive and complex. Three of the leading LCA software packages are PRé’s SimaPro, PE International’s GaBi and Ecobilan’s TEAM. There are also specialized LCA tools and consultancies for specific LCA needs such as carbon footprinting. Transparency with regard to data collection is important when choosing an LCA tool. Choose software that will provide data on what is being analyzed and the extent to which there may be uncertainty in the data.

Temper expectations of your suppliers’ maturity. Don’t fool yourself into believing that your suppliers are currently capable of performing a lifecycle assessment. “Seventy-five percent of your supply chain probably cannot do it, and many have no expectation to do so within the next 12 months,” noted one participant. Be realistic, and engage your suppliers with you in developing LCA expertise.

Develop a basic competency. Start building your knowledge now. If you can’t measure your emissions and water or haven’t determined where your biggest ecoimpacts are, as one member said, “This is a wake-up call to get started. It’s not going to go away, it’s going to get harder.” Now is the time to get involved in the creation of standards. The Sustainability Consortium—backed by Walmart and about 50 other major companies—is one major initiative in which participants are working to develop transparent methodologies, tools and strategies for assessment of lifecycle attributes.

To find out more about the Insights 2010 report, email Jeff at jeff@corporateecoforum.com.

More than 200 executives and sustainability industry leaders filled the Samsung Hall at the Asian Art Museum in San Francisco to honor Walmart Brazil and CEO Héctor Núñez with the C.K. Prahalad Award for Global Sustainability Leadership. Members of C.K.’s family, including his wife, daughter, son-in-law and grandson were in attendance at the Corporate Eco Forum’s Gala Dinner to witness the inaugural award to recognize Walmart Brazil’s historic work to preserve the Amazon rainforest.

“Nowadays sustainability is not just mandatory – it is crucial,” said Núñez as he accepted the award on behalf of the 80,000 Walmart Brazil employees who took his vision “from a PowerPoint presentation” to reality.

In June of 2009, Walmart Brazil convened a Sustainability Summit to introduce new mandates across their supply chain to protect the Amazon. At the Summit, Walmart announced historic plans to address some of the thorniest environmental and social problems in the world. Walmart Brazil will now ensure that its supply chain uses: no companies that employ slave labor; no soybeans sourced from illegally deforested areas; and no beef sourced from any newly cleared Amazonian land. The new mandates also call for a 70 percent reduction in phosphates in detergent and a 50 percent reduction in plastic bags by 2013.

Walmart Brazil recruited the presidents of the Brazilian operations of twenty major suppliers, including Cargill, Johnson & Johnson, Kimberly Clark, The Coca-Cola Company, 3M, Diageo, P&G, and Sara Lee, to sign an agreement on-stage at the Summit to meet these goals. The Brazilian Minister of the Environment and the head of Greenpeace in Brazil both spoke at the Summit and congratulated Walmart Brazil for its aggressive leadership.

“The planet works as a physical and biological system – and the heart of that system is the Amazon,” said Tom Lovejoy, the world-renowned conservation biologist who presented Núñez with the award. Lovejoy applauded Walmart Brazil’s work to curb the two biggest drivers of Amazonian deforestation -  soy and cattle operations. Deforestation accounts for approximately 70 percent  of Brazil’s greenhouse gas emissions.

“By taking extraordinary action to protect the Amazon, Walmart Brazil and Héctor Núñez have carved out a place in history as both pioneering environmentalists and savvy business strategists,” said MR Rangaswami, founder of the Corporate Eco Forum. “We created the Prahalad Award to honor the companies and individuals who best demonstrate that sustainability is the key driver of innovation. We can and must do a better job of integrating the principles of sustainability into core business strategy and Walmart Brazil, under Héctor Núñez’s leadership, has proven that it is not only possible, it is also smart business.”

Núñez closed his remarks by urging his fellow corporate executives to drive progress because government solutions will take a long time to enact.

“We need to act fast to prevent greater impact from climate change… Walmart is not looking back… We’re looking forward to a better future.”

Corporate sustainability work is not for the faint of heart – nor the attention-span challenged. Elizabeth Sturcken understands. After 13 years at Environmental Defense Fund (EDF), Sturcken has experienced the highs, lows and protracted timelines involved in creating environmentally-responsible programs at major corporations.

Called “America’s most economically literate green campaigners” by The Economist, EDF doesn’t take money from the companies with whom it works, but expects them to work together to create real and meaningful environmental results.

For the past several years, EDF worked closely with Walmart to develop its Greenhouse Gas Supplier Innovation Program. The groundbreaking program aims to eliminate 20 million metric tons of greenhouse gases from the lifecycle of Walmart’s products and its 100,000-member supply chain by helping suppliers reduce carbon emissions, costs, and – eventually – the environmental impact of their products when they reach consumers.

Greening the supply chain represents a significant opportunity for many major corporations. In fact, Ford, Kaiser Permanente and Procter & Gamble have debuted their own sustainable supply chain initiatives in the past month.

To learn more about the behind-the-scenes workings involved in developing a sustainable supplier program, The EcoInnovator spoke with Sturcken, Managing Director of Corporate Partnerships at EDF, about the unique value of the supply chain framework, the challenges and surprises of collaborating with Walmart, and her advice for other companies interested in executing a major sustainability initiative.

The Eco Innovator: What is significant about Walmart’s supply chain program?

Elizabeth Sturcken: The Greenhouse Gas Supplier Innovation Program is something only Walmart can do. It is innovative and bold because if you look at the big picture of Walmart’s world, and where the company has the biggest potential for positive impact, it is in its supply chain. It isn’t that Walmart doesn’t need to focus on reducing its own operational impact, but there is a limit to what they can do in terms of becoming more efficient with their fleet and stores. The supply chain represents a really big opportunity.

The program is also quite smart in its approach. It prioritizes the biggest pollution reduction opportunities first. We used a model to estimate which Walmart products have the most carbon embedded in their lifecycles. After identifying the footprint of each product, we overlaid sales data to prioritize the product categories that would deliver the biggest emission-reduction impact.

It is impressive that when a small packaging change on a single product is combined with “Walmart scale,” it is possible to have a really big impact on the global market because the change ripples out to other retailers and similarly packaged products.

The supply chain program represents a giant step forward. It will make a significant impact on carbon reduction today without having to wait for legislative support. When the current U.S. presidential administration took office, I thought green policies would rise to the top of the national agenda. In fact, I believed that in many ways, corporate efforts would become less important.

But as the U.S. continues to struggle with climate policy, I realize that corporate initiatives are needed more than ever. We need to act now if we hope to achieve the emission reductions scientists say are needed to avoid catastrophic climate change.

The good news is that Walmart’s supplier program is just one example of how there are many opportunities for companies to enact sustainable initiatives in a “business positive” way. The changes enacted will not just benefit the environment; they are good for the company, its suppliers and its customers. Clearly, the program delivers wins up and down the value chain.

The Eco-I: How did the EDF become involved in Walmart’s climate strategy?

ES: The EDF and Walmart began to talk about sustainability in 2005.  We emphasized the need for Walmart to make a climate commitment and we stressed our willingness to be a part of the process and help shape the company’s climate goals.

Contrary to what its size might indicate, Walmart is a very fast moving company. We quickly realized that EDF needed to be in the room when environmental discussions took place. We then placed two EDF staff on the ground in Bentonville, Arkansas – EDF is still the only environmental group with an office in the city – so that we could be at the table when decisions were made.

The Eco-I: What was the genesis of the supplier program?

ES: In October 2005, CEO Lee Scott made a speech on 21st Century leadership. In the address, Scott laid out three aspirational goals for Walmart:  Zero waste, self-sustainable products and 100 percent renewable energy. The task then became to find the interim goals and action plans that would bring these goals to reality.

However, conspicuously absent from Walmart’s list of targets was an overall climate goal. The company had created goals for its fleet and operations, but not an overall carbon reduction commitment.  (Earlier this month, Walmart issued its most recent sustainability report which detailed the company’s sustainability progress on a variety of fronts.)

Walmart’s challenge – one shared by most companies – was that as the company grew, its carbon footprint grew. Few executives want to do anything to hinder growth. So it became critical to understand how to decouple growth from carbon emissions.

It was around this time that Walmart had an “aha moment.” The company realized that whatever it did internally to reduce emissions was going to have a miniscule impact when compared to what it could do by engaging its supply chain. Walmart realized that if it shared all the learning it had absorbed while optimizing its own operations, it could help its suppliers greatly reduce their carbon footprints.

From that moment, we began a long – and, at times, frustrating – road to try to find a goal and program that was environmentally rigorous and meaningful while also meeting the business criteria that Walmart needed to meet.

The Eco-I: How were the goals and specifics of the program determined?

ES: We’ve found that when setting goals, it is important to hit the middle ground between “aggressive” and “achievable. Purely aspirational goals are challenging because they are defeating if you never reach them. Companies need goals that spur the best innovation, and inspire collective energy to focus on achieving them.

Once a clear goal is established, companies and industries will rally around it – even when regulatory action is involved. Consider the sulphur dioxide caps enacted as part of the 1990 Clean Air Act to reduce acid rain. The U.S. met its reduction goal three years ahead of schedule and did so at only one-fourth of the estimated compliance cost. As a result, acid rain levels have declined 65 percent since 1976.

EDF and Walmart worked together in an iterative way to set the company’s climate goal: eliminating 20 million metric tons of greenhouse gas emissions from its supply chain by 2015.  In this case, the specific number that we decided upon is less meaningful than the shift in perspective we are aiming to achieve. (In my opinion, the supply chain program will deliver a reduction beyond 20 million metric tons.)

The process to arrive at the actual number involved a series of forecasts. We first looked at what the projection for emissions would be over the next five years, broken out by Scope 1 emissions – Walmart’s own direct emissions – and Scope 2 emissions – the emissions that mainly result from purchased electricity and heat. The 20 million metric ton-figure essentially equates to 1.5 times the forecasted difference between the level to which emissions are projected to grow, and what they are currently. It is a very highly theoretical process – a solid educated guess. Our goal was to arrive at a figure that inspired action and pushed innovative thinking while not sounding so large as to seem unattainable.

Arriving at a specific goal is not a one-size-fits-all process. For manufacturers, operations are important. For tech companies, customer usage matters. For Walmart, the supply chain was the critical factor. The key is for each company to find its biggest lever and use it to have the greatest impact.

The Eco-I: What was the most surprising part of working through the creation and launch of this program?

ES: Risk aversion tends to be the ultimate driving force in big companies. Staying safe is where these enterprises are usually most comfortable. However, I am continually surprised at how open Walmart is to engage on environmental issues. The executives are great at thinking creatively and out-of-the-box. I give the company a lot of credit for its innovative brain trust.

That said, the Walmart emissions goal was four years in the making. There were a few times we made it to the five-yard line but couldn’t get the touchdown. We worked with one CEO, then another, to convince each one that enacting this program was the right thing to do. The process takes time.

In the end, Walmart’s sustainability team deserves congratulations for its steadfast efforts to push the initiative along. Any CEF member company will know the amount of time and effort it takes to achieve a commitment like this – everyone from executive management to mid-level management to the rank-and-file employees must be on board. And that’s when the internal champions at Walmart have to do all the hard work–EDF can only watch from the sidelines and cheer them on.

The Eco-I: What has been the reaction of suppliers to the announcement?

ES: The reaction has very positive. The suppliers want clarity about what they’re working towards. Walmart is being clear about what the program means for suppliers, how it will impact their businesses and what exactly is being asked of each supplier. There is a lot of back-and-forth communication anytime a major new program is enacted – and this is no exception. It can’t just be Walmart telling its partners, “Thou shalt do this…”

The company is also offering a variety of other support mechanisms and communication resources for its suppliers.  EDF recently hosted a webinar to help suppliers fill out the sustainability assessment. Seminars have been conducted for suppliers to discuss the initiatives. EDF is pulling together “Solutions Labs,” including one in Fayetteville, Arkansas, for suppliers to come together for a day and discuss the most pressing issues on the program so that Walmart can get visibility into the biggest challenges suppliers face when they try to comply with the goals.  The University of Arkansas’ Applied Sustainability Center has a whole series of events designed to address supply chain issues. And Walmart has an internal program to assist international suppliers comply with the changes as well.

The Eco-I: What advice do you have for other companies looking to establish major sustainability programs?

ES: My best piece of advice is this one:  Keep a relentless focus on the end goal and work to align internal champions to get there.

It is critical that senior executives and the sustainability team can continue to infuse energy and creative thought into the goal-making process in order to keep it moving forward. There needs to be consistent internal energy to make a commitment like this – and then even more energy to go on and achieve it.

The good news is that the hard work is well worth the effort. At EDF, we’ve seen these commitments pay off time and again. At times, an external NGO like EDF can help maintain the necessary momentum. Few large organizations have the in-depth domain expertise and manpower needed to drive major sustainability initiatives; a third-party expert can help fill that void.

An outside partner often brings in new ideas that open executives’ eyes to what is possible. I think the best thing EDF does is put “green glasses” on a company’s business which allow its leaders to see opportunities they’ve never seen before.

The Eco-I: How does it feel to have played a role in the development of the program?

ES: I recently attended a conference where Patagonia co-founder Yvon Chouinard delivered a thought-provoking observation: “Leading an examined life in business is a pain in the ass.”

After thirteen years at EDF, I know where he’s coming from. If a company really wants to engage in impactful environmental efforts, it ain’t easy. But there are an abundance of business opportunities than can deliver environmental benefits if companies can overcome the organizational barriers, financial barriers and general lack of creative thinking which hinders progress in most enterprises.

In the end, success comes from being the best company possible – an organization truly focused on innovation, quality and creativity. It is clear that Walmart has a commitment to be that kind of company. And though Chouinard is right about the pain of the process, I can attest to the wonderful feeling that accompanies the launch of such an important and potentially impactful program. We’ve got a long way still to go but I’m extremely proud.