As America’s largest retailer and a force felt around the world, Walmart is keenly aware of its influence when it comes to ESG, or environment, social and corporate governance—a top-of-mind topic for businesses and investors alike.
“You can’t create long-term shareholder value unless you are addressing the needs of your customers, your associates or employees, suppliers, communities,” Kathleen McLaughlin, executive vice president and chief sustainability officer and president of Walmart Foundation, said Tuesday at the Cowen 2nd Annual Consumer Platforms for the Next Generation Summit.
Those key points can’t be separated, she added, and the “only path to sustained financial value creation—sustained success—is if you do a great job serving the stakeholders.”
McLaughlin said Walmart tries to “articulate” its “ESG investment thesis” to investors, an approach she believes all of its stakeholders should adopt. “What’s the reason that you would invest $1 in Walmart, if you care about climate change, if you care about racial equity, if you care about Covid response, if you care about equitable access to food,” she said, noting the “issues that are relevant for our business.”
Society, she continued, is in dire need of “regenerative” solutions that will transform critical systems and solve for racial inequity and climate degradation. “It’s not enough anymore for a business or anyone in society to say they’re going to operate in a way that minimizes their impact,” McLaughlin said, adding that what’s needed are “paths that are going to build bridges across divides that are going to unite and not get caught up in polarization or extremes.”
Walmart’s four priorities encompass economic opportunity for employees and suppliers, including racial and gender equity. It is also working to establish sustainable supply chains that decouple consumption from environmental and social outcomes. A third area of focus centers on community resilience and the role Walmart plays to enhance local areas when it is called on to support disaster response. And fourth, as a global business, Walmart aims to operate with ethics and integrity at the fore.
McLaughlin cited Walmart’s action on the climate action front, outlining the progress the company is achieving to contribute to a net-zero future. Walmart was the first retailer to set science-based targets in 2016, including its own operations as well as the supply chain, she pointed out. Last year, the company said it wanted to reach zero emissions in its own operations by 2040. Walmart also has over 3,000 vendors engaging with the retailer to decarbonize their supply chains, “and what’s really great about that is those suppliers are suppliers to all the other retailers too, so when they’re taking actions, it’s not just for Walmart—they’re changing their supply chains and that benefits everybody,” she said.
The retailer is also creating pathways for entry-level employees to upskill from their starter roles, McLaughlin said. “That’s the particular role that retail can play in,” she added, noting Walmart’s $11 minimum wage, which can trend higher based on the region and role.
“It’s a really important role and it does require a shift in people’s approach, especially in terms of investment in human capital, helping people acquire skills in ways that they can while they’re on the job and get access to those career paths,” McLaughlin said. “So, that’s really been our focus.”