Wal-Mart rating system not a standard says industry

By Ahmed ElAmin

- Last updated on GMT

Related tags: European union, Wal-mart

The Wal-Mart environmental scorecard rating system for packaging
does not work and should not be allowed to become the standard for
suppliers, according to an industry organisation.

In an address Friday to delegates at a sustainable packaging forum in Pittsburgh, Pennsylvania, Julian Carroll, the mangaging director of the European Organisation for Packaging and the Environment (Europen), said industry should not allow the Wal-Mart packaging scorecard to determine the market. "Europen believes that we should all avoid the risk of the Wal-Mart packaging scorecard becoming a de facto industry standard,"​ he said. "Not only could such an eventuality disrupt the market but even worse, it risks evolving in such a way as to become an inhibitor of innovation rather than a stimulator."​ The call is unusual in that industry has generally gone along with the Wal-Mart system, an online method of rating method for determining whether a packaging supplier has done as much as possible to reduce the impact of their product on the environment. Carroll's statements also highlight the difference between US and Europe's waste and packaging regulations. Wal-Mart's "green" rating system for packaging pits one supplier against another, with processors and others having to use the top rated ones for their products, or risk being cut from the Wal-Mart supply chain. Originally about 2,000 private label suppliers to Wal-Mart began using the system last year by imputing data on the packaging they use for their products. Now the standard is being rolled out to all suppliers worldwide. Asda is a subsidiary of Wal-Mart in the UK, the company's first foray into Europe. The packaging scorecard requires all suppliers of packaged goods to submit data on nine different criteria, including greenhouse gas emissions, material type, transport distances, product packaging ratios, cube utilisation, recycled content, methods of waste recovery, the type of energy used and any special energy saving initiatives in the manufacturing process. Carroll cautioned that the Wal-Mart scorecard should not be regarded as an environmental indicator. Carroll said Europen has endorsed Wal-Mart's position that the scorecard should be regarded as a "work in progress" with scope for continued improvement. The company itself has stressed that it considers its scorecard as one of its 13 business management tools introduced to evaluate the performance of its suppliers and buyers. The organisation has recommended that industry packaging experts continue to work with Wal-Mart to further develop the tool. Carroll also pointed out differences between the North American and European approach to packaging and environmental questions, one that is not addressed by the scorecard. He said Europen has identified market forces as the key driver in North America while legislative pressure has been the chief instrument driving change in Europe. Carroll said that the Wal-Mart initiative should be seen as a "bold" first step which has contributed to raising awareness of packaging environmental issues within the North American market. In Europe the EU implemented a directive on packaging and packaging waste at the end of 1994 and the EU member states had until mid-1996 to incorporate the requirements into national law. The directive is meant to harmonise waste and environmental packaging standards across the EU. Carroll said the directive is working "pretty well". He noted that Europen helped defeat a proposed measure mooted for the EU 10 years ago that would also have measured the environmental impact of packaging. At the time Europen characterised the effort as "unnecessary, unclear and impractical". "Unnecessary, because enforcement of existing regulations would ensure that the political objectives of prevention, minimisation of hazardous substances and recovery of used packaging are addressed,"​ he said. Europen has concluded that the Wal-Mart attempt has not succeeded where the European Parliament failed, he said. "We reached our conclusion having carefully evaluated the Wal-Mart packaging scorecard including commissioning an independent study to analyse its components and evaluate its measurement criteria against European norms,"​ he said. He cautioned that the scorecard should not be considered as an environmental evaluation tool for packaging, principally because the aggregated result it produces cannot be scientifically validated. For example the greenhouse gas measurement in the scorecard excludes all life cycle steps except material manufacturing, he said. Because of the exclusion the scorecard in not consistent with the European Committee for Standardisation (CEN) standard for life cycle analysis of packaging. The exclusion would leads to a "substantial underestimation" of life cycle CO2 emissions, he said. Additionally, the effect of recycled content on CO2 emissions is not fed back to the greenhouse gas indicator. Wal-Mart's evaluation of packaging material lacks environmental relevance as it will combine occupational health data with environmental impacts emanating from life cycle analysis into one single indicator, he added. "This indicator again excludes all life cycle steps except material manufacturing,"​ he said. Data on distances to transport packaging materials appears inappropriate due to its exclusion of transport distances of finished goods, he said. "Although Wal-Mart has stated that distribution of packaged product is taken account of in a separate product scorecard, the present measurement would, for example, offer no credit for moulding packaging at the point it is filled with the product,"​ he stated. The product-to-packaging ratio component also tends to discourage product concentration and the production of smaller portions which conflicts with current market trends in food and beverage to reduce portion sizes as an obesity reduction measure, he said. On recycled content, the Wal-Mart parameter contains default data inconsistent with current practices within food contact materials in relation to food safety issues, Carroll said. In addition, the absence of a possibility to modify recycled content does not encourage the use of higher amounts of recycled material when possible., he said. Europen also believes it is unclear how the scorecard will achieve the stated 5 per cent packaging reduction target. "Completing the scorecard and gathering necessary data will pose a massive challenge to companies in the supply chain given the diversity of sourcing in today's economy,"​ he said. Europen's members, particularly brand owners, are also concerned that the ratings their products receive may be at variance with ratings they have presently attained in indicators such as the Dow Jones Sustainability Index. "Ultimately, confusing and less meaningful results may emerge from the process,"​ he said.

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