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Scoring the Scorecard

Published: September 01, 2007, By By Edward Boyle, Contributing Editor

Green Converting

There's a baseball adage that says, “You can’t tell the players without a scorecard.” But under Wal-Mart’s latest environmental initiative, none of its more than 66,000 vendors may even be able to take the field without completing a “packaging scorecard” by February 1, 2008.

Wal-Mart developed the scorecard so manufacturers could track and report their own use of packaging materials. Ultimately, it measures the environmental impact of the packaging on Wal-Mart’s store shelves in three general areas: renewable energy, waste reduction, and sustainable product or recyclability. Vendors must complete an individual scorecard for each of the more than 120,000 individual products sold by the world’s largest retailer—or risk being shut out of the business.

Lofty Goals, Monumental Impact
The goal of the scorecard initiative is to “encourage” vendors to use both recycled and recyclable materials in their packaging and to reduce carbon dioxide emissions when transporting finished goods to Wal-Mart’s nearly 6,500 stores and wholesale clubs in 15 countries.

Wal-Mart has set a goal of reducing packaging 5% by 2013. The company projects its suppliers will save a combined $11 billion/yr by using less paper and plastic and by using more eco-friendly materials. It projects its own operations will save about $3.4 billion/yr through packaging reduction, according to the trade publication Promo Magazine, a Penton Media publication.

The impact of Wal-Mart’s packaging scorecard on both the retail community and the environment likely will be as monumental as the sales giant itself. “Someone said this is probably going to have the biggest impact since the Clean Air Act,” notes Jerry Van de Water, executive director of the Paperboard Packaging Council (PPC). “I think this is going to be looked back on as a watershed event.”

In addition to basic information, such as the supplier number and product SKU, the scorecard requires details about dozens of package-related variables, including product and package weight, number of items sold, testing/product performance results, shipped distance of packaging materials, and much more. Ultimately, those formulas favor intangibles such as package weight reduction and recyclability, and reward minimizing transportation distance from the converting facility.

But meeting the deadline, which is just five months away, may be an even more formidable task than the numbers suggest: As of June, less than 2,000 of Wal-Mart’s more than 66,000 vendors had even logged on to the company’s website to download the scorecard; just 1,200 SKUs had been completed.

Task Forces Formed
“It’s a huge undertaking; huge, huge, huge,” says Marla Donahue, president of the Flexible Packaging Assn. (FPA). “It’s going to require a lot more communication between converters and [their customers] and a lot more communication between converters and suppliers of raw materials. The whole supply chain is going to end up getting involved in this.”

In fact, most already are. The FPA, PPC, Fibre Box Assn. (FBA), and American Forest & Paper Assn. (AFPA), among others, have formed task forces, developed support materials, and sponsored seminars that review key aspects of the scorecard. The four associations also are among nine industry trade groups that are members of the Sustainable Packaging Steering Committee for Wal-Mart’s scorecard program, which recommends changes to the scorecard that more properly reflect the realities of the packaging marketplace.

“Our job on the steering committee is to review and provide direction and feedback to Wal-Mart about various changes or proposals that come up,” explains Brian O’Banion, VP of the FBA. “They’re building alliances, and we support that, all in an effort to have sufficient objective data that they can incorporate into the scorecard measures.”

“It’s got to be simple, direct, and understandable,” says Van de Water of the scorecard. “Thus far, we’ve seen a willingness on the part of Wal-Mart to listen to arguments regarding good science, and they’ve been flexible in that regard, which frankly was not expected. I think, to their credit, they are resolute in pursuing their goals, but they have listened and engaged all of their stakeholders, including non-governmental organizations that can’t later detract from it because they had an opportunity to shape it.”

Keeping Score
The FPA’s Donahue notes that completing the scorecard is complicated in some areas, such as specifying the primary packaging material. She notes, for example, that the flexible packaging for beef jerky, one of Wal-Mart’s most popular items, is composed of as many as seven different layers of raw materials, yet the scorecard only permits the consumer product companies to list the “primary” packaging material. Therefore, only the highest-weight substrate can be reported, even though it comprises just a fraction of the total package.

“I think when Wal-Mart, working with some environmental groups, came up with the concept of the scorecard, they thought it was going to be pretty straightforward and fairly easy to input data,” says Donahue. “So, Wal-Mart has really been struggling with how [the flexible packaging industry] can respond to the scorecard in that they came up with what they thought was a simple solution, which was to use the predominant material. But a lot of flexible is not commodity material.”

For its part, the AFPA is working to make sure that “renewability” receives proper “weighting” in the scorecard, since its members “believe that renewability is just as important as recyclability” when considering the environmental impact of raw materials, says Cathy Foley, VP of paper for AFPA. “That’s one of the issues that we’ve been working on with them to incorporate, and they’ve been very open to it.”

The scorecard also contains a requirement that consumer product companies can’t include recyclability in their scorecard calculations unless more than 50% of municipalities in the country recycle a particular material, which most don’t. Companies are encouraged to convince local municipalities to join with the flexible packaging industry to implement such programs, but a similar effort in California in the early ’90s failed because local government didn’t receive what they felt was the necessary financial support.

The association executives agree there has been a willingness on Wal-Mart’s part to accept guidance from industry groups to improve the scorecard completion process. However, converters and their customers should proceed with the expectation that the scorecard will be implemented by the deadline, at least in some form, association executives agree. To do otherwise would be foolhearty, although Wal-Mart has not assured suppliers that those receiving a higher score would be guaranteed shelf space, or that those scoring lower or who do not participate would definitely be denied.

“A lot of them are waiting for it to fall apart,” says Donahue, “but it’s not going to fail totally. I don’t know what it’s going to look like February 1, nobody really does, but our converters have to be prepared to answer their customers’ questions.” “I think anybody who’s sitting back and says, ‘We’ll wait and see,’ is making a huge error, because it will only be stronger as a criteria for the selection of vendors going forward,” adds Van de Water. “Even if Wal-Mart stops, the momentum behind this will continue, and the ripple effects will be with us for generations.”

Get Going
For more information on Wal-Mart’s packaging scorecard, search our website.

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