Wal-Mart to cut emissions from supply chain

The Wal-Mart logo is seen on a sign in Phoenix, Arizona, February 18, 2010. Wal-Mart Stores Inc, the world's biggest retailer, releases its fourth quarter earnings report on on Thursday.

SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc plans to massively cut greenhouse gas emissions from its global supply chain within five years -- an effort the retailer said is equivalent to taking more than 3.8 million cars off the road for a year.

Wal-Mart will reach that goal by having its suppliers reduce emissions involved in the sourcing, manufacturing, transportation, and disposal of the thousands of products it sells in its stores.

The plan to eliminate 20 million metric tons of greenhouse gas from its supply chain by the end of 2015 was announced in a Webcast on Thursday.

Chief Executive Mike Duke said the effort would cut energy use, which in turn would mean lower costs for Wal-Mart and lower prices.

"We do plan and want to continue to build stores. We want to add square footage. That's the reality of our business," Duke said. "Yet we know we need to get ready for a world in which energy will only be more expensive, and that there will only be a greater need to operate with less carbon in the supply chain."

The move is part of broader goals Wal-Mart has outlined to one day use only renewable energy and create zero waste. It has increased its use of solar power and announced plans to roll out an index that will measure the environmental impact of the products it sells in its stores.

The United States is the world's second-leading emitter, after China, of greenhouse gases that scientists blame for warming the planet. U.S. carbon dioxide emissions from fossil fuels like coal and oil should rise this year and next as the economy recovers, according to the Energy Information Administration.

But corporate announcements of plans to cut those emissions have become more rare as a climate bill in the Senate faces tough opposition from lawmakers in energy dependent states, and as rich and poor countries struggle to share the burden of taking action on global warming.

Experts have said that some companies are afraid to promise reductions because they fear they will not be rewarded for their early action in government-run carbon markets.

Duke said America needs "comprehensive legislative policy that addresses energy, energy security, the country's competitiveness and reducing pollution."

But he said companies can take steps now to cut energy use. He said the greenhouse gas emissions it aims to eliminate represent one and a half times Wal-Mart's estimated global carbon footprint growth over the next five years.

Wal-Mart, which collaborated with the Environmental Defense Fund on the effort, said it would work with suppliers to focus first on products where it has the biggest opportunity to take carbon out of the system.

For instance, Matt Kistler, its senior vice president of sustainability, said suppliers could make clothes that can be washed in cold water instead of hot water, or accelerate the innovation of fabrics that dry faster.

Wal-Mart is already enforcing stricter quality and environmental standards for its Chinese suppliers, looking at factories' air emissions, management of toxic substances and disposal of hazardous waste.

Some of Wal-Mart's actions have been criticized by groups that contend the company is squeezing suppliers who cannot pass on higher prices to offset the investments needed to meet Wal-Mart's standards.

Wal-Mart said it wanted to pursue projects that are "economically viable" and would reduce costs, not raise them.

(Additional reporting by Timothy Gardner in Washington; editing by Gunna Dickson))