How do you tell when a firm is really green?

A panel discussion with two experts who research companies that claim to be Earth-friendly.

from the May 7, 2007 edition

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Makower: But that's changing and they're listening now.

Shalit: They're listening now because they have to.

Is there a company that's unexpectedly green?

Shalit: Wal-Mart has been a remarkable story, a huge story. They are probably one of the most aggressive environmental companies on the planet right now.

What are they doing?

Shalit: They're talking about doubling the fuel economy of their fleet by 2015. They hired a consultant to go through their dumpsters and figure out what could be recycled and what couldn't. They found out that 80 percent of the stuff in the dumpsters could be recycled and the CEO said, "Great, we'll recycle that. We'll tell our suppliers that we're not going to accept the other 20 percent anymore. And we'll get rid of our dumpsters." They've adopted something called "the precautionary principle" for chemicals. If there's a chemical that is suspected of being toxic and if there are safer alternatives that can be used, they will stop selling products that contain the potentially toxic chemical. That's a 180-degree turnaround from the standard way of doing business in America.

Makower: I really honor them for that. But the question is whether Wal-Mart really does have an unsustainable model. Most of their stuff is being shipped on freighters across the Pacific from Asia. Ships run the dirtiest fuel. And it's a very nonsustainable, environmentally unhealthy, carbon-intensive way to bring products over. [But] if they can double the fuel economy of their trucks, as Andrew is saying, from 8 to 16 miles per gallon, that's $30-odd million to their bottom line just by doing it. Plus ... they help transform the trucking industry. Because they're such a big buyer of trucks ... all the other major trucking companies will soon be using those same trucks.

Shalit: This is a good example of how environmental issues aren't black and white. Wal-Mart is going to start producing organic cotton and organic cotton clothing in China and shipping it over to the US. A lot of the founders and movers in the organic movement say: "You shouldn't be calling it organic if you have to ship it halfway around the world." Consumers are facing similar questions at Whole Foods. Do you buy the organic apple from New Zealand or do you buy the commercially grown apple from the next town over?

How do investors figure it out?

Makower: One of the questions I ask a lot is: How good is good enough?... I think if they know what their [environmental] impacts are, they're working to make some aggressive moves to reduce them, and they're really trying to exert leadership – even if they're imperfect, I think they're a good company.

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