Weekly Industry Crib Sheet: Wal-Mart's New Game-Changing Mandate...

Plus: The President Addresses Health-Care Reform and its Impact on Small Businesses.

President's Push for Reform

President Barack Obama last week reached out to the American public and skeptical lawmakers, saying an overhaul of health care is needed to bolster both the U.S. economy and families' finances. Earlier in the week, Obama cited health-care costs as "the biggest drivers of our deficit."

Among the most contentious health-reform proposals being considered is the creation of a public plan option, a government health plan that would compete with private companies for customers in a new health insurance marketplace.

The White House Council of Economic Advisers released a major report on health care's impact on small businesses in conjunction with the prime-time address. Among the key takeaways of his weekly address:

  • "Because they lack the bargaining power that large businesses have and face higher administrative costs per person, small businesses pay up to 18 percent more for the very same health insurance plans... . As a result, small businesses are much less likely to offer health insurance. In a recent survey, one third of small businesses reported cutting benefits. Many have dropped coverage altogether."
  • "Under the reform plans in Congress, small businesses will be able to purchase health insurance through an 'insurance exchange,' a marketplace where they can compare the price, quality and services of a wide variety of plans, many of which will provide better coverage at lower costs than the plans they have now. They can then pick the one that works best for them and their employees."
  • "Small businesses that choose to insure their employees will also receive a tax credit to help them pay for it. If a small business chooses not to provide coverage, its employees can purchase high quality, affordable coverage through the insurance exchange on their own. Low-income workers — folks who are more likely to be working at small businesses — will qualify for a subsidy to help them cover the costs."

Lawmakers and others remain divided over the idea: Many support it, saying it would impose discipline on private insurers and keep them honest; and many oppose it, saying it would lead to a single-payer system (like Medicare).

Wal-Mart Announces Sustainable Product Index

Wal-Mart has just changed the game with respect to the environment and the global supply chain. Last week, Wal-Mart announced plans to develop a "sustainable product index" that will establish a single source of data for evaluating the sustainability of products. The retail giant's announcement was made at a meeting with 1,500 Wal-Mart suppliers and associates.

The company will introduce the initiative in three phases, beginning with a survey of its more than 100,000 suppliers around the world. The survey, which includes 15 questions that will serve as a tool for Wal-Mart's suppliers to evaluate their own sustainability efforts, will focus on four areas: energy and climate; material efficiency; natural resources; and people and community.

Essentially, Wal-Mart will condense that information into an easy-to-understand rating for shoppers in a label that will appear along with the price of the product and other consumer information.

Stephen Stokes, vice president of sustainability and green technologies at AMR Research and a champion of sustainable business practices, "gives Wal-Mart kudos" for its internal sustainability efforts, but "ultimately believes a supplier mandate will be "unpopular, ineffective and unsuccessful." (Source: Modern Materials Handling)

"Consumers are not likely to see the first labels for years," the Wall Street Journal reported earlier this month. "The company estimated it could take a half decade or longer, although outside experts involved in the project said it could start sooner, perhaps as early as 2011."

The immediate impact of Wal-Mart's latest drive will be felt by its 100,000 suppliers, which will bear the costs of the company's environmental mandates, at a time in which many are struggling economically.

Any major initiative Wal-Mart undertakes has enormous supply chain implications worldwide. A consortium of universities will oversee the sustainability index and measure each product's life-cycle impact, "from raw materials to disposal."

"It is not our goal to create or own this index," Mike Duke, Walmart's president and CEO, said in the announcement. "We want to spur the development of a common database that will allow the consortium to collect and analyze the knowledge of the global supply chain. We think this shared database will generate opportunities to be more innovative and to improve the sustainability of products and processes."

Top-tier U.S. suppliers are being asked to complete the survey by Oct. 1.

What do you think? Will this new initiative stick?

President and CEO Mike Duke discusses Wal-Mart Stores, Inc.'s progress with measuring sustainability, and how the retail giant will work with others to create a new retail standard for the 21st century with a Sustainability Index.

John Fleming, EVP and Chief Merchandising Officer, talks about the Sustainability Index and Wal-Mart's efforts to accelerate and broaden sustainability with a concrete example of life-cycle thinking.

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