An interview with Walmart's Leslie Dach
MNN CEO Joel Babbit talks to Walmart's executive vice president of corporate affairs.
Thu, Jun 27, 2013 at 01:42 PM
Leslie Dach, executive vice president of corporate affairs for Walmart, is responsible for public policy, reputation management, corporate communications, philanthropy, government relations, and the company's social responsibility and sustainability initiatives. Before joining Walmart, Dach was vice chairman of Edelman, a major global communications firm, where he led the Washington, D.C., office, the company's research, advertising and corporate social responsibility consulting divisions and its global public affairs, crisis, technology and health care practices.
Dach is leaving Walmart at the end of June. He sat down with Mother Nature Network CEO Joel Babbit for a freewheeling conversation about his career, his accomplishments and the future of corporate sustainability.
Joel Babbit: So the first thing that I want to ask you about is certification programs. There are many certification programs out there. I think the most successful has been LEED. It’s limited to the construction industry, but it has kind of become the standard, so much so that even laymen know the term LEED. But for all the talk and effort, no one has really been able to replicate that success in packaged goods or the general marketplace. Why do you think that is? And do you think that there will ever be a LEED standard for general merchandise?
Leslie Dach: That’s a great question, and the answer is I don’t know. What we’ve seen through our work that the hotspots or the issues vary in each of the supply chains, and it takes deep expertise — down to the individual product category — to address that well. So with buildings, in a sense, it was a difficult but narrower job.
That’s part of the challenge. At the same time, we’re working with the sustainability consortium on a broad effort, which doesn’t go all the way to a certification or a seal, but it does provide a common set of environmental and social issues in each product supply chain to focus on and hopefully improve. And I think it’s going to take a while at the product category level before it coalesces.
Also, I think in some ways the consumer is a missing element in the equation — and we have always said we don’t want a Walmart customer to have to choose between a product they can afford and a product that’s good for them or a product that’s good for the environment. And frankly, we don’t think our customer should have to make that economic choice. They should not have to pay more — and sometimes they can’t pay more. So that may be another reason why you don’t see a consumer-facing certification taking hold.
Babbit: You know, I agree with that. When we started this company, almost everything that was quote “environmentally responsibly produced” wasn’t the best designed or the most attractive thing in the world, and it was at a much higher price than everything else – but that’s changed. The price points are coming down, and the design appeal has gotten a lot better. So, I think you make a good point — when the price starts coming down, that might be the tipping point.
There are a lot of certifications out there today that have made a difference. Whether it be in fish or in coffee or other products, so I don’t want to take anything away from the ones that are out there, but I think in general merchandise, it just hasn’t been a driving factor yet. And I think rather than wait, it is important to go get the job done.
Part of the steps you have taken are the standards that have been set for the vendors on the environment and the ethical side of things. Where do you see that going in the future?
We’re looking broadly across our general merchandising categories … and we’re working with the sustainability consortium, which applies the science and tells us where the issues are that need to be addressed. We take that work and translate it into scorecards in our direct conversations and interventions with our suppliers. We will both broaden and deepen that and extend it to more categories of products as the sustainability consortium does the work. We’ll also expand it geographically, for example by financially supporting the creation of the sustainability consortium of China, which will allow us to bring more Chinese suppliers into the system.
At the same time, I think we have to go deeper because what it does tell us is where the products can be produced and grown better, it tells us what the best practices are to do that, and it allows us frankly to judge and compare individual suppliers, to compare them to each other. It really sets up a conversation for a blueprint for change. So we’re right at that point where we are trying to translate that information into action.
One of the issues here is, how do you take all this and put it into a business and put it into buying decisions? How do you make it part of the business process? For us over the next few years, the big goal is to say how do we give the tools and the training to our buyers, so that when they sit with a supplier they can put this scorecard in front of them, and say “Look, you don’t do well. Other people are making products more sustainably than you are. Let’s talk about that.”
We do that in the top-to-top meetings, CEO to CEO, and we also do that at a buyer level. And these scorecards create clear goals for our employees and vendors and help us hold everyone accountable.
Right. I think that’s an important point because a lot of people don’t realize the standards, the empowerment of women for example. Most people think the standards are limited to sustainability issues or safety and health issues, but it’s got a much wider scope doesn’t it?
It does. And when you say you have thousands of suppliers and, historically, their job has been trying to create a product that people will buy at a price that’s attractive to them. Well, now we’re asking them to do that — maintain the assortment, maintain the quality, and maintain the price point — but to do it sustainably.
To do that, you have to give them the tools so they can do that comfortably and effectively — which is a lot of necessary work. So people think it’s easy because they don’t see the inside of the engine to understand how much work it takes to change the system.
Now the nice thing about Walmart is if we convince someone to make a product that is better for our customers, it’s likely to be better for the retail business overall. So that’s a great opportunity and a great lever for us. So our conversations with vendors have a multiplier effect.
I want to talk about you personally, not your personal life, but you as an individual having been at Walmart in the position you’ve been in, what kind of lessons have you learned? I would think that your position gives you kind of a unique inside prospective on the consumer market, on people and people's behavior and vendor's behavior and things like that. What would you think are the highlights of those experiences?
I think, you know, that one is that people's aspirations and values really are the same the world over. Health, education, a job — there’s so much commonality that exists throughout the world. And family issues, those are the ones that matter to people — and everyone has the same aspirations for their families. They want to buy healthier and eat healthier. They want to buy products that are better for the environment and good for their families. But they have to make choices about that. So, if we can help make those choices simpler, if we can democratize and make those more accessible, that’s very important because price is still the greatest weapon in affecting purchase decisions.
You mean the common experience.
Yes. The common experience ... I think it has taken way too long and there are still pockets of it, but I think finally people are starting to understand that there’s not a conflict between being a good business, a strong business and being a sustainable business. That is still one of the things that we have to go out and kind of evangelize.
It’s very clear that by becoming more sustainable we’ve become a better business. It has helped us reduce cost, attract and retain better people, spur innovation, and be a better neighbor.
A good example is the work we do on women’s economic empowerment – 75 to 85 percent of our customers are women. And you can’t succeed in the global war for talent if you close your eyes on the advancement of over 50 percent of the workforce.
I think the other thing that has changed around the world is — we read a lot about people’s loss of faith in institutions in a sense, and the governments around the world don’t have the trust they once had.
But I think what you see is that to drive change at a big scale, nobody can do it alone. It takes business, government, the whole society, social entrepreneurs to work together — and so people are realizing that in all of those sectors that they have to drop the kind of ill will they had, the skepticism about people’s motives, and come together for results. I think that’s an important change and one far from reaching its full potential. So the best work we do is sitting with governments and environmental groups or by helping the first lady, our suppliers, ourselves and local food banks.
The return to doing more business with local operations is right in line with what you’re talking about.
Local food production — clearly people want that. So to me some of the big trends that affect this change include this fact, that people realize it, and they’re trying to come together on the commonalities
I think one of the things that’s happened at Walmart is that over the last several years, we’ve hopefully demonstrated to our partners that not only are we an opportunity for them to drive change of scale — which they couldn’t do alone — but that we're sincere and transparent partners.
So they get to learn from us. If it’s hard to do then they learn what it takes to drive change in a big system, but also they get to see if something doesn’t work quite the way we hoped, then it wasn’t because we didn’t try.
The realization that there’s not a conflict between being sustainable and being a good business from a shareholder standpoint, and the realization from civil society and governments that working together with business is the way to really drive change. I think those are two kind of underlying social changes that really cause and allow this kind of work to continue. We’re still at the early stages of that really — not everyone has bought into that model.
Corporate responsibility used to be more of a PR tactic 10 years ago. It was a little thing in the corner that companies did. Now it has become an integral part of doing business.
I think that back in the consulting days, I had far too many clients that wanted to be better liked, but didn’t want to be a better company.
There was a lot of skepticism when I came to Walmart about where Walmart would fall on that, but one of the things I hope I have personally demonstrated, and the company has demonstrated, is that Walmart actually decided that it needed to be a better company.
And obviously the point is that skeptics are still out there, but I think the reason it has been successful is that the harshest skeptics have looked at the work and they’ve validated that the work is meaningful. I’m hoping that other companies realize that too — that if you have a tough issue, focus on how you can be a better company, because ultimately that’s your best strategy.
Well you’ve been extremely generous with your time. On a personal level, I just wish you the best, and I look forward to catching up soon. Thanks for the time and the opportunity and we’ll be back in touch pretty soon I hope.
Great, Joel. Thanks a lot!