Rosalind Brewer

Wal-Mart's grand, green plans to reduce prices

April 30, 2013: 9:01 AM ET

Wal-Mart says it plans to create a sustainability index to track every product it sells, cut $1 billion in costs by 2020 through energy efficiency efforts, and pass the savings on to customers.

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FORTUNE -- Wal-Mart has taken on a massive green project. CEO Mike Duke said, in 2009, that the retailer would build a sustainability index to track the environmental impact for the entire life cycle of every single product it sells. For many reasons, this has been a challenging process.

But soon, consumers will be able to see the payoff, said Rosalind Brewer, CEO of Wal-Mart's Sam's Club division at Fortune's Brainstorm Green Conference in Laguna Niguel, Calif. Wal-Mart (WMT) is looking to launch a pilot system that will offer detailed product sustainability information to consumers within the next 12 months.

That's fine, but will it change consumer behavior? There's evidence that it will, Brewer said, especially for Sam's Club members, who are, in general, more affluent than the average Wal-Mart consumer. Sam's Club customers are willing to spend on premium products such as Greek yogurt, grass-fed beef, and organic milk on a consistent basis, a surprising trend considering the current economic environment.

Granted, consumers still want Wal-Mart and Sam's Club to keep prices down. During Wal-Mart's February 21 earnings report, Brewer said, "Recent traffic patterns of our business members indicate that they are more deliberate in their spending due to macroeconomic factors." Or, in other words, times are still tight.

It will be a while before Wal-Mart can evaluate how its sustainability index will affect sales. But one of the interesting parts of the mega-company's index is how it will apply to projects beyond food. For example, the company wants to increase its energy efficiency in an effort to save $1 billion in costs by 2020, Brewer said, claiming that the company plans to pass on those savings to Wal-Mart and Sam's Club customers.

"We know how important that $40,000-a-year household is," she said. "They should not have to pay more for things that are better for them."

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