Monday, March 1, 2010

An Up-Side to Corporate Concentration?

Generally speaking, I'm not a big fan of mega-corporations. My fast food consumption is close to nil. I buy something at WalMart once or twice a year. The one significant exception is Amazon. I collect relatively obscure art photography books. There is no place in town to satisfy that desire. While I'll get really obscure ones directly from the small presses, the lure of price and easy availability (30% off! Free shipping on orders over $39!)lures me into Amazon's clutches. But, interestingly, that same level of buying power that corporations have traditionally used to eek out every cent of profit for themselves (yes, I'm aware of how Amazon has forced local bookstores out of business and driven down the price that publisher's receive) can also be used for other purposes.

Thus, we have WalMart's plan to make its supply chain greener. In essence, WalMart is using its buying power to force its suppliers into examining the carbon lifecycle of their products. While it is the suppliers, not WalMart, that will bear the costs of modifying the product, general estimates place about 33% of energy efficiency gains as cost effective. Thus, in many ways, WalMart is only using a stick to get companies to make changes that are already sensible -- such as reducing packaging -- but require some sort of incentive to get the manufacturer to make the effort to change.

The press release claims that the plan will cut 20 million metric tons of greenhouse gas emissions from its supply chain by the end of 2015 -- the equivalent of taking 3.8 million cars of the road for a year. You can read more about it here.

We'll see. But on the face of it, this initiative makes sense for both WalMart and the suppliers. The carbon reductions will come from situations where efficiencies are cost effective and, hence, allow WalMart to further reduce prices at the same time that the suppliers are reducing both their carbon footprint and their production costs. The down side? In ten or twenty years, when all the economic efficiencies have been weaned out of the system, we end up with even more corporate concentration and a less resilient system at the time when hard, uneconomic reductions in carbon are necessary. At that point, all that corporate concentration, actively lined up against making the necessary changes, will come back to bite us in the butt.

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