Retail's Greenest Pastures

In case you missed it, this week, Wal-Mart (NYSE: WMT) surpassed its annual goal of selling 100,000 compact fluorescent light bulbs -- CFLs for short. If you fail to see the significance of this event, consider this quote from Wal-Mart's vice president of strategy and sustainability: "We love the CFL and see the power this product has to unite customers in the struggle against climate change."

I envision thousands of Wal-Mart customers sharing high-fives as they fill their carts with curly light bulbs. While I doubt many Wal-Mart customers are actually united in any kind of struggle (beyond making it through the checkout in one piece), I do wonder how the major retailers compare in terms of meaningful environmental efforts. 

Retail green quotient
Retailers are not like General Electric (NYSE: GE), which actually makes money by manufacturing products that are better for the environment. Retailers sell stuff that other companies make, so "going green" -- and making a profit on it -- is a bit more difficult for them.

Nevertheless, it's not hard to argue that growth, profitability, and environmental consciousness can happily coexist in the retail world ... with a little effort. So who's making that effort? Here is my "green quotient" on five of the biggest retailers. 

Wal-Mart leads the pack
Wal-Mart has had an image problem in recent years, so it's not surprising the company is leading the pack in green efforts. It's the only retailer I'm aware of that has a vice president of strategy and sustainability. Wal-Mart's Web page has an extensive listing of environmental efforts, which represent perhaps the most comprehensive approach of any retailer now. The focus is on three areas:

• using renewable energy sources and building more energy-efficient stores;
• reducing waste production through recycling and packaging improvements;
• selling products that sustain the environment (like CFLs) at low prices

Costco lagging?
While Costco (Nasdaq: COST) is one of the top retailers in terms of total shareholder financial return the past few years, I see little evidence of commitment to the environment. The only mention I can find is listed in Costco's 2006 annual report.

There, the company discusses lighting management systems and warehouse construction standards, introducing hybrid trucks to reduce fuel consumption, and carpool efforts at the Seattle home office. I would call this is an effort, but not yet a significant corporate commitment.

On Target
Target (NYSE: TGT) has an innovative and interesting approach. The company has gone beyond energy efficiency to recycling garment hangers and rechargeable batteries from customers. It also installs low-VOC (volatile organic compound) carpeting in its stores, and it's leading the way in redeveloping "environmentally impaired" existing properties.  The company's environmental slogan is "Real Commitment. Real Progress. Real Results." Leave it to the marketing department to find a way to get in on the eco act.

Home Depot is in real time
Not to be outdone, Home Depot (NYSE: HD) has a counter on its website that measures eco-friendly products sold, electricity saved, CO2 prevented from reaching the atmosphere, and trees grown for 10 years. You can sit and watch the environment being improved in real time ... although it gets old after a few minutes.

Lowe's in the hunt
Lowe's (NYSE: LOW) appears to be in the eco-hunt, but it hasn't found any trophies so far. While the company's website talks about its commitment to being a responsible steward of the environment, most of the links lead to products or tips on how consumers can reduce their energy footprint. Suggestions include purchasing high-efficiency washing machines or fixing leaky toilets (if you didn't already know, they can waste up to 200 gallons a day). 

While environmental commitment is hardly the primary criteria for selecting your next investment, it's comforting to know these powerhouse companies are showing some environmental good sense. Now if we could just get consumers to spend some money during the holiday season, retail might start seeing more green in its cash registers, too.

For more views on the corporate eco-scene, check out this series on how The Motley Fool went green last April in honor of Earth Day.