Eart2Tech, 16 July 2009

The big news in the world of sustainability this week is that Wal-Mart, the world’s largest retailer, will launch a labeling system to disclose the environmental impact of the products it sells and will be asking its more than 100,000 suppliers to start tracking things like the carbon emissions and water use of their goods. For companies that have developed carbon and energy management tools — from startups like Hara to huge software firms like SAP — Wal-Mart’s move is the equivalent of a massive crowbar wedging open the nascent carbon software market.

Wal-Mart is basically saying any company that wants to do business with the 10-ton gorilla retailer will have to provide related environmental impact data, which will lead many to start using this type of software. As Wal-Mart’s Chief Merchandising Officer John Fleming told the Wall Street Journal, companies that don’t supply the data probably won’t have a relationship with Wal-Mart for very long. Wal-Mart plans to use the data in a sustainability index that will rate the products according to their environmental impact, as well as for the labels for the products.

Wal-Mart’s decision also comes at a time of growing momentum for the carbon management industry. Over the last few months, carbon software has started to become one of the hottest topics and investment areas in cleantech. Cleantech-focused VC shop Kleiner Perkins invested $6 million into Hara, which had already been selling its supply chain energy management software to the likes of Coca-Cola and the city of Palo Alto, Calif. SAP bought up 2-year-old carbon software firm Clear Standards, which had raised $4 million from Novak Biddle Venture Partners and Kinetic Ventures. And both Planet Metrics and Carbonetworks raised VC funds towards the end of last year.

Underlying the investments by Wal-Mart and venture capitalists is U.S. legislation coming down the pipeline, most notably the cap-and-trade system proposed in the climate bill currently making its way through the Senate after passing the House earlier this year. In addition to U.S. legislation, other countries in Europe, as well as Japan, already have similar regulations and retailers in those regions have been moving quickly to develop green labels.

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