Leverage is the big news about Walmart’s announcement today. The company has committed to reducing 20 million metric tons of carbon pollution from its products’ lifecycle and supply chain over the next five years. That’s equivalent to the annual greenhouse gas emissions from 3.8 million cars.

So is Walmart moving the earth? No, not yet. But this is precisely the kind of innovative approach to reducing carbon pollution that we need right now. Environmental Defense Fund worked closely with Walmart to craft this goal and project that makes the most of what Walmart can uniquely do to cut carbon pollution across the globe.

This commitment is bold because:

• Walmart’s supply chain is where the action is. It’s the biggest possible lever that Walmart could bring to the table. Walmart will work with suppliers to reduce their emissions – which they otherwise might not do – resulting in positive ripple effects around the globe.
• It prioritizes the biggest opportunities. Walmart is looking at the products that create the most carbon emissions across their lifecycles – as well as products that are top sellers – and focusing on those first.
• It gets carbon pollution reductions now. There’s no waiting for the United States or the world to act.
• It will likely reach ten of thousands of companies around the globe – companies that would not be required to reduce emissions by national or international regulatory proposals but will greatly benefit from energy efficiency efforts.
• It adds to a drumbeat of clear messaging to suppliers from Walmart that they need to reduce carbon pollution. This commitment follows the Sustainability Index, Product Innovation work with Private Brands and other initiatives.
• It’s good for business and good for customers. This project is about Walmart and its suppliers working hand-in-hand to find ways to drive carbon and energy – and cost – out of the supply chain. Walmart customers care about America’s energy future. They see tangible value from carbon reductions every time a lower carbon product costs less or uses dramatically less energy once they get it home.

Two kinds of change: Simple but big and transformational
In this project we will look at two different kinds of opportunities. The first opportunities are simple and relatively small changes that, when coupled with Walmart’s scale, become big reductions. The other opportunities are more transformational, where we dive deep and engage an industry or consumers to fundamentally change products or their uses.

DVD packaging is an example of a simple change that adds up because of Walmart’s scale.

A couple of years ago, Walmart asked one of its DVD suppliers – 20th Century Fox – to be a part of a pilot for our project. They made simple changes to make DVD packaging lighter, which cut energy use by 28% and reduced the lifecycle carbon emissions of DVDs sold to Walmart by about 25,000 tons. It had a big multiplier effect, too, because the lighter packages were also used on DVDs sold at other stores, and the change evolved from movies to video games and software too. Small change – big cumulative effect.

One of the other pilot projects Walmart tried was milk. This is an example of a project that falls into the category of industry transformation. Agriculture contributes 8% of the total U.S. carbon footprint, and the dairy industry is a significant contributor. At Walmart’s request, several dairy suppliers analyzed the costs and emissions associated with a gallon of milk, from dairy farm to distribution center. By gathering and looking at the data, we found many opportunities to reduce emissions – at farms through changes in fertilizer and manure management, at dairy processing facilities through improved energy efficiency and even in the product itself, such as making milk shelf-stable.

Some of these changes are now underway at one of Walmart’s suppliers, Dean Foods. We’re estimating that this one supplier alone can reduce CO2 emissions by 300,000 tons overall by 2015. If these changes were adopted throughout the dairy industry, we estimate that we could see over 2 million tons of greenhouse gas reductions in the same period.

Will this be easy? To put it simply: No. Looking deep into the supply chain and across product lifecycles for carbon pollution reduction wins is uncharted territory. The cross-organizational team working on this project has spent months creating a detailed guidance document about what can count towards Walmart’s goal, as well as how reductions should be quantified and confirmed. We’re committed to making this project as transparent as possible and will be publicly releasing the guidance document within a month for anyone who wishes to comment or share ideas.

Walmart’s action today won’t eliminate the need for a national and global cap on carbon pollution. These caps are absolutely necessary. We can’t solve our pollution problems without them. But negotiations take time, and while the clock keeps ticking, carbon pollution keeps building up in our atmosphere. Today, Walmart has shown that is it not waiting to act to reduce global carbon pollution.

Read more about Walmart’s commitment and view the webcast of the announcement.

This content is cross-posted on GreenBiz.com

Tomorrow, Walmart will announce a new commitment that we helped negotiate and develop. This goal aligns with one of Walmart’s core environmental goals – “to sell products that sustain our resources and the environment.”

EDF President Fred Krupp will join Walmart CEO Mike Duke in the announcement, which will be webcast live on Treehugger.com/Walmart at 11:00 am CST.

We’ll be live tweeting from the event at Twitter.com/EDFix

Following the announcement, Matt Kistler, senior vice president of Sustainability at Walmart, and Elizabeth Sturcken, managing director of Corporate Partnerships for Environmental Defense Fund, will hold a media conference call from 12:30-1:00 pm CST.  Media can join the call at 1-800-862-9098 with conference ID 7WALMART.

Treehugger.com will also be hosting a live online forum at 12:15 pm CST, in which Andrew Hutson, Project Manager on EDF’s Walmart partnership team, will participate.

It's truly uplifting hearing about the revolutionary things going on out there that together could save the planet and have business opportunity written all over them. Some of the best were the ones that EDF worked hard to unearth in the Innovations Review 2009 that we released at the conference. Some fall into the category of extremely creative with far-reaching impact, such as Patagonia’s Footprint Chronicles that lets consumers track the impact of specific Patagonia products. Patagonia gets why this is important. More companies should get it. It reminds me of something someone said at Fortune Brainstorm: GREEN — Your supply chain is your company.

Some of the environmental innovations in our report fall under the "No Brainer" category in my mind: Things like hotels using a system that links all heating, cooling and power to the keycard that guests insert upon entering their rooms. That simple change can save 25 to 45% of the energy used by hotel rooms, yet few hotels in U.S. have taken advantage of these systems. I again think of the Fortune conference. I overheard a senior executive from Marriott talking to Bill Clinton about the funds they were committing to the rainforest and thought "Great, but what about your hotels?" Right there at the conference I had seen water glasses filled up automatically before people arrived and bluefin tuna served at dinner (a health and overfishing double-whammy). Perhaps the small things they could do right here at the Ritz Carlton (owned by Marriott) would add up to a big environmental impact.

It's clear that companies that "make sustainability part of their DNA" (in the words of Cisco's Laura Ipsen) will reap the benefits. They will survive (Ford was at the conference) and thrive (Wal-Mart was too). They are saving money, reducing risk, gaining customers. It's not always an easy choice. Fisk Johnson, CEO of SC Johnson, talked about changing Saran Wrap from a chlorine-based polymer which cost them customers who didn't like how the change affected the product's feel and performance. Fortune's Marc Gunther half jokingly said, "We only like the positive stories here." But I think that this, no doubt, is a positive story. Products that harm our health and our earth should go away and companies like SC Johnson that have the courage to act on their green principles are most certainly doing the right thing for their business in the long term.

Here at Environmental Defense Fund Corporate Partnerships Program we work with business because we think that it's one of the most effective ways to create big, meaningful environmental change. I'm more hopeful than ever after the Fortune Brainstorm: GREEN conference.