The retailer is about to unveil a “sustainability index” on every product it sells.

PepsiCo (PEP) buys lots of renewable energy, while a Coca Cola (KO) plant recycles plastic bottles. Should environmentalists drink Pepsi or Coke?

Dell (DELL) is "carbon neutral." Hewlett Packard (HPQ) says it designs for the environment. Whose laptops are more "green"?

So many choices, so little reliable guidance: Clorox GreenWorks or Seventh Generation? Local or organic strawberries? Paper or plastic? Who's to say?

Wal-Mart (WMT), that's who.

The giant retailer ($406 billion in revenues in 2008) is developing an ambitious, comprehensive, and fiendishly complex plan to measure the sustainability of every product it sells. Wal-Mart has been working quietly on what it calls a "sustainability index" for more than a year, and it will take another year or two for labels to appear on products. But the company's grand plan-"audacious beyond words" is how one insider describes it-has the potential to transform retailing by requiring manufacturers of consumer products to dig deep into their supply chains, measure their environmental impact, and compete on those terms for favorable treatment from the world's most powerful retailer.

Wal-Mart intends to announce the sustainability index at a meeting on Thursday, July 16, at its corporate headquarters in Bentonville, Ark., to which hundreds of suppliers, academics, environmentalists, and government officials have been invited. There, the company will unveil a sustainability consortium led by the University of Arkansas and Arizona State University that will provide scientific research to support the effort. Faculty at Duke, Harvard, Stanford, the University of California at Berkeley, and the University of Michigan have been involved in planning the index, but they haven't yet agreed to join the consortium, in part because some college administrators are skittish about working with Wal-Mart. Consumer-goods companies Procter & Gamble (PG), General Mills (GIS), Tyson (TSN), and Unilever (UN), among others, are partners in the consortium. And competing retailers including Costco (COST), Target (TGT), and Kroger (KR) have been invited to join. This is, in other words, a very big deal.