Put a Wal-Mart guy and a Whole Foods guy on the same stage to talk sustainability at a conference in Boulder, and what happens? Interesting things.

Fresh from their morning yoga and organic luncheon, a not particularly friendly audience of execs and marketers heard Wal-Mart senior director of corporate responsibility Rand Waddoups say: “Wal-Mart is not a green company.”

Countered Michael Besancon, southwest regional president for Whole Foods Market: “If Wal-Mart is not a green company, then Whole Foods is not a green company. We do a lot of green things, and we have green intentions, but we don’t believe that we are, and we try not to say that we are.”

Later in the discussion, asked by eco-journalist Simran Sethi whether Wal-Mart sells products containing genetically modified organisms, Waddoups answered, “Everybody is.”

Sethi started to pursue the point but Besancon interrupted. “We are too,” he said. “We sell GM foods. We can’t source corn and soy in every product… we can’t control everything manufacturers do.”

Because of this, consumers as well as retailers must push for transparency of the supply chain, Waddoups said. Added Besancon: “The more questions you ask, the more answers you get that you don’t want to hear.”

Sustainability, Besancon added, creates a great deal of tension between the three legs of the “triple bottom line”: People, planet, and profits. Replacing plastic bags, which cost a penny each, with paper bags, which cost as much as 17 cents each, is not a zero-sum move.

Waddoups was the salty snack buyer at Wal-Mart, sharing a cubicle with the water buyer, when the company responded to Hurricane Katrina more quickly and effectively than the government did — starting with 18-wheelers full of bottled water. That showed him — and the rest of management — that the world’s largest company could be a potent power for good. “We’re trying to be as good as we were during Hurricane Katrina all the time,” he said. “What’s happening now with the climate is like Hurricane Katrina in slow motion.”

Besancon, who went to work at a southern California health food store 38 years ago, noted that Waddoups started corporate and adopted a sustainable viewpoint, whereas “I started out as a hippie and became a hard-assed businessman.”

From my notebook:

• Food price inflation is the most challenging aspect of the current economic environment for Whole Foods. Having been able to take advantage of “incredible price elasticity” on high-end foods, the company now has to add value to support its higher prices, such as the “Whole Trade” certification. Asked to go beyond what’s already required by Fair Trade and Rainforest Alliance, vendors have complained but more than 70 are participating in the new program, Besancon said.
• While Wal-Mart asks its 60,000 vendors to support sustainability measures, the company has found that operational changes are much easier to manage. “We (once) thought of energy expense as a noncontrollable expense,” Waddoups said, citing a supercenter in Las Vegas that cut energy expenses 45 percent in two years.
• Sometimes a sustainability change is a win-win-win. Wal-Mart now sells Radio Flyer tricycles out of the box, “because who needs a box?” Waddoups said. Because selling it without a box meant it had to be easier to assemble, it’s also easier to display, so “sales are great on it.” Reducing waste has always been a cultural value at Wal-Mart. “Sam Walton was the master of getting rid of waste,” Waddoups said.
• If last year was the year of the compact fluorescent, and this year is the year to bring your own bag and stop drinking bottled water, what happens next? “Spoilage,” said Besancon. “We discovered we were throwing a lot of stuff out.” In his four-state, 38-store region, Whole Foods composted 15 million pounds of trash last year that would have gone into landfills — “and that’s after food banks” take anything that’s still edible.
• While Waddoups is one of a three-person corporate responsibility team, Wal-Mart established sustainability captains at 40,000 stores. Each employee has a “Personal Sustainability Project” that ranges from quitting smoking (20,000 people) to making all Wal-Mart seafood compliant with Marine Stewardship Council guidelines (fish buyer Peter Redmond). “Sustainability is about individual choices in the aggregate,” Waddoups noted — and Wal-Mart CEO Lee Scott has told associates that sustainability will be key to getting promoted.
• Michael Pollan’s accusation of “industrial organics” in “The Omnivore’s Dilemma” was a wake-up call for Whole Foods, Besancon said. While he supports buying local and is conscious of food security, his overriding goal for nearly 40 years has been to remove synthetic chemicals from agriculture “and the reason we support industrial organic is because that’s how it gets done. It wasn’t going to get done one little farm at a time.” When he heard that Wal-Mart was the No. 1 seller of organic produce and organic cotton clothing, “I said, damn, my life has been successful. I won.”
• Whole Foods and three personal care manufacturers (Avalon Natural Products, NutriBiotics and Beaumont Products) were sued June 12 by California Attorney General Jerry Brown for selling products that contain a potential carcinogen, 1,4-dioxane. “What the hell’s up with Jerry?” Besancon asked. “Why in the hell doesn’t he sue Revlon? I don’t get it.”

Image: Organic cotton baby clothing at Wal-Mart.