The Wall Street Journal (Jan.22, 2013) reports that Walmart is warning suppliers that it is adopting a “zero tolerance policy” for violations of its global sourcing standards, and plans to immediately sever ties with anyone who subcontracts work to factories without the retailer’s knowledge. The changes come after Walmart clothing was found at a Bangladesh factory where a fire killed 112 people in November—a factory the company said was no longer supposed to be making its clothes. “Obviously our three-strike policy wasn’t working as well as it could have,” says Walmart’s VP of ethical sourcing.
Here is a summary of the changes:
- Starting March 1, Walmart will employ a “zero tolerance” policy to sever ties with suppliers that subcontract work to factories without the retailer’s knowledge; Its previous “three-strike” policy gave suppliers three chances to comply with Walmart’s safety requirements
- All facilities in Bangladesh must undergo a mandatory electrical and building safety review
- Factories found to have fire-safety related violations have 30 days to take corrective action before being terminated, instead of the previous requirement of six months to a year; all floors and buildings must have a secondary exit, preferably an external fire escape route
- New factories must undergo a pre-approval audit before suppliers can do business with them
- Suppliers must ensure one of its employees, and not a separate agent, is stationed locally to monitor factory facilities
- Walmart will publish a list of factories suppliers are no longer authorized to use on the retailer’s corporate website
“Walmart’s factories are dangerous because they don’t pay adequate prices to suppliers, and because there is no transparency in their monitoring programs,” says the director at Worker Rights Consortium, a nonprofit group. “There is nothing here that changes any of that.”
Discussion questions:
1. Is Walmart doing everything feasible to be “ethically sourcing.”
2. Why has Walmart become a global leader in sustainability?