Walmart claims that its mission is centered on helping people live better which not only applies to customers and associates, but also to the workers who make their products. Furthermore, all the products that Walmart offers to its customers are supposedly verified whether they are produced with dignity and respect for workers. In order to be accepted as Walmart’s supplier there are standards and obligations expected from suppliers. Following section examines closely what are the key standards that according to Walmart prevail within its global supply chain (Walmart, 2012).
Basic standards that Walmart’s suppliers are expected to meet have to be in the compliance with applicable national and/or local laws and regulations, including but not limited to those related to labour, immigration, health and safety and the environment. Key aspects of these include: a) Employment must be on voluntary basis any form of forced labour is prohibited b) Suppliers must provide workers with rest day and make sure that working hours are consistent with the law and not excessive c) Suppliers must implement hiring practices that accurately verify workers’ age and legal right to work in the country prior to the employment d) Freedom of association and collective bargaining
e) Suppliers must provide workers with a safe and healthy work environment f) Suppliers must comply with laws related to waste disposal, air emissions, discharges, toxic substances and hazardous waste disposal
In order to develop socially and environmentally responsible supply chain Walmart obliges its suppliers to regular unannounced 3rd party audits that aim to monitor and assess the working conditions, community impacts and environmental practices in its supply chain. The audit process includes a review and verification of the following (Wal-Mart Stores, Inc., 2012):
a) Opening meeting
b) Factory tour
c) Employee interviews – assessing code of conduct
d) Document review – of at least 3 months to 1 year of records, always includes the review of compensation and labour hours e) Closing meeting and signing of the onsite report – audit findings are summarized in a closing meeting with factory management f) Reporting the audit – report is sent to Walmart detailing all of the findings
Once full inspection of the factory has been conducted an assessment rating is assigned. Finally, the decision is made whether the supplier meets the standards required by Walmart.
Walmart’s standards for suppliers examined in the previous section create a solid base for the engagement with ethically and socially responsible suppliers. However, a recent scandal relating to human trafficking in one of the factories that supplies shrimps to Walmart is undeniable evidence of non-compliance with basic human laws and also with standards for suppliers set by Walmart (Sifton, 2012).
According to Human Rights Watch (2012) workers in the seafood factory had to pay excessive amount of money to their employer for providing them with placement and transportation to work, often leaving them with insufficient money for food. Prior to the employment workers were promised to work at least 26 days per month, while reality was 10-12 days per month. Also, in order to comply with Thai law, employer has to enroll their workers to social security system so they can receive health care. Non-compliance with this law was evident in this case as well. Although the worst part remained that workers could not escape as their official documents i.e. ID cards, passports and working permits were confiscated (Sifton, 2012).
The cases like the one examined above prove that Walmart is does not fulfill its commitments to create an ethical sourcing, thus Walmart’s claims about ethical sourcing are invalid. If Walmart was to ensure that the supplier of seafood meet all the standards set by Walmart including legal, environmental and ethical standards an audit would have been conducted (Sifton, 2012).
Walmart is heavily criticised for an unethical and even lawful approach to its employers relating to number of issues including low wages, discrimination at the workplace and anti-union apparatus (Human Rights Watch , 2007). In the United States Walmart effects negatively retail worker wages as well as retail employment. In addition, University of California researchers found that workers in Walmart earn on average 12.4 % less than retail workers as a whole (UNI Global Union, 2012). Walmart’s workers demonstrated thier dissatisfaction with working conditions and low wages by protesting on Black Friday 2012, which is the day the company is making the biggest profit. Walmart workers stood up and more than 1,000 demonstrations in a hundreds encouraging Walmart to act ethicaly towards them. For workers protesting it was a huge risk as they are oficially not protected by any labour union (Progress, 2012). Another evidence that Walmart treats its employees unfairly are discrimination claims. Women workers in California pursue discrimination claims saying that Walmart systematically treats them unfairly. According to women workers retail giant denied to pay raises and promotions due to gender bias (Levine & Gupta, 2011).
Impact on local communities
According to UNI report (2012) the presence of Walmart stores in local communities has a devastating impact. Large retailers like Walmart force smaller businesses to close up as they neither offer such prices neither the range of products to costumers. An example of Iowa’s mens’ clothing stores across the US that closed up 67% of its stores within last decade due to Walmart’s entry to local market would illustrate the point (Hopkins, 2004). Entry and growth of large retailers in local community has a substantial negative impact on survival of a single unit operating in the same industry. National study of Walmart found that each Walmart worker takes the place of 1.4 retail workers. On a county basis this means that there is a 2.7 % reduction in retail employment due to Walmart opening (UNI Global Union, 2012). Although, it should be taken into the consideration that Walmart also tries to make a positive impact on communities through its ‘’giving programs ’’. In 2011, Walmart gave $86.2 million in cash and donations (Walmart , 2012).
Walmart (2012) promotes its activities relating to environmental sustainability claiming that they have become a key concern when doing business. Three of the key overall objectives relating to environmental sustainability are as follows:
• To be supplied 100% by renewable energy
• To create zero waste
• To sell products that sustain people and environment
Large retailers like Walmart realize how big is their impact on the environment and make commitments to show that they are concerned with the environment, although environmentalists consider these efforts to be insignificant as the whole business model of Walmart cut prices at all costs seems to be incompatible with environmental sustainability. Indeed, Walmart’s environmentally orientated efforts have made a positive impact but it is a far cry from sustainable business model (Deutsch, 2007).
The concept of environmental sustainability within the retail sector fails to accept that current rates of economic growth simply can’t be matched with sustainability, which calls desperately for a fundamental social and political change (Jones, 2011). Jackson (2006 cited in Jones , 2011 p. 267) argues that this partly reflects the consumption patterns that are typical for modern Western Society simply characterized as unsustainable.