Wal-Mart’s Ethical Standards program audited more factories than any company in the world; high-risk factory violations decreased more than 23 percent; program scope increased to include environmental criteria
BENTONVILLE, Ark. – August 15, 2007 – Wal-Mart Stores, Inc. has announced the release of its 2006 Ethical Sourcing report, providing information on the company’s Ethical Standards Program, its impact on factory working conditions and the lives of factory workers. The report details results of more than 16,000 audits of supplier factories, as well as enhancements to the program during the past year, such as strengthened environmental criteria and increased program scope. The report can be viewed at www.walmartstores.com/ethicalstandards.
The report shows that in 2006, Wal-Mart conducted more factory audits than any other company in the world, at 8,873 factories producing goods for Wal-Mart, 15 percent more than in 2005. Unannounced audits made up 26 percent of the audits undertaken, a six percent increase over 2005. High risk violations of the Wal-Mart Standards for Suppliers code decreased 23.5 percent in 2006, mainly due to educational outreach.
“The Wal-Mart Ethical Standards program is in place to do what is right for factory workers and the environment,” said Rajan Kamalanathan, vice president of Ethical Standards for Wal-Mart Stores, Inc. “The only way to achieve our objective is by moving beyond monitoring factories to working in collaboration with stakeholders. In this manner, we not only bring sustainable and positive change to working conditions in factories, we also to help build ladders to a better life in the countries where we’re sourcing.”
Program enhancements detailed in the 2006 report include the expansion of environmental elements into supplier factory audits to include waste identification, waste handling and disposal, wastewater treatment and discharge, and air emissions. Auditors now discuss environmental findings with factory management as part of the audit closing meetings to educate them on the new criteria and on environmental sustainability. In addition, Wal-Mart now includes environmental training in group training sessions for new and existing suppliers.
“Factories that are disapproved may close, and the impact on the factory workers can be devastating. To prevent this, we identify at-risk factories and invite factory management, along with the suppliers they do business with, to meet with members of the Wal-Mart Ethical Standards Team,” Kamalanathan said. “We facilitate dialogue on issues of concern and serve as a resource to factory management in a collaborative way. For example, in the Europe Middle East, and Africa region, meetings were held with eight targeted suppliers and factory management, and at the end of 2006, all eight showed substantial improvement, with six achieving our highest audit rating.”
In 2006, over 200 Ethical Standards associates were located in five regions around the globe: Southeast Asia; the Indian subcontinent; the Far East; the Americas; and the Middle East, Africa and Europe. The Ethical Standards team monitors supplier factories, engages with stakeholders, manages risk, and works to educate factories and suppliers to help prevent violations of Wal-Mart’s Standards for Suppliers code. The team is entrusted with verifying that suppliers comply with Wal-Mart’s Standards for Suppliers code of conduct and working to improve factory working conditions throughout the industry.
Established in 1992, Wal-Mart’s Standards for Suppliers code details the company’s expectations for labor practices in the production of merchandise for sale by Wal-Mart. Every supplier must sign an agreement that they, their contractors, and subcontractors will abide by the Standards for Suppliers code. As part of Wal-Mart’s agreement with suppliers, a poster of the Standards code, signed by factory management, must be displayed in a location visible to all employees at all facilities that manufacture merchandise for sale by Wal-Mart. A local helpline number and e-mail address is located on the poster for workers to contact Wal-Mart with any concerns they may have.
About Wal-Mart Stores, Inc. (NYSE: WMT)
Wal-Mart Stores, Inc. operates Wal-Mart discount stores, Supercenters, Neighborhood Markets and Sam’s Club locations in the United States. The Company operates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. The Company’s securities are listed on the New York Stock Exchange under the symbol WMT.