Wal-Mart Commentary
As the world’s largest retailer, Wal-Mart sets the bar to which other companies are measured. Wal-Mart has come to recognize this responsibility – when it makes a move, most retailers follow suit. Given the pressing importance of climate change and other environmental and social issues, Wal-Mart’s November release of its Sustainability Progress Update is a positive development that is already influencing its competitors. MMA has worked for many years with other concerned investors to engage Wal-Mart management on issues ranging from employee benefits to greenhouse gas emissions, in order to encourage the company to be more sustainable.
In terms of progress, Wal-Mart has made great strides in disclosing critical sustainability information, such as the efficiency of its truck fleet or statistics on employee diversity. This represents a welcome change from the company’s historically secretive disclosure policies and frosty relationship with shareholders. Yet despite this positive trend, there is a rift between the talk of sustainability and the daily implementation of Wal-Mart’s business plan.
Lee Scott, Wal-Mart’s CEO, made major environmental and social commitments in 2005. Scott’s vision sounds ideal – a continued culture of low prices, combined with a focus on long term sustainability. But sustainability does not always coincide with low prices, and we (as shareholder advocates) have not seen willingness among senior management to look beyond the culture of low prices to embrace sustainability. For instance, Wal-Mart’s sourcing department still prioritizes price over all other considerations. Factories which supply merchandise to Wal-Mart – the majority of which are located in Southeast Asia – are often forced to ignore their countries’ already minimal standards for wages, working conditions, and environmental protection in order to meet price demands and still turn a profit.
Wal-Mart is saying the right things – it’s now time for effectual change. Wal-Mart’s sustainability update is a step in the right direction, and we will continue to press for progress, especially within the company’s corporate culture.
February 21st, 2008 at 3:48 pm
I think my main concern about Wal-Mart is pretty local in nature. Here in Oklahoma, they are growing so fast that they are pushing many of the small local stores out of business. In the town I grew up in and where my parents still live, you have one choice for groceries now - Walmart. Before there were two local grocery stores.
There probably isn’t a good answer to this one, but that is a big concern for me.
February 22nd, 2008 at 1:29 pm
That’s a good point - one that I’m personally concerned about as well. I’m from the Midwest, and Wal-Mart’s effect on downtowns in this region has been adverse.
Unfortunately, as a financial services company, MMA is basically limited to investing in publicly traded corporations. As with any other publicly traded retailer, Wal-Mart’s success will inevitably knock locally owned stores out of business. Since we can’t ask Wal-Mart to close down its stores, our best option is to make Wal-Mart’s operations more sustainable in the hope that our efforts will lead to global social and ecological improvements, and pressure other retailers to do the same.