The Case of Modco Inc.

Company Profile

Modcowas founded in 1960, with the opening of the firstModcodiscount store, and was incorporated asModcoStores Inc. in January 1970. The company's shares were listed on the NYSE in 1975.Modcohas a full range of groceries and merchandise in a single store.Modcois proud of the fact that it offers its customers a one-stop shopping experience and is one of the largest private employers in the United States and one of the world's largest retailers. It has more than 8,000 retail units under several banners in 15 countries. They all share a common goal of promoting the idea, "Better life for people by helping them save money."Modcohas 2 millionemploycesworldwide and generated net sales of $200 billion during fiscal year 2017. Since 2005,Modcohas published its annual report on its website. According to its CEO,Modco'sannual report reflects the social andcenvironmentaldimensions of its activities and its constant and progressive work toward social responsibility issues.Modco's2017 annual report states how its emphasis on sustainability has helped the company to be the retail leader in the market. According to the report,Modcohas investments in education, health, commitments to fight hunger, for local farmers, and access to healthier and affordable food. Such reports portray an image of the company as a role model on corporate social responsibility (CSR).

Company Conflicts

There is a national class action againstModcowhich started nearly a decade ago. Plaintiffs allege that female employees inModcoretail stores were discriminated against based on their gender, regarding pay and promotion to top management positions. In 2011, the relevant U.S. District Court issued a judgment in favor of the class action.Modcounsuccessfully appealed to the U.S. Court of Appeals. LaterModcoappealed to the U.S. Supreme Court, which reversed the Appeals Court's decision in May 2017, concluding that the millions of plaintiffs and their claims did not have enough in common. In September 2017, the plaintiffs' lawyers filed an amended lawsuit limiting the class to femaleModcoemployees in the district where the company head office was located. The new lawsuit alleges discriminatory practices against approximately 100,000 women regarding pay and job promotion, as well as requiring nondiscriminatory pay and promotion criteria. At the end of 2016, it was announced on the local radio thatModcowas using child labor at two factories in Page S08 Bangladesh. Children aged 10-14 years old were found to be working in the factories for less than $50 a month, making products of theModcobrand for export to the United States.Modco'sannual report, called "Global Responsibility Report," covers the three dimensions of "People, Planet, Profit." This report emphasizes gender equality and a diverse workforce. In 2015,Modcotook the commitment one step further with the incorporation of the Advisory Board on Gender Equality and Diversity, with the specific function of providingcqualand enhanced opportunities for all in top leadership roles.Modcohas also committed itself to selling products that sustain people and the environment.

Required: Assume that you are part of research team examining the sustainability reporting and stakeholder relations policies of large companies. Evaluate the policies of Modco.

Reference: Doupnik, T., Finn, M., Gotti, G., & Perera, H. (2020).International accounting(5th ed.)