Walmart 3.1. Walmarts profile

Walmart Supercenters (hereafter Walmart) has a full offering of groceries and general merchandise in a single store. Walmart offers to its customers a one-stop shopping experience and is the largest private employer in the US as well as being the worlds largest retailer.66 It has more than 10,130 retail units under 69 different banners in 27 countries. They all share a common goal: Saving people money so they can live better.67 Walmart employs 2.2 million associates worldwide68 and generated net sales of $ 443 billion during the fiscal year of 2012. Walmart was founded in 1962, with the opening of the first Walmart discount store in Rogers, Arkansas (US). The company was incorporated as Wal-mart Stores, Inc. on 31 October 1969.69 The companys shares began trading on OTC (Over-The-Counter) markets in 1970 and were listed on the NYSE two years later.70

3.2. Walmarts CSR policies and reporting

Several authors have pointed to Walmart as an important emerging private actor in the transformation of lawmaking in the CSR field, referring to it as a global legislator.71 They highlight how Walmart is able to use its contractual relationships to regulate behaviour among its suppliers around the globe with respect to product quality, working conditions for the suppliers employees, and ethical conduct.72 Since 2007 Walmart publishes its annual report on its website. It was initially called the Global Sustainability Report and later changed to Global Responsibility Report in 2011. Mike Duke, Walmarts CEO (Chief Executive Officer), says This change reflects the new social and environmental dimensions we have added to our efforts () We believe transparency and accountability are part of being a good and responsible company.73 Walmarts annual report publishes its constant and progressive work towards social responsibility issues. The Global Responsibility Report 2011 is divided into three main reporting parameters: Environment, Social and Goals. Walmarts 2011 report covers every corner of CSR issues. It points out how its successful Sustainability 360 model74 has helped Walmart to be the retail leader in the market. It also communicates the significant progress made by and the new reduction goals of greenhouse gas emissions of its supply chain by 2015. Walmarts financial contributions in kind, such as investments in education, health, commitments to fight hunger, support for local farmers and access to healthier and affordable food, can also be found in Walmarts Global Responsibility Report 2011. Walmarts current performance, policies and financial figures at first sight portray Walmart as a role model company on CSR.

3.3. Walmarts conflicts

Walmart has faced many obstacles over the years. It seems that legal and social challenges have acted as important reasons for the development of its code of conduct and annual reporting. This statement can be illustrated in two relevant cases: Walmart Stores Inc. v. Dukes et al.75 and the press reports accusing Walmart of using child labour.

3.3.1. Walmart Stores Inc. v. Dukes et al.

Walmart Stores Inc. v. Dukes et al. started a decade ago and is still being heard by the US Courts. It commenced as a national class action against Walmart. Plaintiffs Betty Dukes, Patricia Surgeson, Edith Arana (plaintiffs), on behalf of themselves and others similarly situated, allege that female employees in Walmart and Sams Club retail stores were discriminated against based on their gender. They stated that they were discriminated against regarding pay and promotion to top management positions, thereby violating the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq. of Title VII).76 In 2004, the US District Court for the Northern District of California certified a national class of female employees challenging retail store pay and management promotion policies and practices under the Federal Rule of Civil Procedure Article 23(b)(2).77 Walmart appealed to the Ninth Circuit in 2005, arguing that the seven lead plaintiffs were not typical or common of the class.78 Walmart appealed to the Supreme Court in August 2010 after the US Court of Appeals for the Ninth Circuit upheld class certification.79 Finally, the situation changed on 20 June 2011 when the US Supreme Court reversed the class certification.80 The Court held that the nationwide class certification approved by the lower courts was not consistent with the Federal Rule of Civil Procedure Article 23(a) governing class actions.81 Justice Antonin Scalia concluded that the millions of plaintiffs and their claims did not have enough in common:82 Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members claims for relief will produce a common answer to the crucial question why I was disfavored.83 Dukes v. Walmart Stores, which in 2001 was estimated to comprise more than 1.5 million women, included all women employed by Walmart nationwide at any time after 26 December 1998.84 It would have been the largest class action lawsuit in US history.85 Despite the Supreme Court resolution, time, money and efforts invested up to this point, the case did not end there. In October 2011, the plaintiffs lawyers filed an amended lawsuit limiting the class to female Walmart employees in California.86 This suit is expected to be the first of many additional classaction lawsuits against the retailer at the state or regional level.87 The new lawsuit, filed in the US District Court for the Northern District of California, alleges discriminatory practices against more than 90,000 women regarding pay and job promotion as well as requiring non-discriminatory pay and promotion criteria.88

3.3.2. Walmart caught using child labour in Bangladesh

At the end of 2005, the Radio Canada programme Zone Libre made public the news that Walmart was using child labour at two factories in Bangladesh.89 Children aged 10-14 years old were found to be working in the factories for less than $50 a month making products of the Walmart brand for export to Canada.90 Referring to Walmarts policy at that time consisting of cutting ties with suppliers when violations occurred, the NGO Maquila Solidarity Network said that cutting and running is the worst possible response to reports of child labour or other sweatshop abuses.91 Critiques said that it only discourages workers from telling the truth to factory auditors for fear of losing their jobs and encourages suppliers to hide abuses or to subcontract work to other factories that will escape inspection.92 Nevertheless, Walmart ceased business with the two factories immediately.93 Walmart alleges that despite its effort to inspect all factories, it is difficult to enforce its own corporate code of conduct with thousands of subcontractors around the world.94

3.4. Walmarts CSR policies post-conflicts

Walmart developed its first Code of Conduct (COC) Standard for Suppliers in 1992,95 which mainly focuses on quality standards for suppliers only. However, Walmarts first general report (Report on Ethical Sourcing96), which includes suppliers, customers and associates, was generated in 2006. This report was elaborated after the filing of the lawsuit by the female employees in 2001 and the damaging campaigns and press publications accusing Walmarts suppliers in Bangladesh of using child labour. Walmarts reporting culture was imitated by the rest of the companies in the market. Nowadays, Walmart has been qualified as a global legislator in CSR policies.97 The 2005 Report on Ethical Sourcing reported that Walmart had ceased to do business with 141 factories, primarily because of underage labour violations.98 The Report also contains a chart with the main violations found during the audits. Gender discrimination was not mentioned at any stage throughout the whole document. Walmarts 2005 and 2012 COC Standard for Suppliers explicitly establish that Walmart would not tolerate the use of child labour.99 The 2005 COC sets the age of 14 as the minimum age for suppliers and subcontractors to hire workers.100 It also specifies non-discrimination on the basis of gender and other personal characteristics or beliefs. It is important to highlight that gender discrimination was not given any special treatment in the 2005 COC or in the general report. Walmarts zero tolerance policy for underage workers was changed in 2005.101 If a single underage worker was found in a factory, Walmart ceased business ipso facto. At the beginning of 2005, if two underage workers were found, the factory would receive a warning and had to change and correct in the follow-up audit.102 If more than two underage workers were found or the company did not make corrections, the factory was permanently banned from Walmarts production. This decision was based on NGO advice from the Bangladesh case mentioned in the above section. If Walmart cuts business with these factories, many workers could be laid off for lack of production, suppliers will hide abuses and workers will not tell the truth to auditors in order not to lose their jobs. Walmart has a strict corporate code of conduct in the industry but according to investigations Walmart is not able to enforce its code in developing countries.103 Currently, Walmart publishes a full and complete report on CSR issues called Global Responsibility Report which covers the three dimensions of People, Planet, Profit.104 This report emphasizes gender equality and a diverse workforce.105 Walmart has a Gender Equality and Diversity gender policy that can be found in its Global Responsibility Annual Report. In 2009, Walmart took the commitment one step further with the incorporation of the Advisory Board on Gender Equality and Diversity. The board is aimed at providing equal and enhanced opportunities for all in top leadership roles.106 These policies have generated an increase in female officials and managers from 23,873 employees in 2005 to 25,246 employees in 2010.107 Walmart has also committed itself to achieving three goals in its Sustainability Report: using 100% renewable energy, creating zero waste, and selling products that sustain people and the environment. These criteria are established and measured by Walmart at the end of the 2012 report. Walmart indicates every year its completed goals and the progress in the ones that have not yet been achieved. An example of quantifiable measures is creating a zero waste Walmart by eliminating landfill waste from US stores by 2025. Although Walmart does not follow the GRI Guidelines, it has measurable targets on audits. For instance, Walmart requires its suppliers who produce toys in China to sign up to the ICTI CARE Process.108 The ICTI CARE Process was created by the international toy industry to achieve a safe and human working environment for toy factory workers worldwide. In addition, Walmart conducts internal validation audits by Walmarts Ethical Sourcing team. These validation audits ensure that the ICTI CARE process is properly implemented and that it meets Walmarts Standards for Suppliers.109

Make a WAC (Written Analysis Case) following the basic steps of WAC namely:

I. Problem Statement

II. Objective/s

III. Alternative Courses of Action (ACA)

IV. Conclusion

V. Recommendation.