Wal-Mart Nudges Foreign Suppliers

Chief executive H. Lee Scott Jr. says Wal-Mart must act because consumers blame stores, not suppliers, for abuses.
Chief executive H. Lee Scott Jr. says Wal-Mart must act because consumers blame stores, not suppliers, for abuses. (By Scott Sady -- Associated Press)
By Marcus Kabel
Associated Press
Friday, October 21, 2005

FAYETTEVILLE, Ark., Oct. 20 -- Wal-Mart Stores Inc. will start holding its suppliers more accountable for environmental and social standards at foreign factories as public expectations in the United States rise, chief executive H. Lee Scott Jr. said Thursday.

Scott told suppliers at a business conference that the public has high expectations of the world's largest retailer. The company has come under mounting fire from organized opponents over the environmental and labor standards of the low-cost manufacturers overseas from which it buys.

Scott said Wal-Mart would be more involved in its suppliers' businesses to make sure they are accountable and would work with them to find new products that meet demand for higher standards.

"Are you running your factories in a way that promotes environmental sustainability? Are you sourcing from people that causes there to be inclusion and opportunity for women- and minority-owned businesses?" Scott said. "You'll see Wal-Mart taking a stronger stand over the next several months in these areas," he told a conference on retail trends held by the Sam M. Walton College of Business at the University of Arkansas.

Scott said Wal-Mart had to act because the public was targeting retailers, not the manufacturers they buy from, over environmental and social issues.

"The factories in China are going to end up having to be held up to the same standards as the factories in the U.S.," Scott said. "There will be a day of reckoning for retailers. If somebody wakes up and finds out that children that are down the river from that factory where you save 3 cents a foot in the cost of garden hose are developing cancers at a significant rate so that the American public can save 3 cents a foot, those things won't be tolerated, and they shouldn't be tolerated."

But Paul Blank, director of Wake-Up Wal-Mart, backed by the United Food and Commercial Workers Union, was not impressed.

"Unfortunately, Wal-Mart's exploitation of workers is not limited to its use of sweatshop labor overseas," he said in a statement. "Our campaign is building a sea of public pressure to force Wal-Mart to end its race-to-the bottom business model." Blank added that sweatshop labor is only the beginning of many problems Wal-Mart must address.

Scott said he would fly to Shanghai on Wednesday to visit Wal-Mart's fast-growing store operations in China.

As one example of the new approach, Scott said the company would start selling clothing made from organically grown cotton next year.

"We're going to take thousands of tons of pesticides out of the environment and produce a better garment for our customer and a garment that they can be proud of. Those are the kinds of solutions that exist out there that take more sophistication," he said.


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