business news in context, analysis with attitude

MNB reported yesterday that Wal-Mart has been named in class action suit by workers in Bangladesh, Swaziland, Indonesia, China and Nicaragua, accusing the company of being “an unrepentant and recidivist violator of human rights” because it supports toy and clothing factories where employees are paid below minimum wage, forced to work overtime without pay, and even suffer beatings by supervisors.

One MNB user (who happens to work for Wal-Mart) forwarded us the following letter, which was sent out by Wal-Mart CEO Lee Scott on May 31, 2005, and that specifically addressed some of the human rights questions now at issue in the lawsuit. He wrote, in part:

“Wal-Mart instituted its first code of conduct for suppliers in 1992, and we have worked continuously since to strengthen the code and make it a more effective tool for improving conditions for workers in factories making goods for our company. In 1996, I personally saw how important ethical sourcing would be to our company when I went to Bangladesh to investigate allegations of poor conditions at factories where garments were being produced for Wal-Mart. We corrected deficiencies that we found, and in the following nine years we have continued to work towards higher standards and stronger enforcement. The Ethical Standards (ES) program is a vital part of our business….

“While we recognize the need to make our program even stronger, we nevertheless feel it is important to note that we audit more factories than any other company in the world. In 2004, some 12,500 audits, an average of 30 each day, were conducted at factories producing a wide assortment of goods for Wal-Mart…We recognize that full compliance cannot be accomplished through audits alone. Ultimately our suppliers and their factories must realize the benefits of improving worker conditions and incorporate improved standards and processes into their businesses. We will continue with these efforts towards educating and driving change in worker and factory conditions worldwide.

“I also think it is important to recognize the reality that however strong the programs we develop, violations of our standards will occur. I am proud of the fact that when violations are identified, either by our trained auditors or authorized third-party service providers, Wal-Mart takes action. Our first step is always to work constructively with factories to correct problems, but in those few unfortunate instances where factories are not willing to change their business practices after multiple opportunities, we will discontinue our business with them.

“Since I first visited Bangladesh almost a decade ago, factory working conditions around the world have improved in many respects, partly due to corporate efforts made by companies purchasing goods and partly due to the encouragement and guidance of outside groups often
critical of industry practices. While we are proud of this progress, we acknowledge that much more improvement is necessary. We must continue to work cooperatively and constructively with stakeholder groups and other advocates of change. We must continue to focus on workplace conditions, but also turn our attention outside the factory walls to environmental issues that affect both the workers and the local communities where factories are located.”
KC's View:
If Wal-Mart is being straightforward and above-board with its responses to this issue, the company ought to be fine, though there will always be people who will believe that it is the vessel of pure evil and that Lee Scott is the Antichrist. (We’re not kidding. We’ve gotten two of those emails this week.)

But if Wal-Mart bears any responsibility for these kinds of human rights violations, it will come out…and it will cause the company image problems for years to come.

Let the truth be told.

"Sunlight is the best disinfectant." (U.S. Supreme Court Justice Louis Brandeis)