Wal-Mart's (Un)sustainability Index

Originally posted on July 24 at http://dirtdiggersdigest.org/archives/703.

Wal-Mart has taken the latest in a long series of steps to make
itself look good by imposing burdens on its suppliers. The mammoth
retailer, which is thriving amid the recession, recently announced
plans to require its more than 100,000 suppliers to provide information
about their operations that would form the basis of a product
sustainability index.

Rating products is a good idea. It's already being done by various
non-profit organizations that bring independence and legitimacy to the
process. Wal-Mart, by contrast, brings a lot of negative baggage. In
recent years, Wal-Mart has used a purported commitment to environmental
responsibility to draw attention away from its abysmal record with
regard to labor relations, wage and hour regulations, and employment
discrimination laws. It also wants us to forget its scandalous tax
avoidance policies and its disastrous impact on small competitors. The
idea that a company with a business model based on automobile-dependent
customers and exploitative supplier factories on the other side of the
globe can be considered sustainable should be dismissed out of hand.
Yet Wal-Mart is skilled at greenwashing and is, alas, being taken
seriously by many observers who should know better.

On close examination, Wal-Mart's latest plan is, like many of its
previous social responsibility initiatives, rather thin. All the
company is doing at first is to ask suppliers to answer 15 questions.
Ten of these involve environmental issues such as greenhouse gas
emissions, water use, waste generation and raw materials sourcing. The
final five questions are listed under the heading of "People and
Community: Ensuring Responsible and Ethical Production."

Two of them involve "social compliance." It is an amazing act of
chutzpah for Wal-Mart, which probably keeps more sweatshops in business
than any other company, to claim moral authority to ask suppliers about
the treatment of workers in their supply chain.

The questions in this category seem to assume that suppliers don't
do their own manufacturing. This is a tacit acknowledgement of how
Wal-Mart has forced U.S. manufacturers to shift production offshore,
and often to outside contractors. Now Wal-Mart has to ask those
companies to be sure they know the location of all the plants making
their products and the quality of their output.

The point about quality was one that CEO Mike Duke (photo) emphasized
when announcing the rating system. This is also highly disingenuous.
For years, Wal-Mart was notorious for pressing suppliers to reduce the
quality of their goods to keep down prices. Now the behemoth of
Bentonville is suddenly a proponent of proponent of products that "are
more efficient, that last longer and perform better." Will Wal-Mart pay
its suppliers higher prices to cover the costs of improving quality?

I
can't bring myself to jump on Wal-Mart's bandwagon. If I want product
ratings I will turn not to Mike Duke but rather to someone like Dara
O'Rourke, who founded a website called Good Guide
that rates consumer products and their producers using independently
collected data from social investing firms such as KLD Research and
non-profits such as the Environmental Working Group. It uses criteria
such as labor rights, cancer risks and reproductive health hazards that
are unlikely to ever find their way into the Wal-Mart index.

Good Guide also rates companies, including Wal-Mart, which receives a mediocre score
of 5.3 (out of 10), and it reaches that level thanks to its marks on
p.r.-related measures such as charitable contributions and some but not
all environmental measures. In the category of Consumers it gets a 4.1,
Corporate Ethics 3.9, and for Labor and Human Rights 4.1 (which is
generous).

Maybe Wal-Mart should focus on improving its own scores before presuming to rate everyone else.

Dirt Diggers Digest is written by Philip Mattera, director of the Corporate Research Project, an affiliate of Good Jobs First.

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