Wal-Mart Stores, Inc and CSR

Introduction

Wal-Mart is a retail outlet with over 6000 stores spread across the globe (Rasche and Kell 34). The effect the company has in the global arena is astounding. Indeed, Wal-Mart boosts quarterly sales of about $350 billion dollars, and net profits of about $ 4 billion dollars. These operational figures are unparalleled in the retail market. However, the company operates unethically in pursuit of profits. Wal-mart cuts the wages of its workers in an effort to provide low cost products. In addition, the company has a large number of part time workers as a strategy for minimizing health insurance costs for full time employees. Although the company does not adhere to most set standards in the retail industry, it operates as legitimate business in a capitalistic society.

Wal-Mart is an affiliate of the Global Compact Local Network whose main aim is to attain compliance with the ten principles set by the Global Compact. Organizations, which are members of Global Local Network, are usually encouraged to adopt social responsibility and sustainable policies and give a report on their implementation (Rasche & Kell 129). The ten principles cover areas of labour, anti-corruption, human rights, and the environment. Wal-Mart Company can improve their compliance to the Global Compact principles in many ways. There are two main principles that the company is working hard to meet the set standards by the Global Compact expectations. These include the area of environmental protection, which is covered under the seventh, the eights, and ninth principle. However, this does not mean that the company is not working towards achieving the goal of the other principles, although little has been done. Indeed, this paper will evaluate the action of Wal-Mart in relation to the ten principles of the Global Compact. The paper will highlight what the company is currently doing and how it expects to improve its activities. Moreover, effort will be made to determine the whether the company’s action have a direct impact of the profits. Recommendations will be made on how the company can improve its operations based on its current operations.

Business practices in relation to the Global Compact principles

The first two principles of the Global Compact require companies to create an awareness of the basic human rights as stipulated under the Universal Declaration of Human Rights (United Nations Global Compact 4). Companies are mandated to work within their sphere of influence to ensure that these values are upheld in the workplace. Human rights are universal and should be applied equally to all workers in an organization. The Universal Declaration of Human Rights sets forth the minimum standards that can be applied to protect the rights of all people. Human rights deal with individual freedom, life, and security. They also specify equality as well as economic, social, and cultural freedom for each individual (Rasche and Kell 18). Although Wal-Mart has been in operation for many years and is the leading retails stores, it has constantly continued to violate basic human rights of its workers. Wal-Mart refuses to provide health cover for a majority of its employees. In addition, the company violates all set standards for safe working place. Moreover, the company faces a myriad of lawsuits for its continued violation of human rights. Although Wal-Mart has developed a code of conduct that seems to respect the rights of workers, available evident shows a continued effort by the management to suppress the rights of its workers in order to maximize profits. Any measures adopted by the company are cosmetic in nature and only made for public relations exercise. Report show that Wal-Mart if far from respecting the rights of its employees (iqunions.org 3).

The issues of complicity came forth after realizing that some companies can aid a government in violation of internationally recognized human rights (Mashood and Manisuli 533). Supporters of this principle argue that some companies sometimes contribute to a government’s systematic violation of human rights. On the other hand, corporations have raised a red flag on what constitutes complicity and the possible consequences that can affect the reputation of a business entity. Wal-Mart is on the list of the most wanted violators of human rights as well as helping in the violation of the same by some governments. In China, where about 75% of Wal-Mart’s products are manufactured, the workers are “kept under 24-hour-a-day surveillance and can be fired for even discussing factory conditions” (Mashood and Manisuli 533). China leads a number of countries that have little regard for human rights. China has no place for advocates of human rights. The country has been vocal in dismantling efforts to form unions for the protection of factory workers.

Wal-Mart seems to have capitalized on China’s position in pursuit of its goals. Indeed, the company has not made public who their contractors are in China, and neither will it allow anyone to visit their factories without prior arrangements. Such arrangements are required for the company to make efforts to conceal their malpractice. Because of economic integration, it is becoming increasingly difficult to hold Wal-Mart to account for such actions. Indeed, economic globalization and the rise of the Multinational Corporations have created a good breeding ground for the worst violation of human rights. However, some governments such as the Norwegian government have divested from Wal-Mart because of the company’s “complicity in human rights violations” (Mashood and Manisuli 533). The relationships between complicity and due diligence is clear; companies should do everything within their disposal to ensure due diligence in their operations. If pressure is not put on Wal-Mart, through boycotting of the company’s stores and products, it will be impossible to force Wal-Mart to follow due diligence. Moreover, with compatriots such as China, the company will continue to outsmart others in the retail business for years.

Labor issues

The next four principles deal with labor relations at the workplace. The third principle requires companies to allow worker to join unions and freely express themselves through their elected officials (Rasche and Kell 103). However, for Wal-Mart, labor issues are there to be read, but not followed in any way. The company has a systematic policy of disregarding any policy aimed at uplifting the standards of the workers. The company has prevented workers from joining any unions. Those who dare form or join a union are fired. For instance, the company closed a store in Quebec after the workers formed a union for its members (Human Rights 114).

The fourth principle requires companies to eliminate any types of forced labor within their premises (Nystuen at al 36). Wal-mart currently faces many legal battles for forcing workers to work off the clock without overtime pay. Indeed, managers are accused of manipulating time worked and wage records in order to minimize labor costs. Evidence produced in courts indicates that Wal-Mart was aware of such violations and had tried to conceal evidence to avoid liability. Indeed, Wal-Mart works systematically to cheat workers of their pay in order to maximize its profits. This is unethical and goes against the spirit of fourth principle.

Principe 5 requires companies to eliminate child labor. However, according to the National Labor Committee, over 200 children work for firms such as Wal-Mart and J.C Penny (Nystuen at al 35). The report indicates that children are mistreated, beaten and are forced to work for long hours with little pay. This is a violation of children rights an is also against recognized labor laws and human rights (Nystuen at al 36)

Wal-Mart violates the sixth principle on discrimination in its stores. Information on the company website indicates that the company was founded on the principle of non-discrimination. Wal-Mart observes that each of its members is “responsible for creating a culture of trust and respect that promotes a positive working environment” (wallmartstores.com). This information shows Wal-Mart as a company the respects and upholds human dignity by creating conducive working environment. Moreover, Wal-Mart indicates that it respects diversity and that no one is discriminated because of “color, nationality, sexual orientation, religion, disability, veteran status” (wallmartstores.com). However, the company’s treatment of workers proves otherwise.

According to Lila Shapiro, sex discrimination is rampant at Wal-Mart. Lawyers have represented many clients in courts for sex discrimination and gender bias. Some managers in some locations justify paying female employee less money “on the ground that the male workers have families to support” (Shapiro 8). In addition, Wal-Mart has unfair policies when dealing with minority groups. For instance, in 2005, the company was forced to pay over $10 million for employing undocumented workers, who worked under inhumane conditions. The workers were forced to work throughout the week with no overtime. In addition, they locked up in the stores when working extra hours. In 2009, Wal-Mart paid $ 18 million as compensation to workers who had sued the company for discrimination based on race (Human Rights 119). These statistics paint a grim picture of discrimination within Wal-Mart. Although Wal-Mart has a set code of conduct for ethical practices within its stores, its practices are contrary. This has seen numerous complains, lawsuits and payments for the same amounting to millions of dollars. Such costly lawsuits have a negative effect on the company profits.

The Environment

After years of poor environmental standards from Wal-Mart, the company is now striking back by forming policies that are environmentally friendly. Despite increased corporate values and thorough supplier practices examination, Wal-Mart is working hard to improve its environmental impact while assisting consumers and society to live a better life. These sustainability goals set by Wal-Mart mainly emphasize on the need for having “green collar” employees who are well versed in environmentally friendly business practices (Fishman 102). After being fined for violating the Clean Water Act in the year 2001, Wal-Mart now expects its contractors to attest that suitable storm water control dealings are implemented before they begin their construction. Wal-Mart Company also improved their environmental compliance throughout the current construction projects by observing storm water pollutants and giving a report on the results to the party involved.

In the year 2007, Wal-Mart laid down its environmental plan, which focused mainly on three things: waste management, sustainability, and renewable energy. Their main goal was to formulate zero waste, be supplied with 100 percent renewable energy and lastly to sell goods that sustain the environment and the people in it (Fishman 107). In their effort to offer renewable energy to sustain the company, Wal-Mart invented a new Global Greenhouse Gas Strategy. The company has also plans to make more efficient store to get rid of 20 million metric tons of gasses being emitted by greenhouse.

The zero waste projects require Wal-Mart to examine all its supply chain functions. The company has made goals to package the foundation of the project. Wal-Mart has issued the suppliers with question survey to identify whether they are aware of the amount of waste the company was producing before and GHG emissions. The company also gave their suppliers a packaging scorecard to help them assess their transporting costs and the content of their packaging recyclable. Through these surveys, Wal-Mart will be able to make changes that will efficiently support their goals of sustainability. Improving packaging is one of the critical to Wal-Mart’s goals of creating zero waste.

Then, using this data, Walmart was able to hone in on which suppliers were creating the most waste, and to brainstorm changes that Walmart deemed necessary to support their sustainability goals. Initial results of this reevaluation and subsequent changes indicate that improving packaging is critical to Walmart’s goal of zero waste. The company is aiming at creating toy boxes of the right size to save 3,425 tons of materials. Hamburger Helper also helped in product packaging, which eventually reduced the company’s level of GHG emission (Fishman 110).

Walmart is also aiming at selling products that will sustain the environment and the people in it. Their main aim with this goal is to capture sales practices, which work in supply chain. Walmart has assessed its jewelry suppliers to ensure that those who are socially responsible mine the precious metals and to encourage sustainable transportation and packaging. This goal also encourages CFLs in the company. The company aims at displaying CFL in all its stores in the world to help consumers

Anti-corruption

The last principle in the UN Global Compact deals with the issue of corruption. Wal-Mart’s complicity in bribery scandals goes beyond the normal. Wal-Mart’s subsidiary in Mexico is reported to have paid millions of dollars in bribes to government officials to speed up the process of setting up stores within the country. Wal-Mart paid money to get permits that usually take several months to process, in days. The Retail outlet also convinced the Mexican officials to overlook environmental regulations in favor of the company. Back at home, Wal-Mart continues to extend its corrupt practices as it stands accused of working in cohort with the U.S Chamber of Commerce to dilute legislation that make it illegal to bribe officials in foreign countries.

Wal-mart realizes that corruption is an important ingredient in its business model in selected regions or departments. Secondly, Wal-Mart uses corruption as a means to covering up its bribery activities. In addition, Wal-Mart extends the same to the home country by weakening any legislation aimed at regulating bribery in foreign countries. Faced with these allegations, the best Wal-Mart has done is to deny them (Jilani 2). Indeed, corruption plays a big part in the success of the company. It is through bribery that Wal-Mart got licenses to operate in Mexico and establish itself even before competition could do anything (Jilani 2).

Recommendations

Some of the business practices that will be recommended to be initiated by Walmart to enable them improve compliance to environmental protection include engaging in civil enhancement and corporate social responsibility to promote the ten principles of Global Compacts. The company shareholders should understand the overall direction that the store is taking and hence force managers to respect human rights. Shareholders should petition the top management to stick to set codes of conducts and avoid filing false criminal charges on labor leaders, who advocate for higher salaries and better working conditions. This will help the company minimize on lawsuits and maximize its profits.

The company can also forge partnerships with private sector organizations, civil society, and public sector institutions to help them in their project of protecting the environment. The large buyers of the goods sold at Walmart should work together with the smaller suppliers to help in meeting the company’s requirements of protecting the environment. Combined leadership and support is also required in the supply chain to enable efficient implementation of CR in the companied involved such as the suppliers, service providers and purchasing companies. The company should understand their suppliers to achieve credibility of Global Compact Principles. Collaboration helps and benefits companies hence Walmart will benefit from it too. Collaboration will provide the supply chain with best practices, add value to the company, and help them manage costs, instead of employing dirty tricks such as manipulation of employee records and bribing to gain entrance in foreign markets. Collaboration will also generate support amid suppliers ensuring limited effort duplication and consistency. Walmart should collaborate with its purchasers and competitors or suppliers to enable them improve compliance to all the principles of the Global Compact. This will also increase standards for the company and provide a platform where the company can improve its compliances to the ten principles.

Governments also need to put in place strong laws that meet international standards. The laws should not leave a room for employers to violate workers rights. Such laws should explicit provide dissuasive sanctions against employers who interfere with worker rights to organize and champion their own ideals.

Conclusion

In conclusion, Walmart is among those companies, which are members of Global Compact Local Network. The company is not applying best practices and approaches to ensure that they improve their compliance to the first eight principles of Global Compact that mainly deals with the rights of its workers. On the environmental front, Wal-Mart has developed environmental plans that will enable them achieve their goal of supporting a deterrent approach to environmental challenges and the undertaking schemes to encourage and support greater environmental responsibility. Indeed, several recommendations have been made that will enable the company to improve its compliance to all the principles of the Global Compact. The company is also ensuring that they take care of their stakeholders since they can benefit their project, at the same time be a challenge, and cause several implications.

Works Cited

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Iqunions.org. Corporate Watch: Wal-Mart. Web. 15. Nov. 2012. http://www.iqunions.org/walmart-unethical-work-practices.html

Jilani, Zaid. After Its Subsidiary Bribed Mexican Officials, Wal-Mart Lobbies to Weaken Anti-Bribery Laws. 6. June. 2012. Web. 15. Nov. 2012.<http://www.republicreport.org/2012/wal-mart-bribed-mexicans-lobbied-fcpa/>

Mashood, A. Baderin and Manisuli, Ssenyonjo. International Human Rights Law: Six Decades After Udhr and Beyond. Ashgate Publishing Ltd., 2010. Print.

Nystuen, Gro, Follesdal, Andreas and Mestad, Ola. Human Rights, Coporate Complicity and Disinvestment. Cambridge. Cambridge University Press, 2011. Print.

Rasche, Aaron and Kell, George. The United Nations Global Compact: Achievement, Trends and Challenges. Cambridge/New York: Cambridge University Press, 2010. Print.

Shapiro, Lila. Wal-Mart Faces Long Battle on Sex Discrimination, Despite Supreme Court Ruling. 24. Jan. 2012. Web. 15. Nov. 2012. http://www.huffingtonpost.com/2012/01/24/walmart-sex-discrimination-supreme-court_n_1227352.html

United Nations Global Compact. Human Rights. 16 March. 2006. Web. 15. Nov. 2012.< http://www.unglobalcompact.org/aboutthegc/thetenprinciples/humanrights.html >

Walmartstores.com. Wal-mart Statement of Ethics. n.d. Web.15 Nov. 2012. http://ethics.walmartstores.com/IntegrityIntheWorkplace/Nondiscrimination.aspx