Wal-Mart Details Results of Ethical Standards Program

High-risk factory violations down 23%

Retail giant Wal-Mart Stores Inc. on Aug. 15 released its 2006 ethical sourcing report detailing results of more than 16,000 audits of some 8,700 supplier factories in the past year.

Its number of audits in 2006 was a 15% increase over the previous year, with one-quarter of them identified as unannounced audits. As a result of the audits, 0.2% of the suppliers were permanently banned from producing goods for Wal-Mart, and another 2.1% were banned for one year. High-risk factory violations decreased by more than 23%.

The audits are not about shutting down factories, Wal-Mart says. "Factories that are disapproved may close, and the impact on the factory workers can be devastating," says Rajan Kamalanathan, Wal-Mart vice president of ethical standards. "To prevent this, we identify at-risk factories and invite factory management, along with the suppliers they do business with, to meeting with members of the Wal-Mart Ethical Standards Team."

The vice president says the team facilitates dialogue on issues of concern and serves as a resource to factory management to aid in improving working conditions.

Ethical standards personnel are located five regions: southeast Asia, the Indian subcontinent, the Far East, the Americas and the middle East.

The audit report also discusses the top challenges in each of those regions. For example, in the Far East, the top challenges were: legally required benefits not paid, failure to pay minimum wage or applicable wage; and egregious hours of work. In the Americas, the top challenges were: incomplete, expired or missing workers' contracts; violations of Wal-Mart's "seventh day of rest" policy; and working off the clock.

The complete report is available as a pdf at http://walmartstores.com/Files/2006ReportonEthicalSourcing.pdf

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