Wal-Mart Finally Moving Forward on China Labor Conditions

The company that so many of us love to hate has started addressing some of the reasons why I won’t do business with them. This short article by Mallen Baker shows progress on both labor standards and energy. Reprinted in full with Mallen’s generous permission.

This is big news, as my understanding is a major part of why so much of the US economy picked up and moved to Asia is Wal-Mart’s constant demand that suppliers reduce the price 10% every year. About time it started adding some social responsibility to its demands.

Wal-Mart has told a meeting of its Chinese suppliers that social and environmental standards will need to be raised to help the company meet its goals and to move forward in the wake of the milk poisoning scandal that has left many Chinese children still in hospital.

The company’s requirements will aim to improve energy efficiency, with a 20 percent improvement in energy efficiency required of the top 200 suppliers, full disclosure of locations of factories including sub-contractors, and product improvements in terms of energy ratings.

Wal-Mart said that many of the measures would be good for suppliers, helping them to save money by reducing waste. But in any case, it made a direct link between the quality of products and whether or not a supplier cheated on overtime or used child labour, or dumped polluting waste.

In return, the company has said it will change the nature of its relationship with Asian suppliers, aiming to develop deeper long-term relationships to mutual benefit, rather than focusing simply on the price of each transaction.

Overall, I continue to be highly critical of Wal-Mart, but glad to see the company moving forward. I think this is only the third time I had anything good to say about Wal-Mart in this space. The first was after Katrina, when the company stepped in to do what the federal government should have done. And the second was almost two years ago, regarding one of the company’s other energy saving initiatives.