Ethical Standards and Working Conditions in Wal-Mart's Supply Chain

change. Wal-Mart goes further to try to explain the burden of audits on factories as “auditfatigue,” but never comments on why these audits should be considered so burdensome.Wal-Mart should create incentives that truly encourage factories to comply with their standards.For example, instead of extending the period between audits for factories rated Green, Wal-Martshould extend the length of those factories’ contract or make a promise to maintain a certainlevel of production within that factory. Wal-Mart is an innovator in consumer marketing, inproduction, and in the retail business - they should be able to come up with an incentive that willtruly motivate suppliers and factory owners into compliance.WHAT’S THE POINT?Wal-Mart may not be able to define any specific or long term goals for their audit program, butthe company does speak briefly about the overall purpose of its Ethical Standards Program invague phrases. According to the 2005 Report, the Ethical Standards Program Objectives are:• “To encourage the adoption of ethical sourcing practices through supplier and factoryeducation;• To monitor, through auditing, supplier and factory management practices to ensure theyare in accordance with the Wal-Mart Standards for Supplier and the local law; and,• To engage stakeholders in order to continually strengthen our Ethical Standardsprogram.”Wal-Mart goes on to state in the 2006 Report that it intends to:• Identify internal processes that might contribute to non-compliance with Wal-Mart’sStandards for Suppliers; such as short lead time for production and last minute designchanges;• Increase internal alignment between social and commercial objectives, factoring laborcompliance and social responsibility into purchasing decisions; and,• Reward suppliers who drive compliance throughout their supply chain but still deliver onquality with on-time shipping, and price with incentives in the form of future business.The 2005 stated objectives do nothing more than identify problems. The 2006 report suggeststhat Wal-Mart is exploring more systemic purchasing processes. However, the decrease inGreen-rated factories suggests that in reality the company’s sourcing practices may be doing justthe opposite. It is too early to tell how the statements made in the 2006 report will materializeinto any real change for workers. In ILRF’s assessment, it will take a fundamental shift on thepart of Wal-Mart in order to create an “internal alignment between social and commercialobjectives.”14