Today at a gathering of suppliers, Chinese officials and non-governmental organizations (NGOs) in Beijing, China, Wal-Mart Stores Inc (NYSE: WMT) said it will begin enforcing stricter
quality and environmental standards on the products it imports
The company, which purchases roughly $9 billion worth of goods directly from China, outlined a series of goals and expectations that it said will help build a more environmentally and socially responsible global supply chain.
"Sustainability is about building a better business. We think it is essential to our future success as a retailer–and to meeting the expectations of customers," said Lee Scott, president and CEO of Wal-Mart Stores, Inc. "Maintaining the trust of our customers–today and in the future — is tied hand-in-hand with improving the quality of our supplier factories and their products."
The company said it will focus on social and environmental standards, driving innovation and efficiency and building stronger partnerships with suppliers, government and NGOs.
Scott continued, "I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and chemicals in our rivers, that does not pay its taxes or honor its contracts–will ultimately cheat on the quality of its products."
Addressing suppliers in attendance, Mike Duke, vice chairman for Wal-Mart’s international division outlined a number of requirements and expectations for suppliers who want to do business with Wal-Mart.
Wal-Mart said in a release, the requirements include compliance with environmental laws and regulations, higher product safety and quality standards, and partnering with suppliers to improve energy efficiency and use of fewer natural resources.
Wal-Mart said a new supplier agreement will be phased in beginning with suppliers in China in January 2009 and expanding to suppliers around the world by 2011. As part of the process the company said it will audit suppliers, paying particular attention to air emissions, management of toxic substances and disposal of hazardous waste.
However, the process likely won’t be quite that simple, as the China’s manufacturing web is incredibly complex and difficult to monitor.
"Actually, except for the contracts we have with suppliers, we can’t control what they ship us," said Martin Wong, the managing director of Jiangsu Shuangshuang Group, a textile maker and Wal-Mart supplier, who attended the conference in Beijing.
In an effort to improve transparency and accountability, Wal-Mart said by 2009 it will require all direct import suppliers plus all suppliers of private label and non-branded products to provide the name and location of every factory they use to make the products it sells.
The company also pledged to bring more environmentally sustainable products to its store shelves.
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