Sprawl-Busters has received a copy of the recommendations of the Norwegian Government Petroleum Fund to drop Wal-Mart stock from its portfolio because the company runs its business in an “ethically unacceptable manner.” The Government Pension Fund, which invests surplus oil wealth in foreign stocks and bonds, owned about $430 million in Wal-Mart stock as of the end of 2005. The Petroleum Fund’s Council on Ethics made its report to exclude Wal-Mart stock from its investments last November, but the decision to drop the retailer’s stock was not made public until early June, 2006. The Council of Ethics report concluded that by owning Wal-Mart stock, the Petroleum Fund would be complicit “in serious or systematic violations of human rights.” The report noted that “Wal-Mart is alleged to run its business operations in a manner that contradicts internationally recognized human rights and labor rights standards… There are numerous reports alleging that Wal-Mart consistently and systematically employs minors in contravention of international rules, that working conditions at many of its suppliers are dangerous or health-hazardous, that workers are pressured into working overtime without compensation, that the company systematically discriminates against women with regard to pay, (and) that all attempts by the company’s employees to unionize are stopped.” Wal-Mart failed to respond to all inquiries sent by the Norwegian fund. The researchers concluded that “parts of Wal-Mart’s business operations are run in an unethically unacceptable manner. The Fund said that many of Wal-Mart’s ‘tens of thousands of factories’ involve working conditions “far short of standards Wal-Mart itself requires of its suppliers” and that its “production system fosters working conditions bordering on forced labor.” In 2004, Wal-Mart published its own study of 5,300 of its suppliers, and found that 46% did not pay local minimum wages and benefits, 31% had unverifiable wages, 36% violated working hour provisions, 21% had seven day work weeks, 31% did not document worker ages, and 35% had no fire protection. The Fund says these unacceptable conditions are fostered by Wal-Mart’s own policies with its suppliers, described as a “reverse auction” in which many suppliers are invited to bid on a certain item, and after several rounds of competition, the supplier who makes the lowest bid gets the contracts. This leads to “longer working days and pay reductions for employees” at such factories. An estimated 80% of Wal-Mart’s direct suppliers are in China, and a representative of the Chinese labor authorities told the Fund that “Wal-Mart pressures the factory to cut its prices, and the factory responds with longer hours or lower pay… and the workers have no option.” Some of the factories, the Fund said, have working conditions that border on seven day a week forced labor. “There is no doubt,” the Fund concludes, “that Wal-Mart purchases a number of products that are manufactured under unacceptable conditions.” The Fund says Wal-Mart has violated the United Nations Convention on the Rights of the Child that is supposed to protect children from harmful working conditions, and has violated the International Covenant on Civil and Political Rights by using factories that employ forced labor. The report is also critical of Wal-Mart’s labor practices in America, and quotes a company official as saying, “Our philosophy is that only an unhappy associates would be interested in joining a union.” The Fund documents lawsuits over mandatory unpaid overtime, the use of illegal workers, and violations of child labor law. In the end, the Council concludes that “even though all companies aim at maximizing their profits, it is ethically unacceptable to do so by committing, or tacitly accepting, serious and systematic violations of ethical norms. The Council finds that (Wal-Mart’s) violations have been undertaken with a view to facilitate or serving the company’s interests.” The Fund determined that Wal-Mart presents “an unacceptable risk that serious and systematic violations of international standards are taking place today and may continue in the future… The total sum of violations of standards, both in the company’s own business operations, and in the supply chain, appears to be a systematic and planned practice on the part of the company to operate on, or below, the threshold of what are accepted standards for the work environment. Many of the violations are serious, most appear to be systematic, and altogether they form a picture of a company whose overall activity displays a lack of willingness to countervail violations of standards in its business operations. Although it is legitimate to take steps to hold down prices on its merchandise and increase the company’s profits, it is not legitimate to do so by violating applicable minimum standards.” The Council therefore decided to exclude Wal-Mart and Wal-Mart de Mexico from the Petroleum Fund’s portfolio.
Sprawl-Busters has long-maintained that Wal-Mart’s chain store business is comprised of a series of links in the chain, and at every link — from the sweatshops in China to the salesfloors in America — people are exploited. To hold down prices, Wal-Mart has chosen to hold down human rights, and basic human values. Their product is more important than the people who create it. The same, of course, can be said of the many retail conglomerates that imitate the Wal-Mart model, like Target, Home Depot, and others. Wal-Mart is by far the largest violator, and so sets the example. Consumers also have a choice to set an example. By not shopping for products cheapened by human suffering, shoppers make a choice to support human rights, and change the companies that accept exploitation as standard business procedure.
