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Case study over CSR CoNFLICTS

Management in Action- Social Economic and


Ethical Issues

Submitted by- Akshay Sharma (C-17) and Rishabh Jain

MBA (Marketing and Sales)

Submitted to- Dr. Garima Malik


Walmart

Walmarts profile:

Walmart offers the groceries and the general merchandise products to its customers under one
roof. It provides one stop shopping to its customers and is recognized as the largest private
employer in the United States and is also the worlds largest retailer. Walmart is operating in
about 69 countries having more than 1o,13o retailers. The main goal of the walmart is to save the
money of the people so that they live a better and improve their standard of living. Walmart has
provided employment to over 2.2 million associates and has recorded the sales of $443 billion
during the year 2o12. It was founded in the year 1962 in Rogers, Arkansas United States. They
started their trading in the shares from the year 197o and got itself listed on NYSE two years
later.

Walmarts CSR policies and reporting:

Walmart is a multinational retailing corporation and an emerging player that operates a chain of
hypermarkets across the world. Corporate Social Responsibility of Walmart is commendable in
the sense that it optimally utilize all its resources and delivers better quality with low price. Thus,
it acts as a differentiating factor as compared to its competitors. Its ethical code of conduct,
working conditions, transparency, and contractual relationships with its suppliers makes it a
socially responsible company.

Some of its sustainability projects are:-

Elimination of waste
Utlising solar energy for in-store electricity purposes
Improved infrastructure
Spreading awareness regarding recycling
Imparting education among stakeholders
Preserving natural resources
Providing access to affordable and healthy food and other products
Walmart has always been on the front foot towards the CSR activities. Walmarts Global
Responsibility report 2011 focused mainly towards the :
Environment
Society
Goals
Walmart has also developed a Sustainability 360 model which has brought walmart to the
no.1 position in the retail industry. The other major achievements which are achieved are
like they are successful in reducing the green house emissions in their supply chain
operations. Walmart also support the system of education and health for the poor section
of the society. The details regarding all the investments can be found in the Walmarts
Global Responsibility Report 2011.

Walmarts conflicts:

The obstacles which are faced by walmart are:

1. Walmart Stores Inc Vs Dukes et al


2. Case on walmart using and promoting Child Labor.

Walmart Stores Inc. v. Dukes et al

This is the case of walmart which is a decade ago and is still being heard in the US Courts. This
is the case between walmart and the Plaintiffs Betty Dukes who alleges that in walmart there is
Gender Biasness and womens are discriminated on the basis of their gender and moreover
payment system is also not justified. Moreover women are not even eligible for the promotion in
their top management positions. In the year 2004 US court formed a committee of women
challenging the policies of walmart for their pay and promotion schemes. Walmart made an
appeal to the Ninth Circuit in the year 2005, making an argue that all the plaintiffs are not
common of the class. Walmart also appealed to the Supreme Court in the year 2010 after hearing
the Ninth Circuit. In the conclusion Justice Antonin Scalia said that after hearing from no. of
plaintiffs they dont have much in common.

Without some glue holding the alleged reasons for all those decisions together, it will be
impossible to say that examination of all the class members claims for relief will produce a
common answer to the crucial question why I was disfavored. Dukes v. Walmart Stores, which in
2oo1 was estimated to comprise more than 1.5 million women, included all women employed by
Walmart nationwide at any time after 26 December 1998. It would have been the largest class
action lawsuit in US history. Despite the Supreme Court resolution, time, money and efforts
invested up to this point, the case did not end there. In october 2o11, the plaintiffs lawyers filed
an amended lawsuit limiting the class to female Walmart employees in California. This suit is
expected to be the first of many additional class action lawsuits against the retailer at the state or
regional level. The new lawsuit, filed in the US District Court for the Northern District of
California, alleges discriminatory practices against more than 9o,ooo women regarding pay and
job promotion as well as requiring non-discriminatory pay and promotion criteria.

Walmart caught using child labour in Bangladesh:

In the year 2005 , Radio Canada Programme made this news public that walmart is promoting
Child Labor as it has employed labor in two of the factories of Bangladesh. Walmart was
employing children of the age between 10-15 years in its factories at a low wage i.e $50 a month
for manufacturing the products and exporting it to Canada. If we see the policies of Walmart of
that time walmart used to cancel the ties with the suppliers whenever the violations occurred. So
in the fear of loosing job and the fear of ending of contract , suppliers never revealed the truth to
the auditors and encouraged the suppliers to hide the abuses. In the end Walmart had to terminate
the operations in two factories immediately. Walmart alleges that despite its effort to inspect all
factories, it is difficult to enforce its own corporate code of conduct with thousands of
subcontractors around the world.

Walmarts CSR policies post-conflicts

first of all walmart developed the code of conduct for the suppliers in the year 1992 which takes
care of the quality of the products which are supplied by the suppliers. Walmarts first report was
generated in the year 2006 . This report was published after the filing of the lawsuit by the
female employees in the year 2001. Protest was done in the Bangladesh for child labor being
used by them for the supply chain operations. This culture of reporting was copied by rest of the
companies in the market. Walmart has been qualified as the global legislator in the CSR policies.

The 2oo5 Report on Ethical Sourcing reported that Walmart had ceased to do business with 141
factories, primarily because of underage labour violations. The Report also contains a chart with
the main violations found during the audits. Gender discrimination was not mentioned at any
stage throughout the whole document. Walmarts 2oo5 and 2o12 CoC Standard for Suppliers
explicitly establish that Walmart would not tolerate the use of child labour. The 2oo5 CoC sets
the age of 14 as the minimum age for suppliers and subcontractors to hire workers. It also
specifies non-discrimination on the basis of gender and other personal characteristics or beliefs.
It is important to highlight that gender discrimination was not given any special treatment in the
2oo5 CoC or in the general report.

Walmarts zero tolerance policy for underage workers was changed in 2oo5. If a single underage
worker was found in a factory, Walmart ceased business . At the beginning of 2oo5, if two
underage workers were found, the factory would receive a warning and had to change and
correct in the follow-up audit. If more than two underage workers were found or the company
did not make corrections, the factory was permanently banned from Walmarts production. This
decision was based on NGo advice from the Bangladesh case mentioned in the above section. If
Walmart cuts business with these factories, many workers could be laid off for lack of
production, suppliers will hide abuses and workers will not tell the truth to auditors in order not
to lose their jobs. Walmart has a strict corporate code of conduct in the industry but according to
investigations Walmart is not able to enforce its code in developing countries.

Currently, Walmart publishes a full and complete report on CSR issues called Global
Responsibility Report which covers the three dimensions of People, Planet, Profit. This report
emphasizes gender equality and a diverse workforce. Walmart has a Gender Equality and
Diversity gender policy that can be found in its Global Responsibility Annual Report. In 2oo9,
Walmart took the commitment one step further with the incorporation of the Advisory Board on
Gender Equality and Diversity. The board is aimed at providing equal and enhanced
opportunities for all in top leadership roles. These policies have generated an increase in female
officials and managers from 23,873 employees in 2oo5 to 25,246 employees in 2o1o.

Walmart has also committed itself to achieving three goals in its Sustainability Report: using
1oo% renewable energy, creating zero waste, and selling products that sustain people and the
environment. These criteria are established and measured by Walmart at the end of the 2o12
report. Walmart indicates every year its completed goals and the progress in the ones that have
not yet been achieved. An example of quantifiable measures is creating a zero waste Walmart by
eliminating landfill waste from US stores by 2o25.

Although Walmart does not follow the GRI Guidelines, it has measurable targets on audits. For
instance, Walmart requires its suppliers who produce toys in China to sign up to the ICTI CARE
Process. The ICTI CARE Process was created by the international toy industry to achieve a safe
and human working environment for toy factory workers worldwide. In addition, Walmart
conducts internal validation audits by Walmarts Ethical Sourcing team. These validation audits
ensure that the ICTI CARE process is properly implemented and that it meets Walmarts
Standards for Suppliers.