walmart ethical standards

8/14/2019 WalMart Ethical Standards

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Chris McCannCountry Manager, UKWal-Mart Ethical Standards

Wal-Mart Stores, Inc.

February 2008

CIES Food Safety Conference


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Table of Contents

Horizon Scanning

Implications

Whose Problem?

Wal-Mart Overview

Case Study


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Wal-Mart Overview

More than 1.9 million associates located around the world

More than 176 million store customers serviced each week

Wal-Mart U.S. sales of $226 billion**

Wal-Mart International sales of $77 billion**

Sams Club sales of $42 billion**

*From The Journal of Commerce, May 29, 2006**Numbers as of fiscal year 2007 (Feb. 1, 2006-Jan.31, 2007)


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Canada298 Units

U.S.

4,128 Units

Mexico1020 Units

Puerto Rico54 Units

Central America

456 UnitsBrazil

313 Units

Argentina21 Units

UK352 Units

Japan394 Units

China101 Units,102 TrustMart Units

4,128 U.S. Units3,111 International Units

7,239 Worldwide Units

1.9 Million Associates

23 offices sourcing from 70 countries

Units as of 1/08


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ASDALIVING

minibompreco

MAGAZINE


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Horizon scanning


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Rapid change is, today, a way of life

"It is not necessary to change. Survival is not mandatory."

W. Edwards DemingStatistician & Author1900 1993


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Human activities are now adding 7 billion metric tons of carbon

into the atmosphere each year


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Diseases such as malaria are predicted to spread as the worldgrows warmer


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Worldwide energy consumption is projected to grow by 58% by 2025


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By 2025, the worldwide demand for fuel is projected to increase by30%, and that for electricity by 265%


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International Energy Outlook to 2025

China and India alone account for 37 percent of the worldincrease in energy use over the period.

China and India account for 31 percent of the world increase inoil use between 2003 and 2025; 71 percent of the increase incoal use

China and India combined account for 45 percent of the worldincrease in carbon dioxide emissions between 2003 and 2025.


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Scientists estimate sea-levels will rise 19 inches by 2100, though itcould rise as much as 37 inches


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The current pace of sea-level rise is three times the historical rate,and appears to be accelerating.


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After 2010, key aquifers in China, India , West Asia and North Africa

will begin to fail


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Rapid population growth and urbanization in developingcountries will increase water consumption at least 50% in the

next 20 years


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By 2025 water scarcity will cause annual global losses of 350million metric tons of food production slightly more than the

entire U.S. grain crop


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Unless we change polices and priorities, in twenty years, there wontbe enough water for cities, the environment, or growing food


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Implications


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4.8 billion people live in the developing world3 billion live on less than $2/day


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Approximately 1.2 billion people suffer from hunger. Over 9 million

people die worldwide each year because of hunger andmalnutrition. 5 million are children


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The direct medical cost of hunger and malnutrition is estimated at $30billion each year


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Declines in food supply could cause prices to skyrocket, whichwill increase the malnutrition rate, since many poor people indeveloping countries already spend more than half their incomeon food


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Go With The Flow Global Migration

Changing flows


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Mega Cities & Milestones

Tokyo

Mexico City

Sao PauloSeoul

Lagos Growth Shanghai


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Mega Cities & Milestones

Living in poverty Increasing health concerns


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The Perfect Storm

Increasing demand Decreasing E&P, export, reserves Escalating prices


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The Perfect Storm

Fuel versus food Rising prices


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The Perfect Storm Food Insecurity


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Arent these problems forGovernment to deal with?


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The Media Frenzy


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Consumers are concerned

0 20 40 60 80 100

Recycled

Supported local shops / suppliers

Recommended a company on basis ofcompany's responsible reputation

Avoided product / service on basis of

company's reputation

Actively sought information on

company's reputation

Felt guilty about unethical purchase

Actively campaigned on environmental /

social issues

2004

1999

Source: The Ethical Consumer Report 2005, The Cooperative BankBase: 1000 who have undertaken the activity at least once in the year


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License To Trade/ Freedom To Grow

An 80-hour week for 5p an hour:the real price of high-streetfashion

R t ti / i l i k


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Reputation/ commercial risks

Public opinion could turn should corporatesfail to live up to expectations

Future fossil fuel reserves are likely to involvehigher environmental costs

Supply chains in developing economiesincreasingly employ dirty sources of energy

Possibility of legislative punishment for failureto comply with existing/ emerging legislation


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An appropriate response-The beginning


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To be supplied 100%

by renewable energy

Existing stores 20%more efficient in 7years

New stores 30%

more efficient in 4years

Fleet 25% moreefficient in 3 years,50% in 10 years

To create zero waste

25% reduction insolid waste in 3years

All private brand

packaging improvedin 2 years (rightsized, reusable

materials)

To sell products that

sustain our resources

& environment

20% supply basealigned in 3 years

Preference given to

aligned suppliers in 2years

Wal*Mart Corporate Sustainability Goals

2


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Asda Sustainability Objectives

Send zero waste to landfill by 2010

New stores consume 30% less energy by end 2009

Existing stores consumer 20% less energy by end 2009

Fleet transport reduces CO2 emissions by 40% by end 2009

Reduce carrier bags environmental impact by 25% by end 2008

Reduce food packaging by weight by 25% by end 2008

100% sustainable fish by end 2010

ASDA brand products contain sustainable palm oil by end 2008

End sale of filament light bulbs by end 2010


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And results so farin 2007

65% of our waste is recycled, reused or composted

140,000 tonnes of cardboard

5,500 tonnes of plastic

8.9million p/a saved in landfill tax from recycling of cardboard

and plastic

12.3million p/a saved in energy consumption

6.1million saved in transport

Winner of Multiple Environmental Retailer of the Year at 2007

Retail Industry Awards

Recycled from the backof our stores


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I' d be prepared to pay a little more for products and services from acompany if I knew it did a lot for the wider society and community

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All 16-24 25-34 35-44 45-54 55-64 65+

Tend to agreeAgree strongly

Consumer perceptions are changing

Source: 'Changing Lives', nVisionBase: 1200 adults 16+, UK, 2006


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SUSTAINABLE NON-FOOD PRODUCTS

S l h i l b d d


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Supply chain labour standards-

Team of 200+ auditors

16,700 audits of 8,873 factories in 200626% of all audits unannounced

5,000 suppliers trained in 2006

Industry Collaboration

MFA ForumBusiness for Social Responsibility

Beyond MonitoringGlobal Social Compliance Programetc


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ChangeManagementConvergenceCollaboration

Supplier

Development

Stakeholder

Engagement

International

Giving

Ethical Standards

Education andTraining

Sustainability

Supply chain labour standards- Beyond Auditing


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International Giving

The Asia Foundation A vocational scholarship program for migrant women

factory workers in the Guangdong Province

Hope Worldwide India Vocational and primary education centers in areas concentrated with factories

Mobility International USA (MIUSA) Leadership development and empowerment of people with disabilities in Central America

CIMCAW A capacity building program for garment workers and manufacturers in Central America

Hope Worldwide Kenya Vocational and primary education centers in areas concentrated with factories

and an HIV/AIDS program

Apparel Lesotho Alliance to Fight AIDS

An HIV/AIDS prevention program for the apparel workforce in Lesotho

Photo courtesy of The Asia Foundation


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Case Study-An argument for a

more strategic approach


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Mid 20th Century UK Farming Strategy

Post WWII, driven by the desire for Food Security, shaped by:

Importance of food in households budgets in a potentiallyunstable framework for international trade

Importance of agriculture as a sector of the economy,particularly in depressed areas

Agricultures contribution to a trade balance constrained byfixed exchange rates

Source:Defra Farming and Foods Contribution to Sustainable Development: Economic & StatisticalAnalysis 2002

Late 20th Century UK Farming Strategy


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Late 20th Century UK Farming Strategy

Driven by:Food security best served by improved trading relations vs.

self-sufficiencyInternational/ domestic push to open markets, liberalise trade

& abolish subsidies

Recognition of decline of agricultures role in rural economyRecognition of importance of countryside environment to

consumerSource:Defra Farming & Foods Contribution to Sustainable Development- Econ. & Statistical Analysis

2002. Defra The Strategy for Farming & Food- Facing the Future 2002

Govt role fundamentally changes:Reward farmers for public benefits (landscape, access to

countryside)

Take balanced approach to regulationPromote benchmarking & good practice

Source:Defra Sustainable Farming and Food Strategy Forward Look July 2006

Current Position of UK Farming Industry


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g y

Declining farm incomesDeclining labour forceDeclining importance of agricultural labour in UK workforceDeclining importance of agriculture in UK economy

Declining numbers of farm holdingsImprovements in general levels of productivity

Source: Defra Study of long-term trends affecting the farming industry EFFP 2005

But, decline in productivity against EU farm holdingsDeclining levels of self-sufficiency (from previous levels of 70%)Source: Defra Farming and Foods Contribution to Sustainable Development: Current Situation 2002

And CAP reform/ WTO changes will exacerbate this situationSource: Defra Study of long-term trends affecting the farming industry EFFP 2005

Defra Agricultural Futures and Implications for Environment: Defra ISO209

However


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CAP reform and UK Farming Strategy based on assumptions, including: ii) Extensive distribution networks i) Relative stability in Europe (no major wars in 50 years) iii) Relatively cheap costs of movement

While Ceteris Paribus ( All things being equal) reform and strategy islogical

Current and growing externalities have potential of introducing instability

Impact of externalities is exacerbated by downwards trend re. self-sufficiency, and exodus of knowledge/ experience from farming industry

Externalities include: Population growth Climate change

Energy security

Eg. Energy security


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20th Century emerged as worlds first oil based civilisation Estimated that approximately 10 calories of fossil fuels requiredto produce 1 calorie of food

Every step of modern food production is fossil fuel and

petrochemical powered (eg. pesticides from oil, fertilizers fromammonia, farming implements construction and powered by oil,etc)

In a global economy, with extended food chains, it is not unusualfor a food item to travel thousands of miles

President George W. Bush, May 2001What people need to hear loud and clear is were running out ofenergy in America

Energy security contd.


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The most significant difference between now and a decade ago is theextraordinarily rapid erosion of spare capacities at critical segments ofenergy chains. Today, shortfalls appear to be endemic. Among the mostextraordinary of these losses of spare capacity is in the oil arenaTheworld is precariously close to utilising all of its available global oilproduction capacity, raising chances of an oil crisis with more substantialconsequences than seen in 3 decades

Source: Strategic Energy Policy Changes for the 21st Century US Council on Foreign Relations &Baker Institute for Public Policy April 2001

Oil production currently in decline in 33 of the 48 largest oil producing countries

Without timely intervention, world supply/ demand balance will beachieved through massive demand destruction (shortages)The

problems associated with world oil production peaking will not betemporaryThe challenge of oil peaking deserves immediate, seriousattentionthe world has never faced a problem like this

Source: US Department of Energy, March 2005

Energy availability


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$ per barrel oil

Spot the obvious mistake


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Of the world's 100 largest economic entities,42 are now corporations, not countries

-Center for Strategic andInternational Studies, 2004

While future proofing is difficult at best


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While future proofing is difficult at best

The challenges posed by climate change, population growth andresource depletion clearly move Sustainability from the categories of

consumer niche interest and brand protection

Indeed, Sustainability is rapidly becoming a strategic issue for globalretailers and food manufacturers

Question: To what extent will business respond to these issues? Andto what extent will business engage in collaboration with otherStakeholders (govt, retail, manufacturing etc.) to address thesecommon challenges?


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