Investment Firm Expresses Concerns Over Wal-Mart’s Behavior

F&C Assest Management, a UK-based investment fund with holdings of Wal-Mart stock, has criticized the company for its apparent inability to comply even with its own behavioral standards. F&C, which holds approximately $21,932,450 worth of stock in the company, filed one of the several resolutions to be discussed at the annual shareholders meeting tomorrow.

F&C itself claims a strong code of social responsibility, including best community practices, high environmental standards and encouraging clients to improve their own corporate behavior. From the group’s website:

One way in which investors can express their responsibilities is to use their influence as shareholders to seek to encourage companies to improve their business practices with regard to important social, ethical and environmental issues.

Were all of Wal-Mart’s investors to demand the company act responsibly, surely it would be forced to listen.

Wal-Mart shareholder cites corporate governance failures before retailer’s AGM [Forbes]

F&C Asset Management PLC said it has co-filed a shareholder proposal over concerns that Wal-Mart Stores Inc, the US supermarket group, is failing to comply with its own governance standards. This proposal comes ahead of Wal-Mart’s AGM tomorrow.

Karina Litvack, head of governance and sustainable investment at F&C, said, despite strong policies on paper, Wal-Mart has struggled to implement its standards across its US business.

‘Weaknesses in internal controls have eroded the company’s reputation as an attractive employer and are adding fuel to the fires of Wal-Mart’s critics,’ she said.

She added: ‘We fear that its failure to deliver on these policy commitments is inhibiting Wal-Mart’s ability to expand into new domestic markets.’

F&C said that over ‘the past several years’, it has become increasingly concerned by signs of failure in internal controls that have led to government investigations and class action lawsuits by employees.

These allegations include requiring employees to ‘work off the clock’—during breaks and after shifts—systematic discrimination against women, and alleged questionable tactics to prevent workers from voting for union representation.

‘We got off to a promising start in 2005 with expectations of a dialogue with the independent directors on the audit committee. But when this simply withered on the vine, we had little choice but to bring our concerns about internal controls, labour violations and the erosion of the company’s reputation to our fellow shareholders,’ Litvack said.

‘We found that the company was not interested in engaging in a productive discussion about how it builds and supports a compliance culture and, as a result, we have joined an international group of large filers led by the New York City Employees’ Retirement System to file a shareholder proposal,’ she added.

Wal-Mart’s AGM will begin at 1.00 GMT tomorrow in Fayetteville, Arkansas.

Posted by Alex Goldschmidt on Thursday, May 31, 2007

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