Wal-Mart Attempts to Address Labor Problems In Its Supply Chain

Labor rights violations have plagued Wal-Mart’s supply chain since the company abandoned its “Buy American” campaign in the early 1990’s. Wal-Mart’s business model relies on low prices, and those low prices are made possible by manufacturing products overseas where economies are weaker and human rights enforcement is lax.

Yesterday, the company announced that it will require suppliers to avoid cotton from Uzbekistan, which is known for using children to harvest cotton each year. From IWPR’s The Cost of Uzbek White Gold:

Gathering cotton in the autumn has been considered the most important part of life for an Uzbek citizen since Soviet times. But the hefty dollar revenues reaped by the government from its monopoly export and processing business are made on the backs of children who provide cheap labour.

Many other retailers have also started boycotting Uzbekistan’s cotton, and it is without a doubt an issue that should be addressed by every conscientious company. Wal-Mart use it’s purchasing power like this a thousand different times in dozens of countries and still not resolve all the problems in its supply chain. We only hope to see more efforts like this coming out of Bentonville.

Wal-Mart asks suppliers to avoid Uzbek cotton [Reuters]

Wal-Mart Stores Inc said on Tuesday it is requiring its suppliers to stop sourcing cotton from Uzbekistan, in an effort to end child labor there.

Wal-Mart’s move follows similar steps from retailers including British grocery chain Tesco Plc and department store chain Debenhams, which have already banned Uzbek cotton in products they sell.

Wal-Mart, the world’s largest retailer, said instructions to suppliers to stop buying cotton and cotton materials from Uzbekistan came after months of work with industry trade associations, government agencies, nongovernmental organizations and socially responsible investment groups.

“We have formed an unprecedented coalition, representing 90 percent of the U.S. purchases of cotton and cotton-based merchandise, to bring these appalling child labor conditions to an end,” said Rajan Kamalanathan, Wal-Mart’s vice president of ethical standards.

The Central Asian country of Uzbekistan is among the world’s top cotton exporters.

A Wal-Mart spokesman said it is unclear how much cotton its suppliers get from Uzbekistan, since the retailer only buys finished clothes. Wal-Mart’s requirement to its suppliers is effective immediately, the spokesman said.

Swedish clothing retailer Hennes & Mauritz (HMb.ST: Quote, Profile, Research, Stock Buzz) has also joined the chorus speaking out against Uzbekistan’s cotton production, saying it supports UNICEF’s steps to prevent child labor in the cotton industry in Uzbekistan.

Wal-Mart said four industry trade groups, including the National Retail Federation, sent a letter to the Embassy of Uzbekistan on Aug. 18 asking for an end to forced child labor in cotton harvesting. The Uzbekistan government responded on Sept. 12 by outlining steps to stop child labor, Wal-Mart said.

Wal-Mart will revisit its decision once it can verify those steps, the retailer said in a statement.

Posted by Alex Goldschmidt on Wednesday, October 01, 2008