Wal-Mart to Demand More Changes from Chinese Suppliers

Wal-Mart announced this environmental initiative several weeks ago, but an article in today’s Financial Times details a meeting Wal-Mart is currently planning for its Chinese suppliers. Wal-Mart intends to lay down strict environmental regulations for its suppliers overseas, but this is not the first time Wal-Mart has made such demands...with little effect. The company’s anti-sweatshop measures and product safety mandates have had little impact on how suppliers manufacture their products. Even Wal-Mart’s environmental demands in the U.S. have met serious roadblocks. Why the company believes environmental regulations will be any different is anyone’s guess.

Wal-Mart to push 1,000 Chinese suppliers to adopt green agenda [Financial Times]

Wal-Mart, the world’s largest retailer, is to convene a meeting of hundreds of its Chinese suppliers to set out goals for significant reductions in the environmental impact of its vast supply chain.

Wal-Mart accounts for about 30 per cent of all foreign buying in China and just under 10 per cent of total US imports from the country, which were worth $321bn last year.

About 1,000 Chinese companies are expected to attend the Wal-Mart event in October, marking a push by the retailer to globalise a drive on environmental sustainability that has hitherto largely been focused on its US operations.

Lee Scott, Wal-Mart’s chief executive, said in an interview with the Financial Times that “we are really ambitious” about what can be achieved in China, given increased evidence of government concern over the environmental damage done by rapid industrialisation. “I’m very confident that we are going to see in China more progress than any of us has imagined,” he said.

“Part of it is . . . because the Chinese government has just now really got on the sustainability process as far as understanding what it is going to mean for them in the long term. And they’re being really aggressive.”

Blu Skye, an environmental consultancy that started advising the retailer in 2004, is working in China to assess strategies.

Wal-Mart launched a drive in 2005 to improve its muchcriticised record on environmental and social issues. Environmental Defense, a non-profit group that has also worked closely with Wal-Mart, recently signed an agreement with the China Association of Small and Medium Enterprises to offer technical support on environmental issues. Casme’s more than 5,000 members include many Wal-Mart suppliers.

In January, Mr Scott told an annual meeting of Wal-Mart managers that the company would work with the Chinese government and other groups “to make sure suppliers comply with Chinese environmental laws and regulations” and would set up a “mechanism” to monitor performance. Mr Scott has said he hopes to see significant results in China in three to five years.

Since factories supplying Wal-Mart supply other leading international customers as well, Wal-Mart officials argue that its efforts could have a big impact on China’s manufacturing base.

Posted by Alex Goldschmidt on Monday, April 07, 2008

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