Walmart’s CSR Report and Green Washing

What is CSR?

Corporate social responsibility as a concept is relatively self-explanatory. Company’s shape and influence the world’s social and economic activity. They are therefore expected to be accountable for their actions, and take an active responsibility in bettering the communities and societies that they partner with and profit from. It’s only recently that CSR has been absorbed by companies to give them comparative advantage in the market place. While it can’t be irrefutably argued that CSR is strictly a marketing tool; often we do find that companies create the illusion of accountability to distract consumers from their true inner malpractice. The most prominent culprit of this movement is none other than the retail Goliath; Wal-Mart.

Wal-Mart has un-doubly become the world’s largest retailer and economic superpower of the 21st century. Their reign has become a controversial focal point for ethical, environmental, and human rights discuss across the globe. Wal-Mart has created an impressive 33 page report for their consumers that emphasizes three major categories of their CSR model; the environment, community and supply chain.  

Environment 

Wal-Mart Canada has recently built “a state-of-the-art facility that is estimated to be 60% more energy-efficient than the company’s traditional refrigerated centres; helping the company avoid approximately $4.8 million in energy costs over five years.” The company is also investing in solar energy and hydrogen cell powered vehicles that they claim repeatedly will reduce their costs and in turn reduce the cost of their products for the consumer. “We’ve always been about saving people money and giving them better prices – something made possible by reducing costs at every stage of the business and leveraging volume.” The cost-benefit analysis of this green initiative is what drives its success. Being energy efficient saves Wal-Mart millions of dollars a year in operational costs and generates tons of marketable PR for the company. Therefore from a business perspective the mutually beneficial partnership between CSR and business is a blessing for Wal-Mart’s bottom line. Unfortunately that bottom line fundamentally contradicts core foundations of environmental sustainability. The push for mass consumerism promotes frivolous exhaustion of our world’s resources. An example of this would be the gallon jar of Vlasic pickle’s that we’re being sold for $2.97; a price so low it eventually shrivelled the profit margin for Vlasic. “"We saw consumers who used to buy the spears and the chips in supermarkets buying the Wal-Mart gallons. They'd eat a quarter of a jar and throw the thing away when they got moldy. A family can't eat them fast enough." While the company does state that they’ve projected vast expansion of their energy-efficient initiative, they do not mention anything about the environmental standard of their overseas subsidiaries; other than they must comply with the environmental standards of their own country; standards that are vastly different and near impossible to regulate.

 

 

Community

Wal-Mart’s second category in their CSR report is on their people and community stakeholders. This section describes how Wal-Mart is expanding its cultural diversity. This section opens with a testimonial from an Indian employee who praises Wal-Mart for employing him when so many other companies wouldn't.  While yes, this is a touching anecdote it does nothing for displaying the companies true hiring policies and employment procedures. What Wal-Mart does list as their methods for social change is their “Best Host” English training program for associates, group interviews, unspecified mention that the is chance for upward mobility in the company, and gold star motivational system. All of these tactics are efficiency-centered initiatives. What Wal-Mart has done is isolated specific business procedures in place to train staff for the maximization of profits and re-worded them to be “socially groundbreaking CSR” Wal-Mart states that it will seek to include more cultural diversity in their grocery selection and that was expressing their cultural diversity; when in reality they are merely responding to the growing market demand for cross cultural foods in their superstore. The report also claims that it is improving the status of women in retail. There is no mention of plans to break Wal-Mart’s glass ceiling for the staggeringly low 29% of female senior level employees, however Wal-Mart does have plans to provide all of the women a space to “network” and “share feelings” about their Wal-Mart manager experience. The report does not mention if those “feelings” will be recognized or acknowledged by Wal-Mart to create any concrete change in the disproportionate promotion of the genders. Wal-Mart also repeatedly emphasizes its capacity for job creation in this report. This is most likely because Wal-Mart has become sunanimous with massacring local business and devastating communities with their “Wal-Mart effect.” Emek Basker, an economic Ph.D. from MIT studied the impact that a Wal-Mart had on the job availability in its surrounding area. Her analysis concluded that even though an opening of a Wal-Mart may create an immediate boom in employment, within two years local business begins to close and that boom in job creation crawl to a halt.[1]  Just like the environmental initiatives that Wal-Mart engages in we see that the only CSR tactics that benefit Wal-Mart’s bottom line are considered.

Production and Overseas 

The real tragedy is that while the green movement is taking tremendous strides in the business world; its success detracts attention from the human costs of profitability as the staple priority. Wal-Mart’s mission to “provide the lowest cost possible” has set unrealistic standard of efficiency and cost effectiveness all across their production chain. The vibrations of “always low prices, always” ripple through Wal-Mart’s suppliers across the world to its production factories.

Wal-Mart reports that they intend to tackle their factories sweatshop conditions by introducing and auditing process to their supply chain. The auditing system is a color coded rating that grades how ethical the factories they partner with are. However, this report does not relinquish the details on what is comprised in that audit; as well their standards are based on “local and regional standard” that are far less stringent than those of Canada. Working conditions that are deemed acceptable in Wal-Mart’s factories local regions could potentially be appalling to what a Canadian worker is accustomed to. This report offers no way of knowing any specificity of employment standards, and therefore creates the illusion that they are being equitable when in reality they are benefiting from free market policies and lack of global regulations. Wal-Mart seeks to include stakeholders into their CSR practice. They claim to have risen from last to third place on the “2009 Covalence Retail Industry Report.” However the literature on the origins and practices of this report are non-existent. Covalence is also a private limited company based out of Geneva whose clients pay to have a report done. Wal-Mart’s findings are suspiciously missing in action on the website and therefore this ethical quotes legitimacy is questionable.[1] The need for transparency is imperative to global stakeholder’s health and wellbeing. Factory worker conditions are rarely publicized, however when they are, the stories leave a despairing taste.

 

Aleya Akter, 26, journeyed with Kalpona to tell the tale of working 14 years of 11-hour days sewing jackets with 400 employees at a Dhaka factory for Walmart” 

 

She gets two days off a month and lives with the fear of getting fired for being sick or being beaten for going to the bathroom. Sometimes, she sleeps on the factory floor overnight.”

 

This is the true root of corporate social responsibility, the cost of efficiency lies directly on the shoulders of manufacturers. As long as Wal-Mart devotes its CSR to nurturing “reducing costs at every stage of the business and leveraging volume” there will never be relief unless it is forced by global working standards and regulations.

Conclusion           

 Wal-Mart’s manipulation of statistics and business practice demonstrates how a company can pick and chose which ethical dilemmas are compliant with their bottom line and use them to create the illusion of a socially responsible company. Corporate Social Responsibility as an emerging vessel for branding and marketing is absolutely a positive movement; there is no doubt about that. However, it is up to the consumer to demand transparency and lobby for stricter regulations that ensure the safety of every stakeholder, and to identify the loop holes that companies slip through to mask their true malpractice.