Several of the report’s
claims concerning improved supervision of supplier factories ring hollow. For example, responding to years of
complaints that Wal-Mart routinely alerts managers before it inspects factories,
the report applauds the company for raising the percentage of unannounced
audits to 26 percent of all audits in 2006. Yet this falls short of Wal-Mart’s goal of 30 percent for the year
(announced in its 2005 report) and is well below the percentage of audits that
are conducted unannounced by other companies, such as Reebok, which claimed 46
percent of its audits were unannounced in 2005. How much effort would it take for Wal-Mart to simply not alert its
suppliers about impending inspections?

Sadly, looking forward,
Wal-Mart does not offer any new, concrete benchmarks for improving workers’
conditions. The company says it “wants
to create a breakthrough model that is based on positive reinforcement and incentives rather than policing and
punitive measures.” Some components of
this “model” appear good, such as establishing “longer-term supplier
relationships,” but Wal-Mart admits that “details of the strategy, including
milestones and metrics, are still being developed” and that we will have to
wait until the next year’s Ethical Sourcing Report for specifics. In other words, there are no goals for the
coming year.

If anything, Wal-Mart
appears to be trying to lower expectations. While, as noted, the company once set a goal of 30 percent unannounced
audits, it now writes, “We believe 25 percent is the ideal balance between
announced and unannounced audits” (in the report’s appendix, 25 percent is
actually described, deceptively, as “increasing the percentage of audits that
are unannounced”). Factories rated
“Green” were once re-audited after one year, but they are now given two years
because this “gives factories increased incentive for achieving a Green
rating.” Of course, this also gives
factories longer to resolve “Green” problems, such as missing pulley guards on
sewing machines.

After years of Wal-Mart critics raising concerns
related to Wal-Mart’s approach to their compliance program known as the
“Ethical Standards Department,” Wal-Mart needs to engage and listen to its
critics. For instance ILRF has sent
numerous letters of concern related to various factory situations all of which
have been ignored, such as pertaining to the T.O.S. Dominicana Factory in the Dominican Republic,
where unpaid overtime and verbal harassment of workers are both common. Furthermore Wal-Mart’s purchasing policies
have created a dire situation at the factory-level, where managers are forced
to accept orders from Wal-Mart while knowing full well that it is impossible to produce orders according
to the multinational’s Standards for
Suppliers, given
the price Wal-Mart is paying. It is
Wal-Mart’s purchasing policies, in addition, that create a situation of
overtime hours per week reaching over 100 hours as factories need to meet the
unreasonable delivery schedules.

In conjunction with
multi-stakeholder consultation, it is imperative that Wal-Mart begin to
identify and work with independent grassroots monitoring organizations, such as
COVERCO in Guatemala, that have been able to add an integral perspective to the
monitoring and remediation process. Working with NGOs, trade unions and other stake holders in the vicinity
of its supplier factories will provide Wal-Mart the ability to have a more
well-rounded monitoring approach, in which the company is able to receive
ongoing information from the very sources that are trusted by workers in their
communities.

While Wal-Mart
includes basic information about their ongoing programs, such as the Model
Factory Program and the Factory Five Program, it’s unclear what the measurable
goals of these programs are. Wal-Mart
includes information about what it has done in Jordan,
but ignores another country they have focused on - the Philippines. Wal-Mart doesn’t mention the situation at the
Chong Won Fashion, Inc. factory in Cavite, Philippines, in
particular: the factory had been audited several times by Wal-Mart, but
Wal-Mart wasn’t able to find clear violations documented by
the Worker Rights Consortium, including forced overtime, non-access to drinking
water, and freedom of association violations. It wasn’t until organizations like ILRF, Maquila Solidarity Network,
Workers Assistance Centre, United Students Against Sweatshops and Clean Clothes
Campaign came to Wal-Mart with concerns about this factory that Wal-Mart took
the time to have a closer look.

Wal-Mart continues to
divulge information related to the types of violations found during its audits
but doesn’t identify its plan for fixing these violations, either in the
short-term or long-term. Wal-Mart
provides a thorough list of the frequency of violations, but doesn’t even
indicate what color-coded rating the various violations received in their
audits. ILRF is pleased to see the
percentage of “Orange”-rated factories decreasing, though it is unclear which
violations merit an Orange rating. ILRF is alarmed by the high number of
violations present in the Far East Region and would like to see more
information about Wal-Mart’s plan to focus on the violations occurring in over
50 percent of factories in a given region, such as working off the clock.

The 2006 report paints
efforts at corporate social responsibility as an uphill battle, clouded by
“complex issues”—an altogether accurate depiction. Sadly, Wal-Mart’s refusal to rethink its core
business strategy, which consists of paying absolute bottom prices for its
products, all but ensures that it will make little progress in respecting
workers’ rights. And the company’s
refusal to open itself to genuine, independent monitoring means that we will
have to look elsewhere other than its annual reports for an objective reading
of factory conditions.