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June 6, 2005 
VOL.
43, NO. 11Oakland,
CA
Religious investors pressure Wal-Mart
WASHINGTON—Wal-Mart Stores
Inc. is already facing a massive class-action sex-discrimination lawsuit,
an $11 million legal settlement of a federal investigation of labor practices,
$3.1 million in fines for violations of the Clean Water Act and allegations
of executive misuse of funds.
Now the giant retailer must face religious investors who say the company
is long overdue to reassess its business model in light of controversial
labor practices and policies that impact communities and the environment.
A June 3 shareholders meeting in Fayetteville, Ark., will include a vote
on a resolution backed by members of the New York-based Interfaith Center
on Corporate Responsibility (ICCR), which wants the retailer to study
itself regarding a variety of ethical issues.
According to the Rev. David M. Schilling, director of global accountability
for ICCR, the group was founded in 1971 to “bring the faith communities’
concerns related to human rights, environmental issues and economic development
to the companies religious institutions invest in.”
The coalition, made up of a wide range of religious institutions, has
launched successful campaigns against overseas labor practices at Gap
Inc. (owner of the Gap, Banana Republic and Old Navy stores) and Nike
Inc. It has also campaigned on practices at General Motors Corp., Ford
Motor Co., Dell Inc. and Microsoft Corp.
The religious investors are also making overseas labor an issue in targeting
Wal-Mart, arguing that the retailer’s suppliers don’t pay
foreign laborers adequate wages.
“We know Wal-Mart goes to places like Bangladesh and Guatemala because
the labor is so cheap,” said Sister Annette Sinagra, corporate responsibility
analyst for Adrian Dominican Sisters Portfolio Advisory Board, one of
the religious investors involved in the resolution.
The investors’ primary argument against Wal-Mart is that the company’s
business model is flawed because it allegedly relies on low employee wages,
few benefits and pressure on suppliers to maintain Wal-Mart’s trademark
“Low Prices, Every Day.”
“All of these (issues) are of concern to a wide variety of investors,
and investors are increasingly wanting more transparency to understand
what the company’s plans are and how they’re going to address
these problems,” Schilling said.
A resolution for shareholder action calling on the company “to develop
a public sustainability report on its efforts to protect human rights,
worker rights, land and the environment” was filed by 31 religious
investors who are members of ICCR. Overall, the ICCR claims 2,745 religious
institution members and 45 affiliated, non-religious members.
The United Methodist Board of Pension & Health Benefits and the Libra
Fund are primary filers of the resolution. Other religious groups joining
them include the Presbyterian Church (USA), the Dominican Sisters of Adrian,
Mich., the Unitarian Universalist Service Committee, Christus Health of
Houston and Mennonite Mutual Aid of Goshen, Ind.
Vidette Bullock Mixon, director of corporate relations for the United
Methodist Board, said in an interview that “Wal-Mart, as the largest
retailer, needs to join the ranks of other multinational companies that
are developing or have developed sustainability reports.”
In a letter appealing to fellow Wal-Mart investors, Bullock Mixon criticized
the company’s business model.
“We are concerned that persistent failure of Wal-Mart to address
social, ethical and environmental challenges in a substantive manner will
adversely impact investment returns,” Bullock Mixon wrote in the
May 23 letter. “We believe that by focusing on the sustainability
model, and managing corporate responsibility, Wal-Mart will reduce the
risk of future investor losses.”
ICCR members submitted a similar shareholder resolution to Wal-Mart at
last year’s annual meeting. It failed, with 14 percent of shareholders
voting for its passage. Schilling considered that effort successful, however,
because it attracted votes beyond the group’s religious base.
Bentonville, Ark.-based Wal-Mart declined to comment for this article.
In a recent company proxy statement, it said it would prepare a report
on sustainability but it did not give a clear date or format.
Wal-Mart “will prepare, in the future, a report similar to the one
the proponent requests, but the company prefers to do so only in the form
and at the time that is in the best interests of the company and its associates
and the communities and customers we serve,” said the company’s
proxy statement, released in February for the June shareholder vote.
The company also maintains that its pay rates and insurance costs are
no worse than the retail industry average.
“Independent studies show that Wal-Mart associates have health care
coverage at about the same rate as other retailers,” the company
asserts on its Web site, www.walmartfacts.com. “Wal-Mart estimates
about 160,000 people have been taken off the list of America’s uninsured
by coming to work with us.”
Sinagra, of the Adrian Dominican Sisters Portfolio Advisory Board, defended
the involvement of religious organizations.
“It’s a religious issue because we strongly believe in human
rights, we believe that the human rights of workers are being violated
and the Catholic Church especially has always promoted human rights,”
Sinagra said. “Any time you’re dealing with a person being
violated it’s a religious issue for us, a faith issue.”
This apparel factory in Guatemala has produced goods for Wal-Mart. The retail giant also uses workers in China and other countries where wages are low. The Interfaith Center on Corporate Responsibility is asking Wal-Mart to reassess its business practices.
PHOTO COURTESY OF RUTH ROSENBAUM/CREA
