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January 06, 2006
Wal-Mart Faces Host of Shareowner Resolutions, From Union-Busting to Sustainability Reporting
    by William Baue

The broad range of resolutions suggests that the sustainability commitments announced by Wal-Mart last year did not convince shareowners that the company has solved all its challenges.


One indicator of a company's corporate social responsibility (CSR) is its public commitment to social and environmental policies and performance targets. By this gauge, Wal-Mart (ticker: WMT) became a paragon of corporate responsibility with its October 2005 announcement committing to sustainability. These commitments include being supplied by 100 percent renewable energy and eliminating 30 percent of energy use in stores (though with no target date set) and a unveiling a new "Value Plan" healthcare benefits package.

Another indicator of CSR commitment is the opinion of the company's shareowners as gauged by shareowner resolutions filed to address environmental, social, or governance (ESG) issues after discussions with management requesting improvements fail to yield substantive change. Measured by this yardstick, Wal-Mart's CSR performance is not necessarily improving, but rather it continues to raise concern from owners who have filed 11 resolutions this year, the same number as last year (though six resolutions are new this year.)

Members of the Interfaith Center on Corporate Responsibility (ICCR), a coalition of 275 faith-based institutional investors with over $110 billion in assets, have filed seven resolutions for the 2006 proxy season. This figure is up from four last year and the previous ICCR high of five in 1999, according to data provided by ICCR's EthVest database. While this year’s re-filed resolutions ask for reports on sustainability, Equal Employment Opportunity (EEO), and a glass ceiling on equity compensation for women and people of color, the new resolutions seek reports on product safety and pay disparity between executives and workers.

Four additional resolutions have been filed with the company. They include those re-filed by the United Brotherhood of Carpenters and Joiners calling for majority vote director elections and the International Brotherhood of Teamsters asking for political contribution disclosure.

"Why so many proposals this year?--Many people realize that we may be at a historic crossroads," said Conrad MacKerron, director of the corporate responsibility program at the As You Sow Foundation, an ICCR member that filed a new resolution on union-busting and co-filed the resolution on sustainability reporting. "With so many progressive forces pushing the company to change, and with the company becoming more responsive than in the past, we have the opportunity for real systemic change as opposed to cosmetic change."

The union-busting resolution asks Wal-Mart to amend the company's Equality of Opportunity policy to bar intimidation of employees exercising their right to freedom of association. Mr. MacKerron points to a November 2005 report by American Rights at Work, which draws extensively on data acquired through Freedom of Information Act (FOIA) requests, as documenting Wal-Mart's union-busting activities. The resolution itself cites 94 formal complaints lodged by the National Labor Relations Board (NLRB) against the company for interfering with employees' freedom of association from 1998 to 2003.

"These aren’t charges brought by unions which have an agenda but by federal regulators because they appear to have enough merit to move forward for further investigation," Mr. MacKerron told SocialFunds.com. "In one of the most famous cases, when butchers in a Jacksonville, Texas store voted to join a union in 2000, Wal-Mart phased out their jobs, switching to pre-cut meat."

"What good is the right to freedom of association if you are fired for exercising it?" Mr. MacKerron asked, pointing out that the NLRB ruled Wal-Mart's decision illegal three years later--a ruling Wal-Mart has appealed. "Without taking sides on unions, there is a credible body of evidence showing that unionized workers have better pay and benefits, so it's reasonable to ask whether a unionized Wal-Mart might have more satisfied workers."

Wal-Mart spokesperson Marty Heires told SocialFunds that the company officially responds to shareowner resolutions in its proxy. The company may slightly modify its statements from last year's proxy on the five resolutions re-filed this year, but statements on the new resolutions are not available as this year's proxy has yet to be filed with the Securities and Exchange Commission (SEC).

Another new resolution this year requests a report on the public health services used by Wal-Mart workers in the US. The resolution cites a confidential internal memo leaked in October 2005 that reveals almost half of Wal-Mart workers' children are on public assistance or uninsured.

"ICCR's determination to address the issue of health benefits with Wal-Mart preceded the leaking of the memo," said Margaret Weber, corporate responsibility director for the Basilian Fathers of Toronto, an ICCR member with 4,300 shares of Wal-Mart stock. "What the memo highlighted for shareholders is that our concerns are on point and that the company is aware of its public vulnerability regarding employee use of public health programs."

"From our perspective the company's revised health benefit offerings are not likely to address the rate of employee use of public health benefits," Ms. Weber told SocialFunds.com, referring to the "Value Plan" healthcare benefits package outlined in the October 2005 announcement.

Similarly, ICCR's re-filing of its resolution requesting a sustainability report expresses its skepticism that Wal-Mart's new commitment to sustainability precludes the need for a sustainability report.

"Wal-Mart has pledged to report to shareholders in 2007 on its progress towards a set of environmental goals," said David Schilling, director of the global corporate accountability program at ICCR. "However, that is not sufficient--this pledge falls short of the urgent need for Wal-Mart to report on how its business strategies impact sustainability of communities, employees and the broader environment."

"As the largest company in the world in terms of sales, Wal-Mart has a responsibility to join the more than 700 other companies that have issued public sustainability reports," Rev. Schilling told SocialFunds.com. "Wal-Mart has the obligation to report, not only on environmental sustainability, but social and economic sustainability as well."

 

 
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