NEW YORK — In the aftermath of a deadly blaze in a Bangladeshi factory that produced clothing for Wal-Mart Stores Inc., the retailer will soon begin enforcing more stringent standards.
In a letter to suppliers Tuesday, Wal-Mart said it would adopt a “ zero-tolerance” standard beginning March 1 for undisclosed and unauthorized subcontracting. The change contrasts with its former “three-strikes” policy, which would give suppliers warnings at first, according to Wal-Mart spokesman Brooke Buchanan.
Buchanan declined to specify how many suppliers Wal-Mart contacted and how many factories in the world supply the company.
Wal-Mart also will make public the list of unauthorized and failed factories through its third-party auditing system, will require suppliers to qualify new facilities for safety, and will no longer buy from factories that need fire-safety fixes and other improvements.
The retail giant said it will require suppliers to have a company representative based in the country of origin instead of using third-party agents as before. “Frequent in-person monitoring will be considered an essential element,” Buchanan said.
Wal-Mart will also shorten the time it allows a factory to fix any fire-safety violations to 30 days rather than six months to as much as a year, Buchanan said. The company is also mandating additional fire-safetytraining and other standards in Bangladesh.
“We want the right accountability and ownership to be in the hands of the suppliers,” said Rajan Kamalanathan, Wal-Mart’s vice president of ethical sourcing. “We are placing our orders in good faith.”
The Wall Street Journal, which first reported the news about the tougher rules onMonday, said labor activists have played down the new policies, saying they don’t address many issues - including transparency and whether Wal-Mart’s fees to suppliers are enough to ensure safe working conditions.
In late November, a blaze at a garment factory near Dhaka, the capital of Bangladesh, killed 112 workers as the fire escapes apparently were blocked. The Tazreen Fashions facility reportedly made apparel such as T-shirts and fleece jackets for Wal-Mart, Sears Holdings Corp., Walt Disney Co. and others, including items for a clothing label of hip-hop star Sean Combs.
At the time, Wal-Mart said a supplier subcontracted work to the “unauthorized” factory without the company’s knowledge. It later fired New York-based Success Apparel in connection with the unauthorized manufacturing, a person familiar with the matter said last month.
Wal-Mart’s new zero-tolerance policy won’t make factories safer unless it helps suppliers pay for improvements, said Scott Nova, who runs the Washington-based Worker Rights Consortium.
“If Wal-Mart is not going to absorb the costs of substantial factory repairs, improvements are not going to happen,” said Nova, executive director of the labor-rights monitoring group.
Wal-Mart is hosting U.S.-, Canada- and U.K-based Wal-Mart and Sam’s Club garment suppliers at its Bentonville headquarters on Thursday to discuss the changes, company spokesman Buchanan said.
Wal-Mart is holding internal discussions about possibly providing loans to suppliers to help cover the cost of safety upgrades, she said.
“A lot of these steps continue to put the onus entirely on the suppliers,” Scott Zdrazil, director of corporate governance for New York-based Amalgamated Bank, said in an e-mail. “As Wal-Mart investors, we need Wal-Mart to step up and ensure theintegrity of its supply chain and demonstrate a reliable monitoring program.”
Amalgamated holds about 440,000 shares of Wal-Mart stock.
On Jan. 10, Zdrazil wrote to Wal-Mart Chairman Samuel Robson “Rob” Walton asking the company to publicly report known suppliers before the company’s 2012 annual meeting.
“Full disclosure of all of the company’s suppliers would go a long way to demonstrate Wal-Mart’s intent to ensure full supply chain compliance,” Zdrazil said.
Information for this article was contributed by Andria Cheng of Market-Watch, Renee Dudley of Bloomberg News and Anne D’Innocenzio of The Associated Press.
Business, Pages 23 on 01/23/2013