Walmart investors raise concerns about human rights and worker welfare – will Walmart heed the warnings?

Walmart investors raise concerns about human rights and worker welfare – will Walmart heed the warnings?
Walmart investors raise concerns about human rights and worker welfare – will Walmart heed the warnings?

Walmart investors joined the chorus of civil society organizations, labor groups and journalists calling attention to the company’s treatment of its workers. At Walmart’s annual shareholder meeting last month, several shareholder resolutions aimed at improving working conditions for Walmart’s 1.6 million U.S. workers received significantly more votes than in previous years. Voting increased across the board on issues ranging from racial equity and fairness in the company’s treatment of its workers to the important issue of workplace safety.

This was particularly true of the resolution by Oxfam and its co-signatories calling on the company to conduct a human rights impact assessment and publish the results. The proposal received a remarkable 26 percent of the independent vote, more than double the support for last year’s human rights due diligence resolution.

“Workers’ rights are human rights,” says civil rights activist Reverend William J. Barber, who presented the Oxfam resolution to our fellow shareholders at this year’s AGM. It is becoming increasingly clear to companies and investors that one of the best ways to protect workers’ rights and ensure that companies respect those rights is to conduct HRIAs. By examining the real impact of employers’ policies on workers – whether it’s concerns about being paid below a living wage or the near impossibility of providing sick leave – HRIAs enable companies to understand and address the risks their policies and practices create for their own workers (and by extension, investors).

In the case of Walmart, reports have indicated that the company’s labor practices – including the use of invasive surveillance technologies and the imposition of unreasonable work quotas – harm workers’ health, safety, and overall well-being in ways that further exacerbate poverty. Walmart’s excessive market control also allows the company to depress average wages overall, deepening economic inequality and creating a disastrous reality for the American worker at a time when many are already struggling to survive.

Why human rights impact assessments?

As the largest private employer in the United States, Walmart’s relationships with workers and high-risk suppliers have the potential to expose the company to significant reputational, legal, operational and ultimately financial risks if the company fails to adequately identify and assess relevant human rights issues.

HRIAs can help mitigate these risks by enabling Walmart to identify, analyze and address the root causes of these risks. Without such tools, these risks remain uncontrolled and can lead to reputation-damaging media reports, such as those about child labor in U.S. supply chains, inadequate wages and sick leave, and inadequate consideration of pregnant workers in the company’s own workforce and operations.

HRIAs can also help companies prepare for regulatory changes, such as the European Corporate Due Diligence Directive and the Uighur Forced Labor Prevention Act, and mitigate potential legal risks. For these reasons, Walmart competitors such as Kroger, Jumbo and Tesco have already committed to conducting HRIAs.

While Oxfam welcomes Walmart’s recent commitment to conduct a human rights impact assessment, the company has so far refused to take the necessary steps to ensure that the human rights impact assessment actually leads to a tangible reduction in risk, including publishing the full results of the study and explaining how the company intends to stop committing or contributing to human rights abuses.

Why is Walmart’s current valuation commitment inadequate?

We welcome this step, which is undoubtedly a step in the right direction, but Walmart’s commitment falls short of expectations.

First, there is a lack of assurance that the results of the assessment will be communicated to investors (and other stakeholders) – one of the central pillars of a meaningful HRIA and therefore a critical omission. Investors should be given the opportunity to understand the risks in Walmart’s operations and supply chains, and Walmart should disclose those risks and its plan to address them. Simply conducting the assessment is not enough, there must be a mechanism for transparency and accountability.

To be effective, publication of HRIA results must also include specific disclosure of the actual human rights impacts identified, the level of responsibility the company bears for them, and a time-bound action plan on how the company will address those impacts. While Walmart has announced that it will conduct HRIAs, it has only stated that it will share its “goals, focus areas, progress and challenges” – but not the results or an action plan to address them.

Again, Reverend Barber put it best: “This is about people and one of the best ways to protect workers’ rights and ensure that companies respect those rights is to conduct a human rights impact assessment.”

Overall, the results of last month’s shareholder vote confirm what we already know: Investors are responding to growing evidence of poor working conditions and gender and racial disparities in Walmart operations with increasing concern about the risks these pose to the viability of the company’s business model and, as a result, the financial risks they pose to the company’s investors. And they are increasingly voting their shares accordingly.