Wal-Mart Contends That it Wishes

Wal-Mart contends that it wishes to be a socially responsible company (Ferdinand, 2007). The company's social responsibility platform includes everything from creating energy-efficient stores to leveraging suppliers to improve their level of responsibility. The company has cited its role in helping Hurricane Katrina survivors as a key turning point in its quest to be socially responsible (Ibid.) The company's performance with regards to responsibility has come under fire, however.

The company uses its leverage with suppliers in order to place pressure on them to develop responsibility plans. For example, Wal-Mart circulates a questionnaire to its suppliers that includes questions specifically about their plans for ethical and responsible production of products that are destined for Wal-Mart in its Sustainable Product Index (Baue, 2009). Additionally, Wal-Mart's SPI may influence consumer purchasing decisions. In this way, the weight of the world's largest company can dramatically alter the competitive landscape with regards to CSR (Goleman, 2009).

Wal-Mart also includes contribution to communities as part of its commitment to corporate social responsibility. According to the company's 2009 Sustainability Report, Wal-Mart contributed $378 million in cash and in-kind contributions to charities in the U.S., up 27% over the previous year. The company also encourages its employees to donate their time to charitable organizations. This resulted in over 1 million hours being donated by employees to charity in 2009. The company also has programs to help develop their suppliers' businesses. This includes a program for farmers who supply Wal-Mart stores in Asia as well as those in Central America.

In order to gauge Wal-Mart's performance in this regard, some perspective needs to be placed on these figures. The first is that Wal-Mart had $401 billion in revenue in 2009, and $13.4 billion in profit. The charitable donations, therefore, represented less than 0.1% of revenue and just 2.8% of profit. Moreover, the company has $7.2 billion in cash on its balance sheet. Clearly, the company's donations are underwhelming when compared to the company's size. The charitable donations that they made also contribute to tax write-offs, so Wal-Mart is not donating at a level where they no longer have incentive -- they benefit from their donations. The donations of employee time amount to little. Wal-Mart has 2 million employees, so the average donation is 1/2-hour per year per employee.

The SPI may influence the company's suppliers to strengthen their own CSR, but the program is too young to be judged as of yet. Such changes, particularly in the developing world where most of Wal-Mart's suppliers are located, can take a long time to implement. Furthermore, the SPI does not constitute direct pressure from Wal-Mart, and could be seen more as the company covering its backside in the event of a scandal relating to treatment of employees at one of its suppliers.