Wal-Mart Sets New Rules for Suppliers

Beijing Wal-Mart Stores issued environmental and product-safety guidelines for its global suppliers Wednesday, starting with those in China, as part of its bid to be more environmentally responsible and to avoid any recalls or defective-product returns.

“Sustainability is about building a better business,” said Lee Scott, president and CEO of Wal-Mart Stores, in a statement. “We think it is essential to our future success as a retailer—and to meeting the expectations of customers. Maintaining the trust of our customers—today and in the future—is tied hand-in-hand with improving the quality of our supplier factories and their products.”

Under a new agreement with its suppliers, Wal-Mart will require factories to certify compliance with laws and regulations where they operate. The agreement will be phased in with suppliers in China in January 2009, and be expanded to the chain’s suppliers around the world by 2011. Wal-Mart announced the terms of the agreement in a meeting in Beijing with over 1,000 of its top suppliers, Chinese officials and non-governmental organizations.

Addressing suppliers in attendance, Mike Duke, vice chairman for Wal-Mart's international division, outlined a number of requirements and expectations for suppliers who want to do business with Wal-Mart. “Achieving the goals that we lay out today is going to require a common commitment,” Duke said. “It’s going to take even stronger and deeper relationships. And it is going to take all of us working together. We are expecting more of ourselves at Wal-Mart, and we will also expect more of our suppliers.”

Wal-Mart also announced a major effort to make Wal-Mart China a leader in sustainability in China by committing to make its stores more sustainable. The company will design and open a new store prototype that uses 40% less energy and will reduce energy use at existing stores by 30% by 2010.

In addition, during the next two years, Wal-Mart China will aim to cut water use in all of its stores in half by investing in new hardware and systems and developing best practices that will help its associates and stores use water more efficiently.

The company also pledged to bring more environmentally sustainable products to its store shelves.

Wal-Mart will apply the new standards to apparel first and eventually use them on all its products, Duke said. No other details were given.

The measures by Wal-Mart come as confidence in Chinese exports has been shaken after a series of product-safety scandals.