Walmart Urged to Disclose Its Risks Related to Supply Chain, Stores in China

On Wednesday, National Legal and Policy Center presented a “Communist China Risk Audit” proposal at Walmart Inc.‘s annual shareholder meeting that that would require the company to produce a report that addresses its vulnerabilities related to its extensive business in the communist country.

The company’s board of directors opposed our proposal, as explained on pages 116-117 in its proxy statement.

NLPC filed a proxy memo, which includes its response to the board’s opposition statement, with the Securities and Exchange Commission earlier this month.

Speaking as sponsor of the resolution was Paul Chesser, director of NLPC’s Corporate Integrity Project. A transcript of his three-minute remarks, which you can listen to here, follows:

Walmart keeps it short in opposing our proposal, which asks the Company to produce an annual report on the extent of the risks it faces by the large amount of business it does in communist China.

 

The Company claims they’ve got it covered, that there’s nothing to see here, so shareholders can just move along.

 

Walmart claims this by pointing out three measures that they’ve taken:

 

1. Walmart claims that shareholders are sufficiently informed about material risks in periodic reports to the SEC.

 

This is just laughable, as there is zero detail about the extensive risks of doing business in China.

 

2. Walmart claims it addresses the risks we are asking about through its “enterprise risk management program.”

 

This sounds like a perfectly bureaucratic process of questionable value, and it certainly is opaque for shareholders.

 

3. Walmart says it is “committed to respecting human rights and has established robust due diligence processes to manage human rights risk.”

 

In making this claim, the Company points to its ESG Brief on Human Rights, and its Human Rights Statement, on its website.

 

But after reviewing these two statements, it’s interesting that I found mentions about Walmart’s scrutiny of human rights in OTHER countries, but not in China.

 

For example, Walmart mentions in these statements how it focuses on supply chains for:

 

• Apparel in Bangladesh
• Produce in the U.S. and Mexico
• Shrimp and tuna in Thailand
• And electronics sourced for the U.S. market, which does make a passing mention of China

 

Walmart also notes concerns it has about migrant labor in Malaysia, and its supply chains in Central America and India.

 

But when it comes to human rights, there is pretty much no mention of China.

 

Why is that, at a company like Walmart whose reputation is in many ways known for the label, “Made in China?”

 

Oh, there are a few mentions of China on Walmart’s website with regard to other issues.

 

Those ESG issues would be climate change, biodiversity, protecting forests, and foodborne illness.

 

So, communist China has been credibly accused by the U.S. State Department of censorship, political imprisonment, forced labor, torture, organ harvesting, genocide, threatening its neighbors, and many other atrocities.

 

None of these are worth a mention on any of Walmart’s disclosures, while other lesser-offending countries are mentioned.

 

Walmart has big plans for growth in China, with the country representing 13 percent of revenue growth compared to 7.3 percent for the rest of the company.

 

And Walmart has said it plans to invest $1.2 billion dollars in logistics and distribution in China over the next 10 to 20 years.

 

Needless to say, in light of what we do know already about communist China and its tyrannical practices, Walmart’s so-called disclosures are insufficient in light of its plans.

 

Please vote for Proposal Number 11.

Read NLPC’s shareholder proposal for the Walmart Inc. annual meeting here.

Read NLPC’s proxy memo in support of its Walmart proposal here.

Listen to Chesser’s three-minute remarks in support of the proposal here.