Walmart says, “thanks, but no thanks,” to shareholder proposals
It has become something of a tradition at Walmart’s annual meeting that shareholders are asked to consider a number of proposals, which the board of directors typically recommends shareholders reject. It appears likely that will be the case again this year when the shareholders’ meeting is held on June 3 and five proposals are on the ballot.
One proposal deals with the thorny issue of gender identity and recommends Walmart adopt a policy explicitly prohibiting discrimination based on gender identity. Others ask the company to prepare reports related to climate change risk and political contributions. Another would give shareholders the ability to call special meetings.
Another proposal of particular of interest to Walmart suppliers involves a requirement that they publish an annual sustainability report. Even though many already do, the proposal suggests, “such report should include the supplier’s objective assessments and measurements of performance on work place safety, and human and worker rights, using internationally recognized standards, indicators and measurement protocols. In addition, a report should include incidents of non-compliance, actions taken to remedy those incidents, and measures taken to contribute to long-term prevention and mitigation.”
The Walmart board recommends shareholder vote “no” on the proposal and offered the following explanation.
“For years, Walmart has had in place supplier standards that address the treatment of workers by suppliers and supplier workplace safety. We expect our suppliers to meet or exceed these standards. Our supplier standards are not merely goals that we encourage our suppliers to meet; rather, a supplier’s failure to adhere to these standards may jeopardize that supplier’s continued business relationship with Walmart,” according to the company.
“In furtherance of our standards for suppliers, each year Walmart conducts, through Walmart’s internal auditors or through qualified third-party auditors, thousands of audits of the factories of suppliers of products for which Walmart is the importer of record and of suppliers of private-branded products. If an audit reveals that a supplier is not complying with our standards, we take appropriate action to address the problem, up to and including termination of our relationship with the supplier or its non-complying factory. Walmart maintains, and continues to work daily to implement, principles that serve what appears to be the ultimate purpose of the proposal, that is, to purchase products from suppliers that comply with high standards of legal and ethical treatment of workers and work place safety. We believe that requiring our suppliers to produce annual sustainability reports would force our suppliers to incur a significant expense in connection with the commitment of resources necessary to prepare and publish such reports. This requirement and the increased expenses incurred by our suppliers in preparing these reports could ultimately lead to higher costs for Walmart and higher prices for our customers. This would not be in the best interests of Walmart’s shareholders and customers and would place Walmart at a competitive disadvantage against those competitors whose supplier bases are not required to incur the expenses associated with mandated, annual sustainability reports.”