Wal-Mart and Disney: Two Varieties of Corporate Irresponsibility

May 16th, 2013 by Phil Mattera

toysfromhellIt’s difficult to decide which company is acting in the more irresponsible fashion in the wake of the terrible Rana Plaza industrial accident in Bangladesh: Wal-Mart, which continues to source goods from the country but refuses to join a group of other companies in signing a binding agreement to improve factory conditions; or Disney, which simply decided to end its use of suppliers in Bangladesh and several other countries.

Both companies have a dismal record when it comes to sourcing from poor countries. Wal-Mart has been embroiled in controversies regarding labor practices by its foreign suppliers since at least 1992, when media outlets such as NBC’s Dateline reported that some of the company’s Asian suppliers were making use of illegal child labor.

In 2005 the International Labor Rights Fund filed suit against Wal-Mart in federal court in Los Angeles, charging that employees of the company’s suppliers in China, Bangladesh, Indonesia, Swaziland and Nicaragua were forced to work overtime without pay and in some cases were fired for supporting union organizing efforts. Unfortunately, the case was thrown out on legal technicalities.

After a November 2012 fire at a Bangladeshi garment factory supplying Wal-Mart and other Western companies killed more than 100 workers, the Wall Street Journal found that the factory managed to continue working for Wal-Mart despite third-part inspections that had raised concerns about fire safety.

Disney has been targeted over conditions in its foreign supplier factories since 1996, when a report published by the National Labor Committee (now the Institute for Global Labour and Human Rights) alleged that clothing contractors in Haiti producing “Mickey Mouse” and “Pocahontas” pajamas for U.S. companies under license with Disney were in some cases paying as little as 12 cents an hour, below the minimum wage in that country.

In a follow-up report, the group found that the contractors had raised wages to the legal minimum of about 28 cents an hour but said this still left workers living “on the edge of misery,” especially since they were often short-changed by employers.

Over the following two decades, groups such as China Labor Watch and Hong Kong-based Students and Scholars Against Corporate Misconduct (SACOM) have produced a steady stream of reports documenting abuses in Disney supplier factories, especially in China, concerning wages, working conditions and safety. The company has generally brushed off the criticism, saying it could not possibly monitor all of the facilities. It even refused to release a list of its supplier factories.

It thus comes as no surprise that neither Disney nor Wal-Mart is playing a constructive role in helping prevent a repetition of disasters like Rana Plaza. In the case of Wal-Mart, it is likely that the key reasons for its refusal to join with companies such as H&M and Carrefour are that the agreement they signed is legally binding and that international labor federations such as IndustriALL and UNI were involved in making the accord happen. Bangladeshi unions are also signatories to the agreement.

Wal-Mart, of course, is notorious for its aversion to any form of cooperation with unions (except the subservient ones in China). In its dealings with community groups and other non-profits, the company is equally infamous for avoiding binding agreements—preferring to give itself the ability to wiggle out of any commitments it may pretend to make. The National Retail Federation, which shares Wal-Mart’s attitude toward unions, defiantly rejected the accord, while The Gap justified its refusal to sign by warning of the possibility of lawsuits. In other words, like Wal-Mart, it apparently wants an agreement that will do little more than burnish its corporate image.

Disney is acting as if it can simply wash its hands of the problems in Bangladesh by cutting off its suppliers in that country. That does nothing to help the workers who had grown dependent on the jobs its licensees had created, as bad as they were. Liana Foxvog of Sweatfree Communities and Judy Gearhart of the International Labor Rights Forum got it right when they published a column on the New York Times website calling the move “shameful.”

The accord is an important step forward in addressing both the immediate problem of industrial safety in Bangladesh and in starting to make large corporations truly responsible for ameliorating the brutal working conditions they all too often help create in countries with large numbers of desperate workers.

Note: This piece draws from my new Corporate Rap Sheet on Disney, which can be found here.

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