European investors join for attack on Wal-mart labour standards at AGM

A group of European institutional investors including F&C, the UK fund manager, and MN Services, which manages €60bn ($93bn) in Dutch pensions money, is calling for support for a resolution this week at Wal-mart’s AGM over a continued ban by US cities on Wal-mart-type, out-of-town hypermarkets as well as the company’s failure to comply with international labour standards.
The investors, which are believed to include one other Dutch investor and two Scandinavian institutions have clubbed together to file the resolution at Wal-mart’s June 6 shareholder meeting in Arkansas.
They say Wal-mart’s poor business reputation is driving away customers and putting their investments at risk. A 2006 study conducted by the US consulting firm McKinsey found that at least 2% to 8% of the company’s customers had stopped shopping because of controversy around the company.
US cities including San Diego have passed laws to prohibit stores of more than 90,000 square feet: the average size of Wal-mart’s giant Supercenter stores is 185,000 square feet.
The investors are demanding that Wal-mart produce a report on the negative social and reputation impacts of its non-compliance with International Labour Organization (ILO) conventions.
Wal-mart has been hit by allegations of using childlabour in overseas suppliers and preventing employees from joining trades union in the US.
A ruling by Pennsylvania labour courts in 2006 found it guilty of forcing employees to work during breaks and off the clock. The company reportedly faces minimum damages of up to $100m as a result.
Kris Douma, a former Dutch parliamentarian and now head of responsible investment at MN Services, said: “We’re hoping for large-scale support from other investors on this resolution and are inviting other shareholders to join us.” In a response to shareholders, Wal-mart said the United States had ratified only 14 of the ILO conventions and that most did not apply to its operations
It said: “The board believes that a report of the type requested by this proposal could not properly be issued and that the issuance of any such report would be contrary to the best interests of our company and our shareholders.”
In 2006, the €250bn Norwegian Government Pension Fund blacklisted Wal-mart over its poor reputation. The fund sold off more than $400 million worth of Wal-mart shares. At the time, the decision provoked sharp criticism from Benson Whitney, US Ambassador to Norway, who accused the fund of a “national judgment of the ethics of these companies,” and took up the issue with the Norwegian government.