Ex-Wal-Mart CEO Scott Promotes Supplier Compliance

Lee Scott, the former chief executive officer of Wal-Mart Stores, called on attendees at the CIES World Food Business Summit here this month to join the Global Social Compliance Program to help ensure that suppliers are adhering to local wage and environmental regulations. The program, which was started by CIES but is now being taken over by its successor organization, the Consumer Goods

NEW YORK — Lee Scott, the former chief executive officer of Wal-Mart Stores, called on attendees at the CIES World Food Business Summit here this month to join the Global Social Compliance Program to help ensure that suppliers are adhering to local wage and environmental regulations.

The program, which was started by CIES but is now being taken over by its successor organization, the Consumer Goods Forum, involves sharing factory audits to create a database of socially responsible suppliers.

“We should not be rewarding factories that cheat on overtime, that cheat on the age of their labor, that dump their scraps and their chemicals in our rivers, and don't pay their taxes and cheat on their contracts,” he said. “If factories cheat on their communities and their obligations, they will cheat on the quality of their products, and in the end they will cheat our customers.”

These “global reference standards” will give customers greater confidence “that the products they buy are made in a way that is consistent with global values,” Scott said.

Leading companies in the program have already committed to sharing the results of their factory audits, he said, and he encouraged companies to make an effort to keep the program on its timeline of having all shared information available by the end of this year.

“Ultimately, this will reduce costs, it will make factories more efficient, and it will reduce operating costs for brands and for retailers,” Scott asserted.

Scott, who retired as CEO earlier this year, remains chairman of the executive committee at Bentonville, Ark.-based Wal-Mart.

He used his time in front of food industry leaders from around the world to call on them to take a more active role in social responsibility, particularly with respect to energy, the environment and labor.

“Do we as an industry have an opportunity and a responsibility to step out on the big issues? I personally believe that we do,” he said. “As I reflect on my time at Wal-Mart, I think this is especially true with food and with retailing. As retailers and as food companies, we have a unique ability to make this world a better place. We are closer to the working men and women of this world and how they live their daily lives than any other industry.

“We have some great opportunities where we can all work together and be more responsible together and make an even bigger difference in the lives of our customers, our associates and our shareholders.”

In addition to the supply-chain issues that he said the industry can work together on with the Global Social Compliance Program, he also stressed opportunities in the areas of renewable energy and more environmentally friendly packaging, which can reduce costs.

He also warned that the weakened economy should not be used as an excuse for companies to avoid social issues.

“As an industry, as we work to adjust to these troubled times, we don't have to sacrifice responsibility,” Scott said. “We can be even more responsible while also serving our customers and our shareholders.”

He cited as an example the need to provide fresh foods in underserved urban areas, and the need to keep costs down to help mitigate the impact of inflation on lower-income consumers.

“I believe we have a responsibility to work together to tackle some of the problems facing the world,” Scott said. “The question for me is, are we going to emerge stronger in this time? Are we going to reduce our worldwide reliance on oil and put the world on a path to use sustainable energy sources? Here in the U.S., are we finally going to end the embarrassment of 47 million uninsured?

“We have to tackle hard issues, and we have to do it together. We need to come together — government, NGOs [non-government organizations] and business — in a new approach to solving problems. We have to change the way that change is made in this country and this world. It is essential to long-term prosperity.”

Scott also commented on his nine-year tenure as Wal-Mart CEO, heaping praise on his successor, Mike Duke, who was in attendance, and others in the organization.

Even as he eases toward full retirement, Scott maintained a humble, folksy sense of humor that is in some ways a hallmark of the company's culture. Asked what he was most proud of during his time as CEO, he quipped, “I'm proud I wasn't fired by the president of the United States.”