California Apparel News

Boston-based KLD & Co. recently announced its decision to exclude Bentonville, Ark.-based Wal-Mart, the world’s largest retailer, from the Domini 400 Social Index (DSI 400), citing sweatshop conditions in vendor factories overseas.

According to a report from KLD, Wal-Mart was removed from the DSI 400 because the retailer’s domestic and international vendors failed to meet human and labor rights standards, and because its contracting policies and procedures have failed to match those held by “other prominent companies that are similarly exposed to sweatshop controversies.”

According to Peter D. Kinder, KLD’s president, “Wal-Mart’s market dominance puts it in a unique position to lead retailers in a cleanup of sweatshop abuses. To date, it has declined to do so. Wal-Mart has some real positives, but its failure to lead on issues such as this has made it unacceptable to social investors.”

In December of 1997, Nike was removed from the DSI 400 because of involvement in international labor controversies. The Nike action was cited by KLD as a precedent for the decision regarding Wal-Mart.

KLD released a white paper detailing the shortcomings of Wal-Mart’s existing contracting guidelines, providing examples of documented human and labor rights abuses by the retailer’s overseas vendors and discussing the company’s failure to ensure vendor factory compliance with human and labor rights standards.

Established in 1990, KLD provides social research for institutional investors, servicing clients seeking to integrate social criteria into their investment decisions. KLD offers performance benchmarks, corporate-accountability research and compliance, and consulting services comparable to those provided by financial-research service firms. The company monitors the financial performance of 400 corporations that pass multiple broad-based social screens.

As of January of this year, Wal-Mart was the third largest holding in the DSI 400.

Calls to Wal-Mart were unreturned at press time. —Darryl James