Wal-Mart and the gap in corporate policy

June 23, 2011

By Christine Bader
The opinions expressed are her own.

The Supreme Court’s dismissal of the class action lawsuit against Wal-Mart on Monday hinged on the fact that the company had a policy forbidding sex discrimination. In rejecting the plaintiffs’ claims that Wal-Mart disproportionately rewarded and promoted men, Justice Scalia reasoned that the existence of such a policy showed that the company could not have “operated under a general policy of discrimination”.

But this is misguided — and sets a dangerous precedent. It is not the existence of a statement that matters, but how it is implemented and enforced. Do laws against drunk driving or robbery mean that those activities cease to exist? Of course not.

Similarly, there is ample proof that good corporate policies don’t prevent bad corporate behavior. A corporate policy should be seen as an indication of whether an issue is important — not whether it has been resolved. There are far better ways to assess what a company is actually doing in practice.

From 2004-08, I was manager of policy development for BP. I led the development of the company’s human rights policy, which was posted on their website in 2006 and is still there today. The policy, meant to guide staff on how to address problems with labor, communities and security forces, was developed through an intensive yearlong process of collaboration with colleagues around the world as well as external human rights experts.

But it would be foolish to assert that all problems around BP’s operations ended as soon as the policy went up on the company’s website. If I had harbored such delusions, they would have vanished when BP’s Deepwater Horizon rig exploded last year, killing 11 people and wreaking havoc in communities around the Gulf of Mexico.

The London-based Business and Human Rights Resource Centre keeps a running list of all companies with policies that explicitly refer to human rights. Today there are 271 companies on the list, including Vodafone, which shut down Egypt’s mobile network in January on the request of the embattled Mubarak regime, violating millions of citizens’ right to information and free expression. Exxon-Mobil and Freeport-McMoran are on the list as well, both of which have been sued for violence around their installations. Three tobacco companies, and, of course, BP are on the list, too.

I do not cite these examples to mock them. These companies have taken the initiative to create policies on difficult issues exactly because the nature of their business demands it. There are many companies that don’t have human rights policies but clearly have human rights problems. Are they hoping that such challenges quietly disappear on their own?

If the process of policy development is taken seriously, it enables companies to explore an issue in detail, bring in external expertise, and establish procedures that that help them solve problems.

But it’s hard to tell whether a company has done that or had their public relations department spit out a one-pager without looking at other indicators. What processes have been put in place to implement the policy? How are people paid and promoted? What tangible outcomes can be examined?

Last Thursday, the United Nations Human Rights Council unanimously endorsed a set of principles aimed at preventing and addressing corporate-related human rights abuses. (I advised the effort to develop the principles.) Included in the principles is guidance for companies, which emphasizes the need for a policy commitment to respect human rights.

But that statement is only the first step. According to the U.N. principles, companies must also constantly monitor how the policy is being implemented and report on their performance. The principles were created through consultation with businesses, governments and campaigning groups, and comprise a more helpful framework to assess company practice than just looking for policies.

The nonprofit group Catalyst doesn’t just look at corporate policies, but gives awards to companies that have developed programs with measurable results toward recruiting and advancing women. Its 2011 honorees include McDonald’s, where from 2006 to 2010 the percentage of women managers went from 0 to 36 in Asia-Pacific, the Middle East and Africa and 13% to 38% in the U.S.

Preventing discrimination and other human rights abuses is not a responsibility that a company can meet by simply issuing a statement. It requires action:  training, measurement, incentives to reward good behavior and punish bad acts.

For the female employees of Wal-Mart, pointing to a policy is of little consolation. The Supreme Court would have better served them — and others affected by business activity — by looking past corporate statements to processes and results.

Christine Bader just completed her term as Advisor to the United Nations Secretary-General’s Special Representative on business & human rights. She worked for BP from 1999-2008.

Photo: Protesters rally in front of the Supreme Court while class action lawsuit Dukes v. Wal-Mart is being argued inside the court in Washington, March 29, 2011. Several U.S. Supreme Court justices sharply questioned on Tuesday whether female employees at Wal-Mart Stores Inc can proceed with the largest class-action sex-discrimination lawsuit in history that seeks billions of dollars. REUTERS/Larry Downing

3 comments

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I guess what you are advocating for is affirmative action for women? Not that I disagree that America needs such a thing, but that’s neither here-nor-there in this action. The lawsuit in this form was improper and individual managers should have their feet held to the fire since it was at their discretion that promotions were made.

Posted by CDN_Rebel | Report as abusive

In my company, I hire the best person for a job, regardless of sex, religion, color etc. The reason for this is that I want to make money. The more, the better. Therefore, I want the BEST people. Period. It would be foolish to let a competitor of mine hire the best person available simply because I didn’t like their color, creed, sex, etc.

Maybe greed could actually help some problems like this.?.

Posted by acegilbert | Report as abusive

You are not greedy acegilbert, you recognize you have a responsibility to customers and employees alike.

Posted by coyotle | Report as abusive