After factory fire, Walmart tightens its rules

Say suppliers’ subcontractors need approval

BENTONVILLE, Ark. — Walmart Stores Inc. has alerted its global suppliers that it will immediately drop them if they subcontract their work to factories that have not been authorized by the discounter.

Walmart’s stricter contracting rule, along with other changes to its policy, comes amid calls for better safety oversight after a deadly fire at a Bangladesh factory that supplied clothing to Walmart and other retailers. The November fire killed 112 workers at a factory owned by Tazreen Fashions Ltd. Walmart has said the factory was not authorized to make its clothes.

In a letter sent Tuesday to suppliers of its Walmart stores and Sam's Clubs in the United States, Canada, and the United Kingdom, the company said it will adopt a ‘‘zero tolerance’’ policy on subcontracting without the company’s knowledge, effective March. 1. Previously, suppliers had three chances to rectify mistakes.


Walmart also said it plans to publish on its website a list of factories that have not been authorized.

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And starting June 1, suppliers must have an employee stationed in countries where they subcontract to ensure compliance, rather than relying on third-party agents.

‘‘We want the right accountability and ownership to be in the hands of the suppliers,’’ said Rajan Kamalanathan, vice president of ethical sourcing.

Walmart will hold a meeting for clothing suppliers from the United States and Canada on Thursday to explain the policy changes.

Kamalanathan said Walmart is looking to create a fund that factories can tap to improve safety, but that is still in discussion. He also said local governments and other suppliers and retailers have to do their part on factory safety.


Critics quickly called Walmart’s moves inadequate.

‘‘It shows that Walmart is feeling a great deal of pressure,” said Scott Nova, at Workers’ Rights Consortium, a labor-backed advocacy group. He said the company’s response isn’t adequate unless it pays suppliers more so they can cover the costs of repairs.

Scott’s group is one of several organizations trying to get retailers and brands to sign a first-of-its-kind contract that would govern fire-safety inspections. It would call for companies to publicly report fire hazards at factories, pay factory owners more to make repairs, and provide at least $500,000 for the effort. Walmart has no plans to sign.