When Wal-Mart's chief executive, Michael Duke, appeared at a Council on Foreign Relations meeting in New York this month, a raucous crowd of protesters awaited him. Wal-Mart was confronting reports of bribery in Mexico, a wave of labor demonstrations in the United States and, perhaps most critically, questions about a grisly fire that had killed 112 workers at a Bangladeshi garment factory used by several Wal-Mart suppliers.
"We will not buy from an unsafe factory," Duke told the audience. "If a factory is not going to operate with high standards, then we would not purchase from that factory."
But Duke's reassurances that Wal-Mart enforces high standards in the global clothing industry appear to be contradicted by inspection reports it requested and some of Wal-Mart's own internal communications: Just two weeks before Duke's vow, a top Wal-Mart executive acknowledged in an email to a group of retailers that the industry's safety monitoring system was seriously flawed. "Fire and electrical safety aspects are not currently adequately covered in ethical sourcing audits," Rajan Kamalanathan, the executive, wrote to other board members of the Global Social Compliance Program, a business-led group focused on improving the supply chain.
Three inspection reports from 2011 and 2012 at the Tazreen Fashions factory where the fire occurred revealed serious repeated violations, including a lack of fire alarms in many areas, a shortage of fire extinguishers and obstacles blocking workers' escape routes. At the same time, those inspections did not even cover whether the factory had fire-safe emergency exits, leaving that responsibility to often lax government inspectors.
Wal-Mart has become the world's largest retailer by demanding the lowest costs from suppliers and delivering the lowest prices to consumers while promising its customers that the billions of dollars of goods it buys from Bangladesh, China and other countries are produced in safe, nonsweatshop factories. Wal-Mart buys more than $1 billion in garments from Bangladesh each year, attracted by the country's $37-a-month minimum wage, the lowest in the world.
But even as the deadly Nov. 24 fire at the Tazreen factory has stirred soul-searching inside and outside the apparel industry about the effectiveness of its global factory monitoring system, some nonprofit groups say Wal-Mart has been an important obstacle to efforts to upgrade fire safety. That is partly because it has shown little interest in changing the existing practice of demanding that the factories, often operating at razor-thin margins, meet fire safety standards at their own cost.
"They are squeezing the manufacturers, and the manufacturers are happy to get away with the minimum compliance that they can," said Farooq Sobhan, a former Bangladeshi diplomat involved in past negotiations between Bangladesh and the U.S. on trade policy for apparel. "It is kind of a vicious cycle."
Wal-Mart says it is doing everything it can to prevent factory fires. "Wal-Mart has been advocating for improved fire safety with the Bangladeshi government, with industry groups and with suppliers," Kevin Gardner, a Wal-Mart spokesman, said in an email.
Wal-Mart also insists that its apparel suppliers were using the Tazreen factory without its approval.
But critics say that the inspection reports discovered in the Tazreen factory which were obtained by the New York Times from a labor advocacy group underscore fundamental problems with Wal-Mart's supply chain in Bangladesh, allowing it to avoid addressing safety problems it should have dealt with.
"The Wal-Mart system of audits and inspections is not improving the factory safety conditions here in Bangladesh," said Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity. "They maintain this system to enable them to keep their hands clean and deny responsibility."
In the days after the Tazreen disaster, Wal-Mart executive Kamalanathan proposed a series of recommendations to improve fire safety. But nearly all of them put the onus on Bangladeshi authorities and factory owners. He called on the government to conduct more inspections, tighten standards and phase out factories deemed unsafe. He suggested more rigorous fire safety training and said factory owners should pay for any corrective actions.
Many workplace safety experts say Wal-Mart's own monitoring system is part of the problem.
"If Wal-Mart's audits are not ensuring that a multiple-story factory in Bangladesh has functioning fire emergency exits," said Scott Nova, executive director of the Worker Rights Consortium in Washington, D.C., "then they're not really auditing for fire safety."