Walmart could reform the garment industry in 3 weeks

What Would the World Look Like if Walmart Used its Powers to do Good?

Isn’t it time that big corporations did their part to provide ethical and fair trade clothing, or at least, some information?

In the not-too-distant future, Bangladesh will look quite different from what it does now.  We know this because a threshold will soon be reached whereby consumers will no longer accept clothing made by slave labour.  The only reason it hasn’t changed yet is because today consumers accept wearing garments that are made by slave labour, simply because many don’t know the full story.

In our office we regularly discuss what forces will drive the most lasting change – and I’m always the one in the room who is of the strong opinion that money can solve this problem.  I regularly argue that $1 billion can go a long way but if you don’t see it that way, I would LOVE your feedback.

What Could Walmart Really Afford?

Walmart has an average NET-INCOME of $1 billion every 3 weeks (their annual net income for the last 5 years has been roughly $16B/year).   Let’s theorize for a minute if Walmart wanted to spend $1 billion in Bangladesh – what would that really get them?

  • Currently there are approximately 5000 garment factories in Bangladesh. To put things into perspective, you can buy a garment factory with 50 workstations for less than $50,000 USD.  A $1B investment is factories is on average $250,000 per factory. Imagine what this could do in terms of upgrading safety standards, adding HVAC with proper air filtering to improve working conditions, on-site child care etc.  A $1B investment directly into the manufacturing sector could go a long way.
  • Let’s take a different approach – let’s consider social investment. The average yearly per-capita income in Bangladesh was $1,314 in 2014.  At these levels, $1B would pay for 750,000 people’s income for a year.  Imagine for a minute what type of social programs you could run with that many people.  Child care (to combat human trafficking), education, health, and numerous other disciplines could transform the country.
  • There are many ways we can split a billion dollars, but what about putting it into the pockets of the current garment workers? The are currently approximately 4 million workers, which means that splitting it evenly it would amount to 12 cents a person per hour.  That may not sound like a lot but considering the majority of garment workers only get paid 18 cents an hour they would almost double their pay rate, what kind of impact would this have?

Walmart Shareholders VS. Consumers

Don’t get me wrong – I know that there are problems with this approach– corruption, tightly ingrained patterns, greed and, many other forces are at play.  However, all of these problems have solutions – NGO’s and other groups have experience in fixing these problems but more often than not they lack the necessary resources (money).  If a company like Walmart exerted its power, change would happen.  The problem with Walmart is that shareholders speak louder than consumers.  Any astute investor can tell you that “lack of government oversight + massive foreign buying power = slavery, environmental disasters, and very bad things” – if you look at the NYSE I challenge you to find companies that don’t follow this formula.  Such companies exist – but they’re not in the majority.  The moment consumers speak louder than shareholders, change will happen very quickly and very efficiently.

We’re not anti-Walmart or anti-capitalism – we just think the standard for corporate responsibility should be much higher, especially for companies like Walmart who have the size and power to influence a whole county’s socioeconomic situation.

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