In the first move of its kind, the city of Portland, Oregon, announced that a number of holdings the company held in retail giant Wal-Mart (NYSE:WMT) had expired, and that the city would not be making any further investments in the company. The decision by Portland city officials is unique in that it is the first time a major American city has turned on Wal-Mart, raising eyebrows around the country and wondering what other companies may get the cold shoulder from Stumptown. The divestment itself stems from the city’s 2013 adoption of a socially responsible investment protocol, the criteria of which Wal-Mart has apparently not met. Portland looks to be completely free of Wal-Mart investments by 2016, which all together adds up to $36 million, or 2.9 percent of the city’s portfolio.
In response to the divestment, Portland Commissioner Steve Novick says Portland is blazing a new path in the way cities look at their investments. “From what I can tell, no other U.S. city has looked at socially responsible investing in quite the same way as Portland,” he said. “I’m hopeful other cities and states take note and adopt similar investment principles to hold companies accountable and align our investment policies with our values.”
Unions and students from local universities were a driving force in implementing the new socially responsible investment protocols, which include the creation of a committee to oversee any future investments to address issues like health concerns and corruption. The protocols not only allow Wal-Mart’s current investments to expire, but also stops the city from pointing its investing activities back in Wal-Mart’s direction in the future, according to Truth-Out.
Portland is a unique city with a heavily left-leaning populace, made famous and lampooned by television shows like Portlandia. While the show does capture some of the inherent quirkiness, or weirdness as Portland natives like to say, there is some merit in the liberal ideals the city’s inhabitants are shown to exhibit. It’s those ideals that helped shape Portland into the city it is today, and make it a prime location for an initiative, such as the socially responsible investment protocol, to be implemented. United Food and Commercial Workers International representative even cited Portland’s values as a reason Wal-Mart was being snubbed. “A company’s policies and practices have a direct impact on families and individuals living and working in Portland,” he said. A city’s investments should reflect the values of its taxpayers, and Wal-Mart is consistently out of step of Portland values.”
After Portland’s move, will companies like Wal-Mart have to start taking the idea of social responsibility a bit more seriously? It’s possible. Portland is still a major American metropolitan city, and its action hasn’t gone unnoticed. Plenty of larger cities, including Seattle, San Francisco, and New York City, have no Wal-Mart stores inside their city limits. Has the Wal-Mart name itself become so toxic that cities — and their residents — don’t want the company anywhere near their communities? That would appear to be at least somewhat true. As Gawker points out, Wal-Mart is the quintessential American corporate symbol, and for a major city like Portland to completely look the other way is not a good sign.
Wal-Mart has long-been the default name for those looking to point out corporate horrors and hasn’t done much to help its image. As the nation’s largest private employer, the company has been the target of many who point out the enormous burden it places on the taxpayers as a result of paying employees low wages. Exploiting cheap foreign labor is also a chief concern about Wal-Mart’s business model, as in the case when a Bangladeshi factory collapsed killing more than 1,100 workers.
Bangladesh has become a manufacturing hub, where many companies source their products. However, when it came time to take a step forward to improve working conditions in Bangladesh, Wal-Mart balked, according to a release from the University of Pennsylvania concerning corporate social responsibility. “Take the case of Walmart. One month after the disaster, the world’s biggest retailer refused to sign on to the safety measures adopted by more than a dozen European firms. Those companies — including H&M, Carrefour and Marks & Spencer — backed a plan in which they agreed to have rigorous, independent inspections of the factories they contract with in Bangladesh and to help pay for improvements in building safety,” the release said.
While Wal-Mart has taken measures to improve in other areas, high-profile events like the Bangladeshi factory collapse are the things the public remembers, and which ultimately end up hurting the company in the eyes of consumers. Adding to a climate of toxicity, its precisely unsafe labor practices such as these that have cities like Portland passing investment ordinances to shift their city’s business landscape.
Divestment from toxic and potentially unsafe industries is starting to take hold around the country as well, although in more minute forms. For example, Stanford University recently announced a divestment of $18 billion from the fossil fuel industry, in another decision born from internal guidelines regarding corporate policy and social responsibility.
Is Portland’s divestment a big deal? Yes, but for now it’s impossible to tell how far of a reach it will have in influencing policy in other cities. Portland is a very unique place with a populace known to be more liberal than most, but the city itself showing it is willing to take the time to think about where it’s putting funding is a noteworthy and admirable step. As a company, Wal-Mart and others will definitely need to take note, as the Portland decision appears to be in retaliation to corporate behavior the city didn’t see as appropriate. If more cities and investors start holding corporations accountable for their behavior, a major shift in how business is conducted could be around the corner.