Here’s Why Wal-Mart Is Explaining its Sourcing to Investors
The blaze that swept through a Bangladesh garment factory in November of last year killed at least 112 people, injured approximately 200 others, and sent workers jumping out of the multistory building. In the charred ruins of the Tazreen factory — a factory the company said was no longer supposed to be making its clothes — the remains of clothing bound for Wal-Mart (NYSE:WMT) stores was found.
The disaster not only put a spotlight on the poor working conditions in the world’s second largest garment-exporting country and increased pressure on Western retailers to help improve conditions and take more direct responsibility for their suppliers, but created a concern for Wal-Mart shareholders.
Further disasters in Bangladesh — like last November’s fire and a building collapse earlier this year that killed more than 1,100 people — will likely increase the cost of producing goods for the apparel companies that supply Wal-Mart. That the discount retailer is holding a briefing on Thursday to discuss its sourcing practices in Bangladesh is a sign that shareholders are concerned about the condition of the company’s supply line.