Walmart Audit (Walmart Ethical Standards Audit)

Walmart, as the world's largest retailer, is always committed to providing its global customers with high-quality and affordable products. To ensure its vast supply chain system meets high standards of ethical and social responsibility requirements, Walmart has established and strictly enforces an audit program called "Walmart Responsible Sourcing Standards" (RSS), commonly known in the industry as the "Walmart Audit." This is a critical entry threshold that all factories hoping to become Walmart suppliers must pass.

I. Core Objectives and Importance

The core objective of the Walmart audit is to ensure that factories in its supply chain can provide a safe, legal, and respectful working environment for employees. It is not only the cornerstone of Walmart's fulfillment of corporate social responsibility and maintenance of brand reputation but also the foundation for establishing long-term, stable cooperative relationships with suppliers. Through the audit, Walmart aims to:

• Protect Workers' Rights: Ensure workers operate in a fair, safe, and non-discriminatory environment.

• Reduce Business Risks: Avoid negative impacts on the brand due to labor, safety, or ethical issues in the supply chain.

• Promote Sustainable Development: Drive continuous improvement among suppliers to achieve long-term, stable, high-quality development.

• For factories, passing the Walmart audit is a necessary condition for receiving orders and also a valuable opportunity to enhance internal management levels and international competitiveness.

II. Main Audit Standards and Content

The standards for the Walmart audit are comprehensive and strict, primarily focusing on the following core areas. Its audit documents are often referred to as the "Green Book":

Labor:

• Forced Labor: Strictly prohibit any form of forced labor, bonded labor, or prison labor.

• Child Labor: Strictly prohibit the use of child labor; age verification for all employees is mandatory.

• Discrimination and Harassment: Prohibit any form of discrimination, abuse, or harassment in the employment process.

• Freedom of Association: Respect employees' legal rights to freely associate and collectively bargain.

Health & Safety: This is the top priority of the audit, with particular focus on fire safety (e.g., fire exits, emergency lights, fire extinguishers, fire drills), electrical safety, chemical safety, machine guarding, and occupational injury prevention. Any serious safety hazards may lead to audit failure.

Hours & Compensation: Working hours and overtime must comply with local legal requirements.

Wages must be paid at no less than the legal minimum standard, and overtime pay must be fully paid according to the law. Accurate time records and payroll are mandatory documents for inspection.

Environment: Factories are required to comply with all applicable environmental laws and regulations and are encouraged to reduce their environmental impact.

Ethics: Strictly prohibit any form of bribery, corruption, and fraud; require factories to maintain transparency and integrity in business dealings.

III. Audit Process and Results

Walmart commissions its approved third-party auditing agencies (such as STR, ITS, SGS, etc.) to conduct on-site audits. The audits are typically unannounced (surprise) to ensure the authenticity of the results.

Audit results are divided into three grades:

• Green: Meets requirements, valid for one year.

• Yellow: Partially does not meet requirements; requires submission of a Corrective Action Plan (CAP) and a follow-up audit within 180 days.

• Red: Seriously does not meet requirements; orders will be terminated, and the factory will be suspended from cooperation for at least one year. If "zero-tolerance" issues are found (such as child labor, forced labor, corporal punishment, serious health and safety threats, etc.), cooperation will be terminated immediately.

The Walmart audit is a rigorous supply chain management system that deeply reflects Walmart's commitment to corporate social responsibility. For suppliers, actively responding to and continuously complying with its standards is not only the key to obtaining orders but also an important step towards internationalized and standardized management.