Monitoring

Audit Results

Total Audit Results 2006

5.4% Green Low-risk violations
Re-audit after two years
51.6% Yellow Medium-risk violations
Re-audit after 120 days
40.3% Orange
Re-audit after 120 days
0.4% Orange-Age
One or two underage workers found - re-audit after 30 days and if underage labor is still present, give the factory a Red-Failed assessment
2.1% Disapproved
Four orange assessments in a two-year time period - barred from producing merchandise for Wal-Mart for one year
0.2% Red-Failed
Permanently barred from producing merchandise for Wal-Mart

Total Audit Results 2005

9.6% Green Low-risk violations
Re-audit after two years
37.0% Yellow Medium-risk violations
Re-audit after 120 days
52.3% Orange
Re-audit after 120 days
0.8% Orange-Age
One or two underage workers found - re-audit after 30 days and if underage labor is still present, give the factory a Red-Failed assessment
0.1% Disapproved
Four orange assessments in a two-year time period - barred from producing merchandise for Wal-Mart for one year
0.2% Red-Failed
Permanently barred from producing merchandise for Wal-Mart

Total Audit Results 2004

19.1% Green Low-risk violations
Re-audit after two years
38.8% Yellow Medium-risk violations
Re-audit after 120 days
32.5% Orange
Re-audit after 60 days
- Orange-Age
One or two underage workers found - re-audit after 30 days and if underage labor is still present, give the factory a Red-Failed assessment
8.8% Disapproved
Four orange assessments in a two-year time period - barred from producing merchandise for Wal-Mart for one year
0.8% Red-Failed
Permanently barred from producing merchandise for Wal-Mart
  2004 2005 2006
Total number of factory audits 12,561 13,600 16,700
Total number of factories audited 7,600 7,200 8,873
Direct imports 5,300 6,120 6,757
Domestic imports 2,300 1,080 2,116

2004 and 2005 figures include audit results for direct imports and domestic import categories in Wal-Mart US.

2006 figures include audit results for direct imports and domestic import categories in Wal-Mart US, Wal-Mart Canada, and ASDA.

Commentary and Data Biases

Results represent data for the calendar year.

To compare 2004 results with those from 2005 and 2006, it is necessary to combine Orange-Age Assessments and Red-Failed for 2005 and 2006 (2004 Red-Failed at 0.8%, 2005 Red-Failed & Orange-Age Assessments at 1%, 2006 Red-Failed & Orange-Age Assessments at 0.6%).

The Red ratings in 2004 are now deemed Orange. The change is reflected in 2005 and 2006 results.

Factories rated Green decreased in 2006, while Yellow ratings have increased. Green and Yellow ratings represent low to medium risk to factory workers, whereas Orange-rated factories present greater risk to the factory workers. While the percentage of Orange-rated factories decreased in 2006, the ratio is still of concern.

Wal-Mart believes that the decrease in Orange ratings can be attributed to our educational efforts during the factory audits and the supplier and factory management educational sessions. For example, we have observed measurable improvements in factories that have participated in Third Orange Meetings. In the Middle East, Africa, and Europe region, meetings were held with eight targeted suppliers and factory management; at the end of 2006, six of the targeted factories had achieved a Green rating and two had received a Yellow rating.

The lower number of disapproved factories in 2005 and 2006 can be attributed to the program changes that took effect in 2005. The deactivation period for disapproved factories was extended from 90 days to one year to strengthen the consequences for non-compliance. Because of the lengthened disapproval period, we restarted Orange rating counts at zero for all factories on January 1, 2005, leading to lower disapproval rates in 2005 and 2006.

Factory turnover also impacts audit results because results do not reflect the same factory base from year to year. Fifty-two percent of factories audited by Ethical Standards in 2005 were not also part of the program in 2006 due to several factors, including: supplier turnover, disapproved factories, and Red-Failed-rated factories.