Walmart’s current slogan is “Save money. Live better.” On the corporate front, shareholders should question if the company is living up to either of those statements as it continues to deal with significant environmental and social issues. These of course include controversies stemming from bribery allegations, its ties to garment factories in Bangladesh and now, potentially, as a result of its violation of environmental regulations.
On May 28th, the Environmental Protection Agency (“EPA”) announced that Walmart pled guilty to federal environmental crimes and civil violations. The company will pay more than $81 million to settle six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores and to settle violations of the Federal Insecticide, Fungicide and Rodenticide Act from its failing to properly handle pesticides that had been returned by customers at its stores. Additionally, Walmart settled a civil case filed by the EPA as well as cases brought by the states of California and Missouri. In total, Walmart will pay more than $110 million to resolve these violations of federal and state environmental laws.
However, the EPA is hoping to ensure that Walmart doesn’t face similar issues going forward. In addition to paying this settlement, Walmart will also be required to implement a company-wide hazardous waste management program. This program will include, among other things, operational changes to ensure compliance with environmental regulations and will address corporate structure and staffing, employee training, development of an environmental management system, maintaining a hazardous waste electronic database and the development of standard operation procedures relating to environmental compliance.
While a $110 million settlement and the implementation of a hazardous waste management program may not amount to a significant penalty for a company that in fiscal year 2013 had $466 billion in sales, it could be another blow to Walmart’s reputation. Much like the recent bribery scandal, this is yet another issue that points to a possible deficiency in appropriate oversight over certain operational matters. As such, shareholders should closely monitor the board’s response and the company’s compliance with these regulations to ensure that they are demonstrating responsiveness to these issues. Hopefully these fines, operational, and compliance-related improvements will lead to the company saving money and living better.