Wal-mart and Socially Responsible Investing

Brian White at Blogging Stocks has been writing and eliciting copious comments on Wal-Mart (WMT) and social responsibility.  I applaud the fact that  the pressure to behave in a responsible way is having any influence on a company like Wal-Mart in the first place.  Even though they have a long way to go it is a good indicator that the seed of corporate responsibility may be taking hold. 

Only retailers with consumer brands to protect can lead the way in responsible behavior.  I remember talking to the folks at Rainforest Action Network and how much trouble they had convincing Boise Cascade (private company) to stop cutting down old growth forests.  But it was retailers like Home Depot (HD) and Lowes (LOW) who got on the band wagon right away and made a pledge not to buy old growth wood which forced Boise Cascade to capitulate and do the right thing.  So here we have Wal-Mart the biggest retailer in America making some moves into social responsibility. Hurray.

Social pros and cons of Wal-Mart:

Things I don't like:
- They ruin small town communities/main street business when they move into a rural area,
- They buy over 80% of their products from China
- They have weak labor practices (but no worse than McDonald's or other retail low skilled labor employers) - If ever there were a place that needed a union it's Wal-Mart.  However, I'd prefer a national plan that does not put corporations for healthcare.  More on my taxation theories in a later entry.
- They promote consumerism to people who should be spending their money on health care and education.
- Their huge buying power limits choice.  They have only one or two of each type of product in their stores.  This is not a big deal in cities but in rural areas where they are the only choice this actually limits consumer choice.  (I went to buy air rifles for a summer camp in Vermont the other day. They only had two choices, both of them weak).

Things I do like:
- At the same time WalMart provide very low priced products and increase the purchasing options of people, and this benefits those with moderate incomes the most. 
- They have advocated for national health care and believe that universal health coverage should be the responsibility of the government not the employer. Of course, this benefits Wal-Mart no end but it's also good public policy.
- They prefer to employ older people.  Many fast food and customer service companies do not value older workers' experience. Sadly, these are often older people who are supplementing a deficient retirement income. (not Wal-Mart's fault).

My philosophy on ethical investing is that I don't want to hope bad things happen to people.  I do not own tobacco companies because I do not like hoping that more teenagers start smoking.  And I do not like owning defense companies because I do not like rooting for war.  I am able to own an energy company because I think they can behave responsibly and still make a profit. Problem is, that except for some fancy advertising, energy just are not working to protect the earth they exploit right now.  But they can be convinced.   I always vote my proxies in favor of socially responsible shareholder initiatives like this one from Responsible Wealth.

Disclosure: Nothing in this blog is meant to be a recommendation to buy or sell.  I do not give investment advice.  Do your own research.  Do not rely on anything in this weblog to make investment decisions.  I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult your own investment professional before buying or selling any security.

I own Wal-Mart(WMT); it is one of my larger positions.  I am long Wal-Mart shares and short January 2007 - 45 strike calls.