Wal-Mart poses a puzzlement

BY HEATHER HAHN

Posted on Saturday, August 23, 2008

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It’s the largest retailer in world, but faith-based financial managers differ on whether Wal-Mart is a socially responsible investment.

Dozens of funds include it in their portfolios, while others steer clear of the Bentonville-based company.

Christian Brothers Investment Services Inc., an investment firm that seeks to uphold Catholic values, has invested in Wal-Mart for years, and has worked to influence Wal-Mart policies so that they are more in line with the church’s teachings.

Christian Brothers is one of many shareholder groups that helped persuade Wal-Mart to stop selling handguns in the mid-1990 s. And Christian Brothers was among investment groups that got Wal-Mart in 2006 to release Equal Employment Opportunity data on its hiring of women and racial minorities.

“I know we’ve seen changes we’ve been pleased with,” said Julie Tanner, Christian Brothers’ assistant director of Socially Responsible Investments.

Other companies avoid Wal-Mart. The Timothy Plan, a family of mutual funds that cater to conservative evangelical Christians, lists Wal-Mart and a host of other major firms among the 626 companies on its “Hall of Shame” of forbidden securities.

“We deal with pro-life, profamily issues,” Timothy Plan spokesman Stephen Ally said. Corporations make the list, he said, because they “are engaged in activities that are contrary to traditional Judeo-Christian ethics.” Specifically, he said, the Timothy Plan objects to Wal-Mart gifts to Planned Parenthood, which provides abortions as well as women’s health-care services. Ally also said Wal-Mart supports “alternative lifestyles” by including sexual orientation in its diversity training, and criticized the retailer for selling what the Timothy Plan deems “anti-family” entertainment such as the graphic R-rated horror flicks Hostel and Hostel II.

According to Wal-Mart, three stores made donations of $ 1, 000 or less to Planned Parenthood last year. That’s out of about $ 402 million in charitable giving companywide during the same period.

John Simley, Wal-Mart spokesman, said his company offers diversity training because “Wal-Mart will not tolerate discrimination in employment on the basis of race, color, age, sex, sexual orientation, religion, disability, ethnicity, national origin, veteran status, marital status.” Wal-Mart sells R-rated films and mature-rated video games, but Simley said the company requires they only be sold to people who are at least 17.

Choosing which companies to screen from a stock portfolio is never simple, said David Moore, who as president of the Arkansas Baptist Foundation advises clients on how to invest their charitable giving. Large, multinational companies often have at least one part of their business that doesn’t comply with church teachings, he said.

His mostly Southern Baptist clients have many of the same worries that Timothy Plan investors do. But he cautions that if investors object to buying Wal-Mart shares, they should stop shopping there as well.

“When I buy Wal-Mart stock, I don’t contribute a thing to the bottom line of Wal-Mart,” Moore said. “You have 100 shares and you want to sell them, so I go buy them. All we’ve done is change who owns the shares. If I go down to Wal-Mart and spend $ 5, 000 on merchandise, I am contributing to the bottom line of Wal-Mart.” MMA Praxis, a Mennonite family of mutual funds, has a different perspective on Wal-Mart.

Mark Regier, director of stewardship investing for MMA Praxis, said the funds take into consideration a company’s environmental record as well as how it treats its workers when choosing whether to invest.

“There are a number of things that have concerned us for a long time about Wal-Mart — in particular, their economic model,” Regier said. “What is sustainable ? Can you keep having more stores and more stuff that’s cheaper today than yesterday and cheaper tomorrow than today ?” But by investing in the company, Regier said, MMA Praxis investors have a say in how the corporation is run.

“Are they a perfect company ? Certainly not,” Regier said. “None of our companies are perfect. But we really have found that Wal-Mart has been open to dialogue, and sometimes we take steps forward.” MMA Praxis is a member of the New York-based Interfaith Center on Corporate Responsibility, an association of about 275 Catholic and Protestant institutional investors. Over the years, the center has issued a number of shareholder proposals to Wal-Mart on behalf of its members.

The center primarily has called for greater health benefits for Wal-Mart employees, said Margaret Weber, chairman of the center’s board of directors.

She said Wal-Mart has challenged proposals with the Securities Exchange Commission, but the retailer also has addressed some of the center’s concerns. More importantly, Weber said, the company has signed on to one of the center’s main goals by taking leadership in the campaign for comprehensive health-care reform nationwide.

Simley, Wal-Mart’s spokesman, said his company takes shareholder proposals seriously.

“A shareholder is by definition an owner of the company,” he said, “and we have an obligation to consider their views as part owners in the company.” H. Lee Scott, Wal-Mart’s president and chief executive officer, has even met with the center’s leaders.

Weber said engaging with Wal-Mart is important because the company is so huge.

“If you can move Wal-Mart, you can move a lot in the retail industry,” Weber said. “There is no way they are insignificant.” Frank Lockwood contributed to the reporting of this story.

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