Walmart, Centric Brands Probe Cambodia Supply Chains Amid Labor Concerns

Walmart Inc WMT and Centric Brands are reportedly examining their Cambodian supply chains following allegations that the country's largest women's prison utilized inmates for illegal garment production aimed at export markets. 

In communications last year, The American Apparel and Footwear Association (AAFA) highlighted credible reports suggesting that garments and textile products for export, including to the U.S., were produced at the Correctional Center 2 (CC2) near Phnom Penh. 

Both international and Cambodian laws prohibit the trade of goods made by inmates. The International Labour Organization (ILO) allows prison labor only if it's voluntary.

Also Read: Walmart Q2 Earnings: Smashes Expectations, Strong E-Commerce Growth, and Raised Outlook.

This inquiry arose after Reuters questioned them and the AAFA expressed concerns about labor practices in the nation.

Three local companies were fined by Cambodian authorities and had their export licenses suspended for employing CC2 inmates for hotel slipper production aimed at the EU and Japanese markets. These companies did not comment on the allegations when approached by Reuters.

Sources, including former CC2 inmates, have indicated possible ties between products made in the prison and Walmart and Centric Brands. These allegations are based on items like reusable shopping bags with Walmart branding and IZOD-branded polo shirts believed to be produced in prison. Both companies have investigated their supply chains in light of these claims.

The U.S. and Cambodia have trade agreements that the illegal employment of prison labor may jeopardize. Cambodian authorities have acknowledged the concerns and promised to clarify the legal stance on prison labor.

The revelations about labor practices in Cambodia emphasize the challenges and complexities brands face in maintaining ethical supply chains in a global marketplace.

Price Action: WMT shares are up 0.47% at $158.67 on the last check Monday.