Dive Brief:
- Walmart saw a drastic decline in the number of allegations filed against its suppliers for failing to comply with responsible sourcing standards during fiscal 2026, according to the retailer’s ESG report published in July.
- During the year, Walmart reported 754 total opened cases, compared with 1,163 the previous year — a 35% year-over-year decrease.
- Walmart’s “unauthorized production” category saw the biggest drop in received allegations at 146, down 71% YoY, per the report. In FY 2025, the company logged 505 reports in the category, which covers facilities producing goods not authorized by the retailer.
Dive Insight:
Walmart uses a “risk-based approach” to auditing for potential sourcing infractions, focusing on evaluating disclosed facilities and allocating resources to sites that may have a higher risk of violating the retailer’s supplier standards, per the ESG report. The retailer’s requirements state that suppliers must disclose all facilities used to make products where Walmart is the importer of record. Walmart currently has 26,300 supplier-disclosed facilities.
To identify common issues at supplier facilities, Walmart uses publicly available data on country and region risks in addition to its own data, the retailer said. This process creates risk profiles, which Walmart uses to determine where to allocate monitoring resources.
Walmart is facing fewer responsible sourcing allegations
Walmart reviews each audit submitted by workers or anyone with “relevant information” directly to the company, including through a 24/7 global hotline and a dedicated email address. Walmart then assigns facility ratings that correspond to its compliance and risk level, per the report. The company also opens cases whenever “credible” information is received about an alleged supplier or facility standard violation.
Approximately 16,700 responsible sourcing facility audits were conducted by third parties in FY 2026 for Walmart, per the report. About 37% of those facilities were identified as fully compliant, while nearly 50% were largely compliant.
Only about 13% of audits resulted in a facility being flagged for serious concerns about compliance with Walmart’s standards. In these instances, Walmart’s compliance teams collaborate with merchants and sourcing teams to communicate findings and expectations to improve a site’s rating.
Walmart reports increase in supplier standards compliance
Meanwhile, approximately 0.5% of suppliers received ratings where violations could justify suspending or terminating the facility’s ability to produce goods for Walmart. In the last two years, violations have included recruitment fees by workers in Southeast Asia, underage labor in the U.S. and Asia, and the use of involuntary prison labor, according to the ESG report. Between 2021 and 2025, Walmart ceased doing business with 19 suppliers due to serious violations.
