Walmart’s FY2026 ESG report shows uneven progress on cotton, fiber sourcing and supply chain labor

Walmart’s newly released FY2026 ESG Report, “Delivering Shared Value,” lands at a moment when the retailer’s sourcing decisions carry outsized weight for textile and apparel manufacturers worldwide. With $713.2 billion in total revenue and roughly 2.1 million associates across 10,900-plus stores and eCommerce sites in 19 countries, Walmart’s supplier standards function less like corporate guidelines and more like de facto market rules for large parts of the apparel value chain, particularly in Bangladesh, India, Vietnam, and Central America.

For textile and sourcing professionals, the report’s value lies less in its topline narrative and more in the data tables buried in its appendix, where three-year trend lines show where progress is real and where it has stalled.

Fiber sourcing: Cotton gains, MMCF climbs, Canada lags

Walmart tracks the share of private-brand apparel and home textile volume sourced as “more sustainable” cotton – meaning certified through Better Cotton, organic, Fair Trade, or recycled documentation and as man-made cellulosic fiber (MMCF) from forests verified against deforestation risk.

The MMCF figures are the most striking data point in the release. Walmart U.S. more than doubled its sustainable-forest-sourced MMCF share since FY2024, driven largely by supplier adoption of Canopy’s “green shirt” designation. But the swing at Sam’s Club U.S. on cotton — down from 80.7% to 64.0% year over year — is a reminder that these percentages are self-reported by suppliers representing roughly 95% of in-scope net sales, and are sensitive to shifts in supplier mix, not necessarily to sourcing policy changes.

Buyers relying on these figures for competitive benchmarking should treat single-year swings cautiously and look at the three-year window instead.

Supplier opportunity: Local sourcing still dominates product spend

Walmart continues to frame local sourcing as a resilience strategy as much as an economic-development one. More than two-thirds of Walmart U.S. product spend went to items made, grown, or assembled domestically in FY2026, and the figure was even higher in Mexico (93%), China (92%), Chile (84%), and Canada (68%). Cumulative incremental U.S. sourcing tied to the company’s $350 billion, 10-year commitment reached $256 billion by year-end.

Smaller suppliers received $67.4 billion in combined spend from Walmart U.S. and Sam’s Club U.S., and 115,000 participants had graduated from the Walmart Vriddhi supplier-development program in India since 2019, with a target of 170,000 by 2028. For apparel exporters specifically, Walmart disclosed a goal to lift annual exports of goods from India to $10 billion by the end of 2027, up from more than $45 billion cumulatively over two decades of sourcing there though the report is not explicit about how much of that growth target is textile-specific.

Worker dignity: A decade-long initiative concludes, with mixed results

The report marks the formal conclusion of Walmart’s 2016 commitment to advance worker dignity across ten retail supply chains by 2025, including apparel and home textiles sourced from Bangladesh, Guatemala, Jordan, India, and Vietnam. Over the decade, Walmart Foundation grantees reported reaching more than 330,000 people directly and 14 million indirectly through training, worker-voice tools, and recruitment-fee reform programs such as the Issara Institute’s Golden Dreams Recruitment Marketplace and the Employer Pays Verification framework developed with Verité.

One quantified outcome specific to apparel-adjacent sectors: a 43% reduction in workers borrowing money to pay recruitment fees, concentrated primarily in electronics rather than textiles, based on Responsible Business Alliance data. The report describes this initiative’s “initial phase” as concluded, with future work folded into ongoing supply chain partnerships rather than a renewed standalone target — a framing that leaves open how rigorously comparable progress will be tracked going forward.

On compliance monitoring more broadly, Walmart reported 16,700 third-party audit reports assessed across supplier facilities in 83 countries during FY2026.

Between 2021 and 2025, Walmart ended relationships with 19 suppliers over serious standards violations.

Textile waste and circularity: Early-stage investment

Compared with the granular reporting on fiber sourcing, Walmart’s textile circularity disclosures remain thin. The report cites a $2 million grant to Goodwill Industries International for a two-year Textile Circularity Pilot aimed at improving traceability and reuse, part of a broader $20.6 million the company and its foundation have committed to recycling infrastructure since FY2021. There is no dedicated textile-waste diversion metric in the FY2026 data tables comparable to the packaging-recyclability figures reported elsewhere, which limits the ability of apparel and home-textile suppliers to benchmark their own circularity progress against Walmart’s expectations.

What this means for the industry

For sourcing executives, the report confirms that Walmart’s cotton and MMCF sourcing expectations are tightening in measurable ways, even as year-to-year volatility in self-reported figures complicates trend analysis. For apparel manufacturers in South and Southeast Asia, the audit-rating distribution and the wind-down of the decade-long worker dignity initiative suggest compliance oversight will likely shift toward embedded, ongoing supplier engagement rather than a headline campaign with its own separate accounting.

Taken as a whole, the FY2026 report is a more disciplined disclosure than a marketing document, but it is also an incomplete one for textile-specific accountability: strong fiber-sourcing data sits alongside comparatively sparse circularity metrics. Suppliers and industry observers evaluating Walmart’s sustainability trajectory should read the underlying data tables rather than the executive summary, since the gap between the two is where the real signal for FY2027 sourcing decisions is likely to emerge.

Read the full report here