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U.S. Retailers Offer Safety Plan for Bangladeshi Factories U.S. Retailers Offer Safety Plan for Bangladeshi Factories
(about 4 hours later)
Walmart, Gap, Target, Kohl’s, Macy’s and a dozen other American retailers are announcing a plan on Wednesday aimed at improving factory safety in Bangladesh — an alternative to a plan embraced by 70 retailers and apparel brands, most of them European. A group of 17 major North American retailers, including Walmart, Gap, Target and Macy’s, announced on Wednesday a plan to improve factory safety in Bangladesh, drawing immediate criticism from labor groups who complained that it is less stringent than an accord reached among European companies.
The proposal calls for the retailers to inspect the estimated 500 factories that the American companies use within 12 months, and then develop plans to fix any substantial safety problems that are found, one official involved in the planning said. .
Under the effort, called the Alliance for Bangladesh Worker Safety, the participating companies would contribute money — from a modest amount up to $1 million a year, depending on the level of business each does in Bangladesh. This would create a total fund of $40 million to $50 million during the plan’s five years. The American plan commits $42 million for worker safety, including inspections and an anonymous hot line for workers to report concerns about their factories, and more than $100 million in loans and other financing to help Bangladeshi factory owners correct safety problems. But unlike the accord joined mainly by European retailers that was unveiled on Monday, the plan lacks legally binding commitments to pay for those improvements.
While details of the proposal have yet to be fleshed out, it differs from the European-dominated plan in the way the participants take responsibility for safety violations. The Europeans pledge to ensure that there are funds to fix serious fire and building safety problems in any of the factories they use in Bangladesh. Some labor-rights groups estimated that it would cost as much as $3 billion to bring Bangladesh’s garment factories up to an acceptable safety standard.
Under the American plan, there is talk of “shared accountability” – the companies would work closely with the factory owners, the government of Bangladesh and various governments and aid agencies to figure out ways to finance safety improvements. If serious safety problems were found at a factory, the plan’s director would inform the Bangladesh government, the factory owner and what the group calls the factory’s “worker participation committee,” a group to be elected by a factory’s workers. Under the effort announced Wednesday, called the Alliance for Bangladesh Worker Safety, the participating companies will contribute money — from a modest amount up to $1 million a year, depending on the level of business each does in Bangladesh. This would create a fund of $42 million during the five years of the plan.
The American retailers plan to develop a common safety standard for the factories by October and to create a clearinghouse to share information among themselves about which factories have been approved for production and which need safety improvements. One retail executive said the American companies would pledge $100 million in loans and other financing to upgrade safety in Bangladesh’s apparel industry. The proposal calls for the retailers to inspect the estimated 500 Bangladeshi factories that the North American retailers use within 12 months, and then develop plans to fix any substantial safety problems that are found.
The North American retailers plan to develop a common safety standard for the factories by October and to create a clearinghouse to share information among themselves about which factories have been approved for production and which need safety improvements.
Their plan calls for “shared accountability” in responding to those safety problems: the companies would work closely with the factory owners, the government of Bangladesh and various government and aid agencies to figure out ways to finance safety improvements. If serious safety problems were discovered at a particular factory, the plan’s director would inform the Bangladeshi government, the factory owner and what the group calls the factory’s "worker participation committee,” a group to be elected by a factory’s workers.
That differs from the way retailers in the European-dominated plan take responsibility for safety violations. The Europeans pledge to ensure that there is money to fix serious fire and building safety problems in any of the factories they use in Bangladesh.
Under the American plan, the onus is on factory owners to improve their workplaces. Unlike the European group, the North American retailers are not promising to finance needed improvements, outside of the loans. Essentially, if a factory is not up to par and does not fix the problems itself, the American retailers say they will no longer do business there.
“In terms of legal liability, if a worker reports a factory is not measuring up, we have the measures to respond, to investigate,” said Jay Jorgensen, global chief compliance officer for Walmart. “If a factory is not meeting the standards,” he said, “under our agreement they’re going to be terminated. That’s the ultimate pressure point on a factory to treat its workers well — the continuation of business.”
Five labor rights groups, including the Worker Rights Consortium, the Clean Clothes Campaign, and United Students Against Sweatshops, criticized the American plan. “Walmart, Gap and the corporations that have chosen to join them, are unwilling to commit to a program under which they actually have to keep the promises they make to workers and accept financial responsibility for ensuring that their factories are made safe,” the groups said in a statement.
The five organizations faulted the plan for being “company-developed and company-controlled,” adding that “under the Gap/Walmart scheme, brands and retailers are not obligated to pay one cent toward the renovation and repair of their factories in Bangladesh.”
The retailers said repeatedly that their plan contained many of the same elements as the European-dominated effort: inspections of all factories, developing remediation plans, sharing information on the inspections, training Bangladeshi workers about safety.
“We may have two plans — the alliance and the accord — but we have one shared purpose and that purpose is to improve worker safety in garment factories in Bangladesh,” said Bobbi Silten, senior vice president of global responsibility at Gap and president of the Gap Foundation.
However, one executive said, the American retailers were worried about liability issues wrapped up in the heavily European accord.
“The main difference, the reason we couldn’t sign the accord, is Europe has a different legal environment than we do in the United States and Canada. The accord had some provisions that in the U.S. and Canada would subject us to potentially unlimited legal liability and litigation,” Mr. Jorgensen said. Regarding the funds that the North American retailers are offering, he said, “we don’t want one dollar of that to go to lawyers — we want every cent of that to go to the factories.”
Mr. Jorgensen said the $100 million in loans and other financing was an important component. “The Bangladesh Garment Manufacturers Association has asked that financing be made available,” he said. “It’s hard to get loans there, and if you get a loan, it’s expensive. We’re trying to make capital available on a low-cost basis so that repairing a situation where safety issues doesn’t go unremediated because of financing problems.”
However, labor-rights advocates called the plan inadequate.
“It’s clever,” said Scott Nova, executive director of the Worker Rights Consortium, a monitoring group based in Washington. “It’s designed to sound like the accord. They talk about inspections. They talk about renovations. They can use all the rhetoric they choose, but if you look at the substance, there’s very little there.”
He added, “They can walk away whenever they want and there is no real obligation to pay a penny to repair and renovate factories.”
Under the terms of the agreement, participating retailers can leave the alliance whenever they like, though if they do so before two years are up, they must pay what remains of their five-year financial commitment to the alliance.
The 70 companies in the European-dominated effort announced details of their plan on Monday, saying they would have all of the factories they use in Bangladesh inspected within nine months and would have remediation plans developed for those with safety problems. They pledged “to ensure that sufficient funds are available to pay for renovations and other safety improvements.”The 70 companies in the European-dominated effort announced details of their plan on Monday, saying they would have all of the factories they use in Bangladesh inspected within nine months and would have remediation plans developed for those with safety problems. They pledged “to ensure that sufficient funds are available to pay for renovations and other safety improvements.”
Bangladesh is the world’s second-largest apparel exporting nation, after China; Europe buys about 60 percent of its exports and the United States around 25 percent.Bangladesh is the world’s second-largest apparel exporting nation, after China; Europe buys about 60 percent of its exports and the United States around 25 percent.
The chief executives in the alliance made a joint statement Wednesday, saying: “The safety record of Bangladeshi factories is unacceptable and requires our collective effort. We can prevent future tragedies by consolidating and amplifying our individual efforts to bring about real and sustained progress.” The beginning of the American effort was announced in May, as Walmart, Gap and other American retailers felt pressure to act because the European-dominated accord was gathering momentum and because of the outcry after 1,129 workers died in a factory building collapse in Bangladesh in April.
The beginning of the American effort was announced in May, as Walmart, Gap and other American retailers felt pressure to act because the European-dominated accord was gathering momentum and because of the outcry to do more to ensure safety after 1,129 workers died in a factory building collapse in Bangladesh in April. The plan announced Wednesday includes J.C. Penney, Kohl's, Carter’s and the Children’s Place, and was reached with the help of the Bipartisan Policy Center and two former United States senators from Maine, George J. Mitchell and Olympia J. Snowe.
The plan announced Wednesday includes J.C. Penney, Carter’s and the Children’s Place and was reached with the help of the Bipartisan Policy Center and two former United States senators from Maine, George Mitchell and Olympia Snowe. Some American companies have joined the European-dominated plan, including Abercrombie & Fitch and PVH, the parent company of Calvin Klein and Tommy Hilfiger.
Supporters of the European-dominated plan, known as the Accord on Fire and Building Safety in Bangladesh, have pre-emptively criticized the American plan, saying it would achieve less in improving safety because the companies have made a less ambitious commitment to finance safety upgrades. Several American companies have joined the European-dominated plan, including Abercrombie & Fitch and PVH, the parent company of Calvin Klein and Tommy Hilfiger. “Quite simply it’s a pale imitation of the legally binding accord we have,” said Jyrki Raina, general secretary of IndustrIALL, a federation with 50 million union members from 140 countries that played a major role in creating the accord. “This really shows the difference between a legally binding process and these voluntary initiatives, which haven’t functioned well in the past.”
Critics have faulted the American effort for not including the views of unions or workers in their plan. The Bipartisan Policy Center had invited several labor rights groups to attend a meeting to give their views, but the labor groups boycotted, seeing the American effort as one that was undercutting the European-dominated plan.Critics have faulted the American effort for not including the views of unions or workers in their plan. The Bipartisan Policy Center had invited several labor rights groups to attend a meeting to give their views, but the labor groups boycotted, seeing the American effort as one that was undercutting the European-dominated plan.
The problems in Bangladesh’s garment industry have not affected the retail industry’s demand for cheap goods made there. The country’s Export Promotion Bureau said Tuesday that exports in June rose 16.3 percent to $2.7 billion, based on strong clothing sales.